NEW CENTURY MORTGAGE SECURITIES INC
424B5, 2000-06-29
ASSET-BACKED SECURITIES
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PROSPECTUS SUPPLEMENT (to Prospectus dated September 10, 1999)



               NEW CENTURY HOME EQUITY LOAN TRUST, SERIES 2000-NCA

                           $207,468,000 (APPROXIMATE)

                     ASSET BACKED PASS-THROUGH CERTIFICATES


                        NEW CENTURY MORTGAGE CORPORATION
                         ORIGINATOR AND MASTER SERVICER

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

                      NEW CENTURY MORTGAGE SECURITIES, INC.
                                    DEPOSITOR

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


--------------------------------------------------------------------------------
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE S-8 IN THIS PROSPECTUS
SUPPLEMENT AND ON PAGE 4 IN THE PROSPECTUS.

This prospectus supplement may be used to offer and sell the certificates only
if accompanied by the prospectus.
--------------------------------------------------------------------------------


THE OFFERED CERTIFICATES

O    The certificates represent ownership interests in a trust consisting
     primarily of a pool of first lien, adjustable-rate and fixed-rate
     residential mortgage loans. The mortgage loans will be segregated into two
     groups as described in this prospectus supplement.

o    The Class A-1 Certificates will accrue interest at the fixed rate specified
     in this prospectus supplement, subject to limitations described in this
     prospectus supplement.

O    The Class A-2 Certificates will accrue interest at a rate equal to one-
     month LIBOR plus a fixed margin, subject to limitations described in this
     prospectus supplement.

CREDIT ENHANCEMENT

O    Credit enhancement for the offered certificates will be provided by excess
     interest and overcollateralization, crosscollateralization and a
     certificate insurance policy issued by Financial Security Assurance Inc.,
     as described in this prospectus supplement.



UNDERWRITING

O    Greenwich Capital Markets, Inc. and Chase Securities Inc., as underwriters,
     will offer to the public the Class A-1 and Class A-2 Certificates, at
     varying prices to be determined at the time of sale. The proceeds to the
     depositor from the sale of the underwritten certificates will be
     approximately 99.725% of the principal balance of the underwritten
     certificates, plus accrued interest in the case of the Class A-1
     Certificates, before deducting expenses.

NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED THESE
SECURITIES OR DETERMINED THAT THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.





GREENWICH CAPITAL MARKETS, INC.                            CHASE SECURITIES INC.







                                  June 27, 2000



<PAGE>



   IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS SUPPLEMENT
                        AND THE ACCOMPANYING PROSPECTUS

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION.

We provide information to you about the offered certificates in two separate
documents that progressively provide more detail

     o   the accompanying prospectus, which provides general information, some
         of which may not apply to this series of certificates; and

     o   this prospectus supplement, which describes the specific terms of this
         series of certificates.

New Century Mortgage Securities, Inc.'s principal offices are located at 18400
Von Karman, Irvine California 92612 and its phone number is (949) 440-7030.

<TABLE>
<CAPTION>
                                                 TABLE OF CONTENTS

                                               PROSPECTUS SUPPLEMENT
<S>                                                                                                            <C>
Summary of Terms................................................................................................S-3
Risk Factors....................................................................................................S-8
The Mortgage Pool..............................................................................................S-16
The Originator and the Master Servicer.........................................................................S-41
The Pooling and Servicing Agreement............................................................................S-51
Description of the Certificates................................................................................S-58
Yield, Maturity and Prepayment Considerations..................................................................S-74
The Certificate Insurer........................................................................................S-84
Use of Proceeds................................................................................................S-86
Federal Income Tax Consequences................................................................................S-87
Considerations for Benefit Plan Investors......................................................................S-89
Legal Investment Considerations................................................................................S-90
Method of Distribution.........................................................................................S-91
Legal Matters..................................................................................................S-91
Ratings........................................................................................................S-91
Experts........................................................................................................S-92
Annex I.........................................................................................................I-1
</TABLE>








                                       S-2

<PAGE>




                                SUMMARY OF TERMS

O    THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS DOCUMENT AND DOES
     NOT CONTAIN ALL OF THE INFORMATION THAT YOU NEED TO CONSIDER IN MAKING YOUR
     INVESTMENT DECISION. TO UNDERSTAND ALL OF THE TERMS OF THE OFFERING OF THE
     OFFERED CERTIFICATES, READ CAREFULLY THIS ENTIRE DOCUMENT AND THE
     ACCOMPANYING PROSPECTUS.

O    THIS SUMMARY PROVIDES AN OVERVIEW OF CALCULATIONS, CASH FLOW PRIORITIES AND
     OTHER INFORMATION TO AID YOUR UNDERSTANDING AND IS QUALIFIED BY THE FULL
     DESCRIPTION OF THESE CALCULATIONS, CASH FLOW PRIORITIES AND OTHER
     INFORMATION IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS.
     SOME OF THE INFORMATION CONSISTS OF FORWARD-LOOKING STATEMENTS RELATING TO
     FUTURE ECONOMIC PERFORMANCE OR PROJECTIONS AND OTHER FINANCIAL ITEMS.
     FORWARD-LOOKING STATEMENTS ARE SUBJECT TO A VARIETY OF RISKS AND
     UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER FROM THE PROJECTED
     RESULTS. THOSE RISKS AND UNCERTAINTIES ARE BEYOND OUR CONTROL AND INCLUDE
     GENERAL ECONOMIC AND BUSINESS CONDITIONS, REGULATORY INITIATIVES AND
     GOVERNMENTAL REGULATIONS. ACCORDINGLY, WHAT ACTUALLY HAPPENS MAY BE VERY
     DIFFERENT FROM WHAT WE PREDICT IN OUR FORWARD-LOOKING STATEMENTS.

$ 87,073,000          Class A-1               8.30% Pass-Through Rate*
$120,395,000          Class A-2               Variable Pass-Through Rate*

*    Subject to limitation or increase as described under "Description of the
     Certificates--Definitions" in this prospectus supplement.

OFFERED CERTIFICATES

The New Century Home Equity Loan Trust, Series 2000-NCA, Asset Backed
Pass-Through Certificates will consist of three classes of certificates, two of
which are being offered by this prospectus supplement and the accompanying
prospectus. The assets of the trust that will support the certificates will
consist primarily of a pool of adjustable-rate and fixed-rate, first lien,
residential mortgage loans.

The offered certificates will be book-entry securities clearing through The
Depository Trust Company, in the United States, or Clearstream Banking
Luxembourg and the Euroclear System, in Europe, in minimum denominations of
$50,000.

OTHER CERTIFICATES

The trust will issue one class of certificates that are not being offered to the
public by this prospectus supplement. These certificates will be designated as
the Class R Certificates. The Class R Certificates will not have an original
principal balance and are the certificates representing the residual interests
in the trust. The Class R Certificates will be delivered to a wholly-owned
bankruptcy remote subsidiary of the seller as partial consideration for the
mortgage loans.

WE REFER YOU TO "DESCRIPTION OF THE CERTIFICATES--GENERAL," "--BOOK-ENTRY
CERTIFICATES" AND "THE MORTGAGE POOL" IN THIS PROSPECTUS SUPPLEMENT AND
"DESCRIPTION OF THE SECURITIES" IN THE ACCOMPANYING PROSPECTUS FOR ADDITIONAL
INFORMATION.

CUT-OFF DATE

June 1, 2000.

CLOSING DATE

On or about June 29, 2000.



                                       S-3

<PAGE>




ORIGINATOR AND MASTER SERVICER

New Century Mortgage Corporation, a California
corporation.

WE REFER YOU TO "THE ORIGINATOR AND THE MASTER SERVICER" IN THIS PROSPECTUS
SUPPLEMENT FOR ADDITIONAL INFORMATION.

SELLER

NC Capital Corporation, a California corporation.

WE REFER YOU TO "THE POOLING AND SERVICING AGREEMENT--THE SELLER" IN THIS
PROSPECTUS SUPPLEMENT FOR ADDITIONAL INFORMATION.

THE DEPOSITOR

New Century Mortgage Securities, Inc., a Delaware
Corporation.

WE REFER YOU TO "THE DEPOSITOR" IN THE  PROSPECTUS
FOR ADDITIONAL INFORMATION.

TRUSTEE

Firstar Bank, N.A., a national banking association.

WE REFER YOU TO "THE POOLING AND SERVICING AGREEMENT--THE TRUSTEE" IN THIS
PROSPECTUS SUPPLEMENT FOR ADDITIONAL INFORMATION.

TRUST ADMINISTRATOR

U.S. Bank National Association, a national banking
association.

WE REFER YOU TO "POOLING AND SERVICING AGREEMENT--TRUST ADMINISTRATOR" IN THIS
PROSPECTUS SUPPLEMENT FOR ADDITIONAL INFORMATION.

CERTIFICATE INSURER

Financial Security Assurance Inc., a New York
stock insurance company.

WE REFER YOU TO "THE CERTIFICATE INSURER" IN THIS PROSPECTUS SUPPLEMENT FOR
ADDITIONAL INFORMATION.

DESIGNATIONS

Each class of certificates will have different characteristics, some of which
are reflected in the following labels.

O    OFFERED CERTIFICATES

     Class A-1 and Class A-2 Certificates.

O    GROUP I CERTIFICATES

     Class A-1 Certificates. Except under the circumstances described under
     "Description of the Certificates--Allocation of Available Funds" in this
     prospectus supplement, the group I certificates receive their distributions
     from loan group I.

O    GROUP II CERTIFICATES

     Class A-2 Certificates. Except under the circumstances described under
     "Description of the Certificates--Allocation of Available Funds" in this
     prospectus supplement, the Class A-2 Certificates receive their
     distributions from loan group II.

O    FIXED RATE CERTIFICATES

     Class A-1 Certificates.

O    FLOATING RATE CERTIFICATES

     Class A-2 Certificates.

MORTGAGE LOANS

On the closing date the trust will acquire a pool of adjustable-rate and
fixed-rate, first lien residential mortgage loans that will be segregated into
two groups, loan group I and loan group II. As of the cut-off date, the mortgage
loans in loan group I are expected to have an aggregate outstanding principal
balance of approximately $90,371,409,


                                       S-4

<PAGE>




and the mortgage loans in loan group II are expected to have an aggregate
outstanding principal balance of approximately $124,956,298.

The statistical information in this prospectus supplement reflects the
characteristics of the mortgage loans in loan group I and loan group II as of
the cut-off date.

DISTRIBUTION DATES

Beginning in July 2000, the trust administrator will make distributions on the
certificates on the 25th day of each calendar month, or if the 25th day of a
month is not a business day, on the next business day, to the holders of record
of the certificates on the last business day of the preceding calendar month, in
the case of the Class A-1 Certificates, or on the business day preceding the
date of distribution, in the case of the Class A-2 Certificates.

PAYMENTS ON THE CERTIFICATES

INTEREST PAYMENTS

The pass-through rates for each class of offered certificates will be calculated
at the per annum rates specified under "Description of the Certificates
--Definitions" in this prospectus supplement:

Interest payable on each class of certificates accrues during an accrual period.
Except for the first accrual period, the accrual period for the Class A-1
Certificates for any distribution date is the prior calendar month. The first
accrual period for the Class A-1 Certificates will begin on the closing date and
end on June 30, 2000. Interest will be calculated for the Class A-1 Certificates
on the basis of a 360-day year consisting of twelve 30-day months. Except for
the first accrual period, the accrual period for the Class A-2 Certificates is
the period from the distribution date in the prior month through the day prior
to the current distribution date. The first accrual period for the Class A-2
Certificates will begin on the closing date and end on July 24, 2000. Interest
will be calculated for the Class A-2 Certificates on the basis of a 360-day year
and the actual number of days in the accrual period.

WE REFER YOU TO "DESCRIPTION OF THE CERTIFICATES" IN THIS PROSPECTUS SUPPLEMENT
FOR ADDITIONAL INFORMATION.

PRINCIPAL PAYMENTS

Principal will be distributed to holders of the offered certificates on each
distribution date in the amounts described under "Description of the
Certificates--Allocation of Available Funds" in this prospectus supplement.

PAYMENT PRIORITIES

Except as described under "Description of the Certificates--Allocation of
Available Funds" in this prospectus supplement, funds available for distribution
on any distribution date from payments and other amounts received on the
mortgage loans in a loan group will normally be distributed, FIRST, to cover
trust expenses, SECOND, to pay interest on the related offered certificates and,
THIRD, to pay principal on the related offered certificates. However, because of
the cross-collateralization of the offered certificates in each certificate
group by the mortgage loans in each loan group, payments on the mortgage loans
in one loan group may be used to make distributions to the holders of the
offered certificates relating to the other loan group.

WE REFER YOU TO "DESCRIPTION OF THE CERTIFICATES" IN THIS PROSPECTUS SUPPLEMENT
FOR ADDITIONAL INFORMATION.

ADVANCES

The master servicer is required to make cash advances to cover delinquent
payments of principal and interest unless it reasonably believes that the cash
advances are not recoverable from future payments on the related mortgage loans.
Advances are intended to maintain a regular flow of scheduled interest and
principal payments on the


                                       S-5

<PAGE>




certificates and are not intended to guarantee or insure against losses.

WE REFER YOU TO "THE POOLING AND SERVICING AGREEMENT--ADVANCES" IN THIS
PROSPECTUS SUPPLEMENT FOR ADDITIONAL INFORMATION.

OPTIONAL TERMINATION

The master servicer may purchase all of the mortgage loans and retire the
certificates on any distribution date if the then-current aggregate principal
balance of the mortgage loans is equal to or less than 10% of the aggregate
cut-off date principal balances of the mortgage loans.

WE REFER YOU TO "THE POOLING AND SERVICING AGREEMENT--TERMINATION" AND
"DESCRIPTION OF THE CERTIFICATES--DEFINITIONS" IN THIS PROSPECTUS SUPPLEMENT FOR
ADDITIONAL INFORMATION.

CREDIT ENHANCEMENT

THE FINANCIAL GUARANTY POLICY

The certificate insurance policy will guaranty the payment of principal and
interest on the offered certificates to the extent described in this prospectus
supplement. If the certificate insurer were unable to pay under the policy, the
offered certificates could be subject to losses.

WE REFER YOU TO "DESCRIPTION OF THE CERTIFICATES--CREDIT ENHANCEMENT--THE
CERTIFICATE INSURANCE POLICY" IN THIS PROSPECTUS SUPPLEMENT FOR ADDITIONAL
INFORMATION.

OVERCOLLATERALIZATION

The mortgage loans owned by the trust bear interest each month in an amount that
in the aggregate is expected to exceed the amount needed to pay monthly interest
on the offered certificates and trust expenses. A portion of this excess
interest, together with the prepayment premiums collected from mortgagors, will
be applied to maintain the required level of overcollateralization as required
by the pooling and servicing agreement. This will reduce the principal balances
of the offered certificates faster than the principal balance on the mortgage
loans is being reduced. As a result, the aggregate principal balance of the
mortgage loans is expected to exceed the aggregate principal balance of the
offered certificates. This feature is referred to as "overcollateralization."
The required level of overcollateralization may increase or decrease over time.
We cannot assure you that sufficient excess interest or prepayment premiums will
be generated by the mortgage loans to maintain the required level of
overcollateralization.

WE REFER YOU TO "DESCRIPTION OF THE CERTIFICATES--OVERCOLLATERALIZATION" IN THIS
PROSPECTUS SUPPLEMENT FOR ADDITIONAL INFORMATION.

CROSSCOLLATERALIZATION

Funds available with respect to one loan group may be used to make distributions
to the offered certificates relating to the other loan group.

WE REFER YOU TO "DESCRIPTION OF THE CERTIFICATES- CROSSCOLLATERALIZATION" IN
THIS PROSPECTUS SUPPLEMENT FOR ADDITIONAL INFORMATION.

RATINGS

It is a condition of the issuance of the offered certificates that they be rated
"AAA" by Fitch, Inc., "AAA" by Standard & Poor's Ratings Services, a division of
The McGraw Hill Companies, Inc. and "Aaa" by Moody's Investors Service, Inc.

A rating is not a recommendation to buy, sell or hold securities. These ratings
may be lowered or withdrawn at any time by any of the rating agencies.

WE REFER YOU TO "RATINGS" IN THIS PROSPECTUS
SUPPLEMENT FOR ADDITIONAL INFORMATION.

TAX STATUS

For federal income tax purposes, the depositor will elect to treat the trust as
a real estate mortgage


                                       S-6

<PAGE>




investment conduit. The certificates, other than the Class R Certificates, will
represent ownership of regular interests in a real estate mortgage investment
conduit and will be treated as representing ownership of debt for federal income
tax purposes. Certificateholders will be required to include in income all
interest and original issue discount, if any, on the certificates in accordance
with the accrual method of accounting regardless of their usual methods of
accounting.

FOR FURTHER INFORMATION REGARDING THE FEDERAL INCOME TAX CONSEQUENCES OF
INVESTING IN THE OFFERED CERTIFICATES, SEE "MATERIAL FEDERAL INCOME TAX
CONSEQUENCES" IN THIS PROSPECTUS SUPPLEMENT AND "FEDERAL INCOME TAX
CONSEQUENCES" IN THE PROSPECTUS.

CONSIDERATIONS FOR BENEFIT PLAN INVESTORS

The offered certificates may be considered eligible for purchase by persons
investing assets of employee benefit plans or individual retirement accounts. A
fiduciary of an employee benefit plan or individual retirement account must
determine that the purchase of an offered certificate is consistent with its
fiduciary duties under applicable law and does not result in a nonexempt
prohibited transaction under applicable law.

SEE "CONSIDERATIONS FOR BENEFIT PLAN INVESTORS" IN THIS PROSPECTUS SUPPLEMENT
AND IN THE PROSPECTUS.

LEGAL INVESTMENT

The offered certificates will constitute "mortgage related securities" for
purposes of the Secondary Mortgage Market Enhancement Act of 1984, or SMMEA, for
so long as they are rated not lower than the second highest rating category by
one or more nationally recognized statistical rating organizations and
therefore, will be legal investments for those entities to the extent provided
in SMMEA and applicable state laws.

WE REFER YOU TO "LEGAL INVESTMENT CONSIDERATIONS" IN THIS PROSPECTUS SUPPLEMENT
AND "LEGAL INVESTMENT" IN THE PROSPECTUS.



                                       S-7

<PAGE>



                                  RISK FACTORS

         THE FOLLOWING INFORMATION, WHICH YOU SHOULD CAREFULLY CONSIDER,
IDENTIFIES SIGNIFICANT SOURCES OF RISK ASSOCIATED WITH AN INVESTMENT IN THE
CERTIFICATES. YOU SHOULD ALSO CAREFULLY CONSIDER THE INFORMATION SET FORTH UNDER
"RISK FACTORS" IN THE PROSPECTUS.

THE MORTGAGE LOANS WERE UNDERWRITTEN TO STANDARDS WHICH DO NOT CONFORM TO THE
STANDARDS OF FANNIE MAE OR FREDDIE MAC WHICH MAY RESULT IN LOSSES ON THE
MORTGAGE LOANS.

         The originator's underwriting standards are intended to assess the
value of the mortgaged property and to evaluate the adequacy of the property as
collateral for the mortgage loan and consider, among other things, a mortgagor's
credit history, repayment ability and debt service-to- income ratio, as well as
the type and use of the mortgaged property. The originator provides loans
primarily to borrowers who do not qualify for loans conforming to Fannie Mae and
Freddie Mac guidelines. The originator's underwriting standards do not prohibit
a mortgagor from obtaining, at the time of origination of the originator's first
lien, additional financing which is subordinate to that first lien, which
subordinate financing would reduce the equity the mortgagor would otherwise have
in the related mortgaged property as indicated in the originator's loan-to-value
ratio determination for the originator's first lien.

         As a result of the originator's underwriting standards, the mortgage
loans in the mortgage pool are likely to experience rates of delinquency,
foreclosure and bankruptcy that are higher, and that may be substantially
higher, than those experienced by mortgage loans underwritten in a more
traditional manner.

         Furthermore, changes in the values of mortgaged properties may have a
greater effect on the delinquency, foreclosure, bankruptcy and loss experience
of the mortgage loans in the mortgage pool than on mortgage loans originated in
a more traditional manner. No assurance can be given that the values of the
related mortgaged properties have remained or will remain at the levels in
effect on the dates of origination of the related mortgage loans. See "The
Originator and the Master Servicer--Underwriting Standards of the Originator and
Representations Concerning the Mortgage Loans" in this prospectus supplement.

         As described in this prospectus supplement under "The Originator and
the Master Servicer--The Master Servicer--Loan Loss and Delinquency," the
originator commenced receiving applications for mortgage loans under its regular
lending program in February 1996, commenced its default related servicing
operations in September 1997 and until July 1998 had outsourced its other
servicing duties to a subservicer. As of July 1998, the originator is directly
handling the servicing duties that it used to outsource, including loan setup,
escrow administration, monthly billings, cashiering and lockbox operation and
sweeps, demands and payoff requests, year-end tax reporting, routine customer
calls and correspondence and mortgage pool data reporting. Because the
originator commenced its default related servicing operations in September 1997
and other servicing duties in July 1998, the originator, as a servicer of
mortgage loans, does not have representative historical delinquency, bankruptcy,
foreclosure or default experience that may be referred to for purposes of
examining the originator's performance, as a servicer of mortgage loans, in
servicing mortgage loans similar to the mortgage loans in the mortgage pool,
other than to the limited extent as described under "The Originator and the
Master Servicer--The Master Servicer--Loan Loss and Delinquency" in this
prospectus supplement.


                                       S-8

<PAGE>



THE RATE AND TIMING OF PRINCIPAL DISTRIBUTIONS AND THE YIELD ON YOUR
CERTIFICATES WILL BE AFFECTED BY THE RATE OF PREPAYMENTS ON THE MORTGAGE LOANS.

         Borrowers may prepay their mortgage loans in whole or in part at any
time. We cannot predict the rate at which borrowers will repay their mortgage
loans. A prepayment of a mortgage loan generally will result in a prepayment on
the certificates.

O        If you purchase your certificates at a discount and principal is repaid
         slower than you expect, then your yield may be lower than you expect.

O        If you purchase your certificates at a premium and principal is repaid
         faster than you expect, then your yield may be lower than you expect.

O        The rate of prepayments on the mortgage loans will be sensitive to
         prevailing interest rates. In most cases, if prevailing interest rates
         decline significantly, the mortgage loans are more likely to prepay
         than if prevailing rates remain at or above current levels. Conversely,
         if prevailing interest rates rise significantly, the prepayments on the
         mortgage loans are likely to decrease.

O        Approximately 58.62% of the mortgage loans in loan group I and
         approximately 77.57% of the mortgage loans in loan group II, in each
         case by aggregate cut-off date principal balance, have a provision
         that, if enforced, requires the mortgagor to pay a premium if the
         mortgagor prepays the mortgage loan during a specified period. This
         period ranges from six months to five years after the mortgage loan was
         originated. A prepayment premium may or may not discourage a mortgagor
         from prepaying the mortgage loan during the applicable period.

O        The originator may be required to purchase mortgage loans from the
         trust in the event that breaches of representations and warranties
         occur and are not cured. In addition, the master servicer has the
         option to purchase mortgage loans that become ninety days or more
         delinquent, subject to the limitations and conditions described in this
         prospectus supplement. These purchases will have the same effect on the
         holders of the related class of offered certificates as a prepayment of
         the mortgage loans.

O        If the rate of default and the amount of losses on the mortgage loans
         is higher than you expect, then your yield may be lower than you
         expect.

O        The overcollateralization provisions are intended to result in an
         accelerated rate of principal distributions to holders of the offered
         certificates.

         SEE "YIELD, MATURITY AND PREPAYMENT CONSIDERATIONS" IN THIS PROSPECTUS
SUPPLEMENT FOR A DESCRIPTION OF FACTORS THAT MAY INFLUENCE THE RATE AND TIMING
OF PREPAYMENTS ON THE MORTGAGE LOANS.

THE CREDIT ENHANCEMENT PROVIDED TO YOUR CERTIFICATES MAY BE INADEQUATE.

         The credit enhancement features described in this prospectus supplement
are intended to enhance the likelihood that holders of the offered certificates
will receive regular payments of interest and the ultimate return of principal.
However, we cannot assure you that the credit enhancement will adequately cover
any shortfalls in cash available to pay your certificates as a result of
delinquencies or defaults on the mortgage loans. If delinquencies or defaults
occur on the mortgage loans, neither the master servicer nor any other entity
will advance scheduled monthly payments of interest and principal on delinquent
or defaulted mortgage loans if these advances are not likely to be recovered.


                                       S-9

<PAGE>



         If substantial losses occur as a result of defaults and delinquent
payments on the mortgage loans, and the certificate insurer were unable to pay
under the financial guaranty policy, you may suffer losses.

INTEREST GENERATED BY THE MORTGAGE LOANS MAY BE INSUFFICIENT TO MAINTAIN
OVERCOLLATERALIZATION.

         The mortgage loans are expected to generate more interest than is
needed to pay interest owed on the offered certificates and to pay certain fees
and expenses of the trust. Any remaining interest generated by the mortgage
loans will then be used to absorb losses that occur on the mortgage loans. After
these financial obligations of the trust are covered, available excess interest
generated by the mortgage loans will be used to maintain overcollateralization.
We cannot assure you, however, that enough excess interest will be generated to
maintain the required level of overcollateralization. The factors described
below will affect the amount of excess interest that the mortgage loans will
generate.

o        Every time a mortgage loan is prepaid in full, excess interest may be
         reduced because the mortgage loan will no longer be outstanding and
         generating interest or, in the case of a partial prepayment, will be
         generating less interest.

o        Every time a mortgage loan is liquidated or written off, excess
         interest may be reduced because such mortgage loan will no longer be
         outstanding and generating interest.

o        If the rates of delinquencies, defaults or losses on the mortgage loans
         turn out to be higher than expected, excess interest will be reduced by
         the amount necessary to compensate for any shortfalls in cash available
         to make required distributions on the offered certificates.

o        The adjustable-rate group II mortgage loans have rates that adjust
         based on an index that is different from the index used to determine
         the pass-through rate on the Class A-2 Certificates, and the fixed-rate
         group II mortgage loans have rates that do not adjust. As a result, the
         pass-through rate on the Class A-2 Certificates may increase relative
         to interest rates on the mortgage loans, requiring that more of the
         interest generated by the mortgage loans be applied to cover interest
         on the Class A-2 Certificates.

THE RATING OF YOUR CERTIFICATES IS BASED PRIMARILY ON THE RATING OF THE
CERTIFICATE INSURER.

         The ratings on the offered certificates will depend primarily on the
rating of the certificate insurer. Therefore, a reduction of the rating assigned
to the rating of the certificate insurer may result in a corresponding reduction
on the ratings assigned to the offered certificates. The ratings address credit
risk and do not address the likelihood of prepayments.

RATE CAPS ON THE OFFERED CERTIFICATES COULD RESULT IN LESS INTEREST BEING
DISTRIBUTED ON THE AFFECTED OFFERED CERTIFICATES THAN WOULD OTHERWISE BE THE
CASE.

         The Class A-1 Certificates will accrue interest at the pass-through
rate specified in the table appearing in the summary of this prospectus
supplement, but will be subject to a rate cap. The rate cap will be based on the
weighted average of the interest rates of the mortgage loans in loan group I net
of related trust expenses. The mortgage loans accrue interest at various fixed
rates and if mortgage loans bearing higher interest rates were to prepay, the
rate cap on the Class A-1 Certificates would be lower than would otherwise be
the case. As a result, the Class A-1 Certificates may accrue less interest than
they would accrue if their rate was calculated without regard to the rate cap.
The Class A-1 Certificates are not entitled to any "carry-forward" or "catch-up"
if the amount of interest paid to the holders of the Class A-1 Certificates is
reduced by the rate cap.


                                      S-10

<PAGE>





         The yield to maturity on the Class A-2 Certificates may be affected by
the resetting of the mortgage rates on the adjustable-rate group II mortgage
loans on their related adjustment dates. In addition, because the mortgage rate
for each adjustable-rate group II mortgage loan is based on six-month LIBOR plus
a fixed percentage amount, this rate could be higher than prevailing market
interest rates, and this may result in an increase in the rate of prepayments on
the related mortgage loans after their adjustments. Finally, the mortgage rates
on the adjustable-rate group II mortgage loans are based on six-month LIBOR
subject to periodic and lifetime limitations and a number of the adjustable-rate
group II mortgage loans will not have their mortgage rates adjusted for two or
three years from the dates of their origination, while the pass-through rate on
the Class A-2 Certificates is based on one-month LIBOR subject to a rate cap.
The application of that rate cap, to the extent not covered by amounts as
described under "Description of the Certificates--Allocation of Available Funds"
could adversely affect the yield to maturity on the Class A-2 Certificates. In
addition, the rate cap will decrease if mortgage loans with relatively high
mortgage rates prepay at a faster rate than mortgage loans with relatively low
mortgage rates.

INTEREST PAYMENTS ON THE MORTGAGE LOANS MAY BE INSUFFICIENT TO PAY THE AMOUNT OF
INTEREST THAT ACCRUES ON YOUR CERTIFICATES.

         When a mortgage loan is prepaid in full, the borrower is charged
interest only up to the date on which payment is made, rather than for an entire
month. This may result in a shortfall in interest collections available for
payment on the next distribution date. The master servicer is required to cover
a portion of the shortfall in interest collections that are attributable to
prepayments in full, but only up to the amount of the master servicer's fee for
the related accrual period. The certificate insurer will not be required to
cover this shortfall. Therefore, any shortfall of this kind in excess of the
servicing fee may adversely affect the yield on your investment.

         Furthermore, shortfalls in interest collections arising from the
application of the Soldiers' and Sailors' Civil Relief Act of 1940, which we
refer to in this prospectus supplement as the Relief Act, will not be covered by
either the master servicer or the certificate insurer.

LIQUIDATION PROCEEDS RECEIVED ON THE MORTGAGE LOANS MAY BE DELAYED AND WHEN
RECEIVED, MAY BE LESS THAN THE MORTGAGE LOAN BALANCE.

         Substantial delays could be encountered in connection with the
liquidation of delinquent mortgage loans. Further, liquidation expenses such as
legal fees, real estate taxes and maintenance and preservation expenses may
reduce the portion of liquidation proceeds payable to you. If a mortgaged
property fails to provide adequate security for the related mortgage loan, you
will incur a loss on your investment if the certificate insurer fails to perform
its obligations under the certificate insurance policy and the other credit
enhancements are insufficient to cover the loss.

MORTGAGE LOANS WITH HIGH LOAN-TO-VALUE RATIOS OR COMBINED LOAN-TO-VALUE RATIOS
LEAVE THE RELATED BORROWER WITH LITTLE OR NO EQUITY IN THE RELATED MORTGAGED
PROPERTY, WHICH MAY RESULT IN LOSSES WITH RESPECT TO THESE MORTGAGE LOANS.

         Approximately 30.59% of the mortgage loans in loan group I and
approximately 38.51% of the mortgage loans in loan group II, in each case, by
aggregate cut-off date principal balance, had a loan-to-value ratio at
origination in excess of 80%. Mortgage loans with higher loan-to-value ratios or
combined loan-to-value ratios may present a greater risk of loss. An overall
decline in the residential real estate market, a rise in interest rates over a
period of time and the condition of a mortgaged property, as


                                      S-11

<PAGE>



well as other factors, may have the effect of reducing the value of the
mortgaged property from the appraised value at the time the mortgage loan was
originated. If there is a reduction in value of the mortgaged property, the
loan-to-value ratio or combined loan-to-value ratio may increase over what it
was at the time the mortgage loan was originated. An increase of this kind may
reduce the likelihood of liquidation or other proceeds being sufficient to
satisfy the mortgage loan, and any losses to the extent not covered by the
credit enhancement may affect the yield to maturity of your certificates. There
can be no assurance that the value of a mortgaged property estimated in any
appraisal or review is equal to the actual value of that mortgaged property at
the time of that appraisal or review. Investors should note that the values of
the mortgaged properties may be insufficient to cover the outstanding principal
balance of the mortgage loans. There can be no assurance that the loan-to-value
ratio or combined loan-to-value ratio of any mortgage loan determined at any
time after origination is less than or equal to its loan-to-value ratio or
combined loan-to-value ratio at origination.

THERE ARE MORTGAGE LOANS IN THE MORTGAGE POOL THAT ARE DELINQUENT AS OF THE
CUT-OFF DATE WHICH MAY RESULT IN LOSSES WITH RESPECT TO THESE MORTGAGE LOANS.

         As of May 31, 2000, approximately 5.96% of the mortgage loans in loan
group I, by aggregate cut-off date principal balance, failed to make their
monthly payment that was due on May 1, 2000.

         As of May 31, 2000, approximately 4.81% of the mortgage loans in loan
group II, by aggregate cut-off date principal balance, failed to make their
monthly payment that was due on May 1, 2000.

         However, investors in the mortgage loans should realize that
approximately 23.44% of the mortgage loans in loan group I and approximately
18.79% of the mortgage loans in loan group II, in each case, by aggregate
principal balance as of the cut-off date, have a first payment date occurring on
or after June 1, 2000 and, therefore, these mortgage loans could not have failed
to have made a monthly payment on May 1, 2000.

THE MORTGAGE LOANS ARE CONCENTRATED IN THE STATES LISTED IN THE TABLE BELOW,
WHICH MAY RESULT IN LOSSES WITH RESPECT TO THESE MORTGAGE LOANS.

         The chart below lists the states with the highest concentrations of
mortgage loans for each loan group based on aggregate cut-off principal balance
of the mortgage loans in each loan group.

<TABLE>
<CAPTION>
                Loan Group I                                   Loan Group II
<S>                                   <C>        <C>                                <C>
Texas                                 27.26%     California                         27.92%
California                            21.46%     Texas                              12.35%
Florida                                6.77%     Illinois                            7.63%
Illinois                               4.62%     Florida                             6.19%
Michigan                               3.37%     Michigan                            4.88%
</TABLE>


         Property in California may be particularly susceptible to uninsurable
hazards, such as earthquakes, floods, mudslides and other natural disasters.

         In addition, the following conditions will have a disproportionate
impact on the mortgage loans, based on their geographic distribution.

O        Economic conditions in states listed above that may or may not affect
         real property values may affect the ability of borrowers to repay their
         loans on time.


                                      S-12

<PAGE>



O        Declines in the residential real estate markets in the states listed
         above may reduce the values of properties located in those states,
         which would result in an increase in the loan-to-value ratios.

O        Any increase in the market value of properties located in the states
         listed above would reduce the loan-to-value ratios. Lower loan-to-value
         ratios could make alternative sources of financing available to the
         borrowers at lower interest rates, which could result in an increased
         rate of prepayment of the mortgage loans.

         In addition, a portion of the mortgage loans are secured by mortgaged
properties located in Texas, a significant number of which are home equity
loans. The Texas Constitution was recently amended to legalize Texas home equity
loans, but significant limitations were imposed on permitted terms, conditions
and practices incident to their creation. For example, Texas home equity loans
must be made without recourse for personal liability against the homestead owner
or their spouse, except in the case of actual fraud on their part in obtaining
the loan, and may be foreclosed upon only by court order. Further, holders of
Texas home equity loans face unique legal risks and uncertainties that they do
not customarily confront with equity take-out mortgages in other states. For
example, if any of the requirements that are addressed in the amendment to the
Texas Constitution, such as limitations on fees charged to the borrower,
disclosures to the borrower or matters to be provided for in the closing
documents, are not met, the lien may be invalid. There are also similar risks
involved in servicing Texas home equity loans, such as the failure to comply
with an obligation to the borrower within a reasonable time after receiving
notification from the borrower, that can result in the forfeiture of all
principal and interest due on the mortgage loan.

YOUR CERTIFICATES WILL BE LIMITED OBLIGATIONS SOLELY OF THE TRUST FUND AND NOT
OF ANY OTHER PARTY.

         The offered certificates will not represent an interest in or
obligation of the depositor, the master servicer, the seller, the trustee, the
trust administrator or any of their respective affiliates. Neither the
certificates nor the underlying mortgage loans will be guaranteed or insured by
any governmental agency or instrumentality, or by the depositor, the master
servicer, the trustee, the trust administrator or any of their respective
affiliates. The offered certificates are covered by the certificate insurance
policy, as and to the extent described under the caption "Description of the
Certificates--Credit Enhancement--The Certificate Insurance Policy" in this
prospectus supplement. Proceeds of the assets included in the trust and proceeds
from the certificate insurance policy will be the sole source of payments on the
offered certificates, and there will be no recourse to the depositor, the master
servicer, the seller, the trustee, the trust administrator or any other entity
in the event that these proceeds are insufficient or otherwise unavailable to
make all payments provided for under the offered certificates.

VIOLATION OF CONSUMER PROTECTION LAWS MAY RESULT IN LOSSES ON THE MORTGAGE LOANS
AND YOUR CERTIFICATES.

         Applicable state laws regulate interest rates and other charges,
require disclosure, and require licensing of the originator. In addition, other
state laws, public policy and principles of equity relating to the protection of
consumers, unfair and deceptive practices and debt collection practices may
apply to the origination, servicing and collection of the mortgage loans.

         The mortgage loans are also subject to federal laws, including



o        the Federal Truth-in-Lending Act and Regulation Z promulgated
         thereunder, which require disclosures to the borrowers regarding the
         terms of the mortgage loans;




                                      S-13

<PAGE>



o        the Equal Credit Opportunity Act and Regulation B promulgated
         thereunder, which prohibit discrimination on the basis of age, race,
         color, sex, religion, marital status, national origin, receipt of
         public assistance or the exercise of any right under the Consumer
         Credit Protection Act, in the extension of credit; and

o        the Fair Credit Reporting Act, which regulates the use and reporting of
         information related to the borrower's credit experience.

         A portion of the mortgage loans will be subject to the Riegle Community
Development and Regulatory Improvement Act of 1994, or the Riegle Act, which
incorporates the Home Ownership and Equity Protection Act of 1994. The Riegle
Act adds additional provisions to Regulation Z, which is the implementing
regulation of the Federal Truth-in-Lending Act. These provisions impose
additional disclosure and other requirements on creditors with respect to
non-purchase money mortgage loans with high interest rates or high up-front fees
and charges. In most cases, mortgage loans covered by the Riegle Act have annual
percentage rates over 10% greater than the yield on treasury securities of
comparable maturity and fees and points which exceed the greater of 8% of the
total loan amount or $451. The provisions of the Riegle Act apply on a mandatory
basis to all applicable mortgage loans originated on or after October 1, 1995.
These provisions can impose specific statutory liabilities upon creditors who
fail to comply with their provisions and may affect the enforceability of the
related loans. In addition, any assignee of the creditor, including the trust,
would, in most cases, be subject to all claims and defenses that the consumer
could assert against the creditor, including, without limitation, the right to
rescind the mortgage loan.

         Depending on the provisions of the applicable law and the specific
facts and circumstances involved, violations of these federal or state laws,
policies and principles may limit the ability of the trust to collect all or
part of the principal of or interest on the mortgage loans, may entitle the
borrower to a refund of amounts previously paid and, in addition, could subject
the originator to damages and administrative enforcement.

         The originator will represent that as of the closing date, each
mortgage loan originated by it is in compliance with applicable federal and
state laws and regulations. In the event of a breach of this representation, the
originator will be obligated to cure the breach or repurchase or replace the
affected mortgage loan in the manner described in the prospectus.

THE LIQUIDITY OF YOUR CERTIFICATES MAY BE LIMITED.

         Greenwich Capital Markets, Inc. and Chase Securities Inc. have no
obligation to make a secondary market in the classes of offered certificates.
There is therefore no assurance that a secondary market will develop or, if it
develops, that it will continue. Consequently, you may not be able to sell your
certificates readily or at prices that will enable you to realize your desired
yield. The market values of the certificates are likely to fluctuate; these
fluctuations may be significant and could result in significant losses to you.

         The secondary markets for asset-backed securities have experienced
periods of illiquidity and can be expected to do so in the future. Illiquidity
can have a severely adverse effect on the prices of securities that are
especially sensitive to prepayment, credit or interest rate risk, or that have
been structured to meet the investment requirements of limited categories of
investors.


                                      S-14

<PAGE>



IF THE MASTER SERVICER CHOOSES AN ALTERNATIVE TO FORECLOSURE OF A DELINQUENT
MORTGAGE LOAN, THE YIELD ON YOUR CERTIFICATES MAY BE REDUCED.

         The master servicer may foreclose on any delinquent mortgage loan or
may choose to work out an agreement with the mortgagor, which may involve
waiving or modifying any term of the mortgage loan or accepting a lesser amount
than stated in the mortgage note in satisfaction of the mortgage note. With the
consent of the certificate insurer, the master servicer may also sell any
mortgage loan that is at least 90 days delinquent. If the master servicer sells
any mortgage loan for less than its outstanding balance plus all prior advances
thereon, or extends the payment period or accepts a lesser amount than stated in
the mortgage note in satisfaction of the mortgage note, your yield may be
reduced.

THE FINANCIAL CONDITION OF THE MASTER SERVICER MAY ADVERSELY AFFECT THE
PERFORMANCE OF THE CERTIFICATES.

         The master servicer's origination, servicing and securitization
activities require substantial amounts of capital and continuing access to
sources of financing. At present, the master servicer's operating uses of cash
continue to exceed its operating sources of cash. The master servicer has $35
million in subordinated debt outstanding, the maturity date of which has been
extended from June 2000 to June 2002. The master servicer and its affiliates do
not currently have a source of funds to repay the debt in the event of default
or upon its maturity. The master servicer has a committed warehouse line of
credit led by U.S. Bank National Association with an expiration date of June 30,
2000. The master servicer or its affiliates also have in place various
aggregation and residual financing facilities that expire in the next 10 months,
including a facility with an affiliate of Greenwich Capital Markets, Inc. that
expires in June 2000. Both of these facilities have been extended pending
negotiation and execution of renewals of those facilities. For additional
information regarding the credit facilities see the Annual Report on Form 10-K
for the year ended December 31, 1999 and the quarterly report on Form 10-Q for
the quarter ended March 31, 2000, in each case filed by New Century Financial
Corporation and hereby incorporated by reference in this prospectus supplement.
Although the master servicer expects to renew or replace the facilities prior to
their expiration, there can be no assurances that such will be the case. If any
of the master servicer's warehouse, aggregation or residual financing facilities
are not renewed or replaced, or the terms of any renewals or replacements are
less favorable, it would have a material adverse impact on the master servicer's
results of operations. Accordingly, the master servicer and its affiliates have
hired PaineWebber Inc. to explore strategic options, including a possible sale.
There can be no assurances that the master servicer's various facilities will be
renewed or that the master servicer's attempts to explore strategic options will
be successful. If these efforts are unsuccessful, there can be no assurances
that the master servicer will be able to continue to adequately service the
mortgage loans or repurchase mortgage loans that breach any representation or
warranty, among other things.

ALL CAPITALIZED TERMS USED IN THIS PROSPECTUS SUPPLEMENT WILL HAVE THE MEANINGS
ASSIGNED TO THEM UNDER "DESCRIPTION OF THE CERTIFICATES--DEFINITIONS" OR IN THE
PROSPECTUS UNDER "GLOSSARY."


                                      S-15

<PAGE>



                                THE MORTGAGE POOL

         The information set forth in the following paragraphs has been provided
by the seller. None of the depositor, the underwriters, the trust administrator,
the trustee, the certificate insurer or any of their respective affiliates have
made or will make any representations as to the accuracy or completeness of this
information.

         Prior to the closing date, mortgage loans may be removed from a loan
group and other mortgage loans may be substituted for those mortgage loans. In
addition, some amortization of the mortgage loans may occur prior to the closing
date. Moreover, some of the mortgage loans may prepay in full, or may be
determined not to meet the eligibility requirements for the final pool of
mortgage loans acquired by the trust on the closing date. The seller believes
that the information set forth in this prospectus supplement with respect to
each loan group is representative of the characteristics of each loan group as
it will be constituted at the closing date, although some characteristics of the
mortgage loans in a loan group may vary.

GENERAL

         The assets held by the trust fund will consist principally of the
mortgage loans and the trust accounts. All of the mortgage loans will consist of
adjustable-rate and fixed-rate, fully amortizing (other than one balloon loan,
representing 0.02% of the mortgage loans, by cut-off date loan balance) mortgage
loans evidenced by mortgage notes secured by first lien mortgages or deeds of
trust on the related mortgaged properties. The mortgaged properties consist of
owner-occupied properties and non-owner- occupied properties. The mortgaged
properties do not include mobile homes which are not permanently affixed to the
ground, commercial properties or unimproved land. With respect to each mortgage
loan, the "cut-off date loan balance" is the unpaid principal balance of the
mortgage loan as of the cut-off date taking into account all scheduled payments
of principal due on or before the cut-off date, whether or not received.

         The mortgage loans to be included in the trust fund will consist
primarily of loans from the seller's portfolio that are not delinquent in excess
of the levels permitted in the pooling and servicing agreement. Under a mortgage
loan purchase agreement relating to the mortgage loans, the originator will make
various representations and warranties regarding the mortgage loans. See "The
Pooling and Servicing Agreement--Assignment of the Mortgage Loans" in this
prospectus supplement.

         Some of the mortgage loans in each loan group provide for payment by
the mortgagor of a prepayment premium in limited circumstances on some
prepayments as provided in the related mortgage note. These mortgage loans
provide for payment of a prepayment premium on some partial prepayments and on
all prepayments in full made within a specified period not in excess of five
years from the date of origination of applicable mortgage loan, as provided in
the related mortgage note. The amount of each prepayment premium is as provided
in the related mortgage note, but is generally equal to six months' interest on
any amounts prepaid in excess of 20% of the then outstanding principal balance
of the related mortgage loan in any 12 month period, as permitted by law. The
holders of the certificates will be entitled to all prepayment premiums received
on the mortgage loans as described under "Description of the
Certificates--Allocation of Available Funds" in this prospectus supplement.
Under some instances set forth in the pooling and servicing agreement, the
master servicer may waive the payment of any otherwise applicable prepayment
premium. Investors should conduct their own analysis of the effect, if any, that
the prepayment premiums, and decisions by the master servicer with respect to
the waiver thereof, may have on the prepayment performance of the mortgage
loans. The depositor makes no


                                      S-16

<PAGE>



representation as to the effect that the prepayment premiums, and decisions by
the master servicer with respect to the waiver thereof, may have on the
prepayment performance of the mortgage loans.

         References in this prospectus supplement to percentages of the mortgage
loans mean percentages based on the aggregate of the cut-off date loan balances
of the mortgage loans in the related loan group, unless otherwise specified.

GROUP I MORTGAGE LOAN STATISTICS

         The group I mortgage loans are expected to consist of 1,179 mortgage
loans secured by mortgages on mortgaged properties located in 43 states. All of
the group I mortgage loans are secured by first liens on the related mortgage
properties. The aggregate cut-off date loan balances of the group I mortgage
loans totaled approximately $90,371,409. The group I mortgage loans bear
interest at fixed mortgage rates ranging from approximately 7.950% to 15.750%
per annum. The weighted average mortgage rate for the group I mortgage loans was
approximately 10.832% per annum. The lowest cut-off date loan balance of any
group I mortgage loan was approximately $14,489 and the highest was
approximately $914,270. The average cut-off date loan balance of the group I
mortgage loans was approximately $76,651. The weighted average original term to
stated maturity of the group I mortgage loans was approximately 328 months. The
weighted average remaining term to stated maturity of the group I mortgage loans
was approximately 325 months. As of the cut-off date, the weighted average
number of months that have elapsed since origination of the group I mortgage
loans was approximately 3 months. The lowest and highest loan-to-value ratios of
the group I mortgage loans at origination were approximately 13.33% and 100.00%,
respectively. The weighted average loan-to-value ratio of the group I mortgage
loans was approximately 75.79%.

         Approximately 58.62% of the group I mortgage loans provide for payment
by the mortgagor of a prepayment premium in limited circumstances on some
prepayments.

         Approximately 7.36% of the group I mortgage loans are secured by
non-owner-occupied mortgaged properties including second homes and investor
properties. This percentage is based solely upon statements made by the related
mortgagors at the time of origination of the related mortgage loans.

         Approximately 2.20%, 11.05%, 5.77%, 0.60% and 80.37% of the group I
mortgage loans have original stated maturities of approximately 10 years, 15
years, 20 years, 25 years and 30 years, respectively. No group I mortgage loan
is scheduled to mature later than May 2030.

         Approximately 5.96% of the group I mortgage loans were 30 to 59 days
Delinquent as of May 31, 2000. No group I mortgage loan was 60 or more days
Delinquent as of May 31, 2000.

         The group I mortgage loans are expected to have the following
characteristics as of the cut-off date. The sum in any column may not equal the
indicated total due to rounding.


                                      S-17

<PAGE>

<TABLE>
<CAPTION>
                                 LOAN-TO-VALUE RATIOS OF THE GROUP I MORTGAGE LOANS

                                                                                                     Percent of
                                                                                                 Aggregate Cut off
                                                  Number                    Aggregate            Date Loan Balance
               Range of                             of                    Cut off Date             of all Group I
       Loan to Value Ratios (%)               Mortgage Loans              Loan Balance             Mortgage Loans
       ------------------------               --------------              ------------             --------------
<S>                                           <C>                      <C>                       <C>
 13.33 -  15.00........................              1                 $    39,916.04                   0.04%
 15.01 -  20.00........................              1                      29,772.53                   0.03
 25.01 -  30.00........................              7                     251,405.56                   0.28
 30.01 -  35.00........................             13                     591,259.05                   0.65
 35.01 -  40.00........................             11                     585,289.71                   0.65
 40.01 -  45.00........................             23                   1,095,745.07                   1.21
 45.01 -  50.00........................             19                   1,819,627.87                   2.01
 50.01 -  55.00........................             43                   2,702,153.80                   2.99
 55.01 -  60.00........................             45                   3,242,282.45                   3.59
 60.01 -  65.00........................            103                   6,402,851.12                   7.09
 65.01 -  70.00........................            170                   9,925,659.79                  10.98
 70.01 -  75.00........................            186                  13,014,460.47                  14.40
 75.01 -  80.00........................            301                  23,025,234.47                  25.48
 80.01 -  85.00........................            110                  10,945,567.37                  12.11
 85.01 -  90.00........................            140                  16,191,594.35                  17.92
 90.01 -  95.00........................              4                     309,531.43                   0.34
 95.01 - 100.00........................              2                     199,058.16                   0.22
                                                 -----                 --------------                 ------

Total..................................          1,179                 $90,371,409.24                 100.00%
                                                 =====                 ==============                 ======
</TABLE>



         As of the cut-off date, the weighted average loan-to-value ratio of the
group I mortgage loans was approximately 75.79%.


                                      S-18

<PAGE>








<TABLE>
<CAPTION>
                                    MORTGAGE RATES OF THE GROUP I MORTGAGE LOANS

                                                                                                     Percent of
                                                                                                 Aggregate Cut off
                                                  Number                    Aggregate            Date Loan Balance
           Range of Mortgage                        of                    Cut off Date             of all Group I
               Rates(%)                       Mortgage Loans              Loan Balance             Mortgage Loans
               --------                       --------------              ------------             --------------
<S>                                           <C>                     <C>                        <C>
   7.950 -   8.000......................               5              $     982,881.88                   1.09%
   8.001 -   8.500......................               7                    658,032.44                   0.73
   8.501 -   9.000......................              47                  5,441,905.25                   6.02
   9.001 -   9.500......................              71                  7,296,662.90                   8.07
   9.501 -  10.000......................             171                 19,113,978.61                  21.15
  10.001 -  10.500......................             132                 11,685,963.79                  12.93
  10.501 -  11.000......................             174                 13,130,345.40                  14.53
  11.001 -  11.500......................             112                  7,478,862.31                   8.28
  11.501 -  12.000......................             119                  6,674,504.72                   7.39
  12.001 -  12.500......................              92                  5,245,448.82                   5.80
  12.501 -  13.000......................              74                  3,736,686.57                   4.13
  13.001 -  13.500......................              67                  3,792,343.77                   4.20
  13.501 -  14.000......................              55                  2,953,293.36                   3.27
  14.001 -  14.500......................              29                  1,184,008.26                   1.31
  14.501 -  15.000......................              20                    794,129.53                   0.88
  15.001 -  15.500......................               3                    156,867.15                   0.17
  15.501 -  15.750......................               1                     45,494.48                   0.05
                                                   -----                --------------                 ------

Total...................................           1,179                $90,371,409.24                 100.00%
                                                   =====                ==============                 ======
</TABLE>



           As of the cut-off date, the weighted average mortgage rate of the
group I mortgage loans was approximately 10.832% per annum.


                                      S-19

<PAGE>








<TABLE>
<CAPTION>
                            ORIGINAL TERMS TO STATED MATURITY OF THE GROUP I MORTGAGE LOANS

                                                                                                     Percent of
                                                                                                 Aggregate Cut off
                                                  Number                    Aggregate            Date Loan Balance
          Original Terms to                         of                    Cut off Date             of all Group I
       Stated Maturity (months)               Mortgage Loans              Loan Balance             Mortgage Loans
       ------------------------               --------------              ------------             --------------
<S>                                           <C>                      <C>                       <C>
               120                                    46               $  1,992,364.27                          2.20%
               180                                   192                  9,989,387.59                         11.05
               240                                    91                  5,212,680.33                          5.77
               300                                     8                    544,642.31                          0.60
               360                                   842                 72,632,334.74                         80.37
                                                   -----                --------------                        ------

Total............................                  1,179                $90,371,409.24                        100.00%
                                                   =====                ==============                        ======
</TABLE>


                  As of the cut-off date, the weighted average original term to
stated maturity of the group I mortgage loans was approximately 328 months.

<TABLE>
<CAPTION>
                          REMAINING TERMS TO STATED MATURITY OF THE GROUP I MORTGAGE LOANS

                                                                                                     Percent of
                                                                                                 Aggregate Cut off
                                                  Number                    Aggregate            Date Loan Balance
Range of Remaining Terms to                         of                    Cut off Date             of all Group I
  Stated Maturity (months)                    Mortgage Loans              Loan Balance             Mortgage Loans
  ------------------------                    --------------              ------------             --------------
<S>                                           <C>                       <C>                      <C>
112 - 120........................                    46                 $  1,992,364.27                   2.20%
169 - 180........................                   192                    9,989,387.59                  11.05
229 - 240........................                    91                    5,212,680.33                   5.77
289 - 300........................                     8                      544,642.31                   0.60
349 - 359........................                   842                   72,632,334.74                  80.37
                                                  -----                   -------------                -------

Total............................                 1,179                  $90,371,409.24                 100.00%
                                                  =====                  ==============                 ======
</TABLE>



                  As of the cut-off date, the weighted average remaining term to
stated maturity of the group I mortgage loans was approximately 325 months.


                                      S-20

<PAGE>







<TABLE>
<CAPTION>
                              CUT-OFF DATE LOAN BALANCES OF THE GROUP I MORTGAGE LOANS

                                                                                                     Percent of
                                                                                                 Aggregate Cut off
                                                  Number                    Aggregate            Date Loan Balance
         Range of Cut-off Date                      of                    Cut off Date             of all Group I
           Loan Balances($)                   Mortgage Loans              Loan Balance             Mortgage Loans
           ----------------                   --------------              ------------             --------------
<S>                                           <C>                      <C>                       <C>
   14,488.01 -   25,000.00..............              57               $  1,329,648.55                   1.47%
   25,000.01 -   50,000.00..............             422                 16,231,466.16                  17.96
   50,000.01 -   75,000.00..............             300                 18,539,746.29                  20.52
   75,000.01 -  100,000.00..............             150                 12,924,230.06                  14.30
  100,000.01 -  125,000.00..............              83                  9,192,269.32                  10.17
  125,000.01 -  150,000.00..............              52                  7,081,843.22                   7.84
  150,000.01 -  175,000.00..............              35                  5,714,930.88                   6.32
  175,000.01 -  200,000.00..............              29                  5,421,241.25                   6.00
  200,000.01 -  225,000.00..............              21                  4,461,552.73                   4.94
  225,000.01 -  250,000.00..............              10                  2,357,264.26                   2.61
  250,000.01 -  300,000.00..............              11                  3,000,182.31                   3.32
  300,000.01 -  350,000.00..............               3                  1,000,109.68                   1.11
  350,000.01 -  400,000.00..............               2                    764,668.06                   0.85
400,000.01 -    450,000.00..............               1                    405,257.15                   0.45
450,000.01 -    500,000.00..............               1                    494,832.88                   0.55
500,000.01 -    550,000.00..............               1                    537,896.86                   0.60
900,000.01 -    914,270.00..............               1                    914,269.58                   1.01
                                                   -----                --------------                 ------

Total...................................           1,179                $90,371,409.24                 100.00%
                                                   =====                ==============                 ======
</TABLE>



                  As of the cut-off date, the average cut-off date loan balance
of the group I mortgage loans was approximately $76,651.


                                      S-21

<PAGE>




<TABLE>
<CAPTION>
                                 GEOGRAPHIC DISTRIBUTION OF THE GROUP I MORTGAGE LOANS

                                                                                                     Percent of
                                                                                                 Aggregate Cut off
                                                  Number                    Aggregate            Date Loan Balance
                                                    of                    Cut off Date             of all Group I
                State                         Mortgage Loans              Loan Balance             Mortgage Loans
                -----                         --------------              ------------             --------------
<S>                                           <C>                      <C>                       <C>
Alabama....................................             33             $  1,653,549.91                    1.83%
Arizona....................................             18                2,337,505.63                    2.59
Arkansas...................................             39                1,782,874.55                    1.97
California.................................            165               19,389,205.50                   21.46
Colorado...................................              9                  878,095.26                    0.97
Connecticut................................              8                  838,969.99                    0.93
Delaware...................................              2                   73,727.94                    0.08
Florida....................................             82                6,120,670.58                    6.77
Georgia....................................             15                1,338,698.04                    1.48
Hawaii.....................................             16                2,033,529.60                    2.25
Idaho......................................              3                  181,447.21                    0.20
Illinois...................................             45                4,178,385.61                    4.62
Indiana....................................             15                  726,061.75                    0.80
Iowa.......................................              5                  313,813.76                    0.35
Kansas.....................................              8                  482,308.67                    0.53
Kentucky...................................              1                   46,710.62                    0.05
Louisiana..................................             16                1,248,598.18                    1.38
Maine......................................              2                  162,579.76                    0.18
Maryland...................................              2                  294,298.01                    0.33
Massachusetts..............................             14                2,058,456.23                    2.28
Michigan...................................             39                3,045,359.02                    3.37
Minnesota..................................             13                1,352,425.11                    1.50
Mississippi................................              4                  255,648.12                    0.28
Missouri...................................             14                  688,893.62                    0.76
Montana....................................              6                  368,626.91                    0.41
Nevada.....................................              7                  986,533.60                    1.09
New Hampshire..............................              2                  378,864.19                    0.42
New Jersey.................................             11                1,408,800.69                    1.56
New Mexico.................................              7                  554,530.93                    0.61
North Carolina.............................             16                1,096,513.52                    1.21
North Dakota...............................              1                   59,474.50                    0.07
Ohio.......................................             23                1,461,409.97                    1.62
Oklahoma...................................             10                  400,974.48                    0.44
Oregon.....................................              9                  980,999.87                    1.09
Pennsylvania...............................             39                1,988,344.10                    2.20
South Carolina.............................             17                  978,012.35                    1.08
Tennessee..................................             11                  550,390.88                    0.61
Texas......................................            418               24,635,039.93                   27.26
Utah.......................................              3                  267,576.00                    0.30
Virginia...................................              6                  336,788.30                    0.37
Washington.................................             17                1,994,287.09                    2.21
West Virginia..............................              6                  290,637.97                    0.32
Wisconsin..................................              2                  151,791.29                    0.17
                                                     -----              --------------                  ------
Total......................................          1,179              $90,371,409.24                  100.00%
                                                     =====              ==============                  ======
</TABLE>


                  The greatest zip code concentration of the group I mortgage
loans, by cut-off date principal balances, was approximately 1.01% in the 85253
zip code.


                                      S-22

<PAGE>






<TABLE>
<CAPTION>
                                    PROPERTY TYPES OF THE GROUP I MORTGAGE LOANS

                                                                                                     Percent of
                                                                                                 Aggregate Cut off
                                                  Number                    Aggregate            Date Loan Balance
                                                    of                    Cut off Date             of all Group I
          Property Type                       Mortgage Loans              Loan Balance             Mortgage Loans
          -------------                       --------------              ------------             --------------
<S>                                           <C>                       <C>                      <C>
Single Family.............................          1,039               $78,269,495.24                 86.61%
PUD.......................................             47                 4,746,435.71                  5.25
Two- to Four-family.......................             40                 3,599,741.35                  3.98
Manufactured Housing......................             30                 1,897,654.64                  2.10
Condominium...............................             23                 1,858,082.30                  2.06
                                                    -----               --------------                ------

Total.....................................          1,179               $90,371,409.24                100.00%
                                                    =====               ==============                ======
</TABLE>








<TABLE>
<CAPTION>
                                  OCCUPANCY STATUS OF THE GROUP I MORTGAGE LOANS*

                                                                                                     Percent of
                                                                                                 Aggregate Cut off
                                                  Number                    Aggregate            Date Loan Balance
                                                    of                    Cut off Date             of all Group I
      Occupancy Status                        Mortgage Loans              Loan Balance             Mortgage Loans
      ----------------                        --------------              ------------             --------------
<S>                                           <C>                      <C>                       <C>
Owner-occupied............................         1,068               $83,722,967.45                    92.64%
Investor..................................           109                 6,515,346.37                     7.21
Second Home...............................             2                   133,095.42                     0.15
                                                   -----               --------------                   ------

Total.....................................         1,179               $90,371,409.24                   100.00%
                                                   =====               ==============                   ======
</TABLE>


--------------------
* Based on representations of the borrowers at the time of origination of the
mortgage loans.


                                      S-23

<PAGE>








<TABLE>
<CAPTION>
                               MONTHS SINCE ORIGINATION OF THE GROUP I MORTGAGE LOANS

                                                                                                     Percent of
                                                                                                 Aggregate Cut off
                                                  Number                    Aggregate            Date Loan Balance
             Months Since                           of                    Cut off Date             of all Group I
             Origination                      Mortgage Loans              Loan Balance             Mortgage Loans
             -----------                      --------------              ------------             --------------
<S>                                           <C>                      <C>                       <C>
                 1                                   275               $21,182,556.14                   23.44%
                 2                                   355                26,970,860.42                   29.84
                 3                                   163                11,886,999.35                   13.15
                 4                                   208                16,513,023.51                   18.27
                 5                                    94                 7,682,840.58                    8.50
                 6                                     2                    84,486.74                    0.09
                 7                                    24                 1,964,305.95                    2.17
                 8                                    53                 3,729,570.24                    4.13
                 9                                     3                   215,361.39                    0.24
                10                                     1                    99,285.17                    0.11
                11                                     1                    42,119.75                    0.05
                                                   -----               --------------                  ------


             Total.....................            1,179               $90,371,409.24                  100.00%
                                                   =====               ==============                  ======
</TABLE>


           As of the cut-off date, the weighted average number of months since
origination of the group I mortgage loans was approximately 3 months.

<TABLE>
<CAPTION>
                                DOCUMENTATION LEVELS OF THE GROUP I MORTGAGE LOANS

                                                                                                     Percent of
                                                                                                 Aggregate Cut off
                                                  Number                    Aggregate            Date Loan Balance
                                                    of                    Cut off Date             of all Group I
           Loan Programs                      Mortgage Loans              Loan Balance             Mortgage Loans
           -------------                      --------------              ------------             --------------
<S>                                           <C>                      <C>                       <C>
Full Documentation......................           906                 $68,892,149.55                     76.23%
Stated Income...........................           273                  21,479,259.69                     23.77
                                                 -----                 --------------                    ------


Total...................................         1,179                 $90,371,409.24                    100.00%
                                                 =====                 ==============                    ======
</TABLE>






                                      S-24

<PAGE>








<TABLE>
<CAPTION>
                                    CREDIT GRADES FOR THE GROUP I MORTGAGE LOANS

                                                                                                    Percent of
                                                                                                Aggregate Cut off
                                                    Number                 Aggregate            Date Loan Balance
                                                      of                 Cut off Date             of all Group I
           Credit Grade                         Mortgage Loans           Loan Balance             Mortgage Loans
           ------------                         --------------           ------------             --------------
<S>                                             <C>                      <C>                    <C>
A+.............................................           207            $18,027,595.88                19.95%
A+MO*..........................................            21              1,371,170.38                 1.52
A-.............................................           325             29,691,556.49                32.86
A-MO*..........................................            14                779,348.35                 0.86
AAA MO*........................................             8                765,783.72                 0.85
B..............................................           269             20,887,281.37                23.11
C..............................................           220             12,625,262.27                13.97
C-.............................................            59              2,958,429.98                 3.27
C-HS**.........................................            51              2,910,331.31                 3.22
Credit Score...................................             5                354,649.49                 0.39
                                                        -----            --------------               ------


Total..........................................         1,179            $90,371,409.24               100.00%
                                                        =====            ==============               ======
</TABLE>


----------------------
*    Underwritten under the Mortgage Credit Only program.
**   Underwritten under the Home Saver program

<TABLE>
<CAPTION>
                                PURPOSE OF ORIGINATION OF THE GROUP I MORTGAGE LOANS

                                                                                                  Percent of
                                                                                              Aggregate Cut off
                                                  Number                 Aggregate            Date Loan Balance
                                                    of                 Cut off Date             of all Group I
           Purpose                            Mortgage Loans           Loan Balance             Mortgage Loans
           -------                            --------------           ------------             --------------
<S>                                           <C>                     <C>                       <C>
Cash-out Refinance.........................           908             $67,159,134.53                   74.31%
Rate/Term Refinance........................           206              17,457,144.81                   19.32
Purchase...................................            65               5,755,129.90                    6.37
                                                    -----             --------------                  ------


Total......................................         1,179             $90,371,409.24                  100.00%
                                                    =====             ==============                  ======
</TABLE>




                                      S-25

<PAGE>








<TABLE>
<CAPTION>
                         ORIGINAL PREPAYMENT PREMIUM PERIODS FOR THE GROUP I MORTGAGE LOANS

                                                                                                     Percent of
                                                                                                 Aggregate Cut off
         Original Prepayment                      Number                    Aggregate            Date Loan Balance
           Premium Periods                          of                    Cut off Date             of all Group I
              (Months)                        Mortgage Loans              Loan Balance             Mortgage Loans
              --------                        --------------              ------------             --------------
<S>                                           <C>                       <C>                      <C>
                  0                                    590              $37,394,852.38                    41.38%
                  6                                      6                  341,610.28                     0.38
                  12                                     4                  413,125.82                     0.46
                  24                                    51                5,443,427.96                     6.02
                  36                                    74                6,511,032.23                     7.20
                  42                                     9                1,037,813.80                     1.15
                  60                                   445               39,229,546.77                    43.41
                                                     -----              --------------                   ------

                 Total................               1,179              $90,371,409.24                   100.00%
                                                     =====              ==============                   ======
</TABLE>


GROUP II MORTGAGE LOAN STATISTICS

         The group II mortgage loans are expected to consist of 1,050
adjustable-rate mortgage loans and 69 fixed-rate mortgage loans secured by
mortgages on mortgaged properties located in 44 states and the District of
Columbia. All of the group II mortgage loans are secured by first liens on the
related mortgaged properties. The aggregate cut-off date loan balances of the
group II mortgage loans totaled approximately $124,956,298. The lowest cut-off
date loan balance of any group II mortgage loan was approximately $9,938 and the
highest was approximately $999,083. The average cut-off date loan balance of the
group II mortgage loans was approximately $111,668. The weighted average
original term to stated maturity of the group II mortgage loans was
approximately 357 months. The weighted average remaining term to stated maturity
of the group II mortgage loans was approximately 355 months. As of the cut-off
date, the weighted average number of months that have elapsed since origination
of the group II mortgage loans was approximately 2 months. The lowest and
highest loan-to-value ratios of the group II mortgage loans at origination were
approximately 18.18% and 90.00%, respectively. The weighted average
loan-to-value ratio of the group II mortgage loans was approximately 77.86%.

         The adjustable-rate group II mortgage loans provide for semi-annual
adjustment to their mortgage rates and for corresponding adjustments to the
monthly payment amount due thereon, in each case on each adjustment date
applicable thereto; provided, that the first adjustment for the adjustable-rate
group II mortgage loans will occur after an initial period of two years in the
case of 93.40% of the adjustable-rate group II mortgage loans and three years in
the case of 5.12% of the adjustable-rate group II mortgage loans. These mortgage
loans are referred to in this prospectus supplement as "delayed first adjustment
mortgage loans." On each adjustment date for each adjustable-rate group II
mortgage loans, the mortgage rate will be adjusted to equal the sum, rounded to
the nearest or next highest multiple of 0.125%, of six-month LIBOR and a fixed
percentage amount or gross margin. The mortgage rate on any adjustable-rate
group II mortgage loans will not decrease on the first related adjustment date,
will not increase by more than an amount set forth in the related mortgage note,
which is not more than 3.000% per annum on the first related adjustment date and
will not increase or decrease by more than 1.500% on any adjustment date
thereafter. The adjustable-rate group II mortgage loans have a weighted average
initial periodic rate cap of approximately 1.517% per annum and a weighted
average periodic rate cap of approximately 1.485% per annum thereafter. Each
mortgage rate on each adjustable-rate group II mortgage loans will not exceed a
specified maximum mortgage rate over the life of the mortgage loan or


                                      S-26

<PAGE>



be less than a specified minimum mortgage rate over the life of the mortgage
loan. The adjustable-rate group II mortgage loans that are delayed first
adjustment mortgage loans have a weighted average initial periodic rate cap of
approximately 1.518% per annum and a weighted average periodic rate cap of
approximately 1.486% per annum thereafter. Effective with the first monthly
payment due on each adjustable-rate group II mortgage loans after each related
adjustment date, the monthly payment amount will be adjusted to an amount that
will amortize fully the outstanding principal balance of the related mortgage
loan over its remaining term, and pay interest at the mortgage rate as so
adjusted. Due to the application of the periodic rate caps and the maximum
mortgage rates, the mortgage rate on each adjustable-rate group II mortgage
loans, as adjusted on any related adjustment date, may be less than the sum of
six-month LIBOR and the related gross margin, rounded as described in this
prospectus supplement. See "--The Index" in this prospectus supplement. None of
the group II mortgage loans will permit the related mortgagor to convert the
adjustable mortgage rate thereon to a fixed mortgage rate.

         Each group II mortgage loan accrues interest at a mortgage rate of not
less than 7.440% per annum and not more than 15.800% per annum and as of the
cut-off date, the weighted average mortgage rate of the group II mortgage loans
was approximately 10.565% per annum. As of the cut-off date, the adjustable-rate
group II mortgage loans had gross margins ranging from 1.000% to 11.090%,
minimum mortgage rates ranging from 7.700% per annum to 15.800% per annum and
maximum mortgage rates ranging from 14.700% per annum to 22.800% per annum. As
of the cut-off date, the weighted average gross margin of the adjustable-rate
group II mortgage loans was approximately 6.165%, the weighted average minimum
mortgage rate was approximately 10.558% per annum and the weighted average
maximum mortgage rate was approximately 17.551% per annum. The latest next
adjustment date following the cut-off date on any adjustable-rate group II
mortgage loan occurs in May 2003 and the weighted average time until the next
adjustment date for all of the adjustable-rate group II mortgage loans is
approximately 22 months.

         Approximately 77.57% of the group II mortgage loans provide for payment
by the mortgagor of a prepayment premium in limited circumstances on some
prepayments.

         Approximately 5.49% of the group II mortgage loans are secured by
non-owner-occupied mortgaged properties including second homes and investor
properties. This percentage was based solely upon statements made by the related
mortgagors at the time of origination of the related mortgage loans.

         Approximately 0.07%, 1.43%, 0.27%, 0.03% and 98.20% of the group II
mortgage loans have original stated maturities of approximately 10 years, 15
years, 20 years, 25 years and 30 years, respectively. No group II mortgage loan
is scheduled to mature later than May 2030.

         Approximately 4.81% of the group II mortgage loans were 30 to 59 days
Delinquent as of May 31, 2000. No group II mortgage loan was 60 or more days
Delinquent as of May 31, 2000.

         The group II mortgage loans are expected to have the following
characteristics as of the cut-off date. The sum in any column may not equal the
indicated total due to rounding.


                                      S-27

<PAGE>






<TABLE>
<CAPTION>
                                 LOAN-TO-VALUE RATIOS OF THE GROUP II MORTGAGE LOANS

                                                                                                     Percent of
                                                                                                 Aggregate Cut off
                                                  Number                    Aggregate            Date Loan Balance
               Range of                             of                    Cut off Date             of all Group II
       Loan to Value Ratios (%)               Mortgage Loans              Loan Balance             Mortgage Loans
       ------------------------               --------------              ------------             --------------
<S>                                           <C>                      <C>                       <C>
 18.18 -  20.00........................              1                 $     30,170.67                     0.02%
 20.01 -  25.00........................              3                      134,732.59                     0.11
 25.01 -  30.00........................              5                      183,917.23                     0.15
 30.01 -  35.00........................              4                      277,672.62                     0.22
 35.01 -  40.00........................              7                      237,520.32                     0.19
 40.01 -  45.00........................             13                      698,957.01                     0.56
 45.01 -  50.00........................             17                    1,833,581.96                     1.47
 50.01 -  55.00........................             26                    2,039,762.98                     1.63
 55.01 -  60.00........................             37                    3,542,878.92                     2.84
 60.01 -  65.00........................             89                    7,956,913.81                     6.37
 65.01 -  70.00........................            120                   10,301,038.47                     8.24
 70.01 -  75.00........................            183                   18,127,662.01                    14.51
 75.01 -  80.00........................            276                   31,464,964.83                    25.18
 80.01 -  85.00........................            191                   27,488,090.24                    22.00
 85.01 -  90.00........................            147                   20,638,434.23                    16.52
                                                 -----                 ---------------                   ------

Total..................................          1,119                 $124,956,297.89                   100.00%
                                                 =====                 ===============                   ======
</TABLE>


         As of the cut-off date, the weighted average loan-to-value ratio of the
group II mortgage loans was approximately 77.86%.


                                      S-28

<PAGE>






<TABLE>
<CAPTION>
                            MORTGAGE RATES OF THE ADJUSTABLE-RATE GROUP II MORTGAGE LOANS

                                                                                                     Percent of
                                                                                                 Aggregate Cut-off
                                                                                                 Date Loan Balance
                                                  Number                    Aggregate            of all Adjustable-
           Range of Mortgage                        of                    Cut off Date             Rate Group II
               Rates(%)                       Mortgage Loans              Loan Balance             Mortgage Loans
               --------                       --------------              ------------             --------------
<S>                                           <C>                      <C>                       <C>
   7.700 -   8.000......................               7               $  1,175,768.59                    0.97%
   8.001 -   8.500......................              16                  2,416,835.45                    1.99
   8.501 -   9.000......................              47                  7,899,606.74                    6.51
   9.001 -   9.500......................              91                 13,866,353.42                   11.42
   9.501 -  10.000......................             157                 22,848,134.96                   18.83
  10.001 -  10.500......................             127                 15,123,355.76                   12.46
  10.501 -  11.000......................             190                 23,433,813.26                   19.31
  11.001 -  11.500......................             107                 11,000,015.67                    9.06
  11.501 -  12.000......................              99                  8,433,348.94                    6.95
  12.001 -  12.500......................              63                  4,937,054.98                    4.07
  12.501 -  13.000......................              63                  4,880,618.90                    4.02
  13.001 -  13.500......................              24                  1,637,806.44                    1.35
  13.501 -  14.000......................              32                  2,386,902.44                    1.97
  14.001 -  14.500......................              10                    458,091.21                    0.38
  14.501 -  15.000......................              15                    801,233.24                    0.66
  15.001 -  15.500......................               1                     38,494.99                    0.03
  15.501 -  15.800......................               1                     31,984.34                    0.03
                                                   -----               ---------------                   -----

Total...................................           1,050               $121,369,419.33                   100.00%
                                                   =====               ===============                   ======
</TABLE>



         As of the cut-off date, the weighted average mortgage rate of the
adjustable-rate group II mortgage loans was approximately 10.558% per annum.


                                      S-29

<PAGE>






<TABLE>
<CAPTION>
                        MAXIMUM MORTGAGE RATES OF THE ADJUSTABLE-RATE GROUP II MORTGAGE LOANS

                                                                                                     Percent of
                                                                                                 Aggregate Cut-off
                                                                                                 Date Loan Balance
                                                  Number                    Aggregate            of all Adjustable-
        Range of Maximum Mortgage                   of                    Cut-off Date             Rate Group II
               Rates(%)                       Mortgage Loans              Loan Balance             Mortgage Loans
               --------                       --------------              ------------             --------------
<S>                                           <C>                      <C>                       <C>
  14.700 -  15.500......................               23              $  3,592,604.04                 2.96%
  15.501 -  16.500......................              140                22,147,466.73                18.25
  16.501 -  17.500......................              286                38,091,913.26                31.39
  17.501 -  18.500......................              294                34,081,812.59                28.08
  18.501 -  19.500......................              161                13,220,491.15                10.89
  19.501 -  20.500......................               87                 6,518,425.34                 5.37
  20.501 -  21.500......................               42                 2,844,993.65                 2.34
  21.501 -  22.500......................               16                   839,728.23                 0.69
  22.501 -  22.800......................                1                    31,984.34                 0.03
                                                    -----              ---------------               ------

Total...................................            1,050              $121,369,419.33               100.00%
                                                    =====              ===============               ======
</TABLE>



         As of the cut-off date, the weighted average maximum mortgage rate of
the adjustable-rate group II mortgage loans was approximately 17.551% per annum.

<TABLE>
<CAPTION>
                        MINIMUM MORTGAGE RATES OF THE ADJUSTABLE-RATE GROUP II MORTGAGE LOANS

                                                                                                     Percent of
                                                                                                 Aggregate Cut-off
                                                                                                 Date Loan Balance
                                                  Number                    Aggregate            of all Adjustable-
        Range of Minimum Mortgage                   of                    Cut off Date             Rate Group II
               Rates(%)                       Mortgage Loans              Loan Balance             Mortgage Loans
               --------                       --------------              ------------             --------------
<S>                                           <C>                      <C>                       <C>
   7.700 -   8.500......................              23              $    592,604.04                     2.96%
   8.501 -   9.500......................             138                21,765,960.16                    17.93
   9.501 -  10.500......................             284                37,971,490.72                    31.29
  10.501 -  11.500......................             297                34,433,828.93                    28.37
  11.501 -  12.500......................             162                13,370,403.92                    11.02
  12.501 -  13.500......................              87                 6,518,425.34                     5.37
  13.501 -  14.500......................              42                 2,844,993.65                     2.34
  14.501 -  15.500......................              16                   839,728.23                     0.69
  15.501 -  15.800......................               1                    31,984.34                     0.03
                                                   -----              ---------------                   ------

Total...................................           1,050              $121,369,419.33                   100.00%
                                                   =====              ===============                   ======
</TABLE>



         As of the cut-off date, the weighted average minimum mortgage rate of
the adjustable-rate group II mortgage loans was approximately 10.558% per annum.


                                      S-30

<PAGE>






<TABLE>
<CAPTION>
                            GROSS MARGINS OF THE ADJUSTABLE-RATE GROUP II MORTGAGE LOANS

                                                                                                     Percent of
                                                                                                 Aggregate Cut-off
                                                                                                 Date Loan Balance
                                                  Number                    Aggregate            of all Adjustable-
                                                    of                    Cut off Date             Rate Group II
   Range of Gross Margins(%)                  Mortgage Loans              Loan Balance             Mortgage Loans
   -------------------------                  --------------              ------------             --------------
<S>                                           <C>                      <C>                       <C>
   1.000 -   1.000......................                1              $    107,954.71                  0.09%
   4.001 -   4.500......................                4                   463,848.93                  0.38
   4.501 -   5.000......................                4                   440,295.32                  0.36
   5.001 -   5.500......................               17                 1,855,116.31                  1.53
   5.501 -   6.000......................              310                46,307,203.75                 38.15
   6.001 -   6.500......................              436                50,697,266.74                 41.77
   6.501 -   7.000......................              277                21,464,090.34                 17.68
  11.001 -  11.090......................                1                    33,643.23                  0.03
                                                    -----              ---------------                ------

Total...................................            1,050              $121,369,419.33                100.00%
                                                    =====              ===============                ======
</TABLE>



         As of the cut-off date, the weighted average gross margin of the
adjustable-rate group II mortgage loans was approximately 6.165% per annum.

<TABLE>
<CAPTION>
                     INITIAL PERIODIC RATE CAPS OF THE ADJUSTABLE-RATE GROUP II MORTGAGE LOANS*

                                                                                                     Percent of
                                                                                                 Aggregate Cut-off
                                                                                                 Date Loan Balance
                                                  Number                    Aggregate            of all Adjustable-
                                                    of                    Cut off Date             Rate Group II
   Initial Periodic Rate Cap(%)               Mortgage Loans              Loan Balance             Mortgage Loans
   ----------------------------               --------------              ------------             --------------
<S>                                           <C>                      <C>                       <C>
     1.000..............................               4               $    596,637.50                     0.49%
     1.500..............................           1,034                119,195,245.69                    98.21
     2.000..............................               1                     30,170.67                     0.02
     3.000..............................              11                  1,547,365.47                     1.27
                                                   -----               ---------------                   ------

Total...................................           1,050               $121,369,419.33                   100.00%
                                                   =====               ===============                   ======
</TABLE>


-------------------
* Relates solely to initial mortgage rate adjustments.


                                      S-31

<PAGE>






<TABLE>
<CAPTION>
                    SUBSEQUENT PERIODIC RATE CAPS OF THE ADJUSTABLE-RATE GROUP II MORTGAGE LOANS*

                                                                                                     Percent of
                                                                                                 Aggregate Cut-off
                                                                                                 Date Loan Balance
                                                  Number                    Aggregate            of all Adjustable-
                                                    of                    Cut off Date             Rate Group II
     Periodic Rate Cap(%)                     Mortgage Loans              Loan Balance             Mortgage Loans
     --------------------                     --------------              ------------             --------------
<S>                                           <C>                      <C>                       <C>
     1.000..............................               29              $  3,593,500.66                    2.96%
     1.500..............................            1,021               117,775,918.67                   97.04
                                                    -----              ---------------                  ------

Total...................................            1,050              $121,369,419.33                  100.00%
                                                    =====           ==============                      ======
</TABLE>


-------------------------
* Relates to all mortgage rate adjustments subsequent to the initial rate
  adjustments.

<TABLE>
<CAPTION>
                        NEXT ADJUSTMENT DATE FOR THE ADJUSTABLE-RATE GROUP II MORTGAGE LOANS

                                                                                                     Percent of
                                                                                                 Aggregate Cut-off
                                                                                                 Date Loan Balance
                                                  Number                    Aggregate            of all Adjustable-
                                                    of                    Cut off Date             Rate Group II
   Mortgage Rate Change Date                  Mortgage Loans              Loan Balance             Mortgage Loans
   -------------------------                  --------------              ------------             --------------
<S>                                           <C>                      <C>                       <C>
  09/01/00  - 09/30/00..................              3                $    229,225.05                 0.19%
  10/01/00  - 10/31/00..................             12                   1,211,124.12                 1.00
  11/01/00  - 11/30/00..................              2                     405,122.44                 0.33
  04/01/01  - 04/30/01..................              1                      67,102.33                 0.06
  07/01/01  - 07/31/01..................              2                     254,234.23                 0.21
  09/01/01  - 09/30/01..................              2                     417,132.27                 0.34
  11/01/01  - 11/30/01..................              4                     452,663.22                 0.37
  01/01/02  - 01/31/02..................              9                     995,855.39                 0.82
  02/01/02  - 02/28/02..................            104                  11,723,260.21                 9.66
  03/01/02  - 03/31/02..................            151                  18,829,358.00                15.51
  04/01/02  - 04/30/02..................            571                  62,041,717.77                51.12
  05/01/02  - 05/31/02..................            144                  18,557,247.79                15.29
  08/01/02  - 08/31/02..................              1                      64,736.41                 0.05
  02/01/03  - 02/28/03..................              4                     366,500.66                 0.30
  03/01/03  - 03/31/03..................              2                     268,904.56                 0.22
  04/01/03  - 04/30/03..................             14                   1,645,818.24                 1.36
  05/01/03  - 05/31/03..................             24                   3,839,416.64                 3.16
                                                  -----                ---------------               ------

Total...................................          1,050                $121,369,419.33               100.00%
                                                  =====                ===============               ======
</TABLE>




                                      S-32

<PAGE>








<TABLE>
<CAPTION>
                           ORIGINAL TERMS TO STATED MATURITY OF THE GROUP II MORTGAGE LOANS

                                                                                                     Percent of
                                                                                                 Aggregate Cut-off
                                                  Number                    Aggregate            Date Loan Balance
          Original Terms to                         of                    Cut off Date             of all Group II
       Stated Maturity (months)               Mortgage Loans              Loan Balance             Mortgage Loans
       ------------------------               --------------              ------------             --------------
<S>                                           <C>                      <C>                       <C>
               120                                     3               $    $83,688.52                  0.07%
               180                                    37                  1,788,555.68                  1.43
               240                                     6                    337,310.73                  0.27
               300                                     1                     41,903.02                  0.03
               360                                 1,072                122,704,839.94                 98.20
                                                   -----               ---------------                ------

Total............................                  1,119               $124,956,297.89                100.00%
                                                   =====               ===============                ======
</TABLE>


         As of the cut-off date, the weighted average original term to stated
maturity of the group II mortgage loans was approximately 357 months.

<TABLE>
<CAPTION>
                           REMAINING TERMS TO STATED MATURITY OF THE GROUP II MORTGAGE LOANS

                                                                                                     Percent of
                                                                                                 Aggregate Cut-off
                                                  Number                    Aggregate            Date Loan Balance
Range of Remaining Terms to                         of                    Cut off Date             of all Group II
  Stated Maturity (months)                    Mortgage Loans              Loan Balance             Mortgage Loans
  ------------------------                    --------------              ------------             --------------
<S>                                           <C>                       <C>                      <C>
116 - 120........................                      3                $     83,688.52                  0.07%
169 - 180........................                     37                   1,788,555.68                  1.43
229 - 240........................                      6                     337,310.73                  0.27
289 - 300........................                      1                      41,903.02                  0.03
337 - 348........................                      3                     145,685.45                  0.12
349 - 359........................                  1,069                 122,559,154.49                 98.08
                                                   -----                ---------------                ------

Total............................                  1,119                $124,956,297.89                100.00%
                                                   =====                ===============                ======
</TABLE>


         As of the cut-off date, the weighted average remaining term to stated
maturity of the group II mortgage loans was approximately 355 months.


                                      S-33

<PAGE>






<TABLE>
<CAPTION>
                              CUT-OFF DATE LOAN BALANCES OF THE GROUP II MORTGAGE LOANS

                                                                                                     Percent of
                                                                                                 Aggregate Cut-off
                                                  Number                    Aggregate            Date Loan Balance
         Range of Cut-off Date                      of                    Cut off Date             of all Group II
           Loan Balances($)                   Mortgage Loans              Loan Balance             Mortgage Loans
           ----------------                   --------------              ------------             --------------
<S>                                           <C>                      <C>                       <C>
    9,937.01 -   25,000.00..............               28              $    659,064.01                   0.53%
   25,000.01 -   50,000.00..............              253                 9,569,719.45                   7.66
   50,000.01 -   75,000.00..............              241                14,755,241.66                  11.81
   75,000.01 -  100,000.00..............              138                12,118,450.15                   9.70
  100,000.01 -  125,000.00..............              125                14,126,963.44                  11.31
  125,000.01 -  150,000.00..............               83                11,337,646.55                   9.07
  150,000.01 -  175,000.00..............               74                11,867,766.90                   9.50
  175,000.01 -  200,000.00..............               35                 6,613,769.72                   5.29
  200,000.01 -  225,000.00..............               36                 7,584,914.08                   6.07
  225,000.01 -  250,000.00..............               21                 5,018,958.35                   4.02
  250,000.01 -  300,000.00..............               36                 9,858,246.82                   7.89
  300,000.01 -  350,000.00..............               19                 6,257,194.00                   5.01
  350,000.01 -  400,000.00..............               11                 4,093,490.03                   3.28
  400,000.01 -  450,000.00..............                3                 1,254,794.77                   1.00
  450,000.01 -  500,000.00..............                2                   945,526.20                   0.76
  500,000.01 -  550,000.00..............                4                 2,088,317.42                   1.67
  550,000.01 -  600,000.00..............                5                 2,908,896.30                   2.33
  650,000.01 -  700,000.00..............                2                 1,333,831.34                   1.07
  700,000.01 -  750,000.00..............                1                   749,714.56                   0.60
  800,000.01 -  850,000.00..............                1                   814,709.39                   0.65
  950,000.01 -  999,083.00..............                1                   999,082.75                   0.80
                                                    -----              ---------------                 ------

Total...................................            1,119              $124,956,297.89                 100.00%
                                                    =====              ===============                 ======
</TABLE>


         As of the cut-off date, the average cut-off date loan balance of the
group II mortgage loans was approximately $111,668.


                                      S-34

<PAGE>






<TABLE>
<CAPTION>
                                GEOGRAPHIC DISTRIBUTION OF THE GROUP II MORTGAGE LOANS

                                                                                                     Percent of
                                                                                                 Aggregate Cut-off
                                                  Number                    Aggregate            Date Loan Balance
                                                    of                    Cut off Date             of all Group II
                State                         Mortgage Loans              Loan Balance             Mortgage Loans
                -----                         --------------              ------------             --------------
<S>                                           <C>                      <C>                       <C>
Alabama....................................            7               $    423,637.68                   0.34%
Arizona....................................           20                  2,118,746.22                   1.70
Arkansas...................................            8                    659,683.99                   0.53
California.................................          189                 34,886,302.30                  27.92
Colorado...................................           34                  4,451,886.28                   3.56
Connecticut................................            8                    973,470.56                   0.78
District of Columbia.......................            2                    120,344.55                   0.10
Florida....................................           66                  7,731,031.50                   6.19
Georgia....................................           24                  2,102,582.13                   1.68
Hawaii.....................................            3                    869,657.67                   0.70
Idaho......................................            6                    649,175.21                   0.52
Illinois...................................           85                  9,530,767.90                   7.63
Indiana....................................           38                  2,666,801.41                   2.13
Iowa.......................................            8                    380,642.07                   0.30
Kansas.....................................            8                    517,758.19                   0.41
Kentucky...................................            4                    250,304.16                   0.20
Louisiana..................................           11                    873,057.63                   0.70
Maine......................................            3                    462,361.78                   0.37
Maryland...................................            9                  1,338,328.23                   1.07
Massachusetts..............................           20                  4,187,225.07                   3.35
Michigan...................................           87                  6,102,389.70                   4.88
Minnesota..................................           25                  2,468,224.49                   1.98
Mississippi................................            1                    134,894.52                   0.11
Missouri...................................           11                    535,070.62                   0.43
Montana....................................            3                    493,569.73                   0.39
Nevada.....................................           24                  3,926,349.45                   3.14
New Hampshire..............................            1                    121,394.33                   0.10
New Jersey.................................            6                  1,021,888.96                   0.82
New Mexico.................................            8                    761,487.59                   0.61
North Carolina.............................           19                  1,313,287.93                   1.05
Ohio.......................................           43                  3,253,692.73                   2.60
Oklahoma...................................           14                    577,716.10                   0.46
Oregon.....................................           14                  2,559,859.71                   2.05
Pennsylvania...............................           24                  1,340,800.80                   1.07
Rhode Island...............................            5                    615,261.71                   0.49
South Carolina.............................           12                    994,357.84                   0.80
South Dakota...............................            1                     39,667.74                   0.03
Tennessee..................................           17                  1,596,559.40                   1.28
Texas......................................          192                 15,429,830.73                  12.35
Utah.......................................           10                  1,480,270.89                   1.18
Virginia...................................            2                    191,048.64                   0.15
Washington.................................           30                  3,815,554.12                   3.05
West Virginia..............................            2                     79,046.72                   0.06
Wisconsin..................................           13                    837,794.90                   0.67
Wyoming....................................            2                     72,514.01                   0.06
                                                   -----               ---------------                 ------

Total......................................        1,119               $124,956,297.89                 100.00%
                                                   =====               ===============                 ======
</TABLE>


         The greatest zip code concentration of the group II mortgage loans, by
cut-off date principal balances, was approximately 0.95% in the 94509 zip code.


                                      S-35

<PAGE>








<TABLE>
<CAPTION>
                                    PROPERTY TYPES OF THE GROUP II MORTGAGE LOANS

                                                                                                     Percent of
                                                                                                 Aggregate Cut off
                                                  Number                    Aggregate            Date Loan Balance
                                                    of                    Cut off Date             of all Group II
          Property Type                       Mortgage Loans              Loan Balance             Mortgage Loans
          -------------                       --------------              ------------             --------------
<S>                                           <C>                      <C>                       <C>
Single Family.............................            933              $98,726,515.30                    79.01%
PUD.......................................             80                13,124,055.67                   10.50
Two- to Four-family.......................             64                 8,461,681.65                    6.77
Condominium...............................             27                 3,561,480.60                    2.85
Manufactured Housing......................             15                 1,082,564.67                    0.87
                                                    -----              -----------------                ------


Total.....................................          1,119              $124,956,297.89                  100.00%
                                                    =====               ==============                  ======
</TABLE>








<TABLE>
<CAPTION>
                                  OCCUPANCY STATUS OF THE GROUP II MORTGAGE LOANS*

                                                                                                     Percent of
                                                                                                 Aggregate Cut off
                                                  Number                    Aggregate            Date Loan Balance
                                                    of                    Cut off Date             of all Group II
      Occupancy Status                        Mortgage Loans              Loan Balance             Mortgage Loans
      ----------------                        --------------              ------------             --------------
<S>                                           <C>                      <C>                       <C>
Owner-occupied............................          1,031              $118,094,702.61                    94.51%
Investor..................................             85                 6,495,372.60                     5.20
Second Home...............................              3                   366,222.68                     0.29
                                                    -----              ---------------                   ------

Total.....................................          1,119              $124,956,297.89                   100.00%
                                                    =====              ===============                   ======
</TABLE>


----------------
* Based on representations of the borrowers at the time of origination of the
  mortgage loans.


                                      S-36

<PAGE>








<TABLE>
<CAPTION>
                              MONTHS SINCE ORIGINATION OF THE GROUP II MORTGAGE LOANS

                                                                                                     Percent of
                                                                                                 Aggregate Cut off
                                                  Number                    Aggregate            Date Loan Balance
             Months Since                           of                    Cut off Date             of all Group II
             Origination                      Mortgage Loans              Loan Balance             Mortgage Loans
             -----------                      --------------              ------------             --------------
<S>                                           <C>                      <C>                       <C>
                      1                             179                $ 23,485,446.99                   18.79%
                      2                             619                  66,089,292.38                   52.89
                      3                             169                  19,843,247.11                   15.88
                      4                             117                  12,667,515.88                   10.14
                      5                              15                   1,252,102.76                    1.00
                      7                               6                     528,479.53                    0.42
                      8                               6                     208,424.88                    0.17
                      9                               2                     417,132.27                    0.33
                     10                               1                      64,736.41                    0.05
                     11                               2                     254,234.23                    0.20
                     14                               2                      98,480.10                    0.08
                     20                               1                      47,205.35                    0.04
                                                  -----                ---------------                  ------

                 Total......................      1,119                $124,956,297.89                  100.00%
                                                  =====                ===============                  ======
</TABLE>


          As of the cut-off date, the weighted average number of months since
origination of the group II mortgage loans was approximately 2 months.


<TABLE>
<CAPTION>
                               DOCUMENTATION LEVELS OF THE GROUP II MORTGAGE LOANS

                                                                                                     Percent of
                                                                                                 Aggregate Cut off
                                                  Number                    Aggregate            Date Loan Balance
                                                    of                    Cut off Date             of all Group II
           Loan Programs                      Mortgage Loans              Loan Balance             Mortgage Loans
           -------------                      --------------              ------------             --------------
<S>                                           <C>                      <C>                       <C>
Full Documentation............................      823                $ 82,411,921.13                     65.95%
                                                    296                  42,544,376.76                     34.05
Stated Income.................................    -----                ---------------                    ------

Total.........................................    1,119                $124,956,297.89                    100.00%
</TABLE>





                                      S-37

<PAGE>








<TABLE>
<CAPTION>
                                    CREDIT GRADES FOR THE GROUP II MORTGAGE LOANS

                                                                                                    Percent of
                                                                                                Aggregate Cut off
                                                    Number                 Aggregate            Date Loan Balance
                                                      of                 Cut off Date             of all Group II
           Credit Grade                         Mortgage Loans           Loan Balance             Mortgage Loans
           ------------                         --------------           ------------             --------------
<S>                                             <C>                    <C>                    <C>
A+.............................................       280              $ 43,717,805.40                  34.99%
A+MO*..........................................        35                 3,017,582.77                   2.41
A-.............................................       217                25,421,581.55                  20.34
A-MO*..........................................        11                   761,626.15                   0.61
AAA MO*........................................         7                   501,368.80                   0.40
B..............................................       232                25,002,270.58                   20.01
C..............................................       191                14,548,697.64                   11.64
C-.............................................        51                 3,607,497.64                    2.89
C-HS**.........................................        73                 5,547,346.29                    4.44
Credit Score...................................        22                 2,830,521.07                    2.27
                                                    -----              ---------------                  ------

Total..........................................     1,119              $124,956,297.89                  100.00%
</TABLE>


------------------------
*  Underwritten under the Mortgage Credit Only program.

** Underwritten under the Home Saver program.

<TABLE>
<CAPTION>
                                PURPOSE OF ORIGINATION OF THE GROUP II MORTGAGE LOANS

                                                                                                  Percent of
                                                                                              Aggregate Cut off
                                                  Number                 Aggregate            Date Loan Balance
                                                    of                 Cut off Date             of all Group II
           Purpose                            Mortgage Loans           Loan Balance             Mortgage Loans
           -------                            --------------           ------------             --------------
<S>                                           <C>                     <C>                       <C>
Cash-out Refinance.........................         667               $ 67,805,750.03                54.26%
Rate/Term Refinance........................         255                 28,650,949.71                22.93
Purchase...................................         197                 28,499,598.15                22.81
                                                  -----               ---------------               ------

Total......................................       1,119               $124,956,297.89               100.00%
                                                  =====               ===============               ======
</TABLE>




                                      S-38

<PAGE>








<TABLE>
<CAPTION>
                         ORIGINAL PREPAYMENT PREMIUM PERIODS FOR THE GROUP II MORTGAGE LOANS

                                                                                                     Percent of
                                                                                                 Aggregate Cut off
         Original Prepayment                      Number                    Aggregate            Date Loan Balance
           Premium Periods                          of                    Cut off Date             of all Group II
              (Months)                        Mortgage Loans              Loan Balance             Mortgage Loans
              --------                        --------------              ------------             --------------
<S>                                           <C>                      <C>                      <C>
                  0                                    305             $ 28,028,808.87                   22.43%
                  12                                    23                4,622,797.88                    3.70
                  24                                   689               82,074,753.59                   65.68
                  36                                    44                6,102,495.36                    4.88
                  42                                     2                  129,359.60                    0.10
                  60                                    56                3,998,082.59                    3.20
                                                     -----             ---------------                  ------

                 Total................               1,119             $124,956,297.89                  100.00%
                                                     =====             ===============                  ======
</TABLE>








<TABLE>
<CAPTION>
                              MORTGAGE RATES OF THE FIXED-RATE GROUP II MORTGAGE LOANS

                                                                                                     Percent of
                                                                                                 Aggregate Cut-off
                                                  Number                    Aggregate            Date Loan Balance
         Range of Mortgage                          of                    Cut off Date             of all Group II
              Rates(%)                        Mortgage Loans              Loan Balance             Mortgage Loans
              --------                        --------------              ------------             --------------
<S>                                           <C>                       <C>                       <C>
   7.440 -   7.500......................              1                 $   41,903.02                     1.17%
   8.001 -   8.500......................              2                    162,757.25                     4.54
   8.501 -   9.000......................              3                    154,237.24                     4.30
   9.001 -   9.500......................              6                    387,554.91                    10.80
   9.501 -  10.000......................              9                    640,242.50                    17.85
  10.001 -  10.500......................              1                     28,859.98                     0.80
  10.501 -  11.000......................             15                    605,038.62                    16.87
  11.001 -  11.500......................              7                    383,576.21                    10.69
  11.501 -  12.000......................             12                    509,915.17                    14.22
  12.001 -  12.500......................              6                    366,157.60                    10.21
  12.501 -  13.000......................              3                    143,251.90                     3.99
  13.001 -  13.500......................              2                     68,955.59                     1.92
  13.501 -  14.000......................              1                     67,151.25                     1.87
  14.001 -  14.500......................              1                     27,277.32                     0.76

Total...................................             69                 $3,586,878.56                   100.00%
                                                     ==                 =============                   ======
</TABLE>



         As of the cut-off date, the weighted average mortgage rate of the group
II fixed-rate mortgage loans was approximately 10.782% per annum.


                                      S-39

<PAGE>



THE INDEX

         The index with respect to the adjustable-rate group II mortgage loans
is the average of interbank offered rates for six-month U.S. dollar deposits in
the London market based on quotations of major banks, and most recently
available as of a day specified in the related note as published by the Western
Edition of THE WALL STREET JOURNAL. If the index becomes unpublished or is
otherwise unavailable, the master servicer will select an alternative index
which is based upon comparable information.

PAYMENTS ON THE MORTGAGE LOANS

         All of the mortgage loans provide for monthly payments by the related
mortgagor according to the actuarial method. These mortgage loans are referred
to in this prospectus supplement as actuarial loans. Actuarial loans provide
that interest is charged to the mortgagors thereunder, and payments are due from
the mortgagors, as of a scheduled day of each month that is fixed at the time of
origination. Scheduled monthly payments made by mortgagors on the actuarial
loans either earlier or later than the scheduled due dates thereof will not
affect the amortization schedule or the relative application of these payments
to principal and interest.

THE PMI POLICY

         517 mortgage loans as of the cut-off date with original loan-to-value
ratios in excess of 80% as of the cut-off date are insured by Mortgage Guaranty
Insurance Corporation pursuant to a primary mortgage insurance policy. These
mortgage loans are referred to in this prospectus supplement as the "PMI
mortgage loans." The amount of coverage provided by the primary mortgage
insurance policy, which is also referred to below as the "insured percentage of
the claim," varies based on loan-to-value stratifications which provide coverage
that ranges between 30% and 37% based upon the original loan-to-value ratio of
the mortgage loan.

         The primary mortgage insurance policy is required to remain in force
with respect to each PMI mortgage loan until:

o        the Loan Balance of the PMI mortgage loan is paid in full,

o        the Loan Balance of the PMI mortgage loan has amortized down to a level
         that results in a loan-to-value ratio for the mortgage loan of 60% or
         less; provided, however, that no coverage of any PMI mortgage loan
         under the primary mortgage insurance policy is required where
         prohibited by applicable law or

o        any event specified in the primary mortgage insurance policy occurs
         that allows for the termination of the policy by the PMI insurer.

         The primary mortgage insurance policy may not be assigned or
transferred without the prior written consent of the PMI insurer, provided,
however that the PMI insurer has previously provided written consent to the
assignment of the primary mortgage insurance policy from the original insured to
the trustee. The PMI insurer has also given consent for the assignment of
coverage on individual loans from the trustee to the originator in connection
with any mortgage loan repurchased or substituted for by the originator.

         The primary mortgage insurance policy generally requires that
delinquencies on any PMI mortgage loan must be reported to the PMI insurer
within four months of default, and appropriate


                                      S-40

<PAGE>



proceedings to obtain title to the property securing the PMI mortgage loan must
be commenced within six months of default. The primary mortgage insurance policy
under which the PMI mortgage loans are insured contains provisions substantially
as follows:

o        for the insured to present a claim, the insured must have acquired, and
         tendered to the PMI insurer, good and merchantable title to the
         property securing the PMI mortgage loan, free and clear of all liens
         and encumbrances, including, but not limited to, any right of
         redemption by the mortgagor unless such acquisition of good and
         merchantable title is excused under the terms of the primary mortgage
         insurance policy;

o        a claim generally includes unpaid principal, accrued interest to the
         date of such tender to the PMI insurer by the insured, and certain
         expenses;

o        when a claim is presented the PMI insurer will have the option of
         either (i) paying the claim in full, taking title to the property
         securing the PMI mortgage loan, and arranging for its sale or (ii)
         paying the insured percentage of the claim and with the insured
         retaining title to the property securing the PMI mortgage loan;

o        claims generally must be filed within 60 days after the insured has
         acquired good and merchantable title to the property securing the PMI
         mortgage loan and

o        a claim generally must be paid within 60 days after the claim is filed
         by the insured.

         No payment for a loss will be made under the primary mortgage insurance
policy unless the property securing the PMI mortgage loan is in the same
physical condition as when the PMI mortgage loan was originally insured, except
for reasonable wear and tear and unless premiums on the standard homeowner's
insurance policy, real estate taxes and foreclosure protection and preservation
expenses have been advanced by or on behalf of the insured.

         In issuing the primary mortgage insurance policy, the PMI insurer has
relied upon certain information and data regarding the PMI mortgage loans
furnished to the PMI insurer by the originator. The primary mortgage insurance
policy will not insure against a loss sustained by reason of a default arising
from or involving certain matters, including (i) fraud or negligence in
origination or servicing of the PMI mortgage loans, including, but not limited
to, misrepresentation by the lender or certain other persons involved in the
origination of the PMI mortgage loan or the application for insurance; (ii)
failure to construct a property securing a PMI mortgage loan in accordance with
specified plans or (iii) physical damage to a property securing a PMI mortgage
loan.


                     THE ORIGINATOR AND THE MASTER SERVICER

          UNDERWRITING STANDARDS OF THE ORIGINATOR AND REPRESENTATIONS
                         CONCERNING THE MORTGAGE LOANS

         The information set forth in this section with regard to the
originator's underwriting standards has been provided to the depositor or
compiled from information provided to the depositor by the originator. None of
the depositor, the trustee, the trust administrator, the seller, the
underwriters or any of their respective affiliates has made any independent
investigation of this information or has made or will make any representation as
to the accuracy or completeness of this information.


                                      S-41

<PAGE>



         The originator commenced receiving applications for mortgage loans
under its regular lending program in February 1996. Accordingly, other than to
the limited extent as described below under "--The Master Servicer," the
originator, whether as an originator or acquirer of mortgage loans, does not
have representative historical delinquency, bankruptcy, foreclosure or default
experience that may be referred to for purposes of examining the originator's
performance in servicing mortgage loans similar to the mortgage loans.

         The mortgage loans will be acquired on the closing date by the
depositor from the seller, who in turn will have acquired the mortgage loans
prior to the closing date from the originator. All of the mortgage loans were
originated or acquired by the originator in accordance with the underwriting
criteria described in this section.

         The originator's underwriting standards are primarily intended to
assess the value of the mortgaged property and to evaluate the adequacy of the
property as collateral for the mortgage loan. All of the mortgage loans in the
mortgage pool were also underwritten with a view toward the resale of the
mortgage loans in the secondary mortgage market. While the originator's primary
consideration in underwriting a mortgage loan is the value of the mortgaged
property, the originator also considers, among other things, a mortgagor's
credit history, repayment ability and debt service-to-income ratio, as well as
the type and use of the mortgaged property. The mortgage loans, in most cases,
bear higher rates of interest than mortgage loans that are originated in
accordance with Fannie Mae and Freddie Mac standards, which is likely to result
in rates of delinquencies and foreclosures that are higher, and that may be
substantially higher, than those experienced by portfolios of mortgage loans
underwritten in a more traditional manner.

         As a result of the originator's underwriting criteria, changes in the
values of mortgaged properties may have a greater effect on the delinquency,
foreclosure and loss experience on the mortgage loans than these changes would
be expected to have on mortgage loans that are originated in a more traditional
manner. No assurance can be given that the values of the related mortgaged
properties have remained or will remain at the levels in effect on the dates of
origination of the related mortgage loans. In addition, there can be no
assurance that the value of a mortgaged property estimated in any appraisal or
review is equal to the actual value of that mortgaged property at the time of
that appraisal or review.

         The mortgage loans will have been originated in accordance with the
underwriting guidelines of the originator which will be referred to in this
prospectus supplement as the underwriting guidelines. On a case-by-case basis,
exceptions to the underwriting guidelines are made where compensating factors
exist. It is expected that a substantial portion of the mortgage loans in the
mortgage pool will represent these exceptions.

         Each applicant completes an application which includes information with
respect to the applicant's liabilities, income, credit history, employment
history and personal information. The underwriting guidelines require a credit
report on each applicant from a credit reporting company. The report typically
contains information relating to matters such as credit history with local and
national merchants and lenders, installment debt payments and any record of
defaults, bankruptcies, repossessions or judgments. Mortgaged properties that
are to secure mortgage loans generally are appraised by qualified independent
appraisers. These appraisers inspect and appraise the subject property and
verify that the property is in acceptable condition. Following each appraisal,
the appraiser prepares a report which includes a market value analysis based on
recent sales of comparable homes in the area and, when deemed appropriate,
replacement cost analysis based on the current cost of constructing a similar
home. All appraisals are required to conform to the Uniform Standards of
Professional Appraisal Practice adopted by the Appraisal Standards Board of the
Appraisal Foundation and are generally on forms


                                      S-42

<PAGE>



acceptable to Fannie Mae and Freddie Mac. The underwriting guidelines require a
review of the appraisal by a qualified employee of the originator or by an
appraiser retained by the originator. If the appraised value of a mortgaged
property as determined by a review is more than 7% but less than 25% lower than
the value as determined by the appraisal, then the originator uses the value as
determined by the review in computing the loan-to-value ratio or combined
loan-to-value ratio of the related mortgage loan. If the appraised value of a
mortgaged property as determined by a review is 25% or more lower than the value
as determined by the appraisal, then the originator obtains a new appraisal and
repeats the review process.

         The mortgage loans in the mortgage pool were originated consistent with
and generally conform to the underwriting guidelines' full documentation and
stated income documentation residential loan programs. Under each of the
programs, the originator reviews the applicant's source of income, calculates
the amount of income from sources indicated on the loan application or similar
documentation, reviews the credit history of the applicant, calculates the debt
service-to-income ratio to determine the applicant's ability to repay the loan,
reviews the type and use of the property being financed, and reviews the
property. In determining the ability of the applicant to repay the loan, a
qualifying rate has been created under the underwriting guidelines that
generally is equal to the mortgage rate on that loan, in the case of fixed-rate
loans, which are the kind of mortgage loans in the mortgage pool. The
underwriting guidelines require that mortgage loans be underwritten in a
standardized procedure which complies with applicable federal and state laws and
regulations and requires the originator's underwriters to be satisfied that the
value of the property being financed, as indicated by an appraisal and a review
of the appraisal, currently supports the outstanding loan balance. In most
cases, the maximum loan amount for mortgage loans originated under the programs
is $600,000. The underwriting guidelines may permit loans on one- to four-family
residential properties to have

o        a loan-to-value ratio at origination of up to 95% with respect to first
         liens loans and

o        a combined loan-to-value ratio at origination of up to 90% with respect
         to second lien loans.

         In each case, the maximum loan-to-value ratio depends on, among other
things, the purpose of the mortgage loan, a mortgagor's credit history,
repayment ability and debt service-to-income ratio, as well as the type and use
of the property. With respect to mortgage loans in the mortgage pool secured by
mortgaged properties acquired by a mortgagor under a "lease option purchase,"
the loan-to-value ratio of the related mortgage loan is based on the lower of
the appraised value at the time of origination of the mortgage loan or the sale
price of the related mortgaged property if the "lease option purchase price" was
set less than 12 months prior to origination and is based on the appraised value
at the time of origination if the "lease option purchase price" was set 12
months or more prior to origination.

         The underwriting guidelines require that the income of each applicant
for a mortgage loan under the full documentation program be verified. The
specific income documentation required for the originator's various programs is
as follows: under the full documentation program, applicants usually are
required to submit one written form of verification of stable income for at
least 12 months; under the stated income documentation program, an applicant may
be qualified based upon monthly income as stated on the mortgage loan
application if the applicant meets certain criteria. All the foregoing programs
require that, with respect to salaried employees, there be a telephone
verification of the applicant's employment. Verification of the source of funds,
if any, required to be deposited by the applicant into escrow in the case of a
purchase money loan is required.


                                      S-43

<PAGE>



         In evaluating the credit quality of borrowers, the originator utilizes
credit bureau risk scores, or a FICO score, a statistical ranking of likely
future credit performance developed by Fair, Isaac & Company and the three
national credit data repositories--Equifax, TransUnion and Experian.

         The underwriting guidelines have the following categories and criteria
for grading the potential likelihood that an applicant will satisfy the
repayment obligations of a mortgage loan:

         FIRST LIEN MORTGAGE LOANS:

         "AAA" RISK. Under the "AAA" risk category, the applicant must have
excellent repayment history for installment or revolving debt and must have a
FICO score of at least 660. A maximum of one 30-day late payment and no 60-day
late payments within the last 24 months is acceptable on an existing mortgage
loan. An existing mortgage loan is required to be current at the time the
application is submitted. No bankruptcy or notice of default filings may have
occurred during the preceding four years. The mortgaged property must be in at
least average condition. A maximum loan-to-value ratio of 95%, or 90% for
mortgage loans originated under the stated income documentation program for rate
and term refinances only, is permitted for a mortgage loan on a single family
owner-occupied property. Non- owner occupied properties are not allowed. A
maximum loan-to-value ratio of 90% is permitted for a mortgage loan on an owner
occupied condominium or a two- to four-family residential property. Rural,
remote or unique properties are not allowed. The maximum combined loan-to-value
ratio, including any related subordinate lien, is 95% for either a refinance
loan or a purchase money loan. The debt service-to-income ratio is generally 42%
or less.

         "A+" RISK. Under the "A+" risk category, the applicant must have
generally repaid installment or revolving debt according to its terms or must
have a FICO score of 620 or higher. A maximum of one 30-day late payment and no
60-day late payments within the last 12 months is acceptable on an existing
mortgage loan. An existing mortgage loan is required to be current at the time
the application is submitted. No open collection accounts or open charge-offs
may remain open after the funding of the loan. No bankruptcy or notice of
default filings may have occurred during the preceding three years. The
mortgaged property must be in at least average condition. A maximum
loan-to-value ratio of 90%, or 85% for mortgage loans originated under the
stated income documentation program, is permitted for a mortgage loan on a
single family owner-occupied property. A maximum loan-to-value ratio of 85% is
permitted for a mortgage loan on a non-owner occupied property, an
owner-occupied condominium or a two- to four-family residential property. The
maximum loan-to-value ratio for rural, remote or unique properties is 85%. The
maximum combined loan-to-value ratio, including any related subordinate lien, is
100% for either a refinance loan or a purchase money loan. The debt
service-to-income ratio is usually 45% or less.

         "A-" RISK. Under the "A-" risk category, an applicant must have
generally repaid installment or revolving debt according to its terms or must
have a FICO score of 590 or higher. A maximum of three 30-day late payment and
no 60-day late payments within the last 12 months is acceptable on an existing
mortgage loan. An existing mortgage loan is required to be current at the time
of funding of the loan. Minor derogatory items are allowed as to non-mortgage
credit. Medical derogatories are not considered. Open collection accounts or
open charge-offs affecting title with balances of less than $1,000 may remain
open after funding of the loan. No bankruptcy may have occurred during the
preceding two years. No notice of default filings may have occurred during the
preceding three years. The mortgaged property must be in at least average
condition. A maximum loan-to-value ratio of 90%, or 80% for mortgage loans
originated under the stated income documentation program, is permitted for a
mortgage loan on a single family owner-occupied property. A maximum
loan-to-value ratio of 80%, or 70% for mortgage loans originated under the
stated income documentation program, is permitted for a mortgage loan on a


                                      S-44

<PAGE>



non-owner-occupied property. A maximum loan-to-value ratio of 85%, or 75% for
mortgage loans originated under the stated income documentation program, is
permitted for a mortgage loan on an owner- occupied condominium or a two- to
four-family residential property. The maximum loan-to-value ratio for rural,
remote, or unique properties is 80%. The maximum combined loan-to-value ratio,
including any related subordinate lien, is 95% for a refinance loan and 95% for
a purchase money loan. The debt service-to-income ratio is usually 50% or less,
or 45% or less for loans with a loan-to-value ratio greater than 85%.

         "B" RISK. Under the "B" risk category, an applicant may have
experienced isolated credit problems, but should have generally repaid
installment or revolving debt according to its terms or must have a FICO score
of 570 or higher. Unlimited 30-day late payments and a maximum of one 60-day
late payment within the last 12 months is acceptable on an existing mortgage
loan. An existing mortgage loan must be less than 60 days late at the time of
funding of the loan. As to non-mortgage credit, some prior defaults may have
occurred. Medical derogatories are not considered. In most cases, open
charge-offs or collection accounts with balances of less than $2,500 may remain
open after the funding of the loan. No bankruptcy or notice of default filings
by the applicant may have occurred during the preceding two years. The mortgaged
property must be in at least average condition. A maximum loan-to-value ratio of
80%, or 75% for mortgage loans originated under the stated income documentation
program, is permitted for a mortgage loan on an owner-occupied detached property
originated under the full documentation program. A maximum loan-to-value ratio
of 75% is permitted for a mortgage loan on a non-owner-occupied property, an
owner-occupied condominium or a two- to four-family residential property, or 65%
for a mortgage loan on a non-owner occupied property and 70% for a mortgage loan
on an owner-occupied condominium or a two- to four-family residential property
originated under the stated income documentation program. The maximum
loan-to-value ratio for rural, remote or unique properties is 70%. The maximum
combined loan-to-value ratio, including any related subordinate lien, is 90% for
a refinance loan and for a purchase money loan. The debt service-to-income ratio
is usually 55% or less.

         "C" RISK. Under the "C" risk category, an applicant may have
experienced significant credit problems in the past. Unlimited 30-day and 60-day
late payments and a maximum of one 90-day late payment within the last 12 months
is acceptable on an existing mortgage loan. An existing mortgage loan must be
less than 90 days late at the time of funding of the loan. As to non-mortgage
credit, significant prior defaults may have occurred. Open charge-offs or
collection accounts with balances of less than $5,000 may remain open after the
funding of the loan. No bankruptcy or notice of default filings by the applicant
may have occurred during the preceding 12 months. The mortgaged property must be
in average condition. In most cases, a maximum loan-to-value ratio of 75% for a
mortgage loan on a single family, owner-occupied property for a full
documentation program, or 70% for mortgage loans originated under the stated
income documentation program, is permitted. A maximum loan-to-value ratio of 70%
is permitted for a mortgage loan on a non-owner-occupied property, an
owner-occupied condominium or a two- to-four family residential property, or 60%
for a mortgage loan on a non-owner-occupied property and 65% for a mortgage loan
on an owner-occupied condominium or a two- to four-family residential property
originated under the stated income documentation program. Rural, remote or
unique properties are not allowed. The maximum combined loan-to-value ratio,
including any related subordinate lien, is 85% for a refinance loan and for a
purchase money loan. The debt service-to-income ratio is usually 59% or less.

         "C-" RISK. Under the "C-" risk category, an applicant may have
experienced significant credit problems in the past. A maximum of two 90-day
late payments and one 120-day late payment is acceptable on an existing mortgage
loan. An existing mortgage loan must be less than 90 days late at the time of
funding of the loan. As to non-mortgage credit, significant prior defaults may
have occurred. Open charge-offs or collection accounts with balances may remain
open after the funding of the loan.


                                      S-45

<PAGE>



There may be no current notice of default and any bankruptcy must be discharged.
The mortgaged property may exhibit some deferred maintenance. A maximum
loan-to-value ratio of 70%, or 55% for mortgage loans originated under the
stated income documentation program, is permitted for a mortgage loan on a
single family owner-occupied property. A maximum loan-to-value ratio of 65% is
permitted for a mortgage loan on a non-owner occupied property, an
owner-occupied condominium or a two- to four-family residential property, or 45%
for a mortgage loan on a non-owner-occupied property and 50% for a mortgage loan
on an owner-occupied condominium or a two- to four-family residential property
originated under the stated income documentation program. Rural, remote or
unique properties are not allowed. The maximum combined loan- to-value ratio,
including any related subordinate lien, is 80% for a refinance loan and 80% for
a purchase money loan. The debt service-to-income ratio is usually 59% or less.

         MORTGAGE CREDIT ONLY ("MO") AAA RISK. Under the MO "AAA" risk category,
the applicant is allowed a maximum of one 30-day late payment and no 60-day late
payments within the last 12 months on an existing mortgage loan. An existing
mortgage loan is required to be current at the time the application is
submitted. No bankruptcy or notice of default filings may have occurred during
the preceding three years. The mortgaged property must be in at least average
condition. A maximum loan- to-value ratio of 85% for mortgage loans originated
under the full documentation program is permitted for a mortgage loan on a
single family owner-occupied property. MO "AAA" loans are not made available
under the stated income documentation program. A maximum loan-to-value ratio of
80% is permitted for a mortgage loan on a non-owner occupied property,
owner-occupied condominium, or two- to four-family residential property. The MO
"AAA" program is not available for rural, remote or unique properties. The
maximum combined loan-to-value ratio, including any related subordinate lien, is
100% for a refinance loan. The debt service-to-income ratio is generally equal
to or less than 45%. The maximum loan amount is $250,000.

         MORTGAGE CREDIT ONLY ("MO") A+ RISK. Under the MO "A+" risk category,
the applicant is allowed a maximum of two 30-day late payments and no 60-day
late payments within the last 12 months on an existing mortgage loan. An
existing mortgage loan is required to be current at the time the application is
submitted. No bankruptcy or notice of default filings may have occurred during
the preceding three years. The mortgaged property must be in at least average
condition. A maximum loan- to-value ratio of 80% for mortgage loans originated
under the full documentation program is permitted for a mortgage loan on a
single family owner-occupied property. MO "A+" loans are not made available
under the stated income documentation program. A maximum loan-to-value ratio of
80% is permitted for a mortgage loan on a non-owner occupied property,
owner-occupied condominium, or two- to four-family residential property. The MO
"A+" program is not available for rural, remote or unique properties. The
maximum combined loan-to-value ratio, including any related subordinate lien, is
100% for a refinance loan. The debt service-to-income ratio is generally equal
to or less than 45%. The maximum loan amount is $250,000.

         MORTGAGE CREDIT ONLY ("MO") A- RISK. The MO "A-" risk category allows
for three 30-day late payments and no 60-day late payments within the last 12
months on an existing mortgage loan. An existing mortgage loan is not required
to be current at the time the application is submitted. Derogatory items are
allowed as to non-mortgage credit. No bankruptcy or notice of default filings
may have occurred during the preceding two years. The mortgaged property must be
in at least average condition. A maximum loan-to-value ratio of 75% for mortgage
loans originated under the full documentation program is permitted for a
mortgage loan on a single family owner-occupied property. MO "A-" loans are not
made available under the stated income documentation program. A maximum
loan-to-value ratio of 70% is permitted for a mortgage loan on a non-owner
occupied property, owner-occupied condominium, or two- to four-family
residential property. The MO "A-" program is not available for


                                      S-46

<PAGE>



rural, remote or unique properties. The maximum combined loan-to-value ratio,
including any related subordinate lien, is 90% for a refinance loan. The debt
service-to-income ratio is generally equal to or less than 55%. The maximum loan
amount is $250,000.

         HOME SAVER PROGRAM. The originator originates loans under a program
called "Home Saver" to enable borrowers with an existing delinquent loan to
preserve their home ownership. The existing loan may be over 90 days delinquent,
but any bankruptcy proceeding must be dismissed before the loan is funded. The
loan-to-value ratio may not exceed 65%. Home Saver loans are not made available
under the stated income documentation program. A maximum loan-to-value ratio of
60% is permitted for a mortgage loan on a non-owner occupied property,
owner-occupied condominium or a two- to four-family residential property. The
Home Saver program is not available for rural, remote or unique properties. The
maximum combined loan-to-value ratio, including any related subordinate lien, is
80% for a refinance loan. The maximum loan amount is $300,000.

         CREDIT SCORE PROGRAM. Under the "Credit Score Program" for full
documentation loans, the credit risk grade is determined by the primary
borrower's credit score. Loans with a minimum score of 630 and zero 30-day
mortgage late payments can have a maximum loan-to-value of 90%. Loans with a
minimum score of 600 and three 30-day mortgage late payments can have a maximum
loan-to-value of 85%. Loans with a minimum score of 580 with unlimited 30-day
and one 60-day mortgage late and less than 60 days at funding can have a maximum
loan-to-value of 80%. Loans with a minimum score of 560 with unlimited 30-day
and 60-day but no more than one 90-day mortgage late and less than 90 days at
funding can have a maximum loan-to-value of 75%. Loans with a minimum score of
540 with unlimited 30-day and 60-day but no more than two 90-day and one 120-day
mortgage late and less than 120 days at funding can have a maximum loan-to-value
of 70%. The maximum loan-to-value is reduced by 5% for condominiums, full
documentation non-owner occupied properties or stated income loans. Loans for
non-owner occupied stated income, 3-4 unit properties, manufactured housing,
unique properties or properties located in rural or remote areas are not
allowed. No loan, regardless of credit score, could have had a foreclosure or
bankruptcy within the last 2 years. All other derogatory credit is factored into
the credit score and is not evaluated individually. The maximum debt
service-to-income ratio for loans with loan-to-value greater than or equal to
85% is 50%. The maximum debt service-to-income ratio for loans with
loan-to-value less than 85% but greater than 70% is 55%. The maximum debt
service-to-income ratio for loans with loan-to-value less than or equal 70% is
59%. The maximum loan amount for this program is $350,000.

         EXCEPTIONS. As described above, the foregoing categories and criteria
are guidelines only. On a case-by-case basis, it may be determined that an
applicant warrants a debt service-to-income ratio exception, a pricing
exception, a loan-to-value exception, an exception from certain requirements of
a particular risk category, etc. An exception may be allowed if the application
reflects compensating factors, such as: low loan-to-value ratio; pride of
ownership; a maximum of one 30-day late payment on all mortgage loans during the
last 12 months; and stable employment or ownership of current residence of four
or more years. An exception may also be allowed if the applicant places a down
payment through escrow of at least 20% of the purchase price of the mortgaged
property or if the new loan reduces the applicant's monthly aggregate mortgage
payment by 25% or more. Accordingly, a mortgagor may qualify in a more favorable
risk category that, in the absence of compensating factors, would satisfy only
the criteria of a less favorable risk category. It is expected that a
substantial portion of the first lien mortgage loans in the mortgage pool will
represent these kinds of exceptions.


                                      S-47

<PAGE>



THE MASTER SERVICER

         The information set forth in the following paragraphs has been provided
by the master servicer. None of the depositor, the trustee, the trust
administrator or the underwriters or any of their respective affiliates has made
or will make any representation as to the accuracy or completeness of this
information.

         The master servicer is a wholly-owned subsidiary of New Century
Financial Corporation or NCFC, a public company. The master servicer is a
consumer finance and mortgage banking company that originates, sells and
services first and second mortgage loans and other consumer loans. The master
servicer emphasizes the origination of mortgage loans that are commonly referred
to as non-conforming "B&C" loans. The master servicer commenced lending
operations on February 26, 1996. It is headquartered in Irvine, California.

         For the three months ended March 31, 2000, the master servicer
originated and purchased approximately $956.5 million in mortgage loans. For the
three months ended March 31, 2000, the master servicer sold approximately $497
million of mortgage loans, mostly on a servicing-released basis, in whole loan
sales and approximately $430 million of mortgage loans through securitization.

         As of March 31, 2000, the master servicer had retail branch offices in
29 states and wholesale branch offices in 24 states, and was originating
mortgage loans through 5 regional operating centers, 36 wholesale sales offices
and 76 retail sales offices. As of March 31, 2000, the master servicer had
approximately 1,580 employees.

         LOAN LOSS AND DELINQUENCY

         THE MASTER SERVICER COMMENCED LENDING OPERATIONS IN FEBRUARY 1996,
COMMENCED ITS DEFAULT RELATED SERVICING OPERATIONS IN SEPTEMBER 1997 AND AS OF
JULY 1998 IS DIRECTLY HANDLING SERVICING DUTIES THAT IT USED TO OUTSOURCE,
INCLUDING LOAN SETUP, ESCROW ADMINISTRATION, MONTHLY BILLINGS, CASHIERING AND
LOCKBOX OPERATION AND SWEEPS, DEMANDS AND PAYOFF REQUESTS, YEAR-END TAX
REPORTING, ROUTINE CUSTOMER CALLS AND CORRESPONDENCE AND MORTGAGE POOL DATA
REPORTING. ACCORDINGLY, THE MASTER SERVICER HAS NO REPRESENTATIVE HISTORICAL
DELINQUENCY, BANKRUPTCY, FORECLOSURE OR DEFAULT EXPERIENCE THAT MAY BE REFERRED
TO FOR PURPOSES OF ESTIMATING FUTURE DELINQUENCY AND LOSS EXPERIENCE OF THE
MORTGAGE LOANS.

         However, the following tables sets forth information regarding the loan
loss and delinquency experience of mortgage loans for which the master servicer
is servicer or master servicer. The mortgage loans for which this information is
provided include those originated or acquired under the master servicer's
regular lending program and either owned by the master servicer or previously
sold to trusts in transactions in which the master servicer was appointed as
servicer or master servicer.

         Because the master servicer commenced loan origination only in February
1996, all of the mortgage loans included in the statistics contained in this
section are seasoned less than 51 months. Moreover, because mortgage loans are
continually being originated and added to the group for which these statistics
are compiled, the average seasoning of the mortgage loans included in the
statistics is considerably shorter. Because newly originated mortgage loans will
not be added to the mortgage pool after the closing date, the mortgage pool will
consist of a static group of mortgage loans, and accordingly the actual loss and
delinquency percentages with respect to the mortgage pool are likely to be
substantially higher than those indicated in the tables contained in this
section.


                                      S-48

<PAGE>



         A number of the mortgage loans in the statistics contained in the
tables in this section are serviced by a subservicer for the master servicer.
Accordingly, the performance statistics reflect the servicing practices of that
subservicer, as well as the quality and type of mortgage loans. These servicing
practices are not necessarily representative of the practices employed by the
master servicer in its servicing and administrative duties.

<TABLE>
<CAPTION>
                                         DELINQUENCY AND FORECLOSURE EXPERIENCE
                                      OF THE MASTER SERVICER'S SERVICING PORTFOLIO

                        AS OF DECEMBER 31, 1998            AS OF DECEMBER 31, 1999            AS OF MARCH 31, 2000

                                        Percentage                          Percentage                      Percentage
                                         of Total                            of Total                        of Total
                         Dollar          Servicing          Dollar          Servicing         Dollar         Servicing
                         Amount          Portfolio          Amount          Portfolio         Amount         Portfolio
                         ------          ---------          ------          ---------         ------         ---------
<S>                  <C>                <C>             <C>                 <C>           <C>               <C>
Delinquency(1)

30-59 Days           $   66,305,256        1.80%        $   91,134,032        1.52%       $   80,614,518       1.24%
60-89 Days           $   13,690,073        0.37%        $   28,391,092        0.47%       $   26,275,759       0.40%
90 Days or more      $   20,657,896        0.56%        $   75,083,913        1.25%       $   94,566,176(3)    1.46%

Loans in             $   84,547,901        2.30%        $  181,811,560        3.03%       $  203,481,892       3.31%
Foreclosure(2)

REO Properties       $   13,011,568        0.35%        $   50,631,760        0.84%       $   60,072,722       0.93%

Total Servicing
Portfolio            $3,676,504,202                     $6,002,723,518                    $6,490,702,710
</TABLE>

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

(1)      The period of delinquency is based on the number of days payments are
         contractually past due. The delinquency statistics for the period
         exclude loans in foreclosure.

(2)      The percentage of loans in foreclosure and REO properties is based on
         the dollar amount of loans in foreclosure and REO properties as a
         percentage of the total dollar amount of the mortgage loans in the
         servicing portfolio as of the date indicated.

(3)      With respect to the mortgage loans that are 90 days or more delinquent
         but not in foreclosure as of March 31, 2000, 85.09% of the dollar
         amount represents loans the related borrowers of which have filed for
         bankruptcy, 3.65% of the dollar amount represents loans pending
         foreclosure and 1.64% of the dollar amount represents loans where the
         master servicer has postponed commencement of foreclosure proceedings
         as it pursues loss mitigation efforts, in each case as discussed under
         "Realization on Defaulted Mortgage Loans" below.



         With respect to the table above entitled "Delinquency and Foreclosure
Experience of the Master Servicer's Servicing Portfolio," there can be no
assurance that the delinquency and loss experience of the mortgage loans in the
mortgage pool will correspond to the loss experience of the master servicer's
mortgage portfolio set forth in that table. The statistics shown represent the
delinquency and loss experience for the master servicer's total servicing
portfolio only for the time periods presented, whereas the aggregate delinquency
and loss experience on the mortgage loans in the mortgage pool will depend on
the results obtained over the life of the trust. The master servicer's portfolio
includes mortgage loans with payment and other characteristics which are not
representative of the payment and other characteristics of the mortgage loans
included in the mortgage pool. If the residential real estate market should
experience an overall decline in property values, the actual rates of
delinquencies, foreclosures and losses could be higher than those previously
experienced by the master servicer. In addition, adverse economic conditions,
which may or may not affect real property values, may affect the timely payment
by mortgagors of scheduled payments of principal and interest on the mortgage
loans in the mortgage pool and, accordingly, the actual rates of delinquencies,
foreclosures and losses with respect to those mortgage loans.


                                      S-49

<PAGE>



         The delinquency and loss experience percentages set forth above in the
table above entitled "Delinquency and Foreclosure Experience of the Master
Servicer's Servicing Portfolio" are calculated on the basis of the total
mortgage loans serviced as of the end of the periods indicated. However, because
the total outstanding principal balance of residential loans serviced by the
master servicer has increased substantially, the total outstanding principal
balance of originated loans serviced as of the end of any indicated period
includes many loans that will not have been outstanding long enough to give rise
to some or all of the indicated periods of delinquency. In the absence of
substantial and continual additions of newly originated loans to the total
amount of loans serviced, the percentages indicated above would be higher and
could be substantially higher. The actual delinquency percentages with respect
to the mortgage loans in the mortgage pool may be expected to be substantially
higher than the delinquency percentages indicated above because the composition
of the mortgage loans in the mortgage pool will not change.

         REALIZATION ON DEFAULTED MORTGAGE LOANS

         Typically, on the 35th day of delinquency of a mortgage loan, the
master servicer sends a letter to the related mortgagor of its intent to
foreclose if the borrower does not make all past due payments. If that loan
becomes 65 days delinquent the master servicer will generally commence
foreclosure proceedings as soon as legally permissible in the jurisdiction in
which the mortgaged property is located unless precluded from doing so by a
bankruptcy filing on the part of the borrower. In some instances, however, state
laws extend or suspend the period before foreclosure may commence. In other
instances, the master servicer holds off on commencing foreclosure as it pursues
loss mitigation efforts or special collection arrangements, or until the legal
issues, other than bankruptcy, or title issues relating to the mortgage loan are
resolved. Once a mortgage loan is in foreclosure it will either:

o        become REO property and liquidated,

o        be cured or paid off in full, or

o        be liquidated in foreclosure by short payoff from the borrower or short
         sale to a third party without taking title to the related mortgaged
         property.

         The master servicer does not have a write-off policy. All loans are
kept on the servicing system until the final disposition of the loan or the
related mortgaged property. The following table sets forth information with
respect to the mortgage loans that were resolved in any one of these ways as of
December 31, 1998, December 31, 1999 and March 31, 2000.



                                      S-50

<PAGE>



<TABLE>
<CAPTION>
                                          REALIZATION EXPERIENCE OF LOANS

                                         IN FORECLOSURE AND REO PROPERTIES

                       AS OF DECEMBER 31, 1998                  AS OF DECEMBER 31, 1999                  AS OF MARCH 31, 2000

                  Percentage                              Percentage                               Percentage
                      of                                      of                                       of
                     Loans     Average     Average           Loans      Average     Average           Loans      Average    Average
                   Resolved    Days(1)     Loss(2)         Resolved      Days(1)    Loss(2)         Resolved     Days(1)    Loss(2)
                   --------    -------     -------         --------      -------    -------         --------     -------    -------
<S>                <C>         <C>         <C>            <C>           <C>         <C>             <C>          <C>        <C>
Cure/Payoff         11.89%        69         N/A            46.09%       119.8        N/A            38.86%       126.0       N/A

Liquidation in
Foreclosure         22.81%       122      (22.27)%          16.63%       129.1      (13.96)%         19.09%       176.2    (14.47)%

REO Sales           65.30%        88      (34.80)%          37.28%       106.8      (38.31)%         42.05%       125.6    (39.14)%
</TABLE>


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

(1)      Represents the average number of days from foreclosure to resolution.

(2)      Expressed as a percentage of principal balance.



         With respect to the table above entitled "Realization Experience of
Loans in Foreclosure and REO Properties," there can be no assurance that the
manner of resolution, the amount of time it takes to resolution or the average
losses with respect to the mortgage loans in the mortgage pool will conform to
the master servicer's experience provided in the table. The pooling and
servicing agreement provides that the master servicer is to "maximize the timely
and complete recovery of principal and interest" with respect to delinquent and
defaulted mortgage loans and the master servicer can not predict what resolution
methods will enable it to "maximize the timely and complete recovery of
principal and interest" with respect to realizations on defaulted and delinquent
mortgage loans in the mortgage pool.

                       THE POOLING AND SERVICING AGREEMENT

GENERAL

         The certificates will be issued under a pooling and servicing agreement
dated as of June 1, 2000, among the depositor, the master servicer, the trust
administrator and the trustee. The trust created under the pooling and servicing
agreement will consist of:

o        all of the depositor's right, title and interest in the mortgage loans,
         including in each case the related mortgage notes, mortgages and other
         related documents;

o        all payments on or collections in respect of the mortgage loans due
         after the cut-off date, together with any proceeds thereof;

o        any mortgaged properties acquired on behalf of certificateholders by
         foreclosure or by deed in lieu of foreclosure, and any revenued
         received thereon;

o        the rights of the trustee under all insurance policies, including the
         primary mortgage insurance policy, required to be maintained under the
         pooling and servicing agreement; and

o        the rights of the depositor under the mortgage loan purchase agreement.




                                      S-51

<PAGE>



         The offered certificates will be transferable and exchangeable at the
corporate trust offices of the trust administrator at the address indicated
under "--The Trust Administrator" below.

         The following summaries do not purport to be complete and are subject
to, and are qualified in their entirety by reference to, the provisions of the
pooling and servicing agreement. When particular provisions or terms used in the
pooling and servicing agreement are referred to, the actual provisions,
including definitions of terms, are incorporated by reference.

ASSIGNMENT OF THE MORTGAGE LOANS

         On the closing date, the depositor will sell, transfer, assign, set
over and otherwise convey without recourse to the trustee, in trust for the
benefit of the holders of the certificates and the certificate insurer, all
right, title and interest of the depositor in and to each mortgage loan and all
right, title and interest in and to all other assets included in the trust fund,
including all principal and interest payments due thereon after the cut-off
date.

         In connection with each transfer and assignment, the depositor will
deliver, or cause to be delivered, the following documents to the trust
administrator, as custodian for the trustee, with respect to each mortgage loan:

o        the original mortgage note, endorsed by the lender thereunder in blank
         or to the order of the trustee;

o        the original mortgage with evidence of recording thereon;

o        the original executed assignment of the mortgage executed by the seller
         to the trustee or in blank.

         The assignments of mortgage referred to above are required to be
recorded by or on behalf of the master servicer in the appropriate offices for
real property records; provided, however, that those assignments of mortgage are
not required to be recorded if the master servicer furnishes to the trustee, on
or before the closing date, at the master servicer's expense, an opinion of
counsel with respect to the relevant jurisdictions that recording is not
necessary to perfect the trustee's interest in the related mortgage loan;
provided further, however, notwithstanding the delivery of that opinion of
counsel, upon the occurrence of certain events set forth in the pooling and
servicing agreement, these assignments of mortgage are required to be recorded
by the master servicer or the trustee as set forth in the pooling and servicing
agreement. The master servicer expects to deliver that opinion of counsel, and
as a result, the assignments of mortgage for substantially all of the mortgage
loans will not initially be recorded. Any cost associated with the recording of
the assignments of mortgage will be borne by the master servicer; provided,
however, if the master servicer fails to pay the cost of recording, that expense
will be paid by the trust administrator or the trustee, as applicable, and will
be reimbursable to the party that paid that expense by the trust fund prior to
any distribution to certificateholders.

THE SELLER

         The seller, a California corporation, obtained the mortgage loans from
the originator. The seller will transfer the mortgage loans to the depositor
according to the terms of a mortgage loan purchase agreement, dated as of June
27, 2000, among the seller, the originator and the depositor.


                                      S-52

<PAGE>



THE TRUSTEE

         Firstar Bank, N.A., a national banking association, will act as trustee
for the certificates under the pooling and servicing agreement. The trustee's
offices for notices under the pooling and servicing agreement are located at
1555 North River Drive, Suite 301, Milwaukee, Wisconsin 53212, and its telephone
number is (414) 905-5000. In the event the trust administrator advises the
trustee that it is unable to continue to perform its obligations under the terms
of the pooling and servicing agreement prior to the appointment of a successor,
the trustee is obligated to perform these obligations until a new trust
administrator is appointed.

         The principal compensation to be paid to the trustee in respect of its
obligations under the pooling and servicing agreement will consist of a
specified portion of the "administrative fee." The "administrative fee" will
accrue at the "administrative fee rate," which is 0.013% per annum, on the
aggregate loan balance of the mortgage loans. The pooling and servicing
agreement will provide that the trustee and any director, officer, employee or
agent of the trustee will be indemnified by the trust fund and will be held
harmless against any loss, liability or expense incurred by the trustee in
connection with the acceptance or administration of its obligations and duties
under the pooling and servicing agreement, other than any loss, liability or
expense:

o        that constitutes a specific liability of the trustee under the pooling
         and servicing agreement or

o        incurred by reason of willful misfeasance, bad faith or negligence in
         the performance of the trustee's duties under the pooling and servicing
         agreement or as a result of a breach, or by reason of reckless
         disregard, of the trustee's obligations and duties under the pooling
         and servicing agreement.

         The indemnification provided to the trustee in the pooling and
servicing agreement shall not include expenses, disbursements and advances
incurred or made by the trustee, including the compensation and the expenses and
disbursements of its agents and counsel, in the ordinary course of the trustee's
performance in accordance with the provisions of the pooling and servicing
agreement.

THE TRUST ADMINISTRATOR

         The trust administrator, a national banking association, will act as
trust administrator for the certificates under the pooling and servicing
agreement. The trust administrator's offices for notices under the pooling and
servicing agreement are located at 180 East Fifth Street, St. Paul, Minnesota
55101, and its telephone number is (612) 973-5800. The trust administrator will
perform administrative functions on behalf of the trustee and will act as
initial paying agent, certificate registrar and custodian.

         The principal compensation to be paid to the trust administrator in
respect of its obligations under the pooling and servicing agreement will
consist of a specified portion of the administrative fee. The pooling and
servicing agreement will provide that the trust administrator and any director,
officer, employee or agent of the trust administrator will be indemnified by the
trust fund and will be held harmless against any loss, liability or expense
incurred by the trust administrator in connection with any pending or threatened
claim or legal action arising out of or in connection with the acceptance or
administration of its obligations and duties under the pooling and servicing
agreement, other than any loss, liability or expense:

o        that constitutes a specific liability of the trust administrator under
         the pooling and servicing agreement or


                                      S-53

<PAGE>





o        incurred by reason of willful misfeasance, bad faith or negligence in
         the performance of the trust administrator's duties under the pooling
         and servicing agreement or as a result of a breach, or by reason of
         reckless disregard, of the trust administrator's obligations and duties
         under the pooling and servicing agreement.

         The indemnification provided to the trust administrator in the pooling
and servicing agreement shall not include expenses, disbursements and advances
incurred or made by the trust administrator, including the compensation and
expenses and disbursements of its agents and counsel, in the ordinary course of
the trust administrator's performance in accordance with the provisions of the
pooling and servicing agreement.

SERVICING AND OTHER COMPENSATION AND PAYMENT OF EXPENSES

         The principal compensation to be paid to the master servicer in respect
of its servicing activities for the certificates will consist of the "servicing
fee." The servicing fee will accrue at the "servicing fee rate," which is 0.50%
per annum, on the aggregate loan balances of the mortgage loans. As additional
servicing compensation, the master servicer will be entitled to retain

o        all assumption fees, late payment charges and other miscellaneous
         servicing fees, except for prepayment premiums which, to the extent
         collected from mortgagors, will be remitted by the master servicer for
         distribution to the certificateholders as described under "Description
         of the Certificates--Allocation of Available Funds" in this prospectus
         supplement, and

o        any interest or other income earned on funds held in the collection
         account, the certificate account and any escrow accounts.

ADJUSTMENT TO SERVICING FEE IN CONNECTION WITH PREPAID MORTGAGE LOANS

         When a borrower prepays all of a mortgage loan between scheduled
monthly payment dates or "due dates," the borrower pays interest on the amount
prepaid only to the date of prepayment. This results in a shortfall in the
collection of interest on the mortgage loan, as compared with the interest that
would otherwise have been collected and available for distribution to
certificateholders. In order to mitigate the effect of any resulting shortfall
in interest distributions to holders of the offered certificates on any
distribution date, the amount of the servicing fee otherwise payable to the
master servicer for that month shall, to the extent of the shortfall, be
deposited by the master servicer in the collection account for distribution to
holders of the offered certificates on the related distribution date. Any
shortfall in interest distributions resulting from a prepayment shall be
referred to in this prospectus supplement as a "prepayment interest shortfall."
However, any reduction in the servicing fee will be made only to the extent of
the servicing fee otherwise payable to the master servicer with respect to
payments on the mortgage loans received during the Due Period relating to the
related distribution date. Any deposit by the master servicer will be reflected
in the distributions to holders of the offered certificates made on the
distribution date on which the Principal Prepayment received would be
distributed. See "Description of the Certificates--Example of Distributions" in
this prospectus supplement.


                                      S-54

<PAGE>



OPTIONAL TERMINATION

         The master servicer will have the right to purchase all remaining
mortgage loans and REO properties, if any, and thereby effect the early
retirement of the certificates, on or after the Call Option Date. In the event
that this call option is exercised, the purchase will be made at a price equal
to the sum of:

o        the greater of (a) 100% of the loan balance of each mortgage loan and
         the fair market value of each REO property and (b) the fair market
         value, net of accrued interest, of the mortgage loans and REO
         properties determined as set forth in the pooling and servicing
         agreement,

o        30 days' interest thereon at a rate equal to the applicable mortgage
         rate, PLUS, in the case of the Class A-2 Certificates, the amount of
         any Basis Risk Shortfalls and Unpaid Basis Risk Shortfalls, and

o        the aggregate amount of (x) all unreimbursed delinquency advances, (y)
         all unreimbursed out-of- pocket costs and expenses previously incurred
         by the master servicer in the performance of its servicing obligations,
         to the extent these costs and expenses relate to the mortgage loans and
         REO properties then held as part of the trust fund and (z) any accrued
         and unpaid servicing fees.

         Proceeds from any repurchase will be included in available funds and
will be distributed to the holders of the certificates in accordance with the
pooling and servicing agreement. Any purchase that will result in unreimbursed
Reimbursement Amounts to the certificate insurer will require certificate
insurer consent. Any repurchase of the mortgage loans and REO properties will
result in the early retirement of the certificates.

OPTIONAL PURCHASE OF DEFAULTED LOANS

         As to any mortgage loan which is delinquent in payment by 90 days or
more, the master servicer may, at its option, purchase the mortgage loan from
the trust fund at a price which includes 100% of the loan balance thereof plus
accrued interest thereon at the applicable mortgage rate from the date through
which interest was last paid by the related mortgagor through the day before the
due date in the Due Period in which the purchase occurs; provided, however, that
(i) unless the certificate insurer otherwise consents, the total amount of
mortgage loans that may be purchased by the master servicer described in this
paragraph, not including mortgage loans repurchased due to a breach of a
representation or warranty under the pooling and servicing agreement, may not
exceed 5% of the aggregate of the cut-off date loan balances and (ii) unless the
certificate insurer otherwise consents, the mortgage loans must be purchased in
the order they become delinquent.

EVENTS OF DEFAULT; MASTER SERVICER TERMINATION TRIGGER EVENT

         In addition to those events of default as defined in the prospectus
described under "Description of the Securities--Events of Default under the
Governing Agreement and Rights Upon Events of Default," events of default
include defaults under the insurance agreement and the Master Servicer
Termination Trigger Events as set forth in the pooling and servicing agreement.
In the event of an event of default by the master servicer, the successor master
servicer shall be appointed in the manner set forth in the pooling and servicing
agreement and such successor master servicer may be selected by the certificate
insurer.

         Under the pooling and servicing agreement, the master servicer
covenants and agrees to act as the master servicer for an initial term from the
closing date to September 30, 2000, which term will be


                                      S-55

<PAGE>



extendable by the certificate insurer by notice to the trust administrator for
successive terms of three (3) calendar months each, until the termination of the
trust fund. The master servicer will, upon its receipt of each notice of
extension, which are referred to in this prospectus supplement as "master
servicer extension notices" become bound for the duration of the term covered by
the master servicer extension notice to continue as the master servicer subject
to and in accordance with the other provisions of the pooling and servicing
agreement. If, as of the fifteenth (15th) day prior to the last day of any term
of the master servicer, the trust administrator shall not have received any
master servicer extension notice from the certificate insurer, the trust
administrator will, within five (5) days thereafter, give written notice of
non-receipt to the certificate insurer and the master servicer. If the master
servicer does not receive a master servicer extension notice by the last day of
a term, the master servicer shall be automatically terminated as master
servicer. Upon any such termination of the master servicer, all authority and
power of the master servicer under the pooling and servicing agreement will pass
to a successor master servicer appointed in the manner set forth in the pooling
and servicing agreement. This provision under the pooling and servicing
agreement may be modified or repealed upon the consent of the certificate
insurer, without the consent of the certificateholders. The certificate insurer
has agreed to extend each 90-day term of the master servicer, in the absence of
an event of default or Master Servicer Termination Trigger Event under the
pooling and servicing agreement or an event of default under the insurance
agreement.

VOTING RIGHTS

         As of any date of determination, 99% of the voting rights will be
allocated among the holders of the offered certificates and 1% of the voting
rights will be allocated among the holders of the Class R Certificates as set
forth in the pooling and servicing agreement. Voting rights will be allocated
among holders of the certificates of each class of certificates in accordance
with the holders' respective percentage interests in the class. However, unless
a Certificate Insurer Default exists, the voting rights of the holders of the
offered certificates will be exercisable only by the certificate insurer.

ADVANCES

         Subject to the limitations set forth in this section, the master
servicer will be obligated to advance or cause to be advanced prior to each
distribution date its own funds, or funds in the collection account that
constitute amounts held for future distribution, in an amount equal to the
aggregate of all payments of principal and interest, net of the servicing fee,
that were due during the related Due Period on the mortgage loans and that were
delinquent on the related determination date, plus amounts representing assumed
payments not covered by any current net income on the mortgaged properties
acquired through foreclosure or deed in lieu of foreclosure. These advances are
referred to in this prospectus supplement as "delinquency advances".

         Delinquency advances are required to be made only to the extent they
are deemed by the master servicer to be recoverable from related late
collections, Insurance Proceeds or Liquidation Proceeds. The purpose of making
delinquency advances is to maintain a regular cash flow to the
certificateholders, rather than to guarantee or insure against losses. The
master servicer will not be required to make any delinquency advances with
respect to reductions in the amount of the monthly payments on the mortgage
loans due to bankruptcy proceedings or the application of the Relief Act.

         All delinquency advances will be reimbursable to the master servicer
from late collections, Insurance Proceeds and Liquidation Proceeds from the
mortgage loan as to which the unreimbursed delinquency advance was made. In
addition, any delinquency advances previously made in respect of any mortgage
loan that are at any time deemed by the master servicer to be nonrecoverable
from related late collections, Insurance Proceeds or Liquidation Proceeds may be
reimbursed to the master servicer out of


                                      S-56

<PAGE>



any funds in the collection account prior to the distributions on the
certificates. In the event the master servicer fails in its obligation to make
any delinquency advance, the trust administrator will be obligated to make the
delinquency advance, to the extent required in the pooling and servicing
agreement.

         The pooling and servicing agreement provides that the master servicer
may enter into a facility with any person which provides that such person may
fund delinquency advances or servicing advances, although no such facility shall
reduce or otherwise affect the master servicer's obligation to fund such
delinquency advances or servicing advances. Any delinquency advances or
servicing advances made by an advancing person will be reimbursed to the
advancing person in the same manner as reimbursements would be made to the
master servicer.

MATTERS REGARDING THE CERTIFICATE INSURER

         Under the terms of the pooling and servicing agreement, unless there
exists a Certificate Insurer Default, the certificate insurer will be entitled
to exercise, among others, the following rights of the holders of the offered
certificates, without the consent of the holders of the offered certificates,
and the holders of the offered certificates may exercise the following rights
only with the prior written consent of the certificate insurer:

o        the right to direct the trustee to terminate the rights and obligations
         of the master servicer;

o        the right to consent or to direct any waivers of defaults by the master
         servicer;

o        the right to remove the trustee or the trust administrator under the
         terms of the pooling and servicing agreement;

o        the right to institute proceedings against the master servicer in the
         event of default by the master servicer and refusal of the trust
         administrator to institute proceedings; and

o        the right to require the trust administrator, as successor master
         servicer to appoint a different successor master servicer selected by
         the certificate insurer, which could be an affiliate of the certificate
         insurer.

         In addition, unless a Certificate Insurer Default exists, the
certificate insurer will have the right to direct all matters relating to any
proceeding seeking the avoidance as a preferential transfer under applicable
bankruptcy, insolvency, receivership or similar law of any distribution made
with respect to the offered certificates, and, unless a Certificate Insurer
Default exists, the certificate insurer's consent will be required prior to,
among other things:

o        the removal of the trustee or the trust administrator,

o        the appointment of any successor trustee, trust administrator or master
         servicer or

o        any amendment to the pooling and servicing agreement.






                                      S-57

<PAGE>



                         DESCRIPTION OF THE CERTIFICATES

GENERAL

         The certificates will be issued under the pooling and servicing
agreement. Set forth in this section are summaries of the specific terms and
provisions under which the certificates will be issued. The following summaries
do not purport to be complete and are subject to, and are qualified in their
entirety by reference to, the provisions of the pooling and servicing agreement.
When particular provisions or terms used in the pooling and servicing agreement
are referred to, the actual provisions, including definitions of terms, are
incorporated by reference.

         The New Century Home Equity Loan Certificates, Series 2000-NCA will
consist of the Class A-1 Certificates, the Class A-2 Certificates and the Class
R Certificates. The offered certificates and the Class R Certificates are
collectively referred to in this prospectus supplement as the "certificates."
The Class R Certificates, which are not being offered by this prospectus
supplement, will be delivered to a wholly- owned bankruptcy remote subsidiary of
the seller as partial consideration for the mortgage loans.

         The offered certificates will have the Original Certificate Principal
Balances specified in the table in the summary of this prospectus supplement
and, together with the Class R Certificates, will evidence the entire beneficial
ownership interest in the trust fund. The aggregate of the Original Certificate
Principal Balances of the offered certificates is approximately $207,468,000.

         The offered certificates will be issued in book-entry form as described
below. The offered certificates will be issued in minimum dollar denominations
of $50,000 and integral multiples of $1,000 in excess thereof. The assumed final
maturity dates for the offered certificates is June 25, 2030. See "Yield,
Maturity and Prepayment Considerations--Weighted Average Lives" in this
prospectus supplement.

BOOK-ENTRY CERTIFICATES

         The offered certificates will be book-entry certificates. Persons
acquiring beneficial ownership interests in the offered certificates, or
certificate owners, will hold the certificates through The Depository Trust
Company or DTC in the United States, or Clearstream Banking Luxembourg, or
Clearstream, formerly known as Cedelbank SA, or Euroclear in Europe, if they are
participants of these systems, or indirectly through organizations which are
participants in these systems. The book-entry certificates will be issued in one
or more certificates which equal the aggregate Certificate Principal Balance of
the certificates and will initially be registered in the name of Cede & Co., the
nominee of DTC. Clearstream and Euroclear will hold omnibus positions on behalf
of their participants through customers' securities accounts in Clearstream's
and Euroclear's names on the books of their respective depositaries which in
turn will hold positions in customers' securities accounts in the depositaries'
names on the books of DTC. Citibank will act as depositary for Clearstream and
The Chase Manhattan Bank will act as depositary for Euroclear. Citibank and The
Chase Manhattan Bank will be referred to individually in this prospectus
supplement as the "Relevant Depositary" and will be referred to collectively in
this prospectus supplement as the "European Depositaries". Investors may hold
beneficial interests in the book-entry certificates in minimum denominations of
$50,000. Except as described in this section, no person acquiring a book-entry
certificate will be entitled to receive a physical or definitive certificate
representing that certificate. Unless and until definitive certificates are
issued, it is anticipated that the only "certificateholder" of the offered
certificates will be Cede & Co., as nominee of DTC. Certificate owners will not
be certificateholders as that term is used in the pooling and servicing


                                      S-58

<PAGE>



agreement. Certificate owners are only permitted to exercise their rights
indirectly through participants and DTC.

         The beneficial owner's ownership of a book-entry certificate will be
recorded on the records of the brokerage firm, bank, thrift institution or other
financial intermediary that maintains the beneficial owner's account for that
purpose. In turn, the financial intermediary's ownership of the book-entry
certificate will be recorded on the records of DTC or of a participating firm
that acts as agent for the financial intermediary, whose interest will in turn
be recorded on the records of DTC, if the beneficial owner's financial
intermediary is not a DTC participant and on the records of Clearstream or
Euroclear, as appropriate.

         Certificate owners will receive all distributions of principal of and
interest on the book-entry certificates from the trust administrator through DTC
and DTC participants. While the book-entry certificates are outstanding, under
the rules, regulations and procedures creating and affecting DTC and its
operations, DTC is required to make book-entry transfers among participants on
whose behalf it acts with respect to the book-entry certificates and is required
to receive and transmit distributions of principal of, and interest on, the
book-entry certificates. Participants and indirect participants with whom
certificate owners have accounts with respect to book-entry certificates are
similarly required to make book-entry transfers and receive and transmit
distributions on behalf of their respective certificate owners. Accordingly,
although certificate owners will not possess certificates representing their
respective interests in the book-entry certificates, the DTC rules provide a
mechanism by which certificate owners will receive distributions and will be
able to transfer their interest.

         Certificateholders will not receive or be entitled to receive
certificates representing their respective interests in the book-entry
certificates, except under the limited circumstances described under this
section. Unless and until definitive certificates are issued, certificateholders
who are not participants may transfer ownership of book-entry certificates only
through participants and indirect participants by instructing these participants
and indirect participants to transfer book-entry certificates, by book-entry
transfer, through DTC for the account of the purchasers of the book-entry
certificates, which account is maintained with their respective participants.
Under the DTC rules and in accordance with DTC's normal procedures, transfers of
ownership of book-entry certificates will be executed through DTC and the
accounts of the respective participants at DTC will be debited and credited.
Similarly, the participants and indirect participants will make debits or
credits, as the case may be, on their records on behalf of the selling and
purchasing certificateholders.

         Because of time zone differences, credits of securities received in
Clearstream or Euroclear as a result of a transaction with a participant will be
made during subsequent securities settlement processing and dated the business
day following the DTC settlement date. These credits or any transactions in
these securities settled during this processing will be reported to the relevant
Euroclear or Clearstream participants on the business day following the DTC
settlement date. Cash received in Clearstream or Euroclear as a result of sales
of securities by or through a Clearstream participant or Euroclear participant
to a DTC participant will be received with value on the DTC settlement date but
will be available in the relevant Clearstream or Euroclear cash account only as
of the business day following settlement in DTC. For information with respect to
tax documentation procedures relating to the certificates, see "Federal Income
Tax Considerations--REMICs--Backup Withholding With Respect to REMIC
Certificates" and "--Foreign Investors in REMIC Certificates" in the prospectus
and "Global Clearance and Settlement and Tax Documentation Procedures--Certain
U.S. Federal Income Tax Documentation Requirements" in Annex I of this
prospectus supplement.


                                      S-59

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

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

         DTC which is a New York-chartered limited purpose trust company,
performs services for its participants, some of which directly or indirectly own
DTC. In accordance with its normal procedures, DTC is expected to record the
positions held by each DTC participant in the book-entry certificates, whether
held for its own account or as a nominee for another person. In general,
beneficial ownership of book-entry certificates will be subject to the DTC
rules, as in effect from time to time.

         Clearstream was incorporated in 1970 as a limited company under
Luxembourg law. Clearstream is owned by banks, securities dealers and financial
institutions, and currently has about 100 shareholders, including U.S. financial
institutions or their subsidiaries. No single entity may own more than five
percent of Clearstream's stock.

         Clearstream is registered as a bank in Luxembourg, and therefore is
subject to regulation by the Institute Monetaire Luxembourgeois or "IML", the
Luxembourg Monetary Authority, which supervises Luxembourg banks.

         Clearstream holds securities for its customers, which are referred to
in this prospectus supplements as Clearstream participants, and facilitates the
clearance and settlement of securities transactions by electronic book-entry
transfers between their accounts. Clearstream provides various services,
including safekeeping, administration, clearance and settlement of
internationally traded securities and securities lending and borrowing.
Clearstream also deals with domestic securities markets in several countries
through established depository and custodial relationships. Clearstream has
established an electronic bridge with Morgan Guaranty Trust as the Euroclear
operator in Brussels to facilitate settlement of trades between systems.
Clearstream currently accepts over 70,000 securities issues on its books.

         Clearstream's customers are world-wide financial institutions including
underwriters, securities brokers and dealers, banks, trust companies and
clearing corporations. Clearstream's United States customers are limited to
securities brokers and dealers and banks. Currently, Clearstream has
approximately 3,000 customers located in over 60 countries, including all major
European countries, Canada, and the United States. Indirect access to
Clearstream is available to other institutions which clear through or maintain a
custodial relationship with an account holder of Clearstream.

         The Euroclear system was created in 1968 to hold securities for its
participants which are referred to in this prospectus supplement as Euroclear
participants and to clear and settle transactions


                                      S-60

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between Euroclear participants through simultaneous electronic book-entry
delivery against payment, thereby eliminating the need for physical movement of
certificates and any risk from lack of simultaneous transfers of securities and
cash. Transactions may be settled in any of 29 currencies, including United
States dollars. Euroclear includes various other services, including securities
lending and borrowing and interfaces with domestic markets in several countries
similar to the arrangements for cross-market transfers with DTC described above.
Euroclear is operated by the Brussels, Belgium office of Morgan Guaranty Trust
Company of New York, which is referred to in this prospectus supplement as the
Euroclear operator, under contract with Euroclear Clearance Systems S.C., a
Belgian cooperative corporation, or simply, the Cooperative. All operations are
conducted by the Euroclear operator, and all Euroclear securities clearance
accounts and Euroclear cash accounts are accounts with the Euroclear operator,
not the Cooperative. The Cooperative establishes policy for Euroclear on behalf
of Euroclear participants. Euroclear participants include banks, central banks,
securities brokers and dealers and other professional financial intermediaries.
Indirect access to Euroclear is also available to other firms that clear through
or maintain a custodial relationship with a Euroclear participant, either
directly or indirectly.

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

         Securities clearance accounts and cash accounts with the Euroclear
operator are governed by the Terms and Conditions Governing Use of Euroclear and
the related operating procedures of the Euroclear system and applicable Belgian
law, which are referred to in this prospectus supplement as the "terms and
conditions". The terms and conditions govern transfers of securities and cash
within Euroclear, withdrawals of securities and cash from Euroclear, and
receipts of payments with respect to securities in Euroclear. All securities in
Euroclear are held on a fungible basis without attribution of specific
certificates to specific securities clearance accounts. The Euroclear operator
acts under the terms and conditions only on behalf of Euroclear participants,
and has no record of or relationship with persons holding through Euroclear
participants.

         Distributions on the book-entry certificates will be made on each
distribution date by the trust administrator to DTC. DTC will be responsible for
crediting the amount of these payments to the accounts of the applicable DTC
participants in accordance with DTC's normal procedures. Each DTC participant
will be responsible for disbursing these payments to the beneficial owners of
the book-entry certificates that it represents and to each financial
intermediary for which it acts as agent. Each financial intermediary will be
responsible for disbursing funds to the beneficial owners of the book-entry
certificates that it represents.

         Under a book-entry format, beneficial owners of the book-entry
certificates may experience some delay in their receipt of payments, since these
payments will be forwarded by the trust administrator to Cede & Co.
Distributions with respect to certificates held through Clearstream or Euroclear
will be credited to the cash accounts of Clearstream participants or Euroclear
participants in accordance with the relevant system's rules and procedures, to
the extent received by the Relevant Depositary. These distributions will be
subject to tax reporting in accordance with relevant United States tax laws and
regulations. See "Federal Income Tax Considerations--REMICs--Backup Withholding
With Respect to REMIC Certificates" and "--Foreign Investors in REMIC
Certificates" in the prospectus. Because DTC can only act on behalf of financial
intermediaries, the ability of a beneficial owner to pledge book-entry
certificates to persons or entities that do not participate in the depository
system, or otherwise take actions in respect of the book-entry certificates, may
be limited due to the lack of physical certificates for


                                      S-61

<PAGE>



the book-entry certificates. In addition, issuance of the book-entry
certificates in book-entry form may reduce the liquidity of the certificates in
the secondary market since potential investors may be unwilling to purchase
certificates for which they cannot obtain physical certificates.

         Monthly and annual reports on the trust will be provided to Cede & Co.,
as nominee of DTC, and may be made available by Cede & Co. to beneficial owners
upon request, in accordance with the rules, regulations and procedures creating
and affecting the depository, and to the financial intermediaries to whose DTC
accounts the book-entry certificates of the beneficial owners are credited.

         DTC has advised the depositor that, unless and until definitive
certificates are issued, DTC will take any action permitted to be taken by the
holders of the book-entry certificates under the pooling and servicing agreement
only at the direction of one or more financial intermediaries to whose DTC
accounts the book-entry certificates are credited, to the extent that actions
are taken on behalf of financial intermediaries whose holdings include the
book-entry certificates. Clearstream or the Euroclear operator, as the case may
be, will take any other action permitted to be taken by a certificateholder
under the pooling and servicing agreement on behalf of a Clearstream participant
or Euroclear participant only in accordance with its relevant rules and
procedures and subject to the ability of the Relevant Depositary to effect
actions on its behalf through DTC. DTC may take actions, at the direction of the
related participants, with respect to some book-entry certificates which
conflict with actions taken with respect to other book-entry certificates.

         Definitive certificates will be issued to beneficial owners of the
book-entry certificates, or their nominees, rather than to DTC, only if:

o        DTC or the depositor advises the trust administrator in writing that
         DTC is no longer willing, qualified or able to discharge properly its
         responsibilities as nominee and depository with respect to the
         book-entry certificates and the depositor or the trust administrator is
         unable to locate a qualified successor;

o        the depositor, at its sole option, with the consent of the trust
         administrator, elects to terminate a book-entry system through DTC or

o        after the occurrence of an event of default, beneficial owners having
         percentage interests aggregating not less than 51% of the book-entry
         certificates advise the trust administrator and DTC through the
         financial intermediaries and the DTC participants in writing that the
         continuation of a book-entry system through DTC, or a successor to DTC,
         is no longer in the best interests of beneficial owners.

         Upon the occurrence of any of the events described above, the trust
administrator will be required to notify all beneficial owners of the occurrence
of the event and the availability through DTC of definitive certificates. Upon
surrender by DTC of the global certificate or certificates representing the
book-entry certificates and instructions for re-registration, the trust
administrator will issue definitive certificates, and thereafter the trust
administrator will recognize the holders of the definitive certificates as
certificateholders under the pooling and servicing agreement.

         Although DTC, Clearstream and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of book-entry certificates among
participants of DTC, Clearstream and Euroclear, they are under no obligation to
perform or continue to perform these procedures and these procedures may be
discontinued at any time.


                                      S-62

<PAGE>



         None of the depositor, the master servicer, the trust administrator nor
the trustee will have any responsibility for any aspect of the records relating
to or payments made on account of beneficial ownership interests of the
book-entry certificates held by Cede & Co., as nominee for DTC, or for
maintaining, supervising or reviewing any records relating to those beneficial
ownership interests.

DISTRIBUTIONS

         Distributions on the offered certificates will be made by the trust
administrator on each distribution date which is the 25th day of each month, or
if that day is not a business day, on the first business day after the 25th,
commencing in July 2000. Distributions will be made to the persons in whose
names the certificates are registered on each record date which is on the last
business day of the preceding calendar month, in the case of the Class A-1
Certificates, or the close of business on the business day preceding the date of
distribution, in the case of the Class A-2 Certificates.

ALLOCATION OF AVAILABLE FUNDS

         Distributions to holders of the certificates will be made on each
distribution date in an amount equal to the amount of available funds plus any
Insured Payments, if applicable.

         I. On each distribution date, the trust administrator will withdraw (a)
from the certificate account, the Group I Available Funds and (b) from the
policy payments account, as defined in the pooling and servicing agreement, the
amount of any Insured Payment with respect to the Group I Certificates and will
distribute these amounts in the following order of priority:

                  (1) the portion of the following amounts, attributable to the
         group I loans and the Group I Certificates, in the following order:
         first, to pay the PMI Insurer the premium attributable to the group I
         loans and second, to pay the trust administrator the administrative fee
         attributable to the group I loans;

                  (2) to the certificate insurer, the Premium Amount for the
         Group I Certificates for the related distribution date, to the extent
         the payment will not cause an Insured Payment to be required;

                  (3) to the holders of the Group I Certificates, the related
         Interest Distribution Amount for the related distribution date;

                  (4) to the holders of the Group I Certificates, an amount
         equal to the Group I Basic Principal Distribution Amount;

                  (5) to the holders of the Group II Certificates, an amount
         equal to the excess, if any, of (x) the related Interest Distribution
         Amount for the Group II Certificates for the related distribution date
         over (y) the amount actually distributed to the holders of the Group II
         Certificates on the related distribution date under subclause II(3) of
         this section;

                  (6) to the certificate insurer, FIRST, the Reimbursement
         Amount for the Group I Certificates for the related distribution date,
         to the extent the payment will not cause an Insured Payment to be
         required, and SECOND, the Reimbursement Amount for the Group II
         Certificates for the related distribution date, to the extent not paid
         under subclause II(6) from the Group II Available Funds and to the
         extent the payment will not cause an Insured Payment to be required;


                                      S-63

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                  (7) to the holders of the Group I Certificates, an amount
         equal to the Group I Extra Principal Distribution Amount; and

                  (8) to the holders of the Group II Certificates, any remaining
         OC Deficiency Amount for the related distribution date for the Group II
         Certificates, after taking into account the payments made under
         subclauses II(1) through II(6) from the Group II Available Funds.

         II. On each distribution date, the trust administrator will withdraw
(a) from the certificate account, all Group II Available Funds and (b) from the
policy payments account, the amount of any Insured Payment with respect to the
Group II Certificates and will distribute these amounts in the following order
of priority:

                  (1) the portion of the following amounts, attributable to the
         group I loans and the Group I Certificates, in the following order:
         first, to pay the PMI Insurer the premium attributable to the group I
         loans and second, to pay the trust administrator the administrative fee
         attributable to the group I loans;

                  (2) to the certificate insurer, the Premium Amount for the
         Group II Certificates for the related distribution date, to the extent
         the payment will not cause an Insured Payment to be required;

                  (3) to the holders of the Group II Certificates, the related
         Interest Distribution Amount for the related distribution date;

                  (4) to the holders of the Group II Certificates, an amount
         equal to the Group II Basic Principal Distribution Amount;

                  (5) to the holders of the Group I Certificates, an amount
         equal to the excess, if any, of (x) the related Interest Distribution
         Amount for the Group I Certificates for the related distribution date
         over (y) the amount actually distributed to the holders of the Group I
         Certificates on the related distribution date under subclause I(3) of
         this section;

                  (6) to the certificate insurer, FIRST, the Reimbursement
         Amount for the Group II Certificates for the related distribution date,
         to the extent the payment will not cause an Insured Payment to be
         required, and SECOND, the Reimbursement Amount for the Group I
         Certificates for the related distribution date, to the extent not paid
         under subclause I(6) from the Group I Available Funds and to the extent
         the payment will not cause an Insured Payment to be required;

                  (7) to the holders of the Group II Certificates, an amount
         equal to the Group II Extra Principal Distribution Amount;

                  (8) to the holders of the Group I Certificates, any remaining
         OC Deficiency Amount for the related distribution date for the Group I
         Certificates, after taking into account the payments made under
         subclauses I(1) through I(6) from the Group I Available Funds; and

                  (9) to the reserve fund established in accordance with the
         terms of the pooling and servicing agreement and then from that reserve
         fund, to the holders of the Group II Certificates, any Basis Risk
         Shortfall and any Unpaid Basis Risk Shortfall.


                                      S-64

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         On each distribution date, any remaining amounts after giving effect to
the distributions specified in clauses I and II above will be paid to the
holders of the Class R Certificates.

DEFINITIONS

         Many of the defined terms listed in this section may apply to both loan
groups and to both Certificate Groups. However, certain of the terms are
sometimes used in this prospectus supplement to refer to a particular loan group
and Certificate Group by the adjectival use of the words "related" and "Group."

         The "Accrual Period" for the Class A-1 Certificates and any
distribution date after the first distribution date is the prior calendar month.
The Accrual Period for the Class A-1 Certificates with respect to the first
distribution date is the period beginning on the closing date and ending on June
30, 2000. The Accrual Period for the A-2 Certificates and any distribution date
after the first distribution date is the period beginning on the distribution
date in the prior month and ending on the day prior to the current distribution
date. The Accrual Period for the A-2 Certificates with respect to the first
distribution date is the period beginning on the closing date and ending on July
24, 2000. Interest will be calculated for the Class A-1 Certificates on the
basis of a 360-day year consisting of twelve 30-day months. Interest will be
calculated for the Class A-2 Certificates on the basis of a 360-day year and the
actual number of days in the Accrual Period.

         The "Accrual Rate" for the Class A-2 Certificates with respect to any
distribution date is the per annum rate equal to the lesser of (i) the
Pass-Through Rate for the applicable Accrual Period calculated without regard to
the Net WAC Cap and (ii) the Maximum Pass-Through Rate.

         The "Available Funds" means with respect to any Distribution Date, the
sum of the Group I Available Funds and Group II Available Funds.

         The "Basic Principal Distribution Amount" means with respect to each
Certificate Group and any distribution date, the excess of (i) the related
Principal Remittance Amount for that distribution date over (ii) the related OC
Release Amount, if any, for that distribution date.

         The "Basis Risk Shortfall" means with respect to the Class A-2
Certificates and any distribution date on which the Pass-Through Rate is limited
to the Net Wac Cap, an amount equal to interest accrued during the related
Accrual Period on the aggregate Certificate Principal Balance of the Class A-2
Certificates immediately prior to the related distribution date at a per annum
rate equal to the excess of (i) the Accrual Rate for the distribution date over
(ii) the Net WAC Cap for the distribution date.

         The "Call Option Date" is the first distribution date on which the
aggregate loan balance of the mortgage loans in the trust fund is less than or
equal to 10% of the aggregate of the cut-off date loan balances.

         A "Certificate Group" means either the Group I Certificates or the
Group II Certificates, as the context may require.

         A "Certificate Insurer Default" occurs when the certificate insurer
fails to make payments under the certificate insurance policy in accordance with
the terms and conditions of the certificate insurance policy.


                                      S-65

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         The "Certificate Principal Balance" of each class of offered
certificates, as of any distribution date, will be equal to its Original
Certificate Principal Balance minus all distributions in respect of principal
allocated to it on all prior distribution dates.

         A mortgage loan is "Delinquent" if any monthly payment due on the
mortgage loan is not made by the close of business on the day the monthly
payment is scheduled to be due. A mortgage loan is "30 days Delinquent" if the
monthly payment has not been received by the close of business on the
corresponding day of the month immediately succeeding the month in which the
monthly payment was due or, if there was no corresponding day, as when a 30-day
month follows a 31-day month in which a payment was due on the 31st day of the
month, then on the last day of the immediately succeeding month; and similarly
for "60 days Delinquent", etc.

         A "Due Period" with respect to any distribution date is the period
beginning on the second day of the month in the month preceding the distribution
date and ending on the first day of the month in the month in which the
distribution date occurs.

         The "Expense Adjusted Maximum Mortgage Rate" on any group II mortgage
loan is equal to the maximum mortgage rate (or, in the case of a fixed-rate
group II mortgage loan, the mortgage rate) on the mortgage loan MINUS the sum of
(i) the servicing fee rate, (ii) the administrative fee rate and (iii) the per
annum rate at which the premium to the PMI insurer is calculated multiplied by a
fraction the numerator of which is the aggregate loan balance of the group II
mortgage loans covered under the primary mortgage insurance policy and the
denominator of which is the aggregate loan balance of the group II mortgage
loans as of the cut-off date.

         The "Extra Principal Distribution Amount" for a Certificate Group and
any distribution date is the lesser of (x) the related General Excess Available
Amount and (y) the related OC Deficiency Amount.

         The "General Excess Available Amount" for a Certificate Group and any
distribution date is the amount, if any, by which the related Available Funds
for the distribution date exceeds the aggregate amount distributed on the
distribution date under subclauses (1) through (6) of clause I or II, as
applicable, under "--Allocation of Available Funds" in this prospectus
supplement.

         The "Group I Available Funds" for any distribution date is equal to the
sum of the following amounts with respect to the group I mortgage loans, net of
amounts reimbursable therefrom to the master servicer, the trust administrator
and the PMI insurer :

o        the aggregate amount of monthly payments on the group I mortgage loans
         due on the related due date and received by the master servicer on or
         before the 18th day of the month or, if such day is not a business day,
         the next succeeding business day, after deduction of the servicing fee
         for the distribution date, and any accrued and unpaid servicing fees in
         respect of any prior distribution dates,

o        certain unscheduled payments in respect of the group I mortgage loans,
         including prepayments, prepayment premiums, Insurance Proceeds,
         Liquidation Proceeds and proceeds from repurchases of and substitutions
         for mortgage loans occurring during the related prepayment period, and

o        payments from the master servicer in connection with delinquency
         advances and prepayment interest shortfalls for the distribution date.


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         The "Group II Available Funds" for any distribution date is equal to
the sum of the following amounts with respect to the group II mortgage loans,
net of amounts reimbursable therefrom to the master servicer, the trust
administrator and the PMI insurer:

o        the aggregate amount of monthly payments on the group II mortgage loans
         due on the related due date and received by the master servicer on or
         before the 18th day of the month or, if such day is not a business day,
         the next succeeding business day, after deduction of the servicing fee
         for the distribution date, and any accrued and unpaid servicing fees in
         respect of any prior distribution dates,

o        certain unscheduled payments in respect of the group II mortgage loans,
         including prepayments, prepayment premiums, Insurance Proceeds,
         Liquidation Proceeds and proceeds from repurchases of and substitutions
         for mortgage loans occurring during the related prepayment period, and

o        payments from the master servicer in connection with delinquency
         advances and prepayment interest shortfalls for the distribution date.

         "Insurance Proceeds" for any mortgage loan is the amount of proceeds of
any related insurance policies, to the extent these proceeds are not applied to
the restoration of the related mortgaged property or released to the related
mortgagor in accordance with the master servicer's normal servicing procedures.

         The "Insured Payment," if any, for any distribution date is calculated
as described under "Credit Enhancement--The Certificate Insurance Policy" below.
On any distribution date, the certificate insurer will not make an Insured
Payment in respect of an Overcollateralized Amount that is less than zero with
respect to either Certificate Group unless an OC Deficit exists on the related
distribution date. If on a distribution date one Certificate Group has an
Overcollateralized Amount less than zero and the other Certificate Group does
not, after giving effect to all payments on that distribution date other than
any Insured Payment, then any principal portion of any Insured Payment for that
distribution date will be included in the available funds of the Certificate
Group having the Overcollateralized Amount less than zero. If both Certificate
Groups have an Overcollateralized Amount less than zero, after giving effect to
all payments on that distribution date other than any Insured Payment, then any
principal portion of any Insured Payment for that distribution date will be
included in the available funds of each Certificate Group to the extent of and
in proportion to the amount necessary to eliminate that Certificate Group's
negative Overcollateralized Amount.

         The "Interest Distribution Amount" for any distribution date and the
offered certificates equals the amount of interest accrued during the related
Accrual Period on the Certificate Principal Balance of the class at the related
Pass-Through Rate, net of (x) the related prepayment interest shortfalls to the
extent not covered by the servicing fee and (y) related shortfalls resulting
from the Relief Act, plus any Interest Distribution Amount for that class
remaining unpaid from the previous distribution date.

         The "Interest Remittance Amount" for a loan group and any distribution
date is the aggregate amount of all scheduled interest payments due on the
mortgage loans in the related loan group during the related Due Period, which
were either collected or advanced, net of the related servicing fee, minus the
aggregate of the related prepayment interest shortfalls during the previous
calendar month to the extent not covered by application of the servicing fee.

         A "Liquidated Loan" is any defaulted mortgage loan that is finally
liquidated.


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         "Liquidation Proceeds" for any mortgage loan is all cash amounts
received either (a) through eminent domain or condemnation with respect to the
mortgaged property or (b) in connection with the liquidation of a defaulted
mortgage loan.

         The "loan balance" of any mortgage loan with respect to any date of
determination is the outstanding scheduled principal balance of the mortgage
loan calculated in accordance with the terms of the related mortgage note, after
giving effect to all payments of scheduled principal due on or prior to the date
of determination, whether or not received on the date of calculation, and all
payments of unscheduled principal received prior to the month of the date of
determination; provided, however, that the loan balance for any mortgage loan
that has been liquidated through foreclosure sale, trustee's sale, disposition
of the related REO property or taking of the related mortgaged property by
eminent domain shall be zero as of the end of the month in which the related
mortgage loan becomes liquidated and at all times thereafter.

         The "Loan Group Balance" for a loan group with respect to any date of
determination is the aggregate of the loan balances of all mortgage loans in the
loan group as of the date of determination.

         A "Master Servicer Termination Trigger Event" will occur if loss or
delinquency amounts are exceeded with respect to the mortgage loans, as
described in the pooling and servicing agreement.

         The "Maximum Pass-Through Rate" for the Class A-2 Certificates and any
distribution date is a rate per annum equal to the weighted average of the
Expense Adjusted Maximum Mortgage Rates on the then outstanding mortgage loans,
weighted based on their loan balances as of the first day of the calendar month
preceding the month in which the distribution date occurs multiplied by a
fraction, the numerator of which is 30 and the denominator of which is the
actual number of days elapsed in the related Accrual Period.

         The "Net WAC Cap" for the offered certificates and any distribution
date, subject in the case of the Class A-2 Certificates to adjustment based on
the actual number of days elapsed in the related Accrual Period, is a per annum
rate equal to:

o        the average of the mortgage rates of the related loan group as of the
         first day of the month preceding the month of the related distribution
         date or, in the case of the first distribution date, the closing date,
         weighted on the basis of the related loan balances as of the first day
         of the related prepayment period after application of payments due on
         or before the last day of the prepayment period whether or not
         received, MINUS

o        the sum of (i) the servicing fee rate, (ii) the administrative fee
         rate, (iii) the per annum rate at which the Premium Amount is
         calculated for the related Certificate Group multiplied by a fraction
         the numerator of which is the aggregate Certificate Principal Balance
         of the related Certificate Group and the denominator of which is the
         aggregate loan balance of the related mortgage loans, (iv) the per
         annum rate at which the premium to the PMI insurer is calculated
         multiplied by a fraction the numerator of which is the aggregate loan
         balance of the mortgage loans in the related loan group covered under
         the primary mortgage insurance policy and the denominator of which is
         the aggregate loan balance of the mortgage loans in the related loan
         group and (v) in the case of the Class A-2 Certificates, 0.50%.

         An "OC Deficiency Amount" for a Certificate Group and any distribution
date equals the amount, if any, by which the related OC Target Amount exceeds
the related Overcollateralized Amount


                                      S-68

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on the related distribution date, after giving effect to distributions in
respect of the related Basic Principal Distribution Amount on the related
distribution date.

         An "OC Deficit" exists for any distribution date if (a) the aggregate
Certificate Principal Balance of the offered certificates, after giving effect
to all distributions to be made thereon on the related distribution date,
exceeds (b) the sum of the Loan Group Balances on the last day of the
immediately preceding month.

         The "OC Release Amount" for a Certificate Group and any distribution
date is equal to the lesser of (x) the related Principal Remittance Amount for
the related distribution date and (y) the excess, if any, of (i) the related
Overcollateralized Amount for the related distribution date, assuming that 100%
of the related Principal Remittance Amount is applied as a principal payment on
the related Certificate Group on the related distribution date, over (ii) the
related OC Target Amount for the related distribution date.

         The "OC Stepdown Date" means the distribution date in December 2002.

         The "OC Target Amount" for a Certificate Group and any distribution
date is a specified level of overcollateralization determined in accordance with
the pooling and servicing agreement. The OC Target Amount for the group I
certificates will initially be 3.65% of the cut-off date loan balance, and the
OC Target Amount for the group II certificates will initially be 3.65% of the
cut-off date loan balance, in the case of each Certificate Group subject to
increase at any time and subject to decrease on or after the OC Stepdown Date,
in each case based upon the occurrence of the loss and delinquency triggers with
respect to the mortgage pool set forth in the pooling and servicing agreement.

         The "Original Certificate Principal Balance" for any class of
certificates is the Certificate Principal Balance of the class on the closing
date.

         The "Overcollateralized Amount" for a Certificate Group and any
distribution date is the amount, if any, by which (a) the related Loan Group
Balance on the last day of the immediately preceding month exceeds (b) the
aggregate Certificate Principal Balance of the class or classes in the related
Certificate Group as of the related distribution date after giving effect to
distributions of the related Basic Principal Distribution Amount to be made
thereon.

         The "Pass-Through Rate"with respect to the Class A-1 Certificates and
any distribution date on or before the Call Option Date, the lesser of (a) 8.30%
per annum and (b) the related Net WAC Cap. With respect to the Class A-1
Certificates and any Distribution Date after the Call Option Date, the lesser of
(a) 8.80% per annum and (b) the related Net WAC Cap.

         With respect to the Class A-2 Certificates and any distribution date on
or before the Call Option Date, the rate per annum equal to the lesser of (a)
one-month LIBOR plus 0.28% and (b) the related Net WAC Cap. With respect to the
Class A-2 Certificates and any Distribution Date after the Call Option Date, the
lesser of (a) one-month LIBOR plus 0.56% and (b) the related Net WAC Cap.

         The "Premium Amount" payable to the certificate insurer on any
distribution date equals one- twelfth of the product of (i) a per annum rate set
forth in the pooling and servicing agreement which may increase after an event
of default under the insurance agreement and (ii) the Certificate Principal
Balance of the offered certificates; provided, however, that for any
distribution date on which a Certificate Insurer Default has occurred and is
continuing, the Premium Amount will be zero.


                                      S-69

<PAGE>



         A "Principal Prepayment" is any mortgagor payment or other recovery of
principal on a mortgage loan that is received in advance of its scheduled due
date and is not accompanied by an amount representing scheduled interest due on
any date or dates in any month or months in or subsequent to the month of
prepayment.

         The "Principal Remittance Amount" means, with respect to each loan
group and any distribution date, the sum of:

o        each scheduled payment of principal collected or advanced on the
         mortgage loans by the master servicer that were due during the related
         due period,

o        the principal portion of all partial and full principal prepayments of
         the mortgage loans applied by the master servicer during the related
         prepayment period,

o        the principal portion of all related Liquidation Proceeds and Insurance
         Proceeds received during the related prepayment period,

o        that portion of the purchase price, representing principal of any
         repurchased mortgage loan, deposited during the related prepayment
         period, and

o        the principal portion of amounts required to be deposited in connection
         with shortfalls in the principal amount of replacement mortgage loans.

         A "Realized Loss" (i) with respect to a Liquidated Loan is an amount
equal to the portion of the loan balance remaining unpaid after application of
all amounts recovered, net of amounts reimbursable for related delinquency
advances, expenses and servicing fees towards interest and principal owing on
the mortgage loan and (ii) with respect to certain mortgage loans, the principal
balances or the scheduled payments of principal of which have been reduced in
connection with bankruptcy proceedings, is an amount equal to the amount of the
reduction.

         The "Reimbursement Amount" as of any distribution date is the amount of
all Insured Payments made by the certificate insurer under the certificate
insurance policy and other amounts owed to the certificate insurer under the
insurance agreement, together with interest thereon at the rate specified in the
insurance agreement, that have not been previously repaid as of that
distribution date.

         The "Unpaid Basis Risk Shortfall" with respect to the Class A-2
Certificates and any distribution date is an amount equal to the Basis Risk
Shortfall for the previous distribution date, PLUS the Unpaid Basis Risk
Shortfall for the previous distribution date, to the extent not paid on the
previous distribution date, PLUS interest accrued on the unpaid amount for the
most recently ended Accrual Period at the applicable Accrual Rate.

CALCULATION OF ONE-MONTH LIBOR

         On each "LIBOR determination date" which is the second LIBOR business
day preceding the commencement of each Accrual Period with respect to the Class
A-2 Certificates following the initial Accrual Period, the trust administrator
will determine "one-month LIBOR" which is the London interbank offered rate for
one-month United States dollar deposits as this rate appears on the Telerate
Page 3750, as of 11:00 a.m. London time on the LIBOR determination date. As used
in this section, "LIBOR business day" means a day on which banks are open for
dealing in foreign currency and exchange in London and New York City; "Telerate
Page 3750" means the display page currently so


                                      S-70

<PAGE>



designated on the Telerate Service or other page as may replace that page on
that service for the purpose of displaying comparable rates or prices. If that
rate does not appear on that page, the trust administrator will determine
one-month LIBOR, in the manner set forth in the pooling and servicing agreement,
on the basis of the rates at which one month United States dollar deposits are
offered by three major banks in the London interbank market as of 11:00 a.m.
London time on the LIBOR determination date.

         The establishment of one-month LIBOR on each LIBOR determination date
by the trust administrator and the trust administrator's calculation of the rate
of interest applicable to the Class A-2 Certificates for the related Accrual
Period will, absent manifest error, be final and binding.

CREDIT ENHANCEMENT

         THE CERTIFICATE INSURANCE POLICY. The following summary of the terms of
the certificate insurance policy does not purport to be complete and is
qualified in its entirety by reference to the certificate insurance policy. A
form of the certificate insurance policy may be obtained upon request from the
depositor.

         Simultaneously with the issuance of the offered certificates, the
certificate insurer will deliver the certificate insurance policy to the trust
administrator on behalf of the trustee for the benefit of the holders of the
offered certificates. Under the certificate insurance policy, the certificate
insurer will irrevocably and unconditionally guarantee to the trustee on each
distribution date for the benefit of the holders of the offered certificates,
the full and complete payment of Insured Payments with respect to the offered
certificates, calculated in accordance with the original terms of the applicable
offered certificates when issued and without regard to any amendment or
modification of the applicable offered certificates or the pooling and servicing
agreement, except amendments or modifications to which the certificate insurer
has given its prior written consent. "Insured Payments" with respect to any
distribution date shall mean the sum of (i) any shortfall, other than prepayment
interest shortfalls not covered by the servicing fee and shortfalls resulting
from application of the Relief Act, in amounts available in the certificate
account to pay the Interest Distribution Amount on the offered certificates for
the related distribution date and (ii) any OC Deficit, calculated using
available funds only. The certificate insurance policy does not cover prepayment
interest shortfalls, shortfalls resulting from application of the Relief Act or
adjustments in the Pass-Through Rate on any class of offered certificates
resulting from application of the related Net WAC Cap.

         Payment of claims on the certificate insurance policy made in respect
of an Insured Payment will be made by the certificate insurer following receipt
by the certificate insurer of the appropriate notice for payment on the later to
occur of (i) 12:00 noon New York City time, on the second business day following
receipt of the notice for payment and (ii) 12:00 noon New York City time, on the
date on which the payment was due on the related offered certificates.

         If payment of any principal or current interest on any offered
certificates is avoided as a preference payment under applicable bankruptcy,
insolvency, receivership or similar law, the certificate insurer will cause that
amount to be paid on the later of (a) the date when due to be paid under the
order referred to in this paragraph or (b) the first to occur of (i) the fourth
business day following receipt by the certificate insurer from the trust
administrator on behalf of the trustee of:

(A)      a certified copy of the order of the court or other governmental body
         which exercised jurisdiction to the effect that the holder of an
         offered certificate is required to return the amount of any interest or
         principal payment distributed with respect to the related offered
         certificates during the


                                      S-71

<PAGE>



         term of the certificate insurance policy because the distributions were
         avoidable as preference payments under applicable bankruptcy law,

(B)      a certificate of the holders of the offered certificate that the order
         has been entered and is not subject to any stay and

(C)      an assignment duly executed and delivered by the holder of the offered
         certificate, in a form as is reasonably required by the certificate
         insurer and provided to the holder of the offered certificate by the
         certificate insurer, irrevocably assigning to the certificate insurer
         all rights and claims of the holder of the offered certificate relating
         to or arising under the related offered certificates against the debtor
         which made the preference payment or otherwise with respect to the
         preference payment,

or (ii) the date of receipt by the certificate insurer from the trust
administrator of the items referred to in clauses (A), (B) and (C) above if, at
least four business days prior to the date of receipt, the certificate insurer
shall have received written notice from the trust administrator on behalf of the
trustee that the items were to be delivered on that date and that date was
specified in the notice. The payments described in this paragraph shall be
disbursed to the receiver, conservator, debtor-in-possession or trustee in
bankruptcy named in the order and not to the trustee, the trust administrator or
any holder of an offered certificate directly. However, if a holder of the
offered certificate has previously paid the amount of any preference payment
covered under the certificate insurance policy to the receiver, conservator,
debtor-in- possession or trustee in bankruptcy named in the order, then the
payments described in this paragraph shall be disbursed to the trust
administrator on behalf of the trustee for distribution to that holder of the
offered certificate upon proof of payment reasonably satisfactory to the
certificate insurer.

         The terms "receipt" and "received" with respect to the certificate
insurance policy shall mean actual delivery to the certificate insurer and to
its fiscal agent appointed by the certificate insurer at its option, if any,
prior to 12:00 noon, New York City time, on a business day; delivery either on a
day that is not a business day or after 12:00 noon, New York City time, shall be
deemed to be received on the next succeeding business day. If any notice or
certificate given under the certificate insurance policy by the trust
administrator on behalf of the trustee is not in proper form or is not properly
completed, executed or delivered, it shall be deemed not to have been received,
and the certificate insurer or the fiscal agent shall promptly so advise the
trust administrator on behalf of the trustee and the trust administrator on
behalf of the trustee may submit an amended notice.

         Under the certificate insurance policy, "business day" means any day
other than (i) a Saturday or Sunday or (ii) a day on which banking institutions
in New York or California or any other city in which the principal office of any
successor master servicer, the trust administrator or successor trust
administrator or trustee or successor trustee are authorized or obligated by
law, executive order or governmental decree to be closed.

         The certificate insurer's obligations under the certificate insurance
policy in respect of Insured Payments shall be discharged to the extent funds
are transferred to the trust administrator on behalf of the trustee as provided
in the certificate insurance policy, whether or not these funds are properly
applied by the trust administrator on behalf of the trustee.

         The certificate insurer will be subrogated to the rights of each
certificateholder to receive payments of principal and interest on the offered
certificates to the extent of any payment by the certificate insurer under the
certificate insurance policy. For a description of the rights and powers of the
certificate insurer upon an event of default or a Master Servicer Termination
Trigger Event under the


                                      S-72

<PAGE>



pooling and servicing agreement, see "The Pooling and Servicing
Agreement--Voting Rights" in this prospectus supplement.

         Claims under the certificate insurance policy constitute direct,
unsecured and unsubordinated obligations of the certificate insurer ranking not
less than PARI PASSU with other unsecured and unsubordinated indebtedness of the
certificate insurer for borrowed money. Claims against the certificate insurer
under the certificate insurance policy and claims against the certificate
insurer under each other financial guaranty insurance policy issued thereby
constitute pari passu claims against the general assets of the certificate
insurer. The terms of the certificate insurance policy cannot be modified,
altered or affected by any other agreement or instrument, or by the merger,
consolidation or dissolution of the depositor. The certificate insurance policy
by its terms may not be canceled or revoked prior to payment in full of the
offered certificates. The certificate insurance policy is governed by the laws
of the State of New York.

         The certificate insurance policy is not covered by the
Property/Casualty Insurance Security fund specified in Article 76 of the New
York Insurance Law.

         To the fullest extent permitted by applicable law, the certificate
insurer agrees under the certificate insurance policy not to assert, and waives,
for the benefit of each holder of offered certificates, all its rights, whether
by counterclaim, setoff or otherwise, and defenses, including, without
limitation, the defense of fraud, whether acquired by subrogation, assignment or
otherwise, to the extent that these rights and defenses may be available to the
certificate insurer to avoid payment of its obligations under the certificate
insurance policy in accordance with the express provisions of the certificate
insurance policy.

         Under the terms of the pooling and servicing agreement, unless a
Certificate Insurer Default exists, the certificate insurer shall be deemed to
be the holder of the certificates for certain purposes, other than with respect
to payment on the certificates, and will be entitled to exercise all rights of
the certificateholders thereunder, without the consent of the holders, and the
certificateholders may exercise their rights only with the prior written consent
of the certificate insurer. In addition, the certificate insurer will have
additional rights as third party beneficiary to the pooling and servicing
agreement. Provided no Certificate Insurer Default has occurred and is
continuing, the certificate insurer shall have the right to direct many of the
actions of the master servicer and trust administrator.

         The depositor, the seller, the master servicer and the certificate
insurer will enter into an insurance agreement under which the seller and the
master servicer will agree, to the extent described in the second succeeding
sentence below, to reimburse, with interest, the certificate insurer for amounts
paid pursuant to claims under the certificate insurance policy. The parties to
the insurance agreement will further agree to pay the certificate insurer all
reasonable charges and expenses which the certificate insurer may pay or incur
relative to any amounts paid under the certificate insurance policy or otherwise
in connection with the transaction and to indemnify the certificate insurer
against certain liabilities. Amounts owing by the depositor, the seller and
master servicer under the insurance agreement will be payable solely from the
trust fund. An event of default by the depositor, the seller or the master
servicer under the insurance agreement will constitute an event of default by
the master servicer under the pooling and servicing agreement and allow the
certificate insurer among other things, to direct the trustee to terminate the
master servicer. An "event of default" under the insurance agreement includes:

o        failure to pay when due any amount owed under the insurance agreement
         or other documents;




                                      S-73

<PAGE>



o        the depositor's, the seller's or the master servicer's untruth or
         incorrectness in any material respect of any representation or warranty
         in the insurance agreement, the pooling and servicing agreement or
         other documents;

o        the depositor's, the seller's or the master servicer's failure to
         perform or to observe any covenant or agreement in the insurance
         agreement, the pooling and servicing agreement or other documents,

o        the depositor's, the seller's or master servicer's failure to pay its
         debts or the occurrence of events of insolvency or bankruptcy with
         respect to the depositor, the seller or the master servicer,

o        the occurrence of an event of default under the pooling and servicing
         agreement or other documents and

o        the failure of the mortgage loans to meet certain performance tests.

         OVERCOLLATERALIZATION. The weighted average of the mortgage rates for
the mortgage loans in each loan group, net of trust expenses, is expected to be
higher than the Pass-Through Rate on the certificates in the related Certificate
Group. As a result, interest collections on the mortgage loans, together with
the prepayment premiums collected from mortgagors, are expected to be generated
in excess of the amount of interest payable to the holders of the offered
certificates and the fees and expenses of the trust. This excess interest
generated by the mortgage loans will be applied initially to absorb realized
losses on the mortgage loans and to make principal distributions on the Class A
Certificates to the extent necessary to maintain overcollateralization at the
required level. As of the closing date, with respect to each Certificate Group,
the amount of overcollateralization required by the pooling and servicing
agreement shall be satisfied.

         The pooling and servicing agreement provides that, subject to floors,
caps and triggers, the required level of overcollateralization may increase or
decrease over time. Any decrease in the required level of overcollateralization
below that provided for in the pooling and servicing agreement will occur at the
sole discretion of the certificate insurer. Any decrease in the required level
of overcollateralization will have the effect of reducing amounts that otherwise
would have been distributable to holders of the offered certificates.
Furthermore, the pooling and servicing agreement provides that the certificate
insurer shall have the right to waive, in its sole discretion and without the
consent of the certificateholders, the overcollateralization requirements with
respect to any distribution date.

         CROSSCOLLATERALIZATION. Available funds with respect to one loan group
may be available to make distributions with respect to the offered certificates
relating to the other loan group, as described above under "--Allocation of
Available Funds" in this prospectus supplement.

                  YIELD, MATURITY AND PREPAYMENT CONSIDERATIONS

GENERAL

         The rate of principal payments, the aggregate amount of distributions
and the yield to maturity of the offered certificates will be related to the
rate and timing of payments of principal on the mortgage loans and the rate and
timing of Realized Losses on the mortgage loans. The rate of principal payments
on the mortgage loans will in turn be affected by the amortization schedules of
the mortgage loans and by the rate of Principal Prepayments, including for this
purpose Principal Prepayments resulting from refinancing, liquidations of the
mortgage loans due to defaults, casualties or condemnations and


                                      S-74

<PAGE>



purchases by the master servicer or repurchases by the seller. Approximately
58.62% of the mortgage loans in loan group I and approximately 77.57% of the
mortgage loans in loan group II, in each case, by aggregate cut-off date
principal balance, contain prepayment premium provisions. The rate of principal
payments for the mortgage loans containing prepayment premium provisions may or
may not be less than the rate of principal payments for mortgage loans that did
not contain prepayment premium provisions. Under some circumstances, the master
servicer may waive the payment of any otherwise applicable prepayment premium.
Investors should conduct their own analysis of the effect, if any, that the
prepayment premiums, and decisions by the master servicer with respect to the
waiver of prepayment premiums, may have on the prepayment performance of the
mortgage loans. The mortgage loans are subject to the "due-on-sale" provisions
included in the terms of the related mortgage notes.

         Prepayments, liquidations and purchases of the mortgage loans,
including any optional purchase, will result in distributions in respect of
principal on the offered certificates which would otherwise be distributed over
the remaining terms of the mortgage loans. Since the rates of payment of
principal on the mortgage loans will depend on future events and a variety of
other factors, no assurance can be given as to that rate or the rate of
principal prepayments. The extent to which the yield to maturity of the offered
certificates may vary from the anticipated yield will depend upon the degree to
which the offered certificates are purchased at a discount or premium, and the
degree to which the timing of payments on the class of offered certificates is
sensitive to prepayments, liquidations and purchases of the mortgage loans.
Further, an investor should consider the risk that, in the case of any offered
certificate purchased at a discount, a slower than anticipated rate of principal
payments (including prepayments) on the mortgage loans could result in an actual
yield to that investor that is lower than the anticipated yield. In the case of
any offered certificate purchased at a premium, a faster than anticipated rate
of principal payments on the mortgage loans could result in an actual yield to
that investor that is lower than the anticipated yield.

         It is highly unlikely that the mortgage loans will prepay at any
constant rate until maturity or that all of the mortgage loans will prepay at
the same rate. Moreover, the timing of prepayments on the mortgage loans may
significantly affect the yield to maturity on the offered certificates, even if
the average rate of principal payments experienced over time is consistent with
an investor's expectation. In most cases, the earlier a prepayment of principal
is made on the mortgage loans, the greater the effect on the yield to maturity
of the offered certificates. As a result, the effect on an investor's yield of
principal payments occurring at a rate higher or lower than the rate anticipated
by the investor during the period immediately following the issuance of the
offered certificates would not be fully offset by a subsequent like reduction or
increase in the rate of principal payments.

         The rate of principal payments, including prepayments, on pools of
mortgage loans may vary significantly over time and may be influenced by changes
in borrowers' housing needs, job transfers, unemployment, borrowers' net equity
in the mortgaged properties and servicing decisions. If prevailing interest
rates were to fall significantly below the mortgage rates on the mortgage loans,
the mortgage loans could be subject to higher prepayment rates than if
prevailing interest rates were to remain at or above the mortgage rates on the
mortgage loans. Conversely, if prevailing interest rates were to rise
significantly, the rate of prepayments on the mortgage loans could decrease. The
mortgage loans may be subject to a greater rate of Principal Prepayments in a
low interest rate environment. The prepayment experience of the delayed first
adjustment mortgage loans may differ from that of the other mortgage loans. The
delayed first adjustment mortgage loans may be subject to greater rates of
prepayments as they approach their initial adjustment dates even if market
interest rates are only slightly higher or lower than the mortgage rates on the
delayed first adjustment mortgage loans as borrowers seek to avoid changes in
their monthly payments. In addition, the existence of the applicable periodic
rate cap, maximum mortgage rate and minimum mortgage rate may affect the
likelihood of prepayments resulting


                                      S-75

<PAGE>



from refinancings. There can be no certainty as to the rate of prepayments on
the mortgage loans in the mortgage pool during any period or over the life of
the certificates.

         Defaults on mortgage loans may occur with greater frequency in their
early years. In addition, default rates may be higher for mortgage loans used to
refinance an existing mortgage loan. In the event of a mortgagor's default on a
mortgage loan in the mortgage pool, there can be no assurance that recourse will
be available beyond the specific mortgaged property pledged as security for
repayment. See "The Mortgage Pool--Underwriting Standards of the Originator and
Representations Concerning the Mortgage Loans" in this prospectus supplement.

         Except as described under "Description of the Certificates--Allocation
of Available Funds" in this prospectus supplement, principal distributions on
the Group I Certificates relate to principal payments on the mortgage loans in
loan group I, and principal distributions on the Group II Certificates relate to
principal payments on the mortgage loans in loan group II.

SPECIAL YIELD CONSIDERATIONS

         The Pass-Through Rate on the Class A-1 Certificates is the rate set
forth in the table in the summary of this prospectus supplement, subject to the
Net WAC Cap. The interest due on the mortgage loans during any due period may
not be greater than or equal to the amount of interest that would accrue at that
Pass-Through Rate during the related Accrual Period, potentially resulting in
the application of the Net WAC Cap on the Class A-1 Certificates, which would
adversely affect the yield to maturity on the Class A-1 Certificates.

         The mortgage rates on the adjustable-rate mortgage loans adjust
semi-annually, subject to periodic and lifetime limitations, based upon
six-month LIBOR, after an initial period of two or three years with respect to
delayed first adjustment mortgage loans. The Pass-Through Rate on the Class A-2
Certificates adjust monthly based upon one-month LIBOR determined as described
under "Description of the Certificates--Calculation of One-Month LIBOR" in this
prospectus supplement, with the result that increases in the Pass-Through Rate
on the Class A-2 Certificates may be limited for extended periods in a rising
interest rate environment. Investors should note that approximately 98.52% of
the adjustable-rate mortgage loans, by aggregate cut-off date principal balance,
are delayed first adjustment mortgage loans. The interest due on the mortgage
loans during any due period, net of the expenses of the trust, may not equal the
amount of interest that would accrue at one-month LIBOR plus the applicable
spread on the Class A-2 Certificates during the related Accrual Period. In
addition, six-month LIBOR and one-month LIBOR may respond differently to
economic and market factors. Thus, it is possible, for example, that if both
one-month LIBOR and six-month LIBOR rise during the same period, one-month LIBOR
may rise more rapidly than six-month LIBOR, potentially resulting in the
application of the Net WAC Cap on the Class A-2 Certificates. Application of the
Net WAC Cap would adversely affect the yield to maturity on the Class A-2
Certificates,

         The holders of the Class A-1 Certificates WILL NOT be entitled to
interest in excess of the Net WAC Cap on any future distribution date. The
holders of the Class A-2 Certificates will be entitled to interest in excess of
the Net WAC Cap, but only after the required payments set forth under
"Description of the Certificates--Allocation of Available Funds" in this
prospectus supplement. In addition, mortgage loans with high mortgage rates may
prepay faster than mortgage loans with lower mortgage rates and the Net WAC Cap
will be reduced by the prepayment of mortgage loans with higher mortgage rates.


                                      S-76

<PAGE>

DELAY IN DISTRIBUTIONS ON THE CLASS A-1 CERTIFICATES

         The effective yield to holders of the Class A-1 Certificates will be
less than the yield otherwise produced by their respective Pass-Through Rate and
purchase prices because (i) on the first distribution date one month's interest
is payable thereon even though 54 days will have elapsed from the date on which
interest begins to accrue thereon, (ii) on each succeeding distribution date the
interest payable thereon is the interest accrued during the month preceding the
month of the related distribution date, which ends 24 days prior to the related
distribution date and (iii) during each Accrual Period, other than the first
Accrual Period, interest accrues on a Certificate Principal Balance that may be
less than the Certificate Principal Balance of the Class A-1 Certificates
actually outstanding for the first 24 days of the related Accrual Period.

SHORTFALLS IN COLLECTIONS OF INTEREST

         When a principal prepayment in full is made on a mortgage loan, the
mortgagor is charged interest only for the period from the due date of the
preceding monthly payment up to the date of the prepayment, instead of for a
full month. When a partial principal prepayment is made on a mortgage loan, the
mortgagor is not charged interest on the amount of the prepayment for the month
in which the prepayment is made. In addition, the application of the Relief Act,
to any mortgage loan will adversely affect, for an indeterminate period of time,
the ability of the master servicer to collect full amounts of interest on
mortgage loans affected by application of the Relief Act. The master servicer is
obligated to pay from its own funds only those interest shortfalls attributable
to full and partial prepayments by the mortgagors on the mortgage loans, but
only to the extent of its aggregate servicing fee for the related due period.
Accordingly, the effect of:

o        any principal prepayments on the mortgage loans, to the extent that
         prepayment interest shortfalls exceed compensating interest paid by the
         master servicer or

o        any shortfalls resulting from the application of the Relief Act

will be to reduce the aggregate amount of interest collected that is available
for distribution to certificateholders. The certificate insurance policy will
not cover any shortfalls resulting from the application of the Relief Act.

         Furthermore, an Insured Payment will only be made to the extent of any
OC Deficit. Therefore, if the overcollateralized amount is less than zero with
respect to a class of offered certificates without the occurrence of an OC
Deficit, the yield on such class of offered certificates may be negatively
affected.

WEIGHTED AVERAGE LIVES

         The timing of changes in the rate of Principal Prepayments on the
mortgage loans may significantly affect an investor's actual yield to maturity,
even if the average rate of Principal Prepayments is consistent with the
investor's expectation. In most cases, the earlier a Principal Prepayment on the
mortgage loans occurs, the greater the effect of the Principal Prepayment on an
investor's yield to maturity. The effect on an investor's yield of Principal
Prepayments occurring at a rate faster or slower than the rate anticipated by
the investor during the period immediately following the issuance of the offered
certificates may not be fully offset by a subsequent decrease or increase in the
rate of Principal Prepayments.


                                      S-77

<PAGE>



         The weighted average life of a class of the offered certificates is the
average amount of time that will elapse from the closing date until each dollar
of principal is scheduled to be repaid to the investors in that class of offered
certificates. The weighted average life of the offered certificates will be
influenced by the rate at which principal on the mortgage loans is paid, which
may be in the form of scheduled payments or Principal Prepayments, including
repurchases and prepayments of principal by the borrower as well as amounts
received by virtue of condemnation, insurance or foreclosure with respect to the
mortgage loans, and the timing thereof.

         The "assumed final maturity date" for each class of the offered
certificates is as set forth in this prospectus supplement under "Description of
the Certificates--General". The assumed final maturity date for the offered
certificates is the date on which the Original Certificate Principal Balance for
that class less all amounts distributed to the related certificateholders on
account of principal would be reduced to zero, assuming in addition to other
assumptions that no prepayments are received on the mortgage loans, scheduled
monthly payments of principal of and interest on each of the mortgage loans are
timely received and no excess cashflow is used to make accelerated payments of
principal to the certificateholders of the offered certificates. The final
distribution date with respect to most classes of the offered certificates could
occur significantly earlier than the related assumed final maturity date
because:

o        principal Prepayments are likely to occur,

o        excess cashflow, if any, may be applied as principal of the offered
         certificates as described in this prospectus supplement,

o        the OC Target Amount may change as described in the prospectus
         supplement and

o        the master servicer may purchase all of the mortgage loans on or after
         the Call Option Date.

         The model used in this prospectus supplement with respect to the
mortgage loans is the prepayment assumption which represents an assumed rate of
prepayment each month relative to the then outstanding principal balance of a
pool of mortgage loans for the life of the mortgage loans. With respect to the
group I mortgage loans and the fixed-rate group II mortgage loans in the trust
fund, the prepayment assumption assumes constant prepayment rates of 4% per
annum of the then outstanding principal balance of the mortgage loans in the
first month of the life of the mortgage loans and an additional approximately
1.45455% per annum, or 16% divided by 11, in each month thereafter until the
twelfth month. Beginning in the twelfth month and in each month thereafter
during the life of the mortgage loans, the prepayment assumption assumes a
constant prepayment rate of 20% per annum. With respect to the adjustable-rate
group II mortgage loans in the trust fund, the prepayment assumption assumes
constant prepayment rates of 4% per annum of the then outstanding principal
balance of the mortgage loans in the first month of the life of the mortgage
loans and an additional approximately 1.47619% per annum, or 31% divided by 21,
in each month thereafter until the 22nd month. Beginning in the 22nd month and
in each month thereafter during the life of the mortgage loans, the prepayment
assumption assumes a constant prepayment rate of 35% per annum. As used in the
table below, 0% prepayment assumption assumes prepayment rates equal to 0% of
the prepayment assumption. Correspondingly, 200% prepayment assumption assumes
prepayment rates equal to 200% of the prepayment assumption and so forth.

         Each of the prepayment scenarios set forth in the table entitled
"Prepayment Scenarios" assumes the percentage of the prepayment assumption
described thereunder. For example, Prepayment Scenario V assumes 110% of the
prepayment assumption with respect to the group I mortgage loans and the fixed-


                                      S-78

<PAGE>



rate group II mortgage loans in the trust fund and 100% of the prepayment
assumption with respect to the adjustable-rate group II mortgage loans.

         The tables entitled "Percent of Original Certificate Principal Balance
Outstanding" were prepared on the basis of the assumptions in the following
paragraph and the tables set forth below. There are differences between the loan
characteristics included in these assumptions and the characteristics of the
actual mortgage loans. Any discrepancy of this kind may have an effect upon the
percentages of Original Certificate Principal Balances outstanding and weighted
average lives of the offered certificates set forth in those tables. In
addition, since the actual mortgage loans in the trust fund will have
characteristics that differ from those assumed in preparing the tables set forth
below, the distributions of principal of the offered certificates may be made
earlier or later than indicated in the tables.

         The percentages and weighted average lives in the tables entitled
"Percent of Original Certificate Principal Balance Outstanding" were determined
assuming that:

o        the mortgage loans consist of sub-pools of mortgage loans with cut-off
         date loan balances, mortgage rates, original and remaining terms to
         stated maturity and remaining prepayment premium terms as set forth in
         the table below;

o        the closing date for the offered certificates occurs on June 29, 2000
         and the offered certificates were sold to investors by the underwriters
         on the closing date;

o        distributions on the offered certificates are made on the 25th day of
         each month regardless of the day on which the distribution date
         actually occurs, commencing in July 2000, in accordance with the
         priorities described in this prospectus supplement;

o        the prepayment rates with respect to the mortgage loans are a multiple
         of the prepayment assumption as stated in the "Prepayment Scenarios"
         table below;

o        prepayments include thirty days' interest thereon;

o        the originator does not substitute or repurchase any of the mortgage
         loans under the mortgage loan purchase agreement and no optional
         termination is exercised by the master servicer, except with respect to
         the entries identified by the row heading "Weighted Average Life
         (years) to Call Option Date" in the tables below;

o        the OC Target Amount is set initially as specified in the pooling and
         servicing agreement and thereafter decreases in accordance with the
         provisions of the pooling and servicing agreement;

o        scheduled payments for all mortgage loans are received on the first day
         of each month, the principal portion of each scheduled payment is
         computed prior to giving effect to prepayments received in a month and
         there are no losses or delinquencies with respect to the mortgage
         loans;

o        all the mortgage loans prepay at the same rate and all prepayments are
         treated as prepayments in full of individual mortgage loans, with no
         shortfalls in collection of interest;

o        prepayments are received on the last day of each month commencing in
         June 2000;




                                      S-79

<PAGE>



o        prepayments that occur prior to the expiration of the term of the
         applicable prepayment premium provision are accompanied by a prepayment
         premium equal to 100% of four to six months' interest on 80% of the
         portion of the loan balance prepaid;

o        no reinvestment income from any account is available for distribution;

o        for each distribution date, one-month LIBOR is 6.67375% per annum,
         six-month LIBOR is 6.93125% per annum, the rate at which the Premium
         Amount is calculated for each Certificate Group at the rate set forth
         in the pooling and servicing agreement, the servicing fee rate is 0.50%
         per annum, the premium payable to the PMI insurer is 1.48% per annum
         with respect to those loans covered by the primary mortgage insurance
         policy and the administrative fee rate is 0.013% per annum.

         Nothing contained in the foregoing assumptions should be construed as a
representation that the mortgage loans will not experience delinquencies or
losses.

<TABLE>
<CAPTION>
                                               PREPAYMENT SCENARIOS

==========================================================================================================================
                                           Scenario  Scenario  Scenario  Scenario  Scenario  Scenario  Scenario   Scenario
Mortgage Loan:     Prepayment Scenario:       I         II       III        IV        V         VI        VII       VIII
--------------------------------------------------------------------------------------------------------------------------
<S>                <C>                      <C>       <C>       <C>       <C>      <C>       <C>        <C>       <C>
                   % of the Prepayment
Fixed-Rate         Assumption                 0         35        60        90       110       140        175       200
==========================================================================================================================
                   % of the Prepayment
Adjustable-Rate    Assumption                 0         25        50        75       100       125        150       175
==========================================================================================================================
</TABLE>

         Based on the foregoing assumptions, the following tables set forth the
percentages of the Original Certificate Principal Balance of each class that
would be outstanding after each of the dates shown, at various Prepayment
Scenarios, and the corresponding weighted average lives of each class of offered
certificates.


                                      S-80

<PAGE>

<TABLE>
<CAPTION>
                                                      ASSUMED MORTGAGE LOAN SUB-POOLS

                                       Original    Remaining
                                        Term to     Term to     Original
         Cut-off Date                   Stated      Stated     Amortized                Maximum      Minimum       Next
 Sub-    Loan Balance     Mortgage     Maturity    Maturity       Term       Gross      Mortgage     Mortgage   Adjustment
 Pool        ($)            Rate       (Months)    (Months)     (Months)     Margin       Rate         Rate        Date
 ----        ---            ----       --------    --------     --------     ------       ----         ----        ----
<S>      <C>             <C>           <C>         <C>         <C>           <C>        <C>          <C>        <C>
LOAN GROUP I:
     1   $   340,785.91   9.82446%       255         253          255          NA          NA           NA          NA
     2   $ 3,332,232.34  10.82321%       360         358          360          NA          NA           NA          NA
     3   $   109,194.62   8.99000%       120         116          120          NA          NA           NA          NA
     4   $   949,459.96  10.11374%       180         177          180          NA          NA           NA          NA
     5   $   461,423.62  10.25197%       262         259          262          NA          NA           NA          NA
     6   $14,500,719.90  10.13944%       360         357          360          NA          NA           NA          NA
     7   $   151,940.05  11.18666%       120         117          120          NA          NA           NA          NA
     8   $ 6,446,688.37  11.12423%       180         178          180          NA          NA           NA          NA
     9   $ 2,931,793.67  10.94902%       243         240          243          NA          NA           NA          NA
    10   $22,635,946.63  11.31321%       360         357          360          NA          NA           NA          NA
    11   $ 1,598,210.84  10.82128%       120         117          120          NA          NA           NA          NA
    12   $ 2,547,686.74  10.83003%       180         177          180          NA          NA           NA          NA
    13   $ 2,023,319.44  11.08104%       244         241          244          NA          NA           NA          NA
    14   $32,163,435.87  10.76109%       360         357          360          NA          NA           NA          NA
    15   $   133,018.76  11.25497%       120         116          120          NA          NA           NA          NA
    16   $    45,552.52  12.99000%       180         176          360          NA          NA           NA          NA

LOAN GROUP II:
     1   $    86,329.04  11.99000%       360         358          360          NA          NA           NA          NA
     2   $    44,700.36  11.00000%       180         177          180          NA          NA           NA          NA
     3   $    51,115.53  10.79000%       240         237          240          NA          NA           NA          NA
     4   $   522,908.87  10.29350%       360         358          360          NA          NA           NA          NA
     5   $   407,531.77  10.24214%       180         178          180          NA          NA           NA          NA
     6   $    82,231.16   9.55373%       271         268          271          NA          NA           NA          NA
     7   $   867,970.09  10.53344%       360         357          360          NA          NA           NA          NA
     8   $    34,480.19  11.90000%       120         117          120          NA          NA           NA          NA
     9   $   208,099.47  10.43751%       180         177          180          NA          NA           NA          NA
    10   $   245,867.06  11.59775%       240         236          240          NA          NA           NA          NA
    11   $   986,436.69  11.25605%       360         357          360          NA          NA           NA          NA
    12   $    49,208.33  11.65226%       120         117          120          NA          NA           NA          NA

    13   $ 6,198,080.04  10.63034%       360         357          360       5.90893%    17.53002%    10.63034%      21
    14   $   333,721.02   9.81000%       360         359          360       6.06633%    16.81000%     9.81000%      35
    15   $   746,304.19   9.85127%       360         358          360       5.85463%    16.85127%     9.85127%       4
    16   $37,869,229.26  10.10301%       360         358          360       5.89627%    17.10301%    10.10301%      22
    17   $ 2,162,663.73  10.18881%       360         358          360       5.80701%    17.18881%    10.18881%      34
    18   $   111,472.43   8.80000%       360         358          360       5.75000%    15.80000%     8.80000%       4
    19   $   475,101.03   9.85441%       180         177          180       6.26258%    16.85441%     9.85441%      21
    20   $17,059,890.02  11.38575%       360         358          360       6.27389%    18.38154%    11.38575%      22
    21   $   143,437.33   9.55322%       180         179          180       5.97955%    16.55322%     9.55322%      35
    22   $ 1,425,881.62  10.61716%       360         359          360       6.39823%    17.59263%    10.61716%      35
    23   $   167,851.37  10.59001%       360         358          360       5.95003%    17.59001%    10.59001%       4
    24   $     9,937.89  11.75000%       180         177          180       5.75000%    18.75000%    11.75000%       3
    25   $   435,011.42   9.01023%       180         178          180       5.84615%    16.01023%     9.01023%      22
    26   $51,317,087.02  10.65294%       360         358          360       6.36016%    17.65002%    10.65294%      22
    27   $    64,736.41   9.35000%       180         170          180       7.00000%    16.35000%     9.35000%      26
    28   $ 2,086,314.17  10.65311%       360         358          360       6.37505%    17.65311%    10.65311%      34
    29   $   762,700.38  11.21809%       360         358          360       6.53716%    18.21809%    11.21809%       4
</TABLE>


                                                                       Prepay-
                                                          Remaining      ment
                       Initial     Subsequent   Number    Prepayment    Months
 Sub-    Adjustment    Periodic     Periodic      of         Term        of
 Pool     Frequency    Rate Cap     Rate Cap    Loans      (Months)    Interest
 ----     ---------    --------     --------    -----      --------    --------

LOAN GROUP I:
     1       NA           NA           NA           4            0          0
     2       NA           NA           NA          31            0          0
     3       NA           NA           NA           1            0          0
     4       NA           NA           NA          13           45          6
     5       NA           NA           NA           5           46          4
     6       NA           NA           NA         131           49          5
     7       NA           NA           NA           2           57          6
     8       NA           NA           NA         126            0          0
     9       NA           NA           NA          56            0          0
    10       NA           NA           NA         333            0          0
    11       NA           NA           NA          39            0          0
    12       NA           NA           NA          52           53          5
    13       NA           NA           NA          34           53          5
    14       NA           NA           NA         347           49          5
    15       NA           NA           NA           4           45          6
    16       NA           NA           NA           1           56          6

LOAN GROUP II:
     1       NA           NA           NA           1            0          0
     2       NA           NA           NA           1           57          6
     3       NA           NA           NA           1           57          6
     4       NA           NA           NA           6           40          5
     5       NA           NA           NA          10            0          0
     6       NA           NA           NA           2            0          0
     7       NA           NA           NA          16            0          0
     8       NA           NA           NA           1            0          0
     9       NA           NA           NA           6           53          5
    10       NA           NA           NA           4           48          6
    11       NA           NA           NA          19           49          4
    12       NA           NA           NA           2           44          4

    13        6        1.46849%     1.44351%       52            0          0
    14        6        1.50000%     1.50000%        3            0          0
    15        6        1.50000%     1.50000%        4            0          0
    16        6        1.51775%     1.49485%      257           22          6
    17        6        1.50000%     1.50000%       12           34          6
    18        6        1.50000%     1.50000%        1           34          6
    19        6        1.50000%     1.50000%       10            0          0
    20        6        1.55080%     1.47456%      188            0          0
    21        6        1.50000%     1.50000%        3            0          0
    22        6        1.53679%     1.48774%       13            0          0
    23        6        1.10002%     1.10002%        2            0          0
    24        6        1.50000%     1.50000%        1           21          6
    25        6        1.76539%     1.41154%        5           24          6
    26        6        1.51127%     1.48676%      476           22          6
    27        6        1.50000%     1.50000%        1           26          6
    28        6        1.50723%     1.49277%       14           35          6
    29        6        1.50000%     1.50000%        8           24          4


                                      S-81

<PAGE>

<TABLE>
<CAPTION>
                              PERCENT OF ORIGINAL CERTIFICATE PRINCIPAL BALANCE OUTSTANDING*

                                                        CLASS A-1
                           ----------------------------------------------------------------------------------------------
                           Scenario    Scenario     Scenario   Scenario    Scenario     Scenario    Scenario   Scenario
Distribution Date              I          II          III         IV           V           VI          VII       VIII
-------------------------------------------------------------------------------------------------------------------------
<S>                        <C>         <C>          <C>        <C>         <C>          <C>         <C>        <C>
Initial Percentage........   100%        100%         100%       100%        100%         100%        100%       100%
June 25, 2001.............    99          93           89         85          81           76          71         67
June 25, 2002.............    98          86           77         68          62           53          44         38
June 25, 2003.............    97          78           67         54          47           38          29         23
June 25, 2004.............    95          72           58         44          36           27          18         14
June 25, 2005.............    94          65           49         35          28           19          12          8
June 25, 2006.............    92          59           43         28          21           13           7          5
June 25, 2007.............    90          54           37         23          16            9           5          2
June 25, 2008.............    88          49           32         18          12            7           3          1
June 25, 2009.............    86          44           27         15           9            5           2          1
June 25, 2010.............    84          40           23         12           7            3           1          0
June 25, 2011.............    81          36           20          9           5            2           0          0
June 25, 2012.............    78          32           17          7           4            1           0          0
June 25, 2013.............    75          29           14          6           3            1           0          0
June 25, 2014.............    72          26           12          4           2            0           0          0
June 25, 2015.............    69          23           10          3           1            0           0          0
June 25, 2016.............    66          21            9          3           1            0           0          0
June 25, 2017.............    63          18            7          2           1            0           0          0
June 25, 2018.............    60          16            6          1           0            0           0          0
June 25, 2019.............    57          14            5          1           0            0           0          0
June 25, 2020.............    53          13            4          1           0            0           0          0
June 25, 2021.............    49          11            3          0           0            0           0          0
June 25, 2022.............    46           9            3          0           0            0           0          0
June 25, 2023.............    42           8            2          0           0            0           0          0
June 25, 2024.............    37           7            1          0           0            0           0          0
June 25, 2025.............    32           5            1          0           0            0           0          0
June 25, 2026.............    27           4            1          0           0            0           0          0
June 25, 2027.............    21           3            0          0           0            0           0          0
June 25, 2028.............    14           1            0          0           0            0           0          0
June 25, 2029.............     6           0            0          0           0            0           0          0
June 25, 2030.............     0           0            0          0           0            0           0          0
Weighted Average Life
 (years) to Maturity...... 19.25        9.70         6.70       4.72        3.90         3.07        2.43       2.10
Weighted Average Life
(years) to Call Option
Date...................... 19.22        9.34         6.07       4.19        3.41         2.68        2.14       1.84
</TABLE>

-------------
* Rounded to the nearest whole percentage.


                                      S-82

<PAGE>



<TABLE>
<CAPTION>
                          PERCENT OF ORIGINAL CERTIFICATE PRINCIPAL BALANCE OUTSTANDING*


                                                         CLASS A-2
                           ----------------------------------------------------------------------------------------------
                           Scenario    Scenario    Scenario   Scenario     Scenario     Scenario    Scenario   Scenario
Distribution Date              I          II          III        IV           V            VI          VII       VIII
-------------------------------------------------------------------------------------------------------------------------
<S>                        <C>         <C>         <C>        <C>          <C>          <C>         <C>        <C>
Initial Percentage........    100%        100%        100%       100%         100%         100%        100%       100%
June 25, 2001.............     99          95          92         88           84           80          75         71
June 25, 2002.............     99          87          76         66           56           46          38         30
June 25, 2003.............     98          79          62         47           36           26          18         12
June 25, 2004.............     98          71          50         35           23           15           9          5
June 25, 2005.............     97          64          41         26           15            8           4          2
June 25, 2006.............     97          58          34         19           10            5           2          0
June 25, 2007.............     96          52          28         14            6            2           1          0
June 25, 2008.............     95          47          23         10            4            1           0          0
June 25, 2009.............     94          42          19          7            2            0           0          0
June 25, 2010.............     93          38          15          5            1            0           0          0
June 25, 2011.............     92          35          12          4            1            0           0          0
June 25, 2012.............     90          31          10          3            0            0           0          0
June 25, 2013.............     89          28           8          2            0            0           0          0
June 25, 2014.............     87          25           7          1            0            0           0          0
June 25, 2015.............     85          22           5          1            0            0           0          0
June 25, 2016.............     83          20           4          0            0            0           0          0
June 25, 2017.............     80          18           3          0            0            0           0          0
June 25, 2018.............     78          16           3          0            0            0           0          0
June 25, 2019.............     74          14           2          0            0            0           0          0
June 25, 2020.............     71          12           1          0            0            0           0          0
June 25, 2021.............     67          10           1          0            0            0           0          0
June 25, 2022.............     62           9           1          0            0            0           0          0
June 25, 2023.............     57           7           0          0            0            0           0          0
June 25, 2024.............     51           6           0          0            0            0           0          0
June 25, 2025.............     45           5           0          0            0            0           0          0
June 25, 2026.............     38           4           0          0            0            0           0          0
June 25, 2027.............     30           2           0          0            0            0           0          0
June 25, 2028.............     20           1           0          0            0            0           0          0
June 25, 2029.............     10           0           0          0            0            0           0          0
June 25, 2030.............      0           0           0          0            0            0           0          0
Weighted Average Life
 (years) to Maturity......  22.27        9.52        5.50       3.80         2.92         2.37        1.99       1.71
Weighted Average Life
(years) to Call Option
Date......................  22.22        9.18        5.24       3.63         2.82         2.29        1.92       1.66
</TABLE>


-----------------
* Rounded to the nearest whole percentage.


                                      S-83

<PAGE>



                             THE CERTIFICATE INSURER

         The information set forth in this section has been provided by the
certificate insurer. No representation is made by either of the underwriters,
the trustee, the trust administrator, the master servicer, the seller, the
depositor or any of their affiliates as to the accuracy or completeness of this
information or any information related to the certificate insurer incorporated
by reference in this prospectus supplement.

GENERAL

         The certificate insurer is a monoline insurance company incorporated in
1984 under the laws of the State of New York. The certificate insurer is
licensed to engage in financial guaranty insurance business in all 50 states,
the District of Columbia, Puerto Rico and the U.S. Virgin Islands.

         The certificate insurer and its subsidiaries are engaged in the
business of writing financial guaranty insurance, principally in respect of
securities offered in domestic and foreign markets. Financial guaranty insurance
provides a guaranty of scheduled payments on an issuer's securities - thereby
enhancing the credit rating of those securities - in consideration for the
payment of a premium to the insurer. The certificate insurer and its
subsidiaries principally insure asset-backed, collateralized and municipal
securities. Asset-backed securities are typically supported by residential
mortgage loans, consumer or trade receivables, securities or other assets having
an ascertainable cash flow or market value. Collateralized securities include
public utility first mortgage bonds and sale/leaseback obligation bonds.
Municipal securities include general obligation bonds, special revenue bonds and
other special obligations of state and local governments. The certificate
insurer insures both newly issued securities sold in the primary market and
outstanding securities sold in the secondary market that satisfy the certificate
insurer's underwriting criteria.

         The certificate insurer is a wholly owned subsidiary of Financial
Security Assurance Holdings Ltd., which is referred to in this prospectus
supplement as "Holdings." Holdings is a New York Stock Exchange listed company.
Major shareholders of Holdings include White Mountains Insurance Group, Ltd.,
The Tokio Marine and Fire Insurance Co., Ltd. and XL Capital Ltd. On March 14,
2000, Holdings announced that it had entered into a merger agreement pursuant to
which Holdings would become a wholly owned subsidiary of Dexia S.A., a publicly
held Belgian corporation, subject to receipt of regulatory approvals and
satisfaction of other closing conditions. Dexia S.A., through its bank
subsidiaries, is primarily engaged in the business of public finance in France,
Belgium and other European countries. No shareholder of Holdings is obligated to
pay any debt of the certificate insurer or any claim under any insurance policy
issued by the certificate insurer or to make any additional contribution to the
capital of the certificate insurer.

         The principal executive offices of the certificate insurer are located
at 350 Park Avenue, New York, New York 10022, and its telephone number at that
location is (212) 826-0100.

REINSURANCE

         Under an intercompany agreement, liabilities on financial guaranty
insurance written or reinsured from third parties by the certificate insurer or
its domestic or Bermuda operating insurance company subsidiaries are usually
reinsured among those companies on an agreed-upon percentage substantially
proportional to their respective capital, surplus and reserves, subject to
applicable statutory risk limitations. In addition, the certificate insurer
reinsures a portion of its liabilities under certain of its financial guaranty
insurance policies with other reinsurers under various treaties and on a
transaction-by-


                                      S-84

<PAGE>

transaction basis. This reinsurance is used by the certificate insurer as a risk
management device and to comply with statutory and rating agency requirements;
it does not alter or limit the certificate insurer's obligations under any
financial guaranty insurance policy.

RATINGS

         The certificate insurer's insurance financial strength is rated "Aaa"
by Moody's Investors Service, Inc. The certificate insurer's insurer financial
strength is rated "AAA" by Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., and Standard & Poor's (Australia) Pty. Ltd. The
certificate insurer's claims-paying ability is rated "AAA" by Fitch, Inc. and
Japan Rating and Investment Information, Inc. These ratings reflect only the
views of the respective rating agencies, are not recommendations to buy, sell or
hold securities and are subject to revision or withdrawal at any time by those
rating agencies.

CAPITALIZATION

         The following table sets forth the capitalization of the certificate
insurer and its subsidiaries as of March 31, 2000 on the basis of accounting
principles generally accepted in the United States:

<TABLE>
<CAPTION>
                                                                           March 31, 2000
                                                                           (In thousands)
                                                               ---------------------------------------
<S>                                                                        <C>
Deferred Premium Revenue
(net of prepaid reinsurance premiums).........................               $547,872
Surplus Notes.................................................                120,000
Minority Interest.............................................                 33,914

Shareholder's Equity:
Common Stock..................................................                 15,000
Additional Paid-In Capital....................................                841,036
Accumulated Other Comprehensive Loss
(net of deferred income taxes)................................                 (3,409)
Accumulated Earnings..........................................                508,095
Total Shareholder's Equity....................................              1,360,722

Total Deferred Premium Revenue, Surplus
Notes, Minority Interest and Shareholder's
Equity........................................................             $2,062,508
</TABLE>

         For further information concerning the certificate insurer, see the
Consolidated Financial Statements of Financial Security Assurance Inc. and
Subsidiaries and the notes thereto incorporated in this prospectus supplement by
reference. The certificate insurer's financial statements are included as
exhibits in the Annual Reports on Form 10-K and the Quarterly Reports on Form
10-Q filed with the Securities and Exchange Commission by Holdings and may be
reviewed at the EDGAR web site maintained by the Securities and Exchange
Commission and at Holding's website, http://www.FSA.com. Copies of the statutory
quarterly and annual statements filed with the State of New York Insurance
Department by the certificate insurer are available upon request to the State of
New York Insurance Department.


                                      S-85

<PAGE>



INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

         In addition to the documents described under "Incorporation of Certain
Information by Reference" in the prospectus, the financial statements of the
certificate insurer included in, or as exhibits to, the following documents
filed by Holdings with the Securities and Exchange Commission, are hereby
incorporated by reference: (a) the Annual Report on Form 10-K for the year ended
December 31, 1999 and (b) the Quarterly Report on Form 10-Q for the period ended
March 31, 2000.

         All financial statements of the certificate insurer included in, or as
exhibits to, documents filed by Holdings under Section 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act of 1934, as amended, after the filing of this
prospectus supplement and before the termination of the offering of the
certificates shall be deemed to be incorporated by reference into this
prospectus supplement and to be a part of this prospectus supplement.

         You may request a free copy of any of the filings incorporated by
reference in this prospectus supplement by writing to the depositor at 18400 Von
Karman, Irvine, California 92612.

         The trust administrator on behalf of the trust will undertake, for
purposes of determining any liability under the Securities Act of 1933, as
amended, each filing of the trust's annual report under section 13(a) or section
15(d) of the Securities Exchange Act and each filing of the financial statements
of the certificate insurer included in or as an exhibit to the annual report of
Holdings filed under section 13(a) or section 15(d) of the Securities Exchange
Act that is incorporated by reference in the registration statement, as defined
in the prospectus, will be deemed to be a new registration statement relating to
the securities offered by this prospectus supplement, and the offering of the
securities at that time will be deemed to be the initial bona fide offering
thereof.

INSURANCE REGULATION

         The certificate insurer is licensed and subject to regulation as a
financial guaranty insurance corporation under the laws of the State of New
York, its state of domicile. In addition, the certificate insurer and its
insurance subsidiaries are subject to regulation by insurance laws of the
various other jurisdictions in which they are licensed to do business. As a
financial guaranty insurance corporation licensed to do business in the State of
New York, the certificate insurer is subject to Article 69 of the New York
Insurance Law which, among other things, limits the business of each financial
guaranty insurer to writing financial guaranty insurance and related business
lines, requires each financial guaranty insurer to maintain a minimum surplus to
policyholders, establishes contingency, loss and unearned premium reserve
requirements for each financial guaranty insurer, and limits the size of
individual transactions and the volume of transactions that may be underwritten
by each financial guaranty insurer. Other provisions of the New York Insurance
Law, applicable to non-life insurance companies such as the certificate insurer,
regulate, among other things, permitted investments, payment of dividends,
transactions with affiliates, mergers, consolidations, acquisitions or sales of
assets and incurrence of liability for borrowings.

                                 USE OF PROCEEDS

         The seller will sell the mortgage loans to the depositor and the
depositor will convey the mortgage loans to the trust in exchange for and
concurrently with the delivery of the certificates. Net proceeds from the sale
of the certificates will be applied by the depositor to the purchase of the
mortgage loans from the seller. The seller will use a portion of these proceeds
to satisfy its obligations under its financing facility in place with an
affiliate of Greenwich Capital Markets, Inc. with respect to the


                                      S-86

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mortgage loans. The net proceeds from the sale of the offered certificates,
together with the Class R Certificates, will represent the purchase price to be
paid by the depositor to the seller for the mortgage loans. The mortgage loans
were previously purchased by the seller either directly or indirectly from the
originator.

                         FEDERAL INCOME TAX CONSEQUENCES

         In the opinion of Thacher Proffitt & Wood, counsel to the depositor,
assuming compliance with the provisions of the pooling and servicing agreement,
for federal income tax purposes, the trust will qualify as a REMIC under the
Code.

         For federal income tax purposes:

o        the offered certificates will represent (i) ownership of "regular
         interests" in the REMIC and will be treated as debt instruments of the
         REMIC and (ii) in the case of the Class A-2 Certificates, ownership of
         the right to receive payments in respect of Basis Risk Shortfalls which
         will not be an entitlement from the REMIC but from the reserve fund;

o        the Class R Certificates will represent the sole "residual interest" in
         the REMIC.

         See "Federal Income Tax Consequences--REMICs" in the prospectus.

         For federal income tax purposes, the offered certificates will not be
treated as having been issued with original issue discount. The prepayment
assumption that will be used in determining the rate of accrual of original
issue discount, market discount and premium, if any, for federal income tax
purposes will be based on the assumption that, subsequent to the date of any
determination, the group I mortgage loans and the fixed-rate group II mortgage
loans will prepay at a rate equal to 110% of the prepayment assumption and the
adjustable rate group II mortgage loans will prepay at a rate equal to 100% of
the prepayment assumption. No representation is made that the mortgage loans
will prepay at that rate or at any other rate. See "Federal Income Tax
Consequences--General" and "--REMICs--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount" in the prospectus.

         The IRS has issued the OID Regulations under sections 1271 to 1275 of
the Code generally addressing the treatment of debt instruments issued with
original issue discount. Purchasers of the Class A-2 Certificates should be
aware that Section 1272(a)(6) of the Code and the OID Regulations do not
adequately address some issues relevant to, or applicable to, prepayable
securities bearing an adjustable rate of interest such as the Class A-2
Certificates. In the absence of other authority, the trust administrator intends
to be guided by certain principles of the OID Regulations applicable to
adjustable rate debt instruments in determining whether the Class A-2
Certificates should be treated as issued with original issue discount and in
adapting the provisions of Section 1272(a)(6) of the Code to the Class A-2
Certificates for the purpose of preparing reports furnished to the holders of
these certificates and the IRS. Because of the uncertainties concerning the
application of Section 1272(a)(6) of the Code to the Class A- 2 Certificates and
because the rules relating to debt instruments having an adjustable rate of
interest are limited in their application in ways that could preclude their
application to such certificates even in the absence of Section 1272(a)(6) of
the Code, the IRS could assert that the Class A-2 Certificates should be
governed by some other method not yet set forth in regulations or should be
treated as having been issued with original issue discount. Prospective
purchasers of the Class A-2 Certificates are advised to consult their tax
advisors concerning the tax treatment of such certificates.


                                      S-87

<PAGE>



         In some circumstances the OID regulations permit the holder of a debt
instrument to recognize original issue discount under a method that differs from
that used by the issuer. Accordingly, it is possible that the holder of a
certificate may be able to select a method for recognizing original issue
discount that differs from that used by the master servicer in preparing reports
to the certificateholders and the IRS.

         Some of the classes of offered certificates may be treated for federal
income tax purposes as having been issued at a premium. Whether any holder of
one of those classes of certificates will be treated as holding a certificate
with amortizable bond premium will depend on the certificateholder's purchase
price and the distributions remaining to be made on the certificate at the time
of its acquisition by the certificateholder. Holders of those classes of
certificates should consult their tax advisors regarding the possibility of
making an election to amortize this premium. See "Federal Income Tax
Consequences--REMICs--Taxation of Owners of REMIC Regular Certificates" and
"--Premium" in the prospectus.

         Each holder of an offered certificate is deemed to own an undivided
beneficial ownership interest in (i) a REMIC regular interest and (ii) in the
case of the Class A-2 Certificates, the right to receive payments in respect of
Basis Risk Shortfalls. The treatment of amounts received by a holder of a Class
A-2 Certificate under such certificateholder's right to receive amounts in
respect of Basis Risk Shortfalls will depend on the portion, if any, of the
holder's purchase price allocable thereto. Under the REMIC regulations, each
holder of a Class A-2 Certificate must allocate its purchase price for that
certificate between its undivided interest in the REMIC regular interest and its
undivided interest in the right to receive payments in respect of Basis Risk
Shortfalls in accordance with the relative fair market values of each property
right. The trust administrator intends to treat payments made to the holders of
the Class A-2 Certificates with respect to Basis Risk Shortfalls as includible
in income based on the tax regulations relating to notional principal contracts.
The OID regulations provide that the trust's allocation of the issue price is
binding on all holders unless the holder explicitly discloses on its tax return
that its allocation is different from the trust's allocation. For tax reporting
purposes, the trust administrator estimates that the right to receive Basis Risk
Shortfalls has a DE MINIMIS value. Under the REMIC regulations, the trust
administrator is required to account for the REMIC regular interest and the
right to receive payments in respect of Basis Risk Shortfalls as discrete
property rights. Holders of the Class A-2 Certificates are advised to consult
their own tax advisors regarding the allocation of issue price, timing,
character and source of income and deductions resulting from the ownership of
their certificates. Treasury regulations have been promulgated under Section
1275 of the Internal Revenue Code generally providing for the integration of a
"qualifying debt instrument" with a hedge if the combined cash flows of the
components are substantially equivalent to the cash flows on a variable rate
debt instrument. However, such regulations specifically disallow integration of
debt instruments subject to Section 1272(a)(6) of the Internal Revenue Code.
Therefore, holders of the Class A-2 Certificates will be unable to use the
integration method provided for under such regulations with respect to such
certificates. If the trust administrator's treatment of Basis Risk Shortfalls is
respected, ownership of the right to Basis Risk Shortfalls will nevertheless
entitle the owner to amortize the separate price paid for the right to Basis
Risk Shortfalls under the notional principal contract regulations.

         In the event that the right to receive Basis Risk Shortfalls is
characterized as a "notional principal contract" for federal income tax
purposes, upon the sale of a Class A-2 Certificate, the amount of the sale
allocated to the selling certificateholder's right to receive payments in
respect of Basis Risk Shortfalls would be considered a "termination payment"
under the notional principal contract regulations allocable to the related
certificate. A holder of a Class A-2 Certificate will have gain or loss from
such a termination of the right to receive payments in respect of Basis Risk
Shortfalls equal to (i) any termination payment it received or is deemed to have
received minus (ii) the unamortized portion of any


                                      S-88

<PAGE>



amount paid, or deemed paid, by the certificateholder upon entering into or
acquiring its interest in the right to receive payments in respect of Basis Risk
Shortfalls.

         Gain or loss realized upon the termination of the right to receive
payments in respect of Basis Risk Shortfalls will generally be treated as
capital gain or loss. Moreover, in the case of a bank or thrift institution,
Internal Revenue Code Section 582(c) would likely not apply to treat such gain
or loss as ordinary.

         With respect to the Class A-2 Certificates, this paragraph applies
exclusive of any rights in respect of Basis Risk Shortfalls. The offered
certificates will be treated as assets described in Section 7701(a)(19)(C) of
the Internal Revenue Code and "real estate assets" under Section 856(c)(4)(A) of
the Internal Revenue Code generally in the same proportion that the assets of
the trust would be so treated. In addition, interest on the offered certificates
will be treated as "interest on obligations secured by mortgages on real
property" under Section 856(c)(3)(B) of the Internal Revenue Code generally to
the extent that such offered certificates are treated as "real estate assets"
under Section 856(c)(4)(A) of the Internal Revenue Code. Moreover, the offered
certificates will be "qualified mortgages" within the meaning of Section
860G(a)(3) of the Internal Revenue Code. However, prospective investors in the
offered certificates that will be generally treated as assets described in
Section 860G(a)(3) of the Internal Revenue Code should note that,
notwithstanding such treatment, any repurchase of such a certificate pursuant to
the right of the master servicer or the depositor to repurchase such offered
certificates may adversely affect any REMIC that holds such offered certificates
if such repurchase is made under circumstances giving rise to a Prohibited
Transaction Tax. See "The Pooling and Servicing Agreement--Optional Termination"
in this prospectus supplement and "Federal Income Tax Consequences" in the
prospectus.

         The holders of the Class A-2 Certificates will be required to include
in income interest on their certificates in accordance with the accrual method
of accounting. As noted above, each holder of a Class A-2 Certificate will be
required to allocate a portion of the purchase price paid for its certificates
to the right to receive payments in respect of Basis Risk Shortfalls. The value
of the right to receive amounts in respect of Basis Risk Shortfalls is a
question of fact which could be subject to differing interpretations. Because
amounts in respect of Basis Risk Shortfalls are treated as a separate right of
the Class A-2 Certificates not payable by any REMIC, such rights will not be
treated as a qualifying asset for any such certificateholder that is a mutual
savings bank, domestic building and loan association, real estate investment
trust, or real estate mortgage investment conduit and any amounts received in
respect of Basis Risk Shortfalls will not be qualifying real estate income for
real estate investment trusts.

         For further information regarding federal income tax consequences of
investing in the offered certificates, see "Federal Income Tax
Consequences--REMICs" in the prospectus.

                    CONSIDERATIONS FOR BENEFIT PLAN INVESTORS

         A fiduciary of any ERISA plan, IRA, Keogh plan or government plan,
collectively referred to here as "benefit plans," or any insurance company,
whether through its general or separate accounts, or any other person investing
benefit plan assets of any benefit plan, should carefully review with its legal
advisors whether the purchase or holding of offered certificates could give rise
to a transaction prohibited or not otherwise permissible under ERISA or Section
4975 of the Internal Revenue Code. The purchase or holding of the offered
certificates by or on behalf of, or with benefit plan assets of, a benefit plan
may qualify for exemptive relief under the Underwriters' Exemption, as described
under "Considerations for Benefit Plan Investors--Possible Exemptive Relief" in
the prospectus. The Underwriters' Exemption relevant to the offered certificates
was granted by the Department of Labor to Greenwich Capital


                                      S-89

<PAGE>



Markets, Inc. on September 6, 1990 as Prohibited Transaction Exemption 90-59 at
55 Federal Register 36724, and amended on July 21, 1997 as Prohibited
Transaction Exemption 97-34 at 62 Federal Register 39021. However, the
Underwriters' Exemption contains a number of conditions which must be met for
the exemption to apply, including the requirement that the investing benefit
plan must be an "accredited investor" as defined in Rule 501(a)(1) of Regulation
D of the Securities and Exchange Commission under the Securities Act.

         Insurance companies contemplating the investment of general account
assets in the offered certificates should consult with their legal advisors with
respect to the applicability of Section 401(c) of ERISA, as described under
"Considerations for Benefit Plan Investors--Possible Exemptive Relief--Statutory
Exemption for Insurance Company General Accounts" in the prospectus. The DOL
issued final regulations under Section 401(c) on January 5, 2000, but the
regulations are generally not effective until July 5, 2001.

         Any fiduciary or other investor of benefit plan assets that proposes to
acquire or hold the offered certificates on behalf of or with benefit plan
assets of any benefit plan should consult with its counsel with respect to: (i)
whether the specific and general conditions and the other requirements in the
exemption would be satisfied, or whether any other prohibited transaction
exemption would apply, and (ii) the potential applicability of the general
fiduciary responsibility provisions of ERISA and the prohibited transaction
provisions of ERISA and Section 4975 of the Internal Revenue Code to the
proposed investment. See "Considerations for Benefit Plan Investors" in the
prospectus.

         The sale of any of the offered certificates to an benefit plan is in no
respect a representation by the depositor or the related underwriter that an
investment in the offered certificates meets all relevant legal requirements
relating to investments by benefit plans generally or any particular benefit
plan, or that an investment in the offered certificates is appropriate for
benefit plans generally or any particular benefit plan.

                         LEGAL INVESTMENT CONSIDERATIONS

         The offered certificates will constitute "mortgage related securities"
for purposes of SMMEA for so long as they are rated not lower than the second
highest rating category by a rating agency, as defined in the prospectus, and,
therefore, will be legal investments for those entities to the extent provided
in SMMEA. SMMEA, however, provides for state limitation on the authority of
entities to invest in "mortgage related securities" provided that the
restrictive legislation was enacted prior to October 3, 1991. There are ten
states that have enacted legislation which overrides the preemption provisions
of SMMEA.

         The depositor makes no representations as to the proper
characterization of either class of offered certificates for legal investment or
other purposes, or as to the ability of particular investors to purchase either
class of offered certificates under applicable legal investment restrictions.
These uncertainties may adversely affect the liquidity of either class of
offered certificates. Accordingly, all institutions whose investment activities
are subject to legal investment laws and regulations, regulatory capital
requirements or review by regulatory authorities should consult with their legal
advisors in determining whether and to what extent any class of offered
certificates constitutes a legal investment or is subject to investment, capital
or other restrictions.

         See "Legal Investment" in the prospectus.


                                      S-90

<PAGE>



                             METHOD OF DISTRIBUTION

         Subject to the terms and conditions set forth in the underwriting
agreement among the depositor, the originator, Greenwich Capital Markets, Inc.
and Chase Securities Inc., the depositor has agreed to sell to those
underwriters, and those underwriters have agreed to purchase from the depositor,
the offered certificates. In connection with the sale of the offered
certificates, the underwriters may be deemed to have received compensation from
the depositor in the form of underwriting discounts. The underwriters have
severally agreed to purchase from the depositor the principal amounts of the
classes of offered certificates set forth in the following table:

<TABLE>
<CAPTION>
                        GREENWICH CAPITAL
                          MARKETS, INC.            Chase Securities Inc.                  Total
                          -------------            ---------------------                  -----
<S>                     <C>                        <C>                                <C>
Class A-1                 $ 78,365,700                 $  8,707,300                   $ 87,073,000
Class A-2                 $108,355,500                  $12,039,500                   $120,395,000
</TABLE>

         The depositor has been advised by the underwriters that they intend to
make a market in the offered certificates but have no obligation to do so. There
can be no assurance that a secondary market for the offered certificates will
develop or, if it does develop, that it will continue.

         The offered certificates are offered by the underwriters, subject to
prior sale, when, as and if delivered to and accepted by the underwriters and
subject to their right to reject orders in whole or in part. It is expected that
delivery of the offered certificates will be made in book-entry form only
through the facilities of DTC on or about the closing date.

         The depositor and the master servicer have agreed to indemnify the
underwriters against, or make contributions to the underwriters with respect to,
certain liabilities, including liabilities under the Securities Act of 1933, as
amended.

         From time to time, the underwriters and their affiliates may render
services to, and otherwise engage in transactions with, the depositor and its
affiliates.

                                  LEGAL MATTERS

         Legal matters in connection with the issuance of the offered
certificates will be passed upon for the depositor and the seller by Thacher
Proffitt & Wood, for the underwriters by Stroock & Stroock & Lavan LLP.

                                     RATINGS

         It is a condition of the issuance of the offered certificates that the
offered certificates be rated "AAA" by Fitch, Inc., "AAA" by Standard & Poor's
Ratings Services, a division of The McGraw-Hill Companies, Inc. and "Aaa" by
Moody's Investors Service, Inc.

         The ratings on the offered certificates address the likelihood of the
receipt by the holders of the offered certificates of all distributions on the
mortgage loans to which they are entitled. The ratings on the offered
certificates also address the structural, legal and issuer-related aspects of
the offered certificates, including the nature of the mortgage loans. The
ratings on the offered certificates address credit risk and not prepayment risk.
The ratings on the offered certificates do not represent any assessment of the
likelihood that principal prepayments of the mortgage loans will be made by
borrowers or the degree to which the rate of prepayments might differ from that
originally anticipated. The initial


                                      S-91

<PAGE>



ratings assigned to the offered certificates do not address the possibility that
holders of the offered certificates might suffer a lower than anticipated yield
in the event of principal payments on the offered certificates resulting from
rapid prepayments of the mortgage loans or the application of the Extra
Principal Distribution Amount as described in this prospectus supplement, or in
the event that the trust fund is terminated prior to the assumed final maturity
dates of the offered certificates. In addition, the rating on the Class A-2
Certificates does not address the likelihood of receipt by the holders of the
Class A-2 Certificates of any amounts in respect of Basis Risk Shortfalls or
Unpaid Basis Risk Shortfalls.

         The depositor has not engaged any rating agency other than the rating
agencies named above to provide ratings on the offered certificates. However,
there can be no assurance as to whether any other rating agency will rate the
offered certificates, or, if it does, what rating would be assigned by any other
rating agency. Any rating on the certificates by another rating agency, if
assigned at all, may be lower than the ratings assigned to the offered
certificates by the rating agencies named above.

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

                                     EXPERTS

         The consolidated balance sheets of Financial Security Assurance Inc.
and Subsidiaries as of December 31, 1999 and December 31, 1998 and the related
consolidated statements of income, changes in shareholder's equity and cash
flows for each of the three years in the period ended December 31, 1999
incorporated by reference in this prospectus supplement, have been incorporated
herein in reliance on the report of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of that firm as experts in accounting and
auditing.


                                      S-92

<PAGE>



                                     ANNEX I

          GLOBAL CLEARANCE AND SETTLEMENT AND DOCUMENTATION PROCEDURES

         Except in limited circumstances described in this prospectus supplement
under "Description of the Certificates--Book-Entry Certificates", the offered
certificates will be available only in book-entry form. Investors in the global
securities may hold the global securities through any of DTC, Clearstream or
Euroclear. The global securities will be tradeable as home market instruments in
both the European and U.S. domestic markets. Initial settlement and all
secondary trades will settle in same-day funds.

         Secondary market trading between investors through Clearstream and
Euroclear will be conducted in the ordinary way in accordance with the normal
rules and operating procedures of Clearstream and Euroclear and in accordance
with conventional eurobond practice, that is seven calendar day settlement.

         Secondary market trading between investors through DTC will be
conducted according to DTC's rules and procedures applicable to U.S. corporate
debt obligations.

         Secondary cross-market trading between Clearstream or Euroclear and DTC
participants holding certificates will be effected on a delivery-against-payment
basis through the respective Depositaries of Clearstream and Euroclear, in that
capacity, and as DTC participants.

         Non-U.S. holders of Global Securities will be subject to U.S.
withholding taxes unless those holders meet specific requirements and deliver
appropriate U.S. tax documents to the securities clearing organizations or their
participants.

INITIAL SETTLEMENT

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

         Investors electing to hold their Global Securities through DTC will
follow DTC settlement practices. Investor securities custody accounts will be
credited with their holdings against payment in same-day funds on the settlement
date.

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

SECONDARY MARKET TRADING

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


                                       I-1

<PAGE>



         TRADING BETWEEN DTC PARTICIPANTS. Secondary market trading between DTC
participants will be settled using the procedures applicable to prior mortgage
loan asset-backed certificates issues in same-day funds.

         TRADING BETWEEN CLEARSTREAM AND/OR EUROCLEAR PARTICIPANTS. Secondary
market trading between Clearstream participants or Euroclear participants will
be settled using the procedures applicable to conventional eurobonds in same-day
funds.

         TRADING BETWEEN DTC SELLER AND CLEARSTREAM OR EUROCLEAR PURCHASER. When
Global Securities are to be transferred from the account of a DTC participant to
the account of a Clearstream participant or a Euroclear participant, the
purchaser will send instructions to Clearstream or Euroclear through a
Clearstream participant or Euroclear participant at least one business day prior
to settlement. Clearstream or Euroclear will instruct the relevant depositary,
as the case may be, to receive the Global Securities against payment. Payment
will include interest accrued on the Global Securities from and including the
last coupon payment date to and excluding the settlement date, on the basis of
either the actual number of days in the accrual period or a 30 day month and a
year assumed to consist of 360 days. For transactions settling on the 31st of
the month, payment will include interest accrued to and excluding the first day
of the following month. Payment will then be made by the relevant depositary to
the DTC participant's account against delivery of the Global Securities. After
settlement has been completed, the Global Securities will be credited to the
respective clearing system and by the clearing system, in accordance with its
usual procedures, to the Clearstream participant's or Euroclear participant's
account. The securities credit will appear the next day (European time) and the
cash debt will be back-valued to, and the interest on the Global Securities will
accrue from, the value date, which would be the preceding day when settlement
occurred in New York. If settlement is not completed on the intended value
date--the trade fails--the Clearstream or Euroclear cash debt will be valued
instead as of the actual settlement date.

         Clearstream participants and Euroclear participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to preposition
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within Clearstream or Euroclear. Under
this approach, they may take on credit exposure to Clearstream or Euroclear
until the Global Securities are credited to their account one day later. As an
alternative, if Clearstream or Euroclear has extended a line of credit to them,
Clearstream participants or Euroclear participants can elect not to preposition
funds and allow that credit line to be drawn upon to finance settlement. Under
this procedure, Clearstream participants or Euroclear participants purchasing
Global Securities would incur overdraft charges for one day, assuming they
cleared the overdraft when the Global Securities were credited to their
accounts. However, interest on the Global Securities would accrue from the value
date. Therefore, in many cases the investment income on the Global Securities
earned during that one-day period may substantially reduce or offset the amount
of overdraft charges, although the result will depend on each Clearstream
participant's or Euroclear participant's particular cost of funds. Since the
settlement is taking place during New York business hours, DTC participants can
employ their usual procedures for crediting Global Securities to the respective
European depositary for the benefit of Clearstream participants or Euroclear
participants. The sale proceeds will be available to the DTC seller on the
settlement date. Thus, to the DTC participants a cross-market transaction will
settle no differently than a trade between two DTC participants.

         TRADING BETWEEN CLEARSTREAM OR EUROCLEAR SELLER AND DTC PURCHASER. Due
to time zone differences in their favor, Clearstream participants and Euroclear
participants may employ their customary procedures for transactions in which
Global Securities are to be transferred by the respective clearing system,
through the respective depositary, to a DTC participant. The seller will send
instructions to Clearstream or Euroclear through a Clearstream participant or
Euroclear participant at least one business day prior to settlement. In


                                       I-2

<PAGE>



these cases Clearstream or Euroclear will instruct the respective depositary, as
appropriate, to credit the Global Securities to the DTC participant's account
against payment. Payment will include interest accrued on the Global Securities
from and including the last coupon payment to and excluding the settlement date
on the basis of either the actual number of days in the accrual period or a 30
day month and a year assumed to consist to 360 days. For transactions settling
on the 31st of the month, payment will include interest accrued to and excluding
the first day of the following month. The payment will then be reflected in the
account of Clearstream participant or Euroclear participant the following day,
and receipt of the cash proceeds in the Clearstream participant's or Euroclear
participant's account would be back-valued to the value date, which would be the
preceding day, when settlement occurred in New York. Should the Clearstream
participant or Euroclear participant have a line of credit with its respective
clearing system and elect to be in debt in anticipation of receipt of the sale
proceeds in its account, the back-valuation will extinguish any overdraft
incurred over that one-day period. If settlement is not completed on the
intended value date--the trade fails--receipt of the cash proceeds in the
Clearstream participant's or Euroclear participant's account would instead be
valued as of the actual settlement date.

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

o        borrowing through Clearstream or Euroclear for one day, until the
         purchase side of the trade is reflected in their Clearstream or
         Euroclear accounts, in accordance with the clearing system's customary
         procedures

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

o        staggering the value dates for the buy and sell sides of the trade so
         that the value date for the purchase from the DTC participant is at
         least one day prior to the value date for the sale to the Clearstream
         participant or Euroclear participant.

MATERIAL U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS

         A beneficial owner of Global Securities holding securities through
Clearstream or Euroclear, or through DTC if the holder has an address outside
the U.S., will be subject to the 30% U.S. withholding tax that generally applies
to payments of interest, including original issue discount, on registered debt
issued by U.S. Persons, unless

o        each clearing system, bank or other financial institution that holds
         customers' securities in the ordinary course of its trade or business
         in the chain of intermediaries between such beneficial owner and the
         U.S. entity required to withhold tax complies with applicable
         certification requirements and

         o such beneficial owner takes one of the following steps to obtain an
         exemption or reduced tax rate:

         EXEMPTION FOR NON-U.S. PERSONS (FORM W-8 OR FORM W-8BEN). Beneficial
owners of Global Securities that are non-U.S. Persons can obtain a complete
exemption from the withholding tax by filing a signed Form W-8 (Certificate of
Foreign Status) or Form W-8BEN (Certificate of Foreign Status of Beneficial
Owner for United States Tax Withholding). If the information shown on Form W-8
or Form W-8BEN changes, a new Form W-8 or Form W-8BEN must be filed within 30
days of such change. After December 31, 2000, only Form W-8BEN will be
acceptable.


                                       I-3

<PAGE>




         EXEMPTION FOR NON-U.S. PERSONS WITH EFFECTIVELY CONNECTED INCOME (FORM
4224 OR FORM W- 8ECI). A non-U.S. Person, including a non-U.S. corporation or
bank with a U.S. branch, for which the interest income is effectively connected
with its conduct of a trade or business in the United States, can obtain an
exemption from the withholding tax by filing Form 4224 (Exemption from
Withholding of Tax on Income Effectively Connected with the Conduct of a Trade
or Business in the United States) or Form W-8ECI (Certificate of Foreign
Person's Claim for Exemption from Withholding on Income Effectively Connected
with the Conduct of a Trade or Business in the United States). After December
31, 2000, only Form W-8ECI will be acceptable.

         EXEMPTION OR REDUCED RATE FOR NON-U.S. PERSONS RESIDENT IN TREATY
COUNTRIES (FORM 1001 OR FORM W-8BEN). Non-U.S. Persons that are Certificate
Owners residing in a country that has a tax treaty with the United States can
obtain an exemption or reduced tax rate (depending on the treaty terms) by
filing Form 1001 (Ownership, Exemption or Reduced Rate Certificate) or Form
W-8BEN (Certificate of Foreign Status of Beneficial Owner for United States Tax
Withholding). Form 1001 or Form W-8BEN may be filed by the Certificate Owners or
his agent. After December 31, 2000, only Form W-8BEN will be acceptable.

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

         U.S. FEDERAL INCOME TAX REPORTING PROCEDURE. The Certificate Owner of a
Global Security or, in the case of a Form 1001 or a Form 4224 filer, his agent,
files by submitting the appropriate form to the person through whom it holds
(the clearing agency, in the case of persons holding directly on the books of
the clearing agency). Form W-8, Form 1001 and Form 4224 are effective until
December 31, 2000. Form W-8BEN and Form W-8ECI are effective until the third
succeeding calendar year from the date such form is signed.

         The term "U.S. Person" means:

o        a citizen or resident of the United States,

o        a corporation, partnership or other entity treated as a corporation or
         partnership for United States federal income tax purposes organized in
         or under the laws of the United States or any state thereof or the
         District of Columbia (unless, in the case of a partnership, Treasury
         regulations provide otherwise) or

         o an estate the income of which is includible in gross income for
         United States tax purposes, regardless of its source, or

o        a trust if a court within the United States is able to exercise primary
         supervision over the administration of the trust and one or more United
         States persons have authority to control all substantial decisions of
         the trust. Notwithstanding the preceding sentence, to the extent
         provided in Treasury regulations, certain trusts in existence on August
         20, 1996, and treated as United States persons prior to such date, that
         elect to continue to be treated as United States persons will also be a
         U.S. Person.

         This summary does not deal with all aspects of U.S. Federal income tax
withholding that may be relevant to foreign holders of the Global Securities.
Investors are advised to consult their own tax advisors for specific tax advice
concerning their holding and disposing of the Global Securities.


                                       I-4

<PAGE>

MORTGAGE PASS-THROUGH CERTIFICATES
MORTGAGE-BACKED NOTES
(ISSUABLE IN SERIES)

NEW CENTURY MORTGAGE SECURITIES, INC.
Depositor


YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 3 OF THIS
PROSPECTUS AND IN THE PROSPECTUS SUPPLEMENT.

THE PROSPECTUS TOGETHER WITH THE ACCOMPANYING PROSPECTUS SUPPLEMENT WILL
CONSTITUTE THE FULL PROSPECTUS.

THE SECURITIES:

New Century Mortgage Securities, Inc., as depositor, will sell the securities,
which may be in the form of mortgage pass-through certificates or
mortgage-backed notes. Each issue of securities will have its own series
designation and will evidence either:

         o     the ownership of  trust fund assets, or

         o     debt obligations secured by trust fund assets.

THE TRUST FUND AND ITS ASSETS

The assets of a trust fund will primarily include any combination of various
types of one- to four-family residential first and junior lien mortgage loans,
home equity lines of credit, cooperative apartment loans or manufactured housing
conditional sales contracts and installment loan agreements.

CREDIT ENHANCEMENT

The assets of the trust fund for a series of securities may also include pool
insurance policies, letters of credit, reserve funds or currency or interest
rate exchange agreements or any combination of credit support. Credit
enhancement may also be provided by means of subordination of one or more
classes of securities, cross collateralization or by overcollateralization.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THESE SECURITIES OR DETERMINED THAT THIS PROSPECTUS IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

Offers of the securities may be made through one or more different methods,
including through underwriters as described in "Methods of Distribution" in this
prospectus and in the related prospectus supplement.


The date of this Prospectus is September 10, 1999.



<PAGE>



<TABLE>
<CAPTION>
                                TABLE OF CONTENTS

                                                                                                               Page
                                                                                                               ----
<S>                                                                                                            <C>
Risk Factors......................................................................................................4
Description of the Trust Funds...................................................................................12
     Description of the Mortgage Loans to be Included in a Trust Fund............................................12
     Description of the Pre-Funding Account for the Purchase of Additional Mortgage Loans........................18
The Depositor....................................................................................................19
Use of Proceeds..................................................................................................19
Yield Considerations.............................................................................................19
Maturity And Prepayment Considerations...........................................................................20
The Depositor's Mortgage Loan Purchase Program...................................................................22
     Underwriting Standards......................................................................................22
     Qualifications of Originators and Mortgage Loan Sellers.....................................................24
     Representations by or on behalf of Mortgage Loan Sellers; Remedies for Breach of
         Representation..........................................................................................24
Description of The Securities....................................................................................26
     Assignment of Trust Fund Assets; Review of Files by Trustee.................................................28
     Establishment of Certificate Account; Deposits to Certificate Account In Respect of Trust
         Fund Assets.............................................................................................31
     Distributions on the Securities.............................................................................34
     Advances by Master Servicer in Respect of Delinquencies on the Trust Fund Assets............................37
     Form of Reports to Securityholders..........................................................................38
     Collection and Other Servicing Procedures Employed by the Master Servicer...................................39
     Description of Sub-Servicing................................................................................41
     Procedures for Realization Upon Defaulted Mortgage Loans....................................................42
     Retained Interest; Servicing or Administration Compensation and Payment of Expenses.........................43
     Annual Evidence as to the Compliance of the Master Servicer.................................................44
     Matters Regarding the Master Servicer and the Depositor.....................................................45
     Events of Default under the Governing Agreement and Rights Upon Events of Default...........................46
     Amendment of the Governing Agreements.......................................................................50
     Termination of the Trust Fund and Disposition of Trust Fund Assets..........................................51
     Optional Purchase by the Master Servicer of Defaulted Mortgage Loans........................................52
     Duties of the Trustee.......................................................................................52
     Description of the Trustee..................................................................................53
Description of Credit Support....................................................................................53
     Subordination...............................................................................................53
     Letter of Credit............................................................................................55
     Mortgage Pool Insurance Policy..............................................................................56
     Special Hazard Insurance Policy.............................................................................58
     Bankruptcy Bond.............................................................................................60
     Financial Guarantee Insurance...............................................................................61
     Reserve Fund................................................................................................61
     Overcollateralization.......................................................................................61
     Cross-Support Features......................................................................................62
     Cash Flow Agreements........................................................................................62
Description of Primary Insurance Policies........................................................................62
     Primary Mortgage Insurance Policies.........................................................................62
     Primary Hazard Insurance Policies...........................................................................63
     FHA Insurance...............................................................................................64
     VA Guarantees...............................................................................................65


                                        2

<PAGE>



Legal Aspects of Mortgage Loans..................................................................................65
     Single-Family Loans.........................................................................................66
     Cooperative Loans...........................................................................................67
     Manufactured Housing Contracts..............................................................................68
     Foreclosure on Mortgages....................................................................................70
     Foreclosure on Mortgaged Properties Located in the Commonwealth of Puerto Rico..............................72
     Foreclosure on Cooperative Shares...........................................................................72
     Repossession with respect to Manufactured Housing Contracts.................................................74
     Rights of Redemption with respect to Single-Family Properties...............................................75
     Notice of Sale; Redemption Rights with respect to Manufactured Homes........................................75
     Anti-Deficiency Legislation and Other Limitations on Lenders................................................75
     Junior Mortgages............................................................................................77
     Home Equity Line of Credit Loans............................................................................78
     Consumer Protection Laws with respect to Manufactured Housing Contracts.....................................78
     Other Limitations...........................................................................................80
     Enforceability of Provisions................................................................................80
     Subordinate Financing.......................................................................................81
     Applicability of Usury Laws.................................................................................81
     Alternative Mortgage Instruments............................................................................82
     Formaldehyde Litigation with respect to Manufactured Housing Contracts......................................83
     Soldiers' and Sailors' Civil Relief Act of 1940.............................................................84
     Environmental Legislation...................................................................................84
     Forfeitures in Drug and RICO Proceedings....................................................................85
     Negative Amortization Loans.................................................................................86
Federal Income Tax Consequences..................................................................................86
     General.....................................................................................................86
     REMICs......................................................................................................87
     Notes......................................................................................................106
     Grantor Trust Funds........................................................................................107
     Partnership Trust Funds....................................................................................118
State And Other Tax Consequences................................................................................124
Considerations For Benefit Plan Investors.......................................................................124
     Investors Affected.........................................................................................124
     Fiduciary Standards for ERISA Plans and Related Investment Vehicles........................................124
     Prohibited Transaction Issues for ERISA Plans, Keogh Plans, IRAs and Related
         Investment Vehicles....................................................................................125
     Possible Exemptive Relief..................................................................................126
     Consultation with Counsel..................................................................................131
     Government Plans...........................................................................................131
     Required Deemed Representations of Investors...............................................................131
Legal Investment................................................................................................132
Methods of Distribution.........................................................................................133
Legal Matters...................................................................................................134
Financial Information...........................................................................................135
Rating..........................................................................................................135
Available Information...........................................................................................135
Incorporation of Certain Information by Reference...............................................................136
</TABLE>



                                        3

<PAGE>



                                  RISK FACTORS

     The offered securities are not suitable investments for all investors. In
particular, you should not purchase the offered securities unless you understand
and are able to bear the prepayment, credit, liquidity and market risks
associated with the securities.

     You should carefully consider the following factors in connection with the
purchase of the securities offered hereby as well as any additional risk factors
that are set forth in the prospectus supplement related to your security:

THE SECURITIES WILL HAVE LIMITED LIQUIDITY SO INVESTORS MAY BE UNABLE TO SELL
THEIR SECURITIES OR MAY BE FORCED TO SELL THEM AT A DISCOUNT FROM THEIR INITIAL
OFFERING PRICE

     There can be no assurance that a resale market for the securities of any
series will develop following the issuance and sale of any series of securities.
Even if a resale market does develop, it may not provide securityholders with
liquidity of investment or continue for the life of the securities of any
series. The prospectus supplement for any series of securities may indicate that
an underwriter specified in the prospectus supplement intends to establish a
secondary market in the securities, however no underwriter will be obligated to
do so. As a result, any resale prices that may be available for any offered
security in any market that may develop may be at a discount from the initial
offering price. The securities offered hereby will not be listed on any
securities exchange.

CREDIT SUPPORT MAY BE LIMITED; THE FAILURE OF CREDIT SUPPORT TO COVER LOSSES ON
THE TRUST FUND ASSETS WILL RESULT IN LOSSES ALLOCATED TO THE RELATED SECURITIES

     Credit support is intended to reduce the effect of delinquent payments or
losses on the underlying trust fund assets on those classes of securities that
have the benefit of the credit support. With respect to each series of
securities, credit support will be provided in one or more of the forms referred
to in this prospectus and the related prospectus supplement. Regardless of the
form of credit support provided, the amount of coverage will usually be limited
in amount and in most cases will be subject to periodic reduction in accordance
with a schedule or formula. Furthermore, credit support may provide only very
limited coverage as to particular types of losses or risks, and may provide no
coverage as to other types of losses or risks. If losses on the trust fund
assets exceed the amount of coverage provided by any credit support or the
losses are of a type not covered by any credit support, these losses will be
borne by the holders of the related securities or specific classes of the
related securities. SEE "DESCRIPTION OF CREDIT SUPPORT".

THE TYPES OF MORTGAGE LOANS INCLUDED IN THE TRUST FUND RELATED TO YOUR
SECURITIES MAY BE ESPECIALLY PRONE TO DEFAULTS WHICH MAY EXPOSE YOUR SECURITIES
TO GREATER LOSSES

     The securities will be directly or indirectly backed by mortgage loans,
manufactured housing conditional sales contracts and installment loan
agreements. The types of mortgage loans included in the trust fund may have a
greater likelihood of delinquency and foreclosure, and a greater likelihood of
loss in the event of delinquency and foreclosure. You should be aware that if
the mortgaged properties fail to provide adequate security for the mortgage
loans included in a trust


                                        4

<PAGE>



fund, any resulting losses, to the extent not covered by credit support, will be
allocated to the related securities in the manner described in the related
prospectus supplement and consequently would adversely affect the yield to
maturity on those securities. The depositor cannot assure you that the values of
the mortgaged properties have remained or will remain at the appraised values on
the dates of origination of the related mortgage loans. The prospectus
supplement for each series of securities will describe the mortgage loans which
are to be included in the trust fund related to your security and risks
associated with those mortgage loans which you should carefully consider in
connection with the purchase of your security.

NONPERFECTION OF SECURITY INTERESTS IN MANUFACTURED HOMES MAY RESULT IN LOSSES
ON THE RELATED MANUFACTURED HOUSING CONTRACTS AND THE SECURITIES BACKED BY THE
MANUFACTURED HOUSING CONTRACTS

     Any conditional sales contracts and installment loan agreements with
respect to manufactured homes included in a trust fund will be secured by a
security interest in a manufactured home. Perfection of security interests in
manufactured homes and enforcement of rights to realize upon the value of the
manufactured homes as collateral for the manufactured housing contracts are
subject to a number of federal and state laws, including the Uniform Commercial
Code as adopted in each state and each state's certificate of title statutes.
The steps necessary to perfect the security interest in a manufactured home will
vary from state to state. If the master servicer fails, due to clerical errors
or otherwise, to take the appropriate steps to perfect the security interest,
the trustee may not have a first priority security interest in the manufactured
home securing a manufactured housing contract. Additionally, courts in many
states have held that manufactured homes may become subject to real estate title
and recording laws. As a result, a security interest in a manufactured home
could be rendered subordinate to the interests of other parties claiming an
interest in the home under applicable state real estate law. The failure to
properly perfect a valid, first priority security interest in a manufactured
home securing a manufactured housing contract could lead to losses that, to the
extent not covered by credit support, may adversely affect the yield to maturity
of the related securities.

FORECLOSURE OF MORTGAGE LOANS MAY RESULT IN LIMITATIONS OR DELAYS IN RECOVERY
AND LOSSES ALLOCATED TO THE RELATED SECURITIES

     Even assuming that the mortgaged properties provide adequate security for
the mortgage loans, substantial delays can be encountered in connection with the
liquidation of defaulted mortgage loans and corresponding delays in the receipt
of related proceeds by the securityholders could occur. An action to foreclose
on a mortgaged property securing a mortgage loan is regulated by state statutes,
rules and judicial decisions and is subject to many of the delays and expenses
of other lawsuits if defenses or counterclaims are interposed, sometimes
requiring several years to complete. In several states an action to obtain a
deficiency judgment is not permitted following a nonjudicial sale of a mortgaged
property. In the event of a default by a mortgagor, these restrictions may
impede the ability of the master servicer to foreclose on or sell the mortgaged
property or to obtain liquidation proceeds sufficient to repay all amounts due
on the related mortgage loan. The master servicer will be entitled to deduct
from liquidation proceeds all expenses reasonably incurred in attempting to
recover amounts due on the related liquidated mortgage loan and not yet repaid,
including payments


                                        5

<PAGE>



to prior lienholders, accrued servicing fees, legal fees and costs of legal
action, real estate taxes, and maintenance and preservation expenses. If any
mortgaged properties fail to provide adequate security for the mortgage loans in
the trust fund related to your security and insufficient funds are available
from any applicable credit support, you could experience a loss on your
investment.

     Liquidation expenses with respect to defaulted mortgage loans do not vary
directly with the outstanding principal balance of the loan at the time of
default. Therefore, assuming that a servicer takes the same steps in realizing
upon a defaulted mortgage loan having a small remaining principal balance as it
would in the case of a defaulted mortgage loan having a larger principal
balance, the amount realized after expenses of liquidation would be less as a
percentage of the outstanding principal balance of the smaller principal balance
mortgage loan than would be the case with a larger principal balance loan.

MORTGAGED PROPERTIES ARE SUBJECT TO ENVIRONMENTAL RISKS AND THE COST OF
ENVIRONMENTAL CLEAN-UP MAY INCREASE LOSSES ON THE RELATED MORTGAGE LOANS

     Under various federal, state and local environmental laws, ordinances and
regulations, a current or previous owner of real property may be liable for the
costs of removal or remediation of hazardous or toxic substances on, under or in
the property. These laws often impose liability whether or not the owner or
operator knew of, or was responsible for, the presence of the hazardous or toxic
substances. A lender also risks liability on foreclosure of the mortgage on the
property. In addition, the presence of hazardous or toxic substances, or the
failure to properly remediate the property, may adversely affect the owner's or
operator's ability to sell the property. Although the incidence of environmental
contamination of residential properties is less common than that for commercial
properties, mortgage loans contained in a trust fund may be secured by mortgaged
properties in violation of environmental laws, ordinances or regulations. The
master servicer is generally prohibited from foreclosing on a mortgaged property
unless it has taken adequate steps to ensure environmental compliance with
respect to the mortgaged property. However, to the extent the master servicer
errs and forecloses on mortgaged property that is subject to environmental law
violations, and to the extent a mortgage loan seller does not provide adequate
representations and warranties against environmental law violations, or is
unable to honor its obligations, including the obligation to repurchase a
mortgage loan upon the breach of a representation or warranty, a trust fund
could experience losses which, to the extent not covered by credit support,
could adversely affect the yield to maturity on the related securities.

THE RATINGS OF YOUR SECURITIES MAY BE LOWERED OR WITHDRAWN WHICH MAY ADVERSELY
AFFECT THE LIQUIDITY OR MARKET VALUE OF YOUR SECURITY

     It is a condition to the issuance of the securities that each series of
securities be rated in one of the four highest rating categories by a nationally
recognized statistical rating agency. A security rating is not a recommendation
to buy, sell or hold securities and may be subject to revision or withdrawal at
any time. No person is obligated to maintain the rating on any security, and
accordingly, there can be no assurance to you that the ratings assigned to any
security on the date on which the security is originally issued will not be
lowered or withdrawn by a rating agency at any time thereafter. The rating(s) of
any series of securities by any applicable rating agency may be


                                        6

<PAGE>



lowered following the initial issuance of the securities as a result of the
downgrading of the obligations of any applicable credit support provider, or as
a result of losses on the related mortgage loans in excess of the levels
contemplated by the rating agency at the time of its initial rating analysis.
Neither the depositor, the master servicer nor any of their respective
affiliates will have any obligation to replace or supplement any credit support,
or to take any other action to maintain any rating(s) of any series of
securities. If any rating is revised or withdrawn, the liquidity or the market
value of your security may be adversely affected.

FAILURE OF THE MORTGAGE LOAN SELLER TO REPURCHASE OR REPLACE A MORTGAGE LOAN MAY
RESULT IN LOSSES ALLOCATED TO THE RELATED SECURITIES

     Each mortgage loan seller will have made representations and warranties in
respect of the mortgage loans sold by the mortgage loan seller and evidenced by
a series of securities. In the event of a breach of a mortgage loan seller's
representation or warranty that materially adversely affects the interests of
the securityholders in a mortgage loan, the related mortgage loan seller will be
obligated to cure the breach or repurchase or, if permitted, replace the
mortgage loan as described under "Mortgage Loan Program-Representations as to
Mortgage Loans to be made by or on Behalf of Mortgage Loan Sellers; Remedies for
Breach of Representation". However, there can be no assurance that a mortgage
loan seller will honor its obligation to cure, repurchase or, if permitted,
replace any mortgage loan as to which a breach of a representation or warranty
arises. A mortgage loan seller's failure or refusal to honor its repurchase
obligation could lead to losses that, to the extent not covered by credit
support, may adversely affect the yield to maturity of the related securities.

     In instances where a mortgage loan seller is unable, or disputes its
obligation, to purchase affected mortgage loans, the master servicer may
negotiate and enter into one or more settlement agreements with the mortgage
loan seller that could provide for the purchase of only a portion of the
affected mortgage loans. Any settlement could lead to losses on the mortgage
loans which would be borne by the related securities. Neither the depositor nor
the master servicer will be obligated to purchase a mortgage loan if a mortgage
loan seller defaults on its obligation to do so, and no assurance can be given
that the mortgage loan sellers will carry out their purchase obligations. A
default by a mortgage loan seller is not a default by the depositor or by the
master servicer. Any mortgage loan not so purchased or substituted for shall
remain in the related trust fund and any related losses shall be allocated to
the related credit support, to the extent available, and otherwise to one or
more classes of the related series of securities.

     All of the representations and warranties of a mortgage loan seller in
respect of a mortgage loan will have been made as of the date on which the
mortgage loan was purchased from the mortgage loan seller by or on behalf of the
depositor which will be a date prior to the date of initial issuance of the
related series of securities. A substantial period of time may have elapsed
between the date as of which the representations and warranties were made and
the later date of initial issuance of the related series of securities.
Accordingly, the mortgage loan seller's purchase obligation, or, if specified in
the related prospectus supplement, limited replacement option, will not arise
if, during the period after the date of sale by the mortgage loan seller, an
event occurs that would have given rise to a repurchase obligation had the event
occurred prior to sale of the affected mortgage loan.


                                        7

<PAGE>



The occurrence of events during this period that are not covered by a mortgage
loan seller's purchase obligation could lead to losses that, to the extent not
covered by credit support, may adversely affect
the yield to maturity of the related securities.

THE YIELD TO MATURITY ON YOUR SECURITIES WILL DEPEND ON A VARIETY OF FACTORS
INCLUDING PREPAYMENTS

     The timing of principal payments on the securities of a series will be
affected by a number of factors, including the following:

     o        the extent of prepayments on the underlying assets in the trust
              fund or;

     o        how payments of principal are allocated among the classes of
              securities of that series as specified in the related prospectus
              supplement;

     o        if any party has an option to terminate the related trust fund
              early, the effect of the exercise of the option;

     o        the rate and timing of defaults and losses on the assets in the
              related trust fund; and

     o        repurchases of assets in the related trust fund as a result of
              material breaches of representations and warranties made by the
              depositor, master servicer or mortgage loan seller.

     Prepayments on mortgage loans are influenced by a number of factors,
including prevailing mortgage market interest rates, local and regional economic
conditions and homeowner mobility. The rate of prepayment of the mortgage loans
included in or underlying the assets in each trust fund may affect the yield to
maturity of the securities. In general, if you purchase a class of offered
securities at a price higher than its outstanding principal balance and
principal distributions on your class occur faster than you anticipate at the
time of purchase, the yield will be lower than you anticipate. Conversely, if
you purchase a class of offered securities at a price lower than its outstanding
principal balance and principal distributions on that class occur more slowly
than you anticipate at the time of purchase, the yield will be lower than you
anticipate.

     To the extent amounts in any pre-funding account have not been used to
purchase additional mortgage loans, holders of the related securities may
receive an additional prepayment.

     The yield to maturity on the types of classes of securities, including
securities that are entitled to principal distributions only or interest
distributions only, securities as to which accrued interest or a portion thereof
will not be distributed but rather added to the principal balance of the
security, and securities with an interest rate which fluctuates inversely with
an index, may be relatively more sensitive to the rate of prepayment on the
related mortgage loans than other classes of securities and, if applicable, to
the occurrence of an early retirement of the securities. The prospectus
supplement for a series will set forth the related classes of securities that
may be more sensitive to prepayment rates.


                                       8

<PAGE>




     SEE "YIELD CONSIDERATIONS" AND "MATURITY AND PREPAYMENT CONSIDERATIONS" IN
THIS PROSPECTUS.


THE EXERCISE OF AN OPTIONAL TERMINATION RIGHT WILL AFFECT THE YIELD TO MATURITY
ON THE RELATED SECURITIES

     If so specified in the related prospectus supplement, certain parties will
have the option to purchase, in whole but not in part, the securities specified
in the related prospectus supplement in the manner set forth in the related
prospectus supplement. Upon the purchase of the securities or at any time
thereafter, at the option of the party entitled to termination, the assets of
the trust fund may be sold, thereby effecting a retirement of the securities and
the termination of the trust fund, or the securities so purchased may be held or
resold.

     The prospectus supplement for each series of securities will set forth the
party that may, at its option, purchase the assets of the related trust fund if
the aggregate principal balance of the mortgage loans and other trust fund
assets in the trust fund for that series is less than the percentage specified
in the related prospectus supplement of the aggregate principal balance of the
outstanding mortgage loans and other trust fund assets at the cut-off date for
that series. The percentage will be between 25% and 0%. The exercise of the
termination right will effect the early retirement of the securities of that
series. The prospectus supplement for each series of securities will set forth
the price to be paid by the terminating party and the amounts that the holders
of the securities will be entitled to receive upon early retirement.

     In addition to the repurchase of the assets in the related trust fund as
described in the paragraph above, the related prospectus supplement may permit
that, a holder of a non-offered class of securities will have the right, solely
at its discretion, to terminate the related trust fund on any distribution date
after the 12th distribution date following the date of initial issuance of the
related series of securities and until the date as the option to terminate as
described in the paragraph above becomes exercisable and thereby effect early
retirement of the securities of the series. Any call of this type will be of the
entire trust fund at one time; multiple calls with respect to any series of
securities will not be permitted. In this case, the call class must remit to the
trustee for distribution to the holders of the related securities offered hereby
a price equal to 100% of the principal balance of their securities offered
hereby as of the day of the purchase plus accrued interest thereon at the
applicable interest rate during the related period on which interest accrues on
their securities. If funds equal to the call price are not deposited with the
related trustee, the securities will remain outstanding. There will not be any
additional remedies available to securityholders. In addition, in the case of a
trust fund for which a REMIC election or elections have been made, the
termination will constitute a "qualified liquidation" under Section 860F of the
Internal Revenue Code. In connection with a call by the call class, the final
payment to the securityholders will be made upon surrender of the related
securities to the trustee. Once the securities have been surrendered and paid in
full, there will not be any continuing liability from the securityholders or
from the trust fund to securityholders.



                                        9

<PAGE>



     A trust fund may also be terminated and the certificates retired upon the
master servicer's determination, if applicable and based upon an opinion of
counsel, that the REMIC status of the trust fund has been lost or that a
substantial risk exists that the REMIC status will be lost for the then current
taxable year.

     The termination of a trust fund and the early retirement of securities by
any party would decrease the average life of the securities and may adversely
affect the yield to holders of some or all classes
of the  related securities.

VIOLATIONS OF CONSUMER PROTECTION LAWS MAY RESULT IN LOSSES ON THE MORTGAGE
LOANS AND THE SECURITIES BACKED BY THOSE MORTGAGE LOANS

     Federal and state laws, public policy and general principles of equity
relating to the protection of consumers, unfair and deceptive practices and debt
collection practices:

     o    regulate interest rates and other charges on mortgage loans;

     o    require specific disclosures to borrowers;

     o    require licensing of originators; and

     o    regulate generally the origination, servicing and collection process
          for the mortgage loans.

     Depending on the specific facts and circumstances involved, violations may
limit the ability of a trust fund to collect all or a part of the principal of
or interest on the mortgage loans, may entitle the borrower to a refund of
amounts previously paid and could result in liability for damages and
administrative enforcement against the originator or an assignee of the
originator, like a trust fund, or the initial servicer or a subsequent servicer,
as the case may be. In particular, it is possible that mortgage loans included
in a trust fund will be subject to the Home Ownership and Equity Protection Act
of 1994. The Homeownership Act adds additional provisions to Regulation Z, the
implementing regulation of the Federal Truth-In-Lending Act. These provisions
impose additional disclosure and other requirements on creditors with respect to
non-purchase money mortgage loans with high interest rates or high up-front fees
and charges. In general, mortgage loans within the purview of the Homeownership
Act have annual percentage rates over 10 percentage points greater than the
yield on Treasury securities of comparable maturity and/or fees and points which
exceed the greater of 8% of the total loan amount or $441. The $441 amount is
adjusted annually based on changes in the Consumer Price Index for the prior
year. The provisions of the Homeownership Act apply on a mandatory basis to all
mortgage loans originated on or after October 1, 1995. These provisions can
impose specific statutory liabilities upon creditors who fail to comply with
their provisions and may affect the enforceability of the related loans. In
addition, any assignee of the creditor, like a trust fund, would generally be
subject to all claims and defenses that the consumer could assert against the
creditor, including the right to rescind the mortgage loan. Recently, class
action lawsuits under the Homeownership Act have been brought naming as a
defendant securitization trusts like the trust funds described in this
prospectus with respect to the mortgage loans.



                                       10

<PAGE>



     In addition, amendments to the federal bankruptcy laws have been proposed
that could result in (1) the treatment of a claim secured by a junior lien in a
borrower's principal residence as protected only to the extent that the claim
was secured when the security interest was made and (2) the disallowance of
claims based on secured debt if the creditor failed to comply with specific
provisions of the Truth in Lending Act (15 U.S.C. ss.1639). These amendments
could apply retroactively to secured debt incurred by the debtor prior to the
date of effectiveness of the amendments.

     The depositor will represent that all applicable federal and state laws
were complied with in connection with the origination of the mortgage loans. If
there is a material and adverse breach of a representation, the depositor will
be obligated to repurchase any affected mortgage loan or to substitute a new
mortgage loan into the related trust fund. SEE "LEGAL ASPECTS OF MORTGAGE
LOANS".


MODIFICATION OF A MORTGAGE LOAN BY THE MASTER SERVICER MAY REDUCE THE YIELD ON
THE RELATED SECURITIES

     In instances in which a mortgage loan is in default, or if default is
reasonably foreseeable, the master servicer, if it determines it is in the best
interests of the related securityholders, may permit modifications of the
mortgage loan rather than proceeding with foreclosure. Modification may have the
effect of reducing the interest rate on the mortgage loan, forgiving the payment
of principal or interest rate or extending the final maturity date of the
mortgage loan. Any modified mortgage loan retained in the related trust fund may
result in reduced collections from that mortgage loan and, to the extent not
covered by the related credit support, reduced distributions on one or more
classes of the related securities. Any mortgage loan modified to extend the
final maturity of the mortgage loan may result in extending the final maturity
of one or more classes of the related securities. SEE "COLLECTION AND OTHER
SERVICING PROCEDURES EMPLOYED BY THE MASTER SERVICER".





                                       11

<PAGE>



     Several capitalized terms are used in this prospectus to assist you in
understanding the terms of the securities. All of the capitalized terms used in
this prospectus are defined in the glossary beginning on page 140 in this
prospectus.


                         DESCRIPTION OF THE TRUST FUNDS

     The trust fund for each series will be held by the trustee for the benefit
of the related securityholders. Each trust fund will consist of:

     o   a segregated pool of various types of one- to four-family residential
         first and junior lien mortgage loans, cooperative apartment loans or
         manufactured housing conditional sales contracts and installment loan
         agreements as from time to time are subject to the related agreement
         governing the trust fund;

     o   amounts on deposit in the certificate account, pre-funding account, if
         applicable, or any other account maintained for the benefit of the
         securityholders;

     o   property acquired on behalf of securityholders by foreclosure, deed in
         lieu of foreclosure or repossession and any revenues received on the
         property;

     o   the rights of the depositor under any hazard insurance policies, FHA
         insurance policies, VA guarantees and primary mortgage insurance
         policies to be included in the trust fund, each as described under
         "Description of Primary Insurance Policies";

     o   the rights of the depositor under the agreement or agreements under
         which it acquired the mortgage loans to be included in the trust fund;

     o   the rights of the trustee in any cash advance reserve fund or surety
         bond to be included in the trust fund, each as described under
         "Advances by Master Servicer in Respect of Delinquencies on the Trust
         Fund Assets"; and

     o   any letter of credit, mortgage pool insurance policy, special hazard
         insurance policy, bankruptcy bond, financial guarantee insurance
         policy, reserve fund, currency or interest rate exchange agreement or
         guarantee, each as described under "Description of Credit Support".


     To the extent specified in the related prospectus supplement, a portion of
the interest received on a mortgage loan may not be included in the trust for
that series. Instead, the retained interest will be retained by or payable to
the originator, servicer or seller of the loan, free and clear of the interest
of securityholders under the related agreement.

DESCRIPTION OF THE MORTGAGE LOANS TO BE INCLUDED IN A TRUST FUND

     Each mortgage loan will be originated by a person other than the depositor.
Each mortgage loan will be selected by the depositor for inclusion in a trust
fund from among those purchased by the


                                       12

<PAGE>



depositor, either directly or through its affiliates, from New Century Mortgage
Corporation, the indirect parent of the depositor, and its affiliates or from
banks, savings and loan associations, mortgage bankers, mortgage brokers,
investment banking firms, the Federal Deposit Insurance Corporation and other
mortgage loan originators or sellers not affiliated with the depositor. Each
seller of mortgage loans will be referred to in this prospectus and the related
prospectus supplement as a mortgage loan seller. The mortgage loans acquired by
the depositor will have been originated in accordance with the underlying
criteria described in this prospectus under "The Depositor's Mortgage Loan
Purchase Program-Underwriting Standards" and in the prospectus supplement. All
mortgage loans to be included in a trust fund will have been purchased by the
depositor on or before the date of initial issuance of the related securities.

     The mortgage loans included in a trust fund may be secured by any of the
following:

     o   first or junior liens evidenced by promissory notes on one- to
         four-family residential properties including detached and attached
         dwellings, townhouses, rowhouses, individual condominium units,
         individual units in planned-unit developments and individual units in
         de minimis planned-unit developments. Loans secured by this type of
         property may be conventional loans, FHA-insured loans or VA-guaranteed
         loans as specified in the related prospectus supplement;

     o   mortgage loans evidenced by promissory notes secured by shares in a
         private cooperative housing corporation that give the owner of the
         shares the right to occupy a particular dwelling unit in the
         cooperative;

     o   conditional sales contracts and installment loan agreements with
         respect to new or used manufactured homes; or

     o   real property acquired upon foreclosure or comparable conversion of the
         mortgage loans included in a trust fund.

     No more than 10% of the assets of a trust fund, by original principal
balance of the pool, will consist of conditional sales contracts or installment
loan agreements secured by manufactured homes. The manufactured homes securing
the manufactured housing contracts will consist of manufactured homes within the
meaning of 42 United States Code, Section 5402(6), which defines a manufactured
home as "a structure, transportable in one or more sections, which in the
traveling mode, is eight body feet or more in width or forty body feet or more
in length, or, when erected on site, is three hundred twenty or more square
feet, and which is built on a permanent chassis and designed to be used as a
dwelling with or without a permanent foundation when connected to the required
utilities, and includes the plumbing, heating, air conditioning, and electrical
systems contained therein; except that such term shall include any structure
which meets all the requirements of this paragraph except the size requirements
and with respect to which the manufacturer voluntarily files a certification
required by the Secretary of Housing and Urban Development and complies with the
standards established under this chapter."



                                       13

<PAGE>



     The mortgaged properties may be located in any one of the fifty states, the
District of Columbia, Guam, Puerto Rico or any other territory of the United
States. The mortgaged properties may include leasehold interests in residential
properties, the title to which is held by third party lessors. The term of any
leasehold will exceed the term of the mortgage note by at least five years.

     The mortgage loans to be included in a trust fund will be any one of the
following types of mortgage loans:

     o   Fully amortizing mortgage loans with a fixed rate of interest and level
         monthly payments to maturity;

     o   Fully amortizing mortgage loans with an interest rate that adjusts
         periodically, with corresponding adjustments in the amount of monthly
         payments, to equal the sum, which may be rounded, of a fixed percentage
         amount and an index;

     o   ARM Loans that provide for an election, at the borrower's option, to
         convert the adjustable interest rate to a fixed interest rate, which
         will be described in the related prospectus supplement;

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

     o   Fully amortizing mortgage loans with a fixed interest rate and level
         monthly payments, or payments of interest only, during the early years
         of the term, followed by periodically increasing monthly payments of
         principal and interest for the duration of the term or for a specified
         number of years, which will be described in the related prospectus
         supplement;

     o   Fixed interest rate mortgage loans providing for level payment of
         principal and interest on the basis of an assumed amortization schedule
         and a balloon payment at the end of a specified term;

     o   Mortgage loans that provide for a line of credit under which amounts
         may be advanced to the borrower from time to time; and

     o   Another type of mortgage loan described in the related prospectus
         supplement.

     All of the mortgage loans to be included in a trust fund will have:

     o   individual principal balances at origination of not less than $10,000
         or more than $5,000,000,

     o   original terms to maturity of not more than 40 years, and

     o   a loan-to-value ratio at origination not in excess of 150%.



                                       14

<PAGE>



     The loan-to-value ratio of a mortgage loan at any given time is the
ratio, expressed as a percentage, of the then outstanding principal balance of
the mortgage loan, or, in the case of a home equity line of credit loan, the
maximum principal amount which may be advanced over the term of the loan, plus,
in the case of a mortgage loan secured by a junior lien, the outstanding
principal balance of the related senior liens, to the value of the related
mortgaged property. The value of a single-family property or cooperative unit,
other than with respect to loans made to refinance existing loans, is the lesser
of (a) the appraised value determined in an appraisal obtained by the originator
at origination of the loan or, if the mortgaged property has been appraised
subsequent to origination, the value determined in the subsequent appraisal and
(b) the sales price for the property.

The value of the mortgaged property securing a mortgage loan made to refinance
an existing loan is the appraised value of the mortgaged property determined in
an appraisal obtained at the time of origination of the refinance loan or in an
appraisal, if any, obtained at the time of refinancing. For purposes of
calculating the loan-to-value ratio of a manufactured housing contract relating
to a new manufactured home, the value is no greater than the sum of a fixed
percentage of the list price of the unit actually billed by the manufacturer to
the dealer, exclusive of freight to the dealer site, including accessories
identified in the invoice, plus the actual cost of any accessories purchased
from the dealer, a delivery and set-up allowance, depending on the size of the
unit, and the cost of state and local taxes, filing fees and up to three years
prepaid hazard insurance premiums. With respect to a used manufactured home, the
value is generally the least of the sale price, the appraised value, and the
National Automobile Dealer's Association book value plus prepaid taxes and
hazard insurance premiums. The appraised value of a manufactured home is based
upon the age and condition of the manufactured housing unit and the quality and
condition of the mobile home park in which it is situated, if applicable.
Manufactured homes are less likely than other types of housing to experience
appreciation in value and are more likely to experience depreciation in value.

     The underwriting standards of the mortgage loan originator or mortgage loan
seller may require a review of the appraisal used to determine the loan-to-value
of a mortgage loan. Where the review appraisal results in a valuation of the
mortgaged property that is less than a specified percentage of the original
appraisal, the loan-to-value ratio of the related mortgage loan will be based on
the review appraisal. The prospectus supplement of each series will describe the
percentage variance used by the related mortgage loan originator or mortgage
loan seller in determining whether the review appraisal will apply.

     Each mortgage loan having a loan-to-value ratio at origination in excess of
80%, may be required to be covered by a primary mortgage guaranty insurance
policy insuring against default on the mortgage loan as to at least the
principal amount thereof exceeding 75% of the value of the mortgaged property at
origination of the mortgage loan. This type of insurance will remain in force at
least until the mortgage loan amortizes to a level that would produce a
loan-to-value ratio lower than 80%. SEE "DESCRIPTION OF PRIMARY INSURANCE
POLICIES--PRIMARY MORTGAGE INSURANCe POLICIES".

     A mortgaged property may have been subject to secondary financing at
origination of the mortgage loan, but, unless otherwise specified in the related
prospectus supplement, the total amount of primary and secondary financing at
the time of origination of the mortgage loan did not produce a combined
loan-to-value ratio in excess of 150%. The trust fund may contain mortgage loans
secured by junior liens, and the related senior lien may not be included in the
trust fund. The primary risk to holders of mortgage loans secured by junior
liens is the possibility that adequate


                                       15

<PAGE>



funds will not be received in connection with a foreclosure of the related
senior liens to satisfy fully both the senior liens and the junior mortgage
loan. SEE "LEGAL ASPECTS OF THE MORTGAGE LOANS-FORECLOSURE ON MORTGAGES".

     As of the cut-off date specified in the related prospectus supplement, the
aggregate principal balance of mortgage loans secured by condominium units will
not exceed 30% of the aggregate principal balance of the mortgage loans in the
related mortgage pool. A mortgage loan secured by a condominium unit will not be
included in a mortgage pool unless, at the time of sale of the mortgage loan by
the mortgage loan seller, representations and warranties as to the condominium
project are made by the mortgage loan seller or an affiliate of the mortgage
loan seller or by another person acceptable to the depositor having knowledge
regarding the subject matter of those representations and warranties. The
mortgage loan seller, or another party on its behalf, will have made the
following representations and warranties:

     o   If a condominium project is subject to developer control or to
         incomplete phasing or add-ons, at least 50% of the units have been sold
         to bona fide purchasers to be occupied as primary residences or
         vacation or second homes.

     o   If a condominium project has been controlled by the unit owners, other
         than the developer, and is not subject to incomplete phasing or
         add-ons, at least 50% of the units been are occupied as primary
         residences or vacation or second homes.

      SEE "THE DEPOSITOR'S MORTGAGE LOAN PURCHASE PROGRAM--REPRESENTATIONS BY OR
ON BEHALF Of MORTGAGE LOAN SELLERS; REMEDIES FOR BREACH OF REPRESENTATION" IN
THIS PROSPECTUS FOR A DESCRIPTION OF OTHER REPRESENTATIONS MADE BY OR ON BEHALF
OF MORTGAGE LOAN SELLERS AT THE TIME MORTGAGE LOANS ARE SOLD.

     The trust fund may include mortgage loans subject to temporary buydown
plans which provide that the monthly payments made by the borrower in the early
years of the mortgage loan will be less than the scheduled monthly payments on
the mortgage loan, the resulting difference to be made up from (a) an amount
contributed by the borrower, the seller of the mortgaged property, or another
source and placed in a custodial account and (b) unless otherwise specified in
the prospectus supplement, investment earnings on the buydown funds. The
borrower under a buydown mortgage loan is usually qualified at the lower monthly
payment taking into account the funds on deposit in the custodial account.
Accordingly, the repayment of a buydown mortgage loan is dependent on the
ability of the borrower to make larger level monthly payments after the funds in
the custodial account have been depleted. SEE "THE DEPOSITOR'S MORTGAGE LOAN
PURCHASE PROGRAM--UNDERWRITING STANDARDS" FOR A DISCUSSION OF LOSS AND
DELINQUENCY CONSIDERATIONS RELATING TO BUYDOWN MORTGAGE LOANS.

     The trust fund may include mortgage loans that provide for a line of credit
under which amounts may be advanced to the borrower from time to time. Interest
on each home equity line of credit loan, excluding introductory rates offered
from time to time during promotional periods, is computed and payable monthly on
the average daily outstanding balance of the mortgage loan. Principal on a home
equity line of credit loan may be drawn down, up to a maximum amount as set
forth in the related prospectus supplement, or repaid under each mortgage loan
from time to time, but may be subject to a minimum periodic payment. Each home
equity line of credit loan included in a trust fund will be


                                       16

<PAGE>



secured by a lien on a one-to-four family property or a manufactured home. A
trust fund will not include any amounts borrowed under a home equity line of
credit loan after the cut-off date specified
in the related prospectus supplement.

     The trust fund may include mortgage loans that are delinquent as of the
date the related series of securities is issued. In that case, the related
prospectus supplement will set forth, as to each mortgage loan, available
information as to the period of delinquency and any other information relevant
for a prospective purchaser to make an investment decision. No mortgage loan in
a trust fund will be 90 or more days delinquent and no trust fund will include a
concentration of mortgage loans which are more than 30 and less than 90 days
delinquent of greater than 20%.

     MORTGAGE LOAN INFORMATION IN PROSPECTUS SUPPLEMENT. Each prospectus
supplement will contain specific information with respect to the mortgage loans
contained in the related trust fund, as of the cut-off date specified in the
prospectus supplement, which will usually be close of business on the first day
of the month of formation of the related trust fund, to the extent specifically
known to the depositor as of the date of the prospectus supplement, including
the following:

     o   the aggregate outstanding principal balance, the largest, smallest and
         average outstanding principal balance of the mortgage loans,

     o   the type of property securing the mortgage loans, e.g., one- to
         four-family houses, shares in cooperatives and the related proprietary
         leases or occupancy agreements, condominium units and other attached
         units, new or used manufactured homes and vacation and second homes,

     o   the original terms to maturity of the mortgage loans,

     o   the earliest origination date and latest maturity date,

     o   the aggregate principal balance of mortgage loans having loan-to-value
         ratios at origination exceeding 80%, or, with respect to mortgage loans
         secured by a junior lien, the aggregate principal balance of mortgage
         loans having combined loan-to-value ratios exceeding 80%,

     o   the interest rates or range of interest rates borne by the mortgage
         loans,

     o   the geographical distribution of the mortgaged properties on a
         state-by-state basis,

     o   the number and aggregate principal balance of buydown mortgage loans,
         if any,

     o   the weighted average retained interest, if any,

     o   with respect to ARM Loans, the index, the adjustment dates, the
         highest, lowest and weighted average margin, and the maximum interest
         rate variation at the time of any adjustment and over the life of the
         ARM Loan, and

     o   whether the mortgage loans provide for payments of interest only for
         any period and the frequency and amount by which, and the term during
         which, monthly payments adjust.



                                       17

<PAGE>



     If specific information respecting the trust fund assets is not known to
the depositor at the time securities are initially offered, more general
information of the nature described in the bullet points above will be provided
in the prospectus supplement, and specific information as to the trust fund
assets to be included in the trust fund on the date of issuance of the
securities will be set forth in a report which will be available to purchasers
of the related securities at or before the initial issuance of the securities
and will be filed, together with the related pooling and servicing agreement,
with respect to each series of certificates, or the related servicing agreement,
trust agreement and indenture, with respect to each series of notes, as part of
a report on Form 8-K with the Securities and Exchange Commission within fifteen
days after the initial issuance. If mortgage loans are added to or deleted from
the trust fund after the date of the related prospectus supplement, the addition
or deletion will be noted on the Current Report or Form 8-K. In no event,
however, will more than 5%, by principal balance at the cut-off date, of the
mortgage loans deviate from the characteristics of the mortgage loans set forth
in the related prospectus supplement. In addition, a report on Form 8-K will be
filed within 15 days after the end of any pre-funding period containing
information respecting the trust fund assets transferred to a trust fund after
the date of issuance of the related securities as described in the following
paragraph.

DESCRIPTION OF THE PRE-FUNDING ACCOUNT FOR THE PURCHASE OF ADDITIONAL MORTGAGE
LOANS

     The agreement governing the trust fund may provide for the transfer by the
mortgage loan seller of additional mortgage loans to the related trust fund
after the date of initial issuance of the securities. In that case, the trust
fund will include a pre-funding account, into which all or a portion of the
proceeds of the sale of one or more classes of securities of the related series
will be deposited to be released as additional mortgage loans are transferred.
Additional mortgage loans will be required to conform to the requirements set
forth in the related agreement or other agreement providing for the transfer,
and will be underwritten to the same standards as the mortgage loans initially
included in the trust fund. A pre-funding account will be required to be
maintained as an eligible account under the related agreement, all amounts in
the pre-funding account will be required to be invested in U.S. government
securities or other investments that are rated in one of the top three rating
categories by a nationally recognized rating agency as specified in the
agreement and the amount held in the pre-funding account shall at no time exceed
40% of the aggregate outstanding principal balance of the securities. The
related agreement providing for the transfer of additional mortgage loans will
provide that all transfers must be made within 3 months after the date on which
the related securities were issued, and that amounts set aside to fund the
transfers, whether in a pre- funding account or otherwise, and not so applied
within the required period of time will be deemed to be principal prepayments
and applied in the manner set forth in the related prospectus supplement.


     The depositor will be required to provide data regarding the additional
mortgage loans to the rating agencies and the security insurer, if any,
sufficiently in advance of the scheduled transfer to permit review by the rating
agencies and the security insurer. Transfer of the additional mortgage loans
will be further conditioned upon confirmation by the rating agencies that the
addition of mortgage loans to the trust fund will not result in the downgrading
of the securities or, in the case of a series guaranteed or supported by a
security insurer, will not adversely affect the capital requirements of the
security insurer. Finally, a legal opinion to the effect that the conditions to
the transfer of the additional mortgage loans have been satisfied will be
required.



                                       18

<PAGE>



                                  THE DEPOSITOR

     New Century Mortgage Securities, Inc., the depositor, was incorporated in
the State of Delaware on March 25, 1999 as an indirect wholly-owned subsidiary
of New Century Mortgage Corporation. The depositor was organized for the purpose
of serving as a private secondary mortgage market conduit. The depositor
maintains its principal office at 18400 Von Karman, Suite 1000, Irvine,
California 92612. Its telephone number is 949-440-7030.

     The depositor does not have, nor is it expected in the future to have, any
significant assets. The prospectus supplement for each series of securities will
disclose if the depositor is a party to any legal proceedings that could have a
material impact on the related trust fund and the interests of the potential
investors.

                                 USE OF PROCEEDS

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


                              YIELD CONSIDERATIONS

     The basis on which each monthly interest payment on a trust fund asset is
calculated will be either:

     o   as one-twelfth of the interest rate on that asset multiplied by the
         unpaid principal balance of the trust fund asset, often referred to as
         the 30/360 basis, or

     o   by multiplying the unpaid principal balance of the trust fund asset by
         the number of days elapsed since the last day interest was paid on that
         asset and dividing by 365, often referred to as the simple interest
         method.

     Interest to be distributed on each distribution date to the holders of the
various classes of securities, other than principal only classes of Strip
Securities, of each series may be similarly calculated or may be calculated by
multiplying the outstanding principal balance of the security by the actual
number of days elapsed in the accrual period and dividing 360, often referred to
as the actual/360 basis. In the case of Strip Securities with no or a nominal
principal balance, distributions of interest will be in an amount described in
the related prospectus supplement.

     The effective yield to securityholders will be lower than the yield
otherwise produced by the applicable security interest rate, or, as to a Strip
Security, the distributions of Stripped Interest thereon, and purchase price,
because although interest that accrued on each trust fund asset during each
month is due and payable on the first day of the following month, the
distribution of interest on the securities will not be made until the
distribution date occurring in the month following the month


                                       19

<PAGE>



of accrual of interest on the mortgage loans or later in the case of a series of
securities having distribution dates occurring at intervals less frequently than
monthly.

     When a principal prepayment in full is made on a mortgage loan, the
borrower is charged interest only for the period from the due date of the
preceding monthly payment up to the date of the prepayment, instead of for a
full month. When a partial prepayment is made on a mortgage loan, the mortgagor
is not charged interest on the amount of the prepayment for the month in which
the prepayment is made. Accordingly, the effect of principal prepayments in full
during any month will be to reduce the aggregate amount of interest collected
that is available for distribution to securityholders. The mortgage loans in a
trust fund may contain provisions limiting prepayments or requiring the payment
of a prepayment penalty upon prepayment in full or in part. If so specified in
the related prospectus supplement, a prepayment penalty collected may be applied
to offset the above-described shortfalls in interest collections on the related
distribution date. Full and partial principal prepayments collected during the
prepayment period set forth in a prospectus supplement will be available for
distribution to securityholders on the related distribution date. Neither the
trustee nor the depositor will be obligated to fund shortfalls in interest
collections resulting from prepayments. The prospectus supplement for a series
of securities may specify that the master servicer will be obligated to pay from
its own funds, without reimbursement, those interest shortfalls attributable to
full and partial prepayments by mortgagors but only up to an amount equal to its
servicing fee for the related due period. SEE "MATURITY AND PREPAYMENT
CONSIDERATIONS" AND "DESCRIPTION OF THE SECURITIES".

     In addition, if so specified in the related prospectus supplement, a holder
of a non-offered class of securities will have the right, solely at its
discretion, to terminate the related trust fund on any distribution date after
the 12th distribution date following the date of initial issuance of the related
series of securities and until the date as the Clean-up Call becomes exercisable
and thereby effect early retirement of the securities of the series. Any call of
this type will be of the entire trust fund at one time; multiple calls with
respect to any series of securities will not be permitted. Early termination
would result in the concurrent retirement of all outstanding securities of the
related series and would decrease the average lives of the terminated
securities, perhaps significantly. The earlier after the date of the initial
issuance of the securities that the termination occurs, the greater would be the
effect.

     The prospectus supplement for each series of securities may set forth
additional information regarding yield considerations.

                     MATURITY AND PREPAYMENT CONSIDERATIONS

     The original terms to maturity of the trust fund assets in a particular
trust fund will vary depending upon the type of mortgage loans underlying or
comprising the trust fund assets in a trust fund. Each prospectus supplement
will contain information with respect to the type and maturities of the trust
fund assets in the related trust fund. The mortgage loans in a trust fund may
contain provisions prohibiting prepayment for a specified period after the
origination date, prohibiting partial prepayments entirely or prohibiting
prepayment in full or in part without a prepayment penalty.

     The prepayment experience on the mortgage loans underlying or comprising
the trust fund assets in a trust fund will affect the weighted average life of
the related series of securities. Weighted


                                       20

<PAGE>



average life refers to the average amount of time that will elapse from the date
of issuance of a security until each dollar of principal of the security will be
repaid to the investor. The weighted average life of the securities of a series
will be influenced by the rate at which principal on the mortgage loans
underlying or comprising the trust fund assets included in the related trust
fund is paid, which payments may be in the form of scheduled amortization or
prepayments. For this purpose, the term prepayment includes prepayments, in
whole or in part, and liquidations due to default and hazard or condemnation
losses. The rate of prepayment with respect to fixed rate mortgage loans has
fluctuated significantly in recent years. In general, if interest rates fall
below the interest rates on the mortgage loans underlying or comprising the
trust fund assets, the rate of prepayment would be expected to increase. There
can be no assurance as to the rate of prepayment of the mortgage loans
underlying or comprising the trust fund assets in any trust fund. The depositor
is not aware of any publicly available statistics relating to the principal
prepayment experience of diverse portfolios of mortgage loans over an extended
period of time. All statistics known to the depositor that have been compiled
with respect to prepayment experience on mortgage loans indicates that while
some mortgage loans may remain outstanding until their stated maturities, a
substantial number will be paid prior to their respective stated maturities. The
depositor is not aware of any historical prepayment experience with respect to
mortgage loans secured by properties located in Puerto Rico or Guam and,
accordingly, prepayments on loans secured by properties in Puerto Rico or Guam
may not occur at the same rate or be affected by the same factors as other
mortgage loans.

     A number of factors, including homeowner mobility, economic conditions,
enforceability of due-on-sale clauses, mortgage market interest rates, the terms
of the mortgage loans, as affected by the existence of lockout provisions,
due-on-sale and due-on-encumbrance clauses, prepayment fees and the frequency
and amount of any future draws on any home equity line of credit loans, the
quality of management of the mortgaged properties, possible changes in tax laws
and the availability of mortgage funds, may affect prepayment experience. Other
than FHA loans and VA loans, all mortgage loans in the trust fund will contain
due-on-sale provisions permitting the lender to accelerate the maturity of the
mortgage loan upon sale or other types of transfers by the borrower of the
underlying mortgaged property. Loans insured by the FHA and loans guaranteed by
the VA contain no due-on-sale clauses and may be assumed by the purchaser of the
mortgaged property. An ARM Loan may also be assumable under certain conditions,
despite the existence of a due-on-sale clause, if the proposed transferee of the
related mortgaged property establishes its ability to repay the mortgage loan
and, in the reasonable judgment of the master servicer or sub-servicer, the
security for the ARM Loan would not be impaired by the assumption. Thus, the
rate of prepayments on FHA loans, VA loans and ARM Loans may be lower than that
of conventional mortgage loans bearing comparable interest rates. The extent to
which ARM Loans, FHA loans and VA loans are assumed by purchasers of the
mortgaged properties rather than prepaid in connection with the sales of the
mortgaged properties will affect the weighted average life of the related
securities.

     The master servicer generally will enforce, in accordance with the terms of
the related servicing agreement, any due-on-sale clause or due-on-encumbrance
clause, to the extent it has knowledge of the conveyance or encumbrance or the
proposed conveyance or encumbrance of the underlying mortgaged property and
reasonably believes that it is entitled to do so under applicable law; provided,
however, that the master servicer will not take any enforcement action that
would impair or threaten to impair any recovery under any related insurance
policy. SEE "DESCRIPTION OF THE SECURITIES--COLLECTION AND OTHER SERVICING
PROCEDURES EMPLOYED BY THE MASTER SERVICER" AND


                                       21

<PAGE>



"LEGAL ASPECTS OF MORTGAGE LOANS--ENFORCEABILITY OF PROVISIONS" AND
"--PREPAYMENT CHARGES AND PREPAYMENTS" FOR A DESCRIPTION OF THE PROVISIONS OF
EACH AGREEMENT GOVERNING THE SERVICING OF THE MORTGAGE LOANS AND LEGAL
DEVELOPMENTS THAT MAY AFFECT THE PREPAYMENT EXPERIENCE ON THE MORTGAGE LOANS.
SEE "DESCRIPTION OF THE SECURITIES--TERMINATION OF THE TRUST FUND AND
DISPOSITION OF TRUST FUND ASSETS" FOR A DESCRIPTION OF THE POSSIBLE EARLY
TERMINATION OF ANY SERIES OF SECURITIES. SEE ALSO "THE DEPOSITOR'S MORTGAGE LOAN
PURCHASE PROGRAM--REPRESENTATIONS BY OR ON BEHALF OF MORTGAGE LOAN SELLERS;
REMEDIES FOR BREACH OF REPRESENTATION" AND "DESCRIPTION OF THE
SECURITIES--ASSIGNMENT OF TRUST FUND ASSETS" FOR A DESCRIPTION OF THE OBLIGATION
OF THE MORTGAGE LOAN SELLERS, THE MASTER SERVICER AND THE DEPOSITOR TO
REPURCHASE MORTGAGE LOANS.

     In addition, if the applicable agreement for a series of securities
provides for a pre-funding account or other means of funding the transfer of
additional mortgage loans to the related trust fund and the trust fund is unable
to acquire the additional mortgage loans within any applicable time limit, the
amounts set aside for the purpose may be applied as principal payments on one or
more classes of securities of the series. SEE "DESCRIPTION OF THE TRUST FUNDS--
DESCRIPTION OF THE PRE-FUNDINg ACCOUNT FOR THE PURCHASE OF ADDITIONAL MORTGAGE
LOANS".

                 THE DEPOSITOR'S MORTGAGE LOAN PURCHASE PROGRAM

     The mortgage loans to be included in a trust fund will be purchased by the
depositor, either directly or indirectly, from the mortgage loan sellers.

UNDERWRITING STANDARDS

     All mortgage loans to be included in a trust fund will have been subject to
underwriting standards acceptable to the depositor and applied as described in
the following paragraph. Each mortgage loan seller, or another party on its
behalf, will represent and warrant that mortgage loans purchased by or on behalf
of the depositor from it have been originated by the related originators in
accordance with these underwriting guidelines.

     The underwriting standards are applied by the originators to evaluate the
value of the mortgaged property and to evaluate the adequacy of the mortgaged
property as collateral for the mortgage loan. While the originator's primary
consideration in underwriting a mortgage loan is the value of the mortgaged
property, the originator also considers the borrower's credit history and
repayment ability as well as the type and use of the mortgaged property. As a
result of this underwriting criteria, changes in the values of mortgage
properties may have a greater effect on the delinquency, foreclosure and loss
experience on the mortgage loans in a trust fund than these changes would be
expected to have on mortgage loans that are originated in a more traditional
manner. No assurance can be given by the depositor that the values of the
related mortgaged properties have remained or will remain at the levels in
effect on the dates of origination of the related mortgage loans.

     Initially, a prospective borrower is required to fill out a detailed
application with respect to the applicant's liabilities, income and credit
history and personal information, as well as an authorization to apply for a
credit report that summarizes the borrower's credit history with local merchants
and lenders and any record of bankruptcy. In addition, an employment
verification is obtained that reports the borrower's current salary and may
contain information regarding length of employment and whether it is expected
that the borrower will continue his or her employment in the future. If a


                                       22

<PAGE>



prospective borrower is self-employed, the borrower is required to submit copies
of signed tax returns. The borrower may also be required to authorize
verification of deposits at financial institutions where the borrower has demand
or savings accounts.

     In determining the adequacy of the property as collateral, an appraisal is
made of each property considered for financing, except in the case of new
manufactured homes whose appraised value is determined using the list price of
the unit and accessories as described above under "Description of the Trust
Funds". Each appraiser is selected in accordance with predetermined guidelines
established for appraisers. The appraiser is required to inspect the property
and verify that it is in good condition and that construction, if new, has been
completed. The appraisal is based on the market value of comparable homes, the
estimated rental income, if considered applicable by the appraiser, and, when
deemed appropriate, the cost of replacing the home. The value of the property
being financed, as indicated by the appraisal, must be high enough so that it
currently supports, and is anticipated to support in the future, the outstanding
loan balance.

     Once all applicable employment, credit and property information is
received, the originator reviews the applicant's source of income, calculates
the amount of income from sources indicated on the loan application or similar
documentation, reviews the credit history of the applicant, calculates the debt
service-to-income ratio to determine the applicant's ability to repay the loan,
reviews the type of property being financed and reviews the property. In
evaluating the credit quality of borrowers, the originator may utilize credit
bureau risk scores, a statistical ranking of likely future credit performance
developed by Fair, Isaac & Company and three national credit data repositories -
Equifax, TransUnion and Experian.

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

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

     With respect to any loan insured by the FHA, the mortgage loan seller is
required to represent that the FHA loan complies with the applicable
underwriting policies of the FHA. SEE "DESCRIPTION OF PRIMARY INSURANCE
POLICIES--FHA INSURANCE".

     With respect to any loan guaranteed by the VA, the mortgage loan seller is
required to represent that the VA loan complies with the applicable underwriting
policies of the VA. SEE "DESCRIPTION OF PRIMARY INSURANCE POLICIES-VA
GUARANTEE".

     The recent foreclosure or repossession and delinquency experience with
respect to loans serviced by the master servicer or, if applicable, a
significant sub-servicer will be provided in the related prospectus supplement.


                                       23

<PAGE>



     The types of loans that may be included in the mortgage pools may be
recently developed and may involve additional uncertainties not present in
traditional types of loans. For example, the mortgage loans may provide for
escalating or variable payments by the borrower. These types of mortgage loans
are underwritten on the basis of a judgment that borrowers will have the ability
to make larger monthly payments in subsequent years. The borrower's income,
however, may not be sufficient to make loan payments as monthly payments
increase.

QUALIFICATIONS OF ORIGINATORS AND MORTGAGE LOAN SELLERS

     Each originator will be required to satisfy the qualifications set forth in
this paragraph. Each originator must be an institution experienced in
originating and servicing conventional mortgage loans in accordance with
accepted practices and prudent guidelines, and must maintain satisfactory
facilities to originate and service those loans. Each originator must be a
HUD-approved mortgagee or an institution the deposit accounts in which are
insured by the Bank Insurance Fund or Savings Association Insurance Fund of the
FDIC. In addition, with respect to FHA loans or VA loans, each originator must
be approved to originate the mortgage loans by the FHA or VA, as applicable.
Each originator and mortgage loan seller must also satisfy criteria as to
financial stability evaluated on a case by case basis by the depositor.

REPRESENTATIONS BY OR ON BEHALF OF MORTGAGE LOAN SELLERS; REMEDIES FOR BREACH OF
REPRESENTATION

     Each mortgage loan seller, or a party on its behalf, will have made
representations and warranties in respect of the mortgage loans sold by that
mortgage loan seller. The following material representations and warranties as
to the mortgage loans will be made by or on behalf of each
mortgage loan seller:

     o   that any required hazard insurance was effective at the origination of
         each mortgage loan, and that each required policy remained in effect on
         the date of purchase of the mortgage loan from the mortgage loan seller
         by or on behalf of the depositor;

     o   that either (A) title insurance insuring, subject only to permissible
         title insurance exceptions, the lien status of the Mortgage was
         effective at the origination of each and the policy remained in effect
         on the date of purchase of the mortgage loan from the mortgage loan
         seller by or on behalf of the depositor or (B) if the mortgaged
         property securing any mortgage loan is located in an area where title
         insurance policies are generally not available, there is in the related
         mortgage file an attorney's certificate of title indicating, subject to
         permissible exceptions set forth therein, the first lien status of the
         mortgage;

     o   that the mortgage loan seller had good title to each mortgage loan and
         each mortgage loan was subject to no offsets, defenses, counterclaims
         or rights of rescission except to the extent that any buydown agreement
         described herein may forgive some indebtedness of a borrower;

     o   that each Mortgage constituted a valid lien on, or security interest
         in, the mortgaged property, subject only to permissible title insurance
         exceptions and senior liens, if any, and that the mortgaged property
         was free from damage and was in good repair;

     o   that there were no delinquent tax or assessment liens against the
         mortgaged property;


                                       24

<PAGE>




     o   that each mortgage loan was not currently more than 90 days delinquent
         as to required payments; and

     o   that each mortgage loan was made in compliance with, and is enforceable
         under, all applicable local, state and federal laws and regulations in
         all material respects.

     If a person other than a mortgage loan seller makes any of the foregoing
representations and warranties on behalf of the mortgage loan seller, the
identity of the person will be specified in the related prospectus supplement.
Any person making representations and warranties on behalf of a mortgage loan
seller shall be an affiliate of the mortgage loan seller or a person acceptable
to the depositor having knowledge regarding the subject matter of those
representations and warranties.

     All of the representations and warranties made by or on behalf of a
mortgage loan seller in respect of a mortgage loan will have been made as of the
date on which the mortgage loan seller sold the mortgage loan to or on behalf of
the depositor. A substantial period of time may have elapsed between the date
the representation or warranty was made to or on behalf of the depositor and the
date of initial issuance of the series of securities evidencing an interest in
the related mortgage loan.

In the event of a breach of any representation or warranty made by a mortgage
loan seller, the mortgage loan seller will be obligated to cure the breach or
repurchase or replace the affected mortgage loan as described in the second
following paragraph. Since the representations and warranties made by or on
behalf of a mortgage loan seller do not address events that may occur following
the sale of a mortgage loan by that mortgage loan seller, it will have a cure,
repurchase or substitution obligation in connection with a breach of a
representation and warranty only if the relevant event that causes the breach
occurs prior to the date of the sale to or on behalf of the depositor. A
mortgage loan seller would have no repurchase or substitution obligations if the
relevant event that causes the breach occurs after the date of the sale to or on
behalf of the depositor. However, the depositor will not include any mortgage
loan in the trust fund for any series of securities if anything has come to the
depositor's attention that would cause it to believe that the representations
and warranties made in respect of a mortgage loan will not be accurate and
complete in all material respects as of the date of initial issuance of the
related series of securities.

     The only representations and warranties to be made for the benefit of
holders of securities in respect of any mortgage loan relating to the period
commencing on the date of sale of a mortgage loan by the mortgage loan seller to
or on behalf of the depositor will be the limited representations of the
depositor and of the master servicer described below under "Description of the
Securities-- Assignment of Trust Fund Assets; Review of Files by Trustee". If
the master servicer is also a mortgage loan seller with respect to a particular
series, the representations will be in addition to the representations and
warranties made by the master servicer in its capacity as a mortgage loan
seller.

     The master servicer and the trustee, or the trustee, will promptly notify
the relevant mortgage loan seller of any breach of any representation or
warranty made by or on behalf of it in respect of a mortgage loan that
materially and adversely affects the value of that mortgage loan or the
interests in the mortgage loan of the securityholders. If the mortgage loan
seller cannot cure a breach within a specified time period up to 120 days from
the date on which the mortgage loan seller was notified of the breach, then the
mortgage loan seller will be obligated to repurchase the affected mortgage loan
from the trustee within a specified time period up to 180 days from the date on
which the mortgage


                                       25

<PAGE>



loan seller was notified of the breach, at the purchase price therefor. A
mortgage loan seller, rather than repurchase a mortgage loan as to which a
breach has occurred, may have the option, within a specified period after
initial issuance of the related series of securities, to cause the removal of
the mortgage loan from the trust fund and substitute in its place one or more
other mortgage loans, in accordance with the standards described below under
"Description of the Securities--Assignment of the Mortgage Loans". The master
servicer will be required under the applicable servicing agreement to use its
best efforts to enforce the repurchase or substitution obligations of the
mortgage loan seller for the benefit of the trustee and the holders of the
securities, following the practices it would employ in its good faith business
judgment were it the owner of the mortgage loan. This repurchase or substitution
obligation will constitute the sole remedy available to holders of securities or
the trustee for a breach of representation by a mortgage loan seller. SEE
"DESCRIPTION OF THE SECURITIES".

     Neither the depositor nor the master servicer will be obligated to purchase
or substitute for a mortgage loan if a mortgage loan seller defaults on its
obligation to do so, and no assurance can be given that mortgage loan sellers
will carry out their repurchase or substitution obligations with respect to
mortgage loans. To the extent that a breach of the representations and
warranties of a mortgage loan seller may also constitute a breach of a
representation made by the depositor, the depositor may have a repurchase or
substitution obligation as described below under "Description of the
Securities--Assignment of Trust Fund Assets; Review of Files by Trustee".

                          DESCRIPTION OF THE SECURITIES

     The securities will be issued in series. Each series of certificates
evidencing interests in a trust fund consisting of mortgage loans will be issued
in accordance with a pooling and servicing agreement among the depositor, the
master servicer and the trustee named in the prospectus supplement. Each series
of notes evidencing indebtedness of a trust fund consisting of mortgage loans
will be issued in accordance with an indenture between the related issuer and
the trustee named in the prospectus supplement. The issuer of notes will be the
depositor or an owner trust established under an owner trust agreement between
the depositor and the owner trustee for the purpose of issuing a series of
notes. Where the issuer is an owner trust, the ownership of the trust fund will
be evidenced by equity certificates issued under the owner trust agreement. The
provisions of each agreement will vary depending upon the nature of the
securities to be issued thereunder and the nature of the related trust fund.
Various forms of pooling and servicing agreement, servicing agreement, owner
trust agreement, trust agreement and indenture have been filed as exhibits to
the registration statement of which this prospectus is a part. The following
summaries describe specific provisions which will appear in each agreement. The
prospectus supplement for a series of securities will describe additional
provisions of the agreement relating to a series. This prospectus together with
the prospectus supplement will describe the material terms of the agreement
governing the trust fund related to a series of securities. As used in this
prospectus supplement with respect to any series, the term certificate or the
term note refers to all of the certificates or notes of that series, whether or
not offered by this prospectus and by the related prospectus supplement, unless
the context otherwise requires.

     The certificates of each series, including any class of certificates not
offered hereby, will be issued in fully registered form only and will represent
the entire beneficial ownership interest in the trust fund created by the
related pooling and servicing agreement. The notes of each series,


                                       26

<PAGE>



including any class of notes not offered hereby, will be issued in fully
registered form only and will represent indebtedness of the trust fund created
by the related indenture. If so provided in the prospectus supplement, any class
of securities of any series may be represented by a certificate or note
registered in the name of a nominee of The Depository Trust Company. The
interests of beneficial owners of securities registered in the name of DTC will
be represented by entries on the records of participating members of DTC.
Definitive certificates or notes will be available for securities registered in
the name of DTC only under the limited circumstances provided in the related
prospectus supplement. The securities will be transferable and exchangeable for
like securities of the same class and series in authorized denominations at the
corporate trust office of the trustee as specified in the related prospectus
supplement. The prospectus supplement for each series of securities will
describe any limitations on transferability. No service charge will be made for
any registration of exchange or transfer of securities, but the depositor or the
trustee or any agent of the trustee may require payment of a sum sufficient to
cover any tax or other governmental charge.

     Each series of securities may consist of either:

     o   a single class of securities evidencing the entire beneficial ownership
         of or indebtedness of the related trust fund;

     o   two or more classes of securities evidencing the entire beneficial
         ownership of or indebtedness of the related trust fund, one or more
         classes of which will be senior in right of payment to one or more of
         the other classes;

     o   two or more classes of securities, one or more classes of which are
         entitled to (a) principal distributions, with disproportionate, nominal
         or no interest distributions or (b) interest distributions, with
         disproportionate, nominal or no principal distributions;

     o   two or more classes of securities which differ as to timing, sequential
         order, priority of payment, security interest rate or amount of
         distributions of principal or interest or both, or as to which
         distributions of principal or interest or both on any class may be made
         upon the occurrence of specified events, in accordance with a schedule
         or formula, or on the basis of collections from designated portions of
         the mortgage pool, which series may include one or more classes of
         securities, as to which accrued interest or a portion thereof will not
         be distributed but rather will be added to the principal balance of the
         security on each distribution date in the manner described in the
         related prospectus supplement; and

     o   other types of classes of securities, as described in the related
         prospectus supplement.

     With respect to any series of notes, the equity certificates, insofar as
they represent the beneficial ownership interest in the issuer, will be
subordinate to the related notes.

     Each class of securities, other than interest only Strip Securities, will
have a stated principal amount and, unless otherwise provided in the related
prospectus supplement, will be entitled to payments of interest on the stated
principal amount based on a fixed, variable or adjustable interest rate. The
security interest rate of each security offered hereby will be stated in the
related prospectus supplement as the pass-through rate with respect to a
certificate and the note interest rate with


                                       27

<PAGE>



respect to a note. SEE "-DISTRIBUTION OF INTEREST ON THE SECURITIES" AND
"-DISTRIBUTION OF PRINCIPAL OF THE SECURITIES" BELOW.

     The specific percentage ownership interest of each class of securities and
the minimum denomination for each security will be set forth in the related
prospectus supplement.

     As to each series of certificates with respect to which a REMIC election is
to be made, the master servicer or the trustee will be obligated to take all
actions required in order to comply with applicable laws and regulations, and
will be obligated to pay any Prohibited Transaction Taxes or Contribution Taxes
arising out of a breach of its obligations with respect to its compliance
without any right of reimbursement therefor from the trust fund or from any
securityholder. A Prohibited Transaction Tax or Contribution Tax resulting from
any other cause will be charged against the related trust fund, resulting in a
reduction in amounts otherwise distributable to securityholders. SEE "FEDERAL
INCOME TAX CONSEQUENCES."

ASSIGNMENT OF TRUST FUND ASSETS; REVIEW OF FILES BY TRUSTEE

     At the time of issuance of any series of securities, the depositor will
cause the pool of mortgage loans to be included in the related trust fund to be
assigned to the trustee, together with all principal and interest received by or
on behalf of the depositor on or with respect to the mortgage loans after the
related cut-off date, other than principal and interest due on or before the
cut-off date and other than any retained interest. The trustee will,
concurrently with the assignment of mortgage loans, deliver the securities to
the depositor in exchange for the trust fund assets. Each mortgage loan will be
identified in a schedule appearing as an exhibit to the related servicing
agreement. The schedule of mortgage loans will include information as to the
outstanding principal balance of each mortgage loan after application of
payments due on the cut-off date, as well as information regarding the interest
rate on the mortgage loan, the interest rate net of the sum of the rates at
which the servicing fees and the retained interest, if any, are calculated, the
retained interest, if any, the current scheduled monthly payment of principal
and interest, the maturity of the mortgage note, the value of the mortgaged
property, the loan-to-value ratio at origination and other information with
respect to the mortgage loans.

     In addition, the depositor will, with respect to each mortgage loan,
deliver or cause to be delivered to the trustee, or to the custodian hereinafter
referred to:

         (1) With respect to each single-family loan, the mortgage note
     endorsed, without recourse, to the order of the trustee or in blank, the
     original Mortgage with evidence of recording indicated thereon and an
     assignment of the Mortgage to the trustee or in blank, in recordable form.
     If, however, a mortgage loan has not yet been returned from the public
     recording office, the depositor will deliver or cause to be delivered a
     copy of the Mortgage together with its certificate that the original of the
     Mortgage was delivered to the recording office. The depositor will promptly
     cause the assignment of each related mortgage loan to be recorded in the
     appropriate public office for real property records, except in the State of
     California or in other states where, in the opinion of counsel acceptable
     to the trustee, recording of the assignment is not required to protect the
     trustee's interest in the mortgage loan against the claim of any subsequent
     transferee or any successor to or creditor of the depositor, the master
     servicer, the relevant mortgage loan seller or any other prior holder of
     the mortgage loan.


                                       28

<PAGE>



         (2) With respect to each cooperative loan, the cooperative note, the
     original security agreement, the proprietary lease or occupancy agreement,
     the related stock certificate and related stock powers endorsed in blank,
     and a copy of the original filed financing statement together with an
     assignment thereof to the trustee in a form sufficient for filing. The
     depositor will promptly cause the assignment and financing statement of
     each related cooperative loan to be filed in the appropriate public office,
     except in states where in the opinion of counsel acceptable to the trustee,
     filing of the assignment and financing statement is not required to protect
     the trustee's interest in the cooperative loan against the claim of any
     subsequent transferee or any successor to or creditor of the depositor, the
     master servicer, the relevant mortgage loan seller or any prior holder of
     the cooperative loan.

         (3) With respect to each manufactured housing contract, the original
     manufactured housing contract endorsed, without recourse, to the order of
     the trustee and copies of documents and instruments related to the
     manufactured housing contract and the security interest in the manufactured
     home securing the manufactured housing contract, together with a blanket
     assignment to the trustee of all manufactured housing contracts in the
     related trust fund and the documents and instruments. In order to give
     notice of the right, title and interest of the securityholders to the
     manufactured housing contracts, the depositor will cause to be executed and
     delivered to the trustee a UCC-1 financing statement identifying the
     trustee as the secured party and identifying all Contracts as collateral.

     With respect to any mortgage loan secured by a mortgaged property located
in Puerto Rico, the Mortgages with respect to these mortgage loans either (a)
secure a specific obligation for the benefit of a specified person or (b) secure
an instrument transferable by endorsement. Endorsable Puerto Rico Mortgages do
not require an assignment to transfer the related lien. Rather, transfer of
endorsable mortgages follows an effective endorsement of the related mortgage
note and, therefore, delivery of the assignment referred to in paragraph (1)
above would be inapplicable. Puerto Rico Mortgages that secure a specific
obligation for the benefit of a specified person, however, require an assignment
to be recorded with respect to any transfer of the related lien and the
assignment for that purpose would be delivered to the trustee.

     The trustee, or the custodian, will review the mortgage loan documents
within a specified period after receipt, and the trustee, or the custodian, will
hold the mortgage loan documents in trust for the benefit of the
securityholders. If any mortgage loan document is found to be missing or
defective in any material respect, the trustee, or the custodian, shall notify
the master servicer and the depositor, and the master servicer shall immediately
notify the relevant mortgage loan seller. If the mortgage loan seller cannot
cure the omission or defect within a specified number of days after receipt of
notice, the mortgage loan seller will be obligated to repurchase the related
mortgage loan from the trustee at the purchase price or substitute for the
mortgage loan. There can be no assurance that a mortgage loan seller will
fulfill this repurchase or substitution obligation. Although the master servicer
is obligated to use its best efforts to enforce the repurchase or substitution
obligation to the extent described above under "The Depositor's Mortgage Loan
Purchase Program-Representations by or on behalf of Mortgage Loan Sellers;
Remedies for Breach of Representation", neither the master servicer nor the
depositor will be obligated to repurchase or substitute for that mortgage loan
if the mortgage loan seller defaults on its obligation. The assignment of the
mortgage loans to the trustee will be without recourse to the depositor and this
repurchase or substitution obligation


                                       29

<PAGE>



constitutes the sole remedy available to the securityholders or the trustee for
omission of, or a material defect in, a constituent document.

     With respect to the mortgage loans in a trust fund, the depositor will make
representations and warranties as to the types and geographical concentration of
the mortgage loans and as to the accuracy in all material respects of
identifying information furnished to the trustee in respect of each mortgage
loan, e.g., original loan-to-value ratio, principal balance as of the cut-off
date, interest rate and maturity. In addition, the depositor will represent and
warrant that, as of the cut-off date for the related series of securities, no
mortgage loan was currently more than 90 days delinquent as to payment of
principal and interest and no mortgage loan was more than 90 days delinquent
more than once during the previous 12 months. Upon a breach of any
representation of the depositor that materially and adversely affects the value
of a mortgage loan or the interests of the securityholders in the mortgage loan,
the depositor will be obligated either to cure the breach in all material
respects, repurchase the mortgage loan at the purchase price or substitute for
that mortgage loan as described in the paragraph below.

     If the depositor discovers or receives notice of any breach of its
representations or warranties with respect to a mortgage loan, the depositor may
be permitted under the agreement governing the trust fund to remove the mortgage
loan from the trust fund, rather than repurchase the mortgage loan, and
substitute in its place one or more mortgage loans, but only if (a) with respect
to a trust fund for which a REMIC election is to be made, the substitution is
effected within two years of the date of initial issuance of the certificates,
plus permissible extensions, or (b) with respect to a trust fund for which no
REMIC election is to be made, the substitution is effected within 180 days of
the date of initial issuance of the securities. Each substitute mortgage loan
will, on the date of substitution, comply with the following requirements:

         (1)  have an outstanding principal balance, after deduction of all
              scheduled payments due in the month of substitution, not in excess
              of, and not more than $10,000 less than, the outstanding principal
              balance, after deduction of all unpaid scheduled payments due as
              of the date of substitution, of the deleted mortgage loan,

         (2)  have an interest rate not less than, and not more than 1% greater
              than, the interest rate of the deleted mortgage loan,

         (3)  have a remaining term to maturity not greater than, and not more
              than one year less than, that of the deleted mortgage loan

         (4)  have a Lockout Date, if applicable, not earlier than the Lockout
              Date on the deleted mortgage loan and

         (5)  comply with all of the representations and warranties set forth in
              the pooling and servicing agreement or indenture as of the date of
              substitution.

     In connection with any substitution, an amount equal to the difference
between the purchase price of the deleted mortgage loan and the outstanding
principal balance of the substitute mortgage loan, after deduction of all
scheduled payments due in the month of substitution, together with one month's
interest at the applicable rate at which interest accrued on the deleted
mortgage loan, less


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<PAGE>



the servicing fee rate and the retained interest, if any, on the difference,
will be deposited in the certificate account and distributed to securityholders
on the first distribution date following the prepayment period in which the
substitution occurred. In the event that one mortgage loan is substituted for
more than one deleted mortgage loan, or more than one mortgage loan is
substituted for one or more deleted mortgage loans, then the amount described in
(1) above will be determined on the basis of aggregate principal balances, the
rate described in (2) above with respect to deleted mortgage loans will be
determined on the basis of weighted average interest rates, and the terms
described in (3) above will be determined on the basis of weighted average
remaining terms to maturity and the Lockout Dates described in (4) above will be
determined on the basis of weighted average Lockout Dates.

     With respect to any series as to which credit support is provided by means
of a mortgage pool insurance policy, in addition to making the representations
and warranties described above, the depositor or the related mortgage loan
seller, or another party on behalf of the related mortgage loan seller, as
specified in the related prospectus supplement, will represent and warrant to
the trustee that no action has been taken or failed to be taken, no event has
occurred and no state of facts exists or has existed on or prior to the date of
the initial issuance of the securities which has resulted or will result in the
exclusion from, denial of or defense to coverage under any applicable primary
mortgage insurance policy, FHA insurance policy, mortgage pool insurance policy,
special hazard insurance policy or bankruptcy bond, irrespective of the cause of
the failure of coverage but excluding any failure of an insurer to pay by reason
of the insurer's own breach of its insurance policy or its financial inability
to pay. This representation is referred to in this prospectus and the related
prospectus supplement as the insurability representation. Upon a breach of the
insurability representation which materially and adversely affects the interests
of the securityholders in a mortgage loan, the depositor or the mortgage loan
seller, as the case may be, will be obligated either to cure the breach in all
material respects or to purchase the affected mortgage loan at the purchase
price. The related prospectus supplement may provide that the performance of an
obligation to repurchase mortgage loans following a breach of an insurability
representation will be ensured in the manner specified in the prospectus
supplement. SEE "DESCRIPTION OF PRIMARY INSURANCE POLICIES" AND "DESCRIPTION OF
CREDIT SUPPORT" IN THIS PROSPECTUS AND IN THE RELATED PROSPECTUS SUPPLEMENT FOR
INFORMATION REGARDING THE EXTENT OF COVERAGE UNDER THE AFOREMENTIONED INSURANCE
POLICIES.

     The obligation to repurchase or, other than with respect to the
insurability representation if applicable, to substitute mortgage loans
constitutes the sole remedy available to the securityholders or the trustee for
any breach of the representations.

     The master servicer will make representations and warranties regarding its
authority to enter into, and its ability to perform its obligations under, the
servicing agreement. Upon a breach of any representation of the master servicer
which materially and adversely affects the interests of the securityholders, the
master servicer will be obligated to cure the breach in all material respects.

ESTABLISHMENT OF CERTIFICATE ACCOUNT; DEPOSITS TO CERTIFICATE ACCOUNT IN RESPECT
OF TRUST FUND ASSETS

     The master servicer or the trustee will, as to each trust fund, establish
and maintain or cause to be established and maintained one or more separate
accounts for the collection of payments on the


                                       31

<PAGE>



related trust fund assets. These accounts are collectively referred to in this
prospectus and the related prospectus supplement as the certificate account.
The certificate account must be either

         o maintained with a bank or trust company, and in a manner,
         satisfactory to the rating agency or agencies rating any class of
         securities of the series or

o        an account or accounts the deposits in which are insured by the BIF or
         the SAIF, to the limits established by the FDIC, and the uninsured
         deposits in which are otherwise secured so that the securityholders
         have a claim with respect to the funds in the certificate account or a
         perfected first priority security interest against any collateral
         securing the funds that is superior to the claims of any other
         depositors or general creditors of the institution with which the
         certificate account is maintained.

     The collateral eligible to secure amounts in the certificate account is
limited to United States government securities and other high-quality
investments specified in the related servicing agreement as permitted
investments. A certificate account may be maintained as an interest bearing or
a non-interest bearing account, or the funds held in the certificate account may
be invested pending each succeeding distribution date in permitted investments.
Any interest or other income earned on funds in the certificate account will be
paid to the master servicer or the trustee or their designee as additional
compensation. The certificate account may be maintained with an institution that
is an affiliate of the master servicer or the trustee, provided that the
institution meets the standards set forth in the bullet points above. If
permitted by the rating agency or agencies and so specified in the related
prospectus supplement, a certificate account may contain funds relating to more
than one series of pass-through certificates and may, if applicable, contain
other funds respecting payments on mortgage loans belonging to the master
servicer or serviced or master serviced by it on behalf of others.

     Each sub-servicer servicing a trust fund asset under a sub-servicing
agreement will establish and maintain one or more separate accounts which may be
interest bearing and which will comply with the standards with respect to
certificate accounts or other standards as may be acceptable to the master
servicer. The sub-servicer is required to credit to the related sub-servicing
account on a daily basis the amount of all proceeds of mortgage loans received
by the sub-servicer, less its servicing compensation. The sub-servicer will
remit to the master servicer by wire transfer of immediately available funds all
funds held in the sub-servicing account with respect to each mortgage loan on
the monthly remittance date or dates specified in the related servicing
agreement.

     The master servicer will deposit or cause to be deposited in the
certificate account for each trust fund including mortgage loans, the following
payments and collections received, or advances made, by the master servicer or
on its behalf subsequent to the cut-off date, other than payments due on or
before the cut-off date, and exclusive of any retained interest:

            (1) all payments on account of principal, including principal
     prepayments, on the mortgage loans;

            (2) all payments on account of interest on the mortgage loans, net
     of any portion retained by the master servicer or by a sub-servicer as its
     servicing compensation and net of any retained interest;


                                       32

<PAGE>



            (3) all proceeds of the hazard insurance policies and any special
     hazard insurance policy, to the extent the proceeds are not applied to the
     restoration of the property or released to the mortgagor in accordance with
     the normal servicing procedures of the master servicer or the related
     sub-servicer, subject to the terms and conditions of the related Mortgage
     and mortgage note, any primary mortgage insurance policy, any FHA insurance
     policy, any VA guarantee, any bankruptcy bond and any mortgage pool
     insurance policy and all other amounts received and retained in connection
     with the liquidation of defaulted mortgage loans, by foreclosure or
     otherwise, together with the net proceeds on a monthly basis with respect
     to any mortgaged properties acquired for the benefit of securityholders by
     foreclosure or by deed in lieu of foreclosure or otherwise;

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

            (5) any advances made as described below under "Advances by the
     Master Servicer in respect of Delinquencies on the Trust Funds Assets";

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

            (7) any buydown funds, and, if applicable, investment earnings
     thereon, required to be deposited in the certificate account as described
     in the first paragraph below;

            (8) all proceeds of any mortgage loan or property in respect of the
     mortgage loan purchased by the master servicer, the depositor, any
     sub-servicer or any mortgage loan seller as described under "The
     Depositor's Mortgage Loan Purchase Program-Representations by or on behalf
     of Mortgage Loan Sellers; Remedies for Breach of Representations" or
     "--Assignment of Trust Fund Assets; Review of Files by Trustee" above,
     exclusive of the retained interest, if any, in respect of the mortgage
     loan;

            (9) all proceeds of any mortgage loan repurchased as described under
     "--Termination" below;

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

           (11) any amount required to be deposited by the master servicer in
     connection with losses realized on investments for the benefit of the
     master servicer of funds held in the certificate account.

     With respect to each buydown mortgage loan, the master servicer, or a
sub-servicer, will deposit related buydown funds in a custodial account, which
may be interest bearing, and that otherwise meets the standards for certificate
accounts. This account is referred to in this prospectus and the related
prospectus supplement as a buydown account. The terms of all buydown mortgage
loans provide for the contribution of buydown funds in an amount not less than
either (a) the total payments to be made from the buydown funds under the
related buydown plan or (b) if the buydown


                                       33

<PAGE>



funds are present valued, that amount that, together with investment earnings
thereon at a specified rate, compounded monthly, will support the scheduled
level of payments due under the buydown mortgage loan. Neither the master
servicer, the sub-servicer nor the depositor will be obligated to add to the
buydown funds any of its own funds should investment earnings prove insufficient
to maintain the scheduled level of payments. To the extent that any
insufficiency in buydown funds is not recoverable from the borrower,
distributions to securityholders will be affected. With respect to each buydown
mortgage loan, the master servicer will deposit in the certificate account the
amount, if any, of the buydown funds, and, if applicable, investment earnings
thereon, for each buydown mortgage loan that, when added to the amount due from
the borrower on the buydown mortgage loan, equals the full monthly payment which
would be due on the buydown mortgage loan if it were not subject to the buydown
plan.

     If a buydown mortgage loan is prepaid in full or liquidated, the related
buydown funds will be applied as follows. If the mortgagor on a buydown mortgage
loan prepays the loan in its entirety during the buydown period, the master
servicer will withdraw from the buydown account and remit to the mortgagor in
accordance with the related buydown plan any buydown funds remaining in the
buydown account. If a prepayment by a mortgagor during the buydown period
together with buydown funds will result in a prepayment in full, the master
servicer will withdraw from the buydown account for deposit in the certificate
account the buydown funds and investment earnings thereon, if any, which
together with the prepayment will result in a prepayment in full. If the
mortgagor defaults during the buydown period with respect to a buydown mortgage
loan and the mortgaged property is sold in liquidation, either by the master
servicer or the insurer under any related insurance policy, the master servicer
will withdraw from the buydown account the buydown funds and all investment
earnings thereon, if any, for deposit in the certificate account or remit the
same to the insurer if the mortgaged property is transferred to the insurer and
the insurer pays all of the loss incurred in respect of the default. In the case
of any prepaid or defaulted buydown mortgage loan the buydown funds in respect
of which were supplemented by investment earnings, the master servicer will
withdraw from the buydown account and either deposit in the certificate account
or remit to the borrower, depending upon the terms of the buydown plan, any
investment earnings remaining in the related buydown account.

     Any buydown funds, and any investment earnings thereon, deposited in the
certificate account in connection with a full prepayment of the related buydown
mortgage loan will be deemed to reduce the amount that would be required to be
paid by the borrower to repay fully the related mortgage loan if the mortgage
loan were not subject to the buydown plan.

DISTRIBUTIONS ON THE SECURITIES

     Distributions allocable to principal and interest on the securities of each
series will be made by or on behalf of the trustee each month on each date as
specified in the related prospectus supplement and referred to as a distribution
date, commencing with the month following the month in which the applicable
cut-off date occurs. Distributions will be made to the persons in whose names
the securities are registered at the close of business on the Record Date, and
the amount of each distribution will be determined as of the close of business
on the date specified in the related prospectus supplement and referred to as
the determination date. All distributions with respect to each class of
securities on each distribution date will be allocated pro rata among the
outstanding securities in that class. Payments to the holders of securities of
any class on each distribution date


                                       34

<PAGE>



will be made to the securityholders of the respective class of record on the
next preceding Record Date, other than in respect of the final distribution,
based on the aggregate fractional undivided interests in that class represented
by their respective securities. Payments will be made by wire transfer in
immediately available funds to the account of a securityholder, if the
securityholder holds securities in the requisite amount specified in the related
prospectus supplement and if the securityholder has so notified the depositor or
its designee no later than the date specified in the related prospectus
supplement. Otherwise, payments will be made by check mailed to the address of
the person entitled to payment as it appears on the security register maintained
by the depositor or its agent. The final distribution in retirement of the
securities will be made only upon presentation and surrender of the securities
at the office or agency of the depositor or its agent specified in the notice to
securityholders of the final distribution. With respect to each series of
certificates or notes, the security register will be referred to as the
certificate register or note register, respectively.

     All distributions on the securities of each series on each distribution
date will be made from the available distribution amount described in the next
sentence, in accordance with the terms described in the related prospectus
supplement. The available distribution amount for each distribution date will
equal the sum of the following amounts:

            (1) the total amount of all cash on deposit in the related
     certificate account as of the corresponding determination date, exclusive
     of:

                (a) all scheduled payments of principal and interest collected
         but due on a date subsequent to the related Due Period,

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

                (c) all amounts in the certificate account that are due or
         reimbursable to the depositor, the trustee, a mortgage loan seller, a
         sub-servicer or the master servicer or that are payable in respect of
         specified expenses of the related trust fund;

            (2) if the related prospectus supplement so provides, interest or
     investment income on amounts on deposit in the certificate account;

            (3) all advances with respect to the distribution date;

            (4) if the related prospectus supplement so provides, amounts paid
     with respect to interest shortfalls resulting from prepayments during the
     related Prepayment Period;

            (5) to the extent not on deposit in the related certificate account
     as of the corresponding determination date, any amounts collected under,
     from or in respect of any credit support with respect to the distribution
     date; and

            (6) any other amounts described in the related prospectus
     supplement.



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<PAGE>



     The entire available distribution amount will be distributed among the
related securities, including any securities not offered hereby, on each
distribution date, and accordingly will be released from the trust fund and will
not be available for any future distributions.

     DISTRIBUTIONS OF INTEREST ON THE SECURITIES. Each class of securities may
earn interest at a different rate, which may be a fixed, variable or adjustable
security interest rate. The related prospectus supplement will specify the
security interest rate for each class, or, in the case of a variable or
adjustable security interest rate, the method for determining the security
interest rate. Unless otherwise specified in the related prospectus supplement,
interest on the securities will be calculated on the basis of a 360-day year
consisting of twelve 30-day months.

     With respect to each series of securities and each distribution date, the
distribution in respect of interest on each security, other than principal only
Strip Securities, will be equal to one month's interest on the outstanding
principal balance of the security immediately prior to the distribution date, at
the applicable security interest rate, subject to the following. As to each
Strip Security with no or a nominal principal balance, the distributions in
respect of interest on any distribution date will be on the basis of a notional
amount and equal one month's Stripped Interest. Prior to the time interest is
distributable on any class of Accrual Securities, interest accrued on that class
will be added to the principal balance thereof on each distribution date.
Interest distributions on each security of a series will be reduced in the event
of shortfalls in collections of interest resulting from prepayments on mortgage
loans, with that shortfall allocated among all of the securities of that series
if specified in the related prospectus supplement unless the master servicer is
obligated to cover the shortfalls from its own funds up to its servicing fee for
the related due period. With respect to each series of certificates or notes,
the interest distributions payable will be referred to in the applicable
prospectus supplement as the accrued certificate interest or accrued note
interest, respectively. SEE "YIELD CONSIDERATIONS".

     DISTRIBUTIONS OF PRINCIPAL OF THE SECURITIES. The principal balance of a
security, at any time, will equal the maximum amount that the holder will be
entitled to receive in respect of principal out of the future cash flow on the
trust fund assets and other assets included in the related trust fund. The
principal balance of each security offered hereby will be stated in the related
prospectus supplement as the certificate principal balance with respect to a
certificate and the note balance with respect to a note. With respect to each
security, distributions generally will be applied to undistributed accrued
interest thereon, and thereafter to principal. The outstanding principal balance
of a security will be reduced to the extent of distributions of principal on
that security, and, if and to the extent so provided on the related prospectus
supplement, by the amount of any realized losses, allocated to that security.
The initial aggregate principal balance of a series and each class of securities
related to a series will be specified in the related prospectus supplement.
Distributions of principal will be made on each distribution date to the class
or classes of securities entitled to principal until the principal balance of
that class has been reduced to zero. With respect to a Senior/Subordinate
Series, distributions allocable to principal of a class of securities will be
based on the percentage interest in the related trust fund evidenced by the
class, which in turn will be based on the principal balance of that class as
compared to the principal balance of all classes of securities of the series.
Distributions of principal of any class of securities will be made on a pro rata
basis among all of the securities of the class. Strip Securities with no
principal balance will not receive distributions of principal.



                                       36

<PAGE>



     ALLOCATION TO SECURITYHOLDERS OF LOSSES ON THE TRUST FUND ASSETS. With
respect to any defaulted mortgage loan that is finally liquidated, through
foreclosure sale or otherwise, the amount of the realized loss incurred in
connection with liquidation will equal the excess, if any, of the unpaid
principal balance of the liquidated loan immediately prior to liquidation, over
the aggregate amount of Liquidation Proceeds derived from liquidation remaining
after application of the proceeds to unpaid accrued interest on the liquidated
loan and to reimburse the master servicer or any sub-servicer for related
unreimbursed servicing expenses. With respect to mortgage loans the principal
balances of which have been reduced in connection with bankruptcy proceedings,
the amount of that reduction also will be treated as a realized loss. As to any
series of securities, other than a Senior/Subordinate Series, any realized loss
not covered as described under "Description of Credit Support" will be allocated
among all of the securities on a pro rata basis. As to any Senior/Subordinate
Series, realizes losses will be allocated first to the most subordinate class of
securities as described below under "Description of Credit
Support--Subordination".

ADVANCES BY MASTER SERVICER IN RESPECT OF DELINQUENCIES ON THE TRUST FUND ASSETS

     With respect to any series of securities, the master servicer will advance
on or before each distribution date its own funds or funds held in the
certificate account that are not included in the available distribution amount
for that distribution date unless the master servicer, in good faith, determines
that any advances made will not be reimbursable from proceeds subsequently
recovered on the mortgage loan related to the advance. The amount of each
advance will be equal to the aggregate of payments of interest, net of related
servicing fees and retained interest, that were due during the related Due
Period and were delinquent on the related determination date. In most cases, the
prospectus supplement for a series will also provide that the master servicer
will advance, together with delinquent interest, the aggregate amount of
principal payments that were due during the related Due Period and delinquent as
of the determination date, subject to the same reimbursement determination,
except that, with respect to balloon loans, the master servicer will not have to
advance a delinquent balloon payment.

     Advances are intended to maintain a regular flow of scheduled interest and
principal payments to holders of the class or classes of securities entitled to
payments, rather than to guarantee or insure against losses. Advances of the
master servicer's funds will be reimbursable only out of related recoveries on
the mortgage loans, including amounts received under any form of credit support,
respecting which advances were made; provided, however, that any advance will be
reimbursable from any amounts in the certificate account to the extent that the
master servicer shall determine that the advance is not ultimately recoverable
from Related Proceeds. If advances have been made by the master servicer from
excess funds in the certificate account, the master servicer will replace those
funds in the certificate account on any future distribution date to the extent
that funds in the certificate account on that distribution date are less than
payments required to be made to securityholders on that date. If so specified in
the related prospectus supplement, the obligations of the master servicer to
make advances may be secured by a cash advance reserve fund or a surety bond. If
applicable, information regarding the characteristics of, and the identity of
any obligor on, any surety bond, will be set forth in the related prospectus
supplement.


                                       37

<PAGE>




FORM OF REPORTS TO SECURITYHOLDERS

     With each distribution to holders of any class of securities of a series,
the master servicer or the trustee, will forward or cause to be forwarded to
each securityholder, to the depositor and to those other parties as may be
specified in the related servicing agreement, a statement setting forth the
following as of the distribution date:

                (1) the amount of the distribution to holders of securities of
     that class applied to reduce the principal balance of the securities;

                (2) the amount of the distribution to holders of securities of
     that class allocable to interest;

                (3) the amount of related administration or servicing
     compensation received by the trustee or the master servicer and any
     sub-servicer and any other customary information as the master servicer
     deems necessary or desirable, or that a securityholder reasonably requests,
     to enable securityholders to prepare their tax returns;

                (4) if applicable, the aggregate amount of advances included in
     the distribution, and the aggregate amount of unreimbursed advances at the
     close of business on that distribution date;

                (5) the aggregate stated principal balance of the mortgage loans
     at the close of business on that distribution date;

                (6) the number and aggregate stated principal balance of
     mortgage loans (a) delinquent one month, (b) delinquent two or more months,
     and (c) as to which foreclosure proceedings have been commenced;

                (7) with respect to any mortgaged property acquired on behalf of
     securityholders through foreclosure or deed in lieu of foreclosure during
     the preceding calendar month, the stated principal balance of the related
     mortgage loan as of the close of business on the distribution date in that
     month;

                (8) the book value of any mortgaged property acquired on behalf
     of securityholders through foreclosure or deed in lieu of foreclosure as of
     the close of business on the last business day of the calendar month
     preceding the distribution date;

                (9) the aggregate principal balance of each class of securities
     (including any class of securities not offered hereby) at the close of
     business on that distribution date, separately identifying any reduction in
     the principal balance due to the allocation of any realized loss;

               (10) the amount of any special hazard realized losses allocated
     to the subordinate securities, if any, at the close of business on that
     distribution date;

               (11) the aggregate amount of principal prepayments made and
     realized losses incurred during the related Prepayment Period;


                                       38

<PAGE>



                (12) the amount deposited in the reserve fund, if any, on that
     distribution date;

               (13) the amount remaining in the reserve fund, if any, as of the
     close of business on that distribution date;

               (14) the aggregate unpaid accrued interest, if any, on each class
     of securities at the close of business on that distribution date;

               (15) in the case of securities that accrue interest at the
     variable rate, the security interest rate applicable to that distribution
     date, as calculated in accordance with the method specified in the related
     prospectus supplement;

               (16) in the case of securities that accrued interest at an
     adjustable rate, for statements to be distributed in any month in which an
     adjustment date occurs, the adjustable security interest rate applicable to
     the next succeeding distribution date as calculated in accordance with the
     method specified in the related prospectus supplement; and

               (17) as to any series which includes credit support, the amount
     of coverage of each instrument of credit support included in the trust fund
     as of the close of business on that distribution date.

     In the case of information furnished under subclauses (1)-(3) above, the
amounts shall be expressed as a dollar amount per minimum denomination of
securities or for other specified portion thereof. With respect to each series
of certificates or notes, securityholders will be referred to as the
certificateholders or the noteholders, respectively.

     Within a reasonable period of time after the end of each calendar year, the
master servicer or the trustee, as provided in the related prospectus
supplement, shall furnish to each person who at any time during the calendar
year was a holder of a security a statement containing the information set forth
in subclauses (1)-(3) above, aggregated for that calendar year or the applicable
portion thereof during which that person was a securityholder. The obligation of
the master servicer or the trustee shall be deemed to have been satisfied to the
extent that substantially comparable information shall be provided by the master
servicer or the trustee in accordance with any requirements of the Code as are
from time to time in force.

COLLECTION AND OTHER SERVICING PROCEDURES EMPLOYED BY THE MASTER SERVICER

     The master servicer, directly or through sub-servicers, will make
reasonable efforts to collect all scheduled payments under the mortgage loans
and will follow or cause to be followed the collection procedures as it would
follow with respect to mortgage loans that are comparable to the mortgage loans
and held for its own account, provided these procedures are consistent with the
related servicing agreement and any related insurance policy, bankruptcy bond,
letter of credit or other insurance instrument described under "Description of
Primary Insurance Policies" or "Description of Credit Support". Consistent with
this servicing standard, the master servicer may, in its discretion, waive any
late payment charge in respect of a late mortgage loan payment and, only upon
determining that the coverage under any related insurance instrument will not be
affected, extend or


                                       39

<PAGE>



cause to be extended the due dates for payments due on a mortgage note for a
period not greater than 180 days.

     In instances in which a mortgage loan is in default, or if default is
reasonably foreseeable, and if determined by the master servicer to be in the
best interests of the related securityholders, the master servicer may permit
modifications of the mortgage loan rather than proceeding with foreclosure. In
making that determination, the estimated realized loss that might result if the
mortgage loan were liquidated would be taken into account. Modifications may
have the effect of reducing the interest rate on the mortgage loan, forgiving
the payment of principal or interest or extending the final maturity date of the
mortgage loan. Any modified mortgage loan may remain in the related trust fund,
and the reduction in collections resulting from the modification may result in
reduced distributions of interest, or other amounts, on, or may extend the final
maturity of, one or more classes of the related securities.

     In connection with any significant partial prepayment of a mortgage loan,
the master servicer, to the extent not inconsistent with the terms of the
mortgage note and local law and practice, may permit the mortgage loan to be
reamortized so that the monthly payment is recalculated as an amount that will
fully amortize the remaining principal amount of the mortgage loan by the
original maturity date based on the original interest rate. Reamortization will
not be permitted if it would constitute a modification of the mortgage loan for
federal income tax purposes.

     In any case in which property securing a mortgage loan, other than an ARM
Loan, has been, or is about to be, conveyed by the borrower, the master servicer
will exercise or cause to be exercised on behalf of the related trust fund the
lender's rights to accelerate the maturity of the mortgage loan under any
due-on-sale or due-on-encumbrance clause applicable to that mortgage loan. The
master servicer will only exercise these rights only if the exercise of any
these rights is permitted by applicable law and will not impair or threaten to
impair any recovery under any related insurance instrument. If these conditions
are not met or if the master servicer reasonably believes it is unable under
applicable law to enforce a due-on-sale or due-on-encumbrance clause, the master
servicer will enter into or cause to be entered into an assumption and
modification agreement with the person to whom the property has been or is about
to be conveyed or encumbered, under which that person becomes liable under the
mortgage note, cooperative note or manufactured housing contract and, to the
extent permitted by applicable law, the borrower remains liable thereon. The
original mortgagor may be released from liability on a mortgage loan if the
master servicer shall have determined in good faith that a release will not
adversely affect the collectability of the mortgage loan. An ARM Loan may be
assumed if the ARM Loan is by its terms assumable and if, in the reasonable
judgment of the master servicer, the proposed transferee of the related
mortgaged property establishes its ability to repay the loan and the security
for the ARM Loan would not be impaired by the assumption. If a mortgagor
transfers the mortgaged property subject to an ARM Loan without consent, that
ARM Loan may be declared due and payable. Any fee collected by or on behalf of
the master servicer for entering into an assumption agreement will be retained
by or on behalf of the master servicer as additional servicing compensation. In
connection with any assumption, the terms of the related mortgage loan may not
be changed. SEE "LEGAL ASPECTS OF MORTGAGE LOANS--ENFORCEABILITY OF PROVISIONS".



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DESCRIPTION OF SUB-SERVICING

     Any master servicer may delegate its servicing obligations in respect of
the mortgage loans to third-party servicers, but the master servicer will remain
obligated under the related servicing agreement. Each sub-servicer will be
required to perform the customary functions of a servicer of comparable loans,
including:

     o        collecting payments from borrowers and remitting the collections
              to the master servicer,

     o        maintaining primary hazard insurance as described in this
              prospectus and in any related prospectus supplement,

     o        filing and settling claims under primary hazard insurance
              policies, which may be subject to the right of the master
              servicer to approve in advance any settlement,

     o        maintaining escrow or impoundment accounts of borrowers for
              payment of taxes, insurance and other items required to be paid by
              any borrower in accordance with the mortgage loan,

     o        processing assumptions or substitutions where a due-on-sale clause
              is not exercised,

     o        attempting to cure delinquencies,

     o        supervising foreclosures or repossessions,

     o        inspecting and managing mortgaged properties, if applicable, and

     o        maintaining accounting records relating to the mortgage loans.

The master servicer will be responsible for filing and settling claims in
respect of mortgage loans in a particular mortgage pool under any applicable
mortgage pool insurance policy, bankruptcy bond, special hazard insurance policy
or letter of credit. SEE "DESCRIPTION OF CREDIT SUPPORT".

     The sub-servicing agreement between any master servicer and a sub-servicer
will be consistent with the terms of the related servicing agreement and will
not result in a withdrawal or downgrading of any class of securities issued in
accordance with the related agreement. With respect to those mortgage loans
serviced by the master servicer through a sub-servicer, the master servicer will
remain liable for its servicing obligations under the related policy and
servicing agreement or servicing agreement as if the master servicer alone were
servicing those mortgage loans. Although each sub-servicing agreement will be a
contract solely between the master servicer and the sub-servicer, the agreement
under which a series of securities is issued will provide that, if for any
reason the master servicer for the series of securities is no longer acting in a
servicing capacity, the trustee or any successor master servicer must recognize
the sub-servicer's rights and obligations under the sub-servicing agreement.

     The master servicer will be solely liable for all fees owed by it to any
sub-servicer, irrespective of whether the master servicer's compensation under
the related agreement is sufficient to pay the


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<PAGE>



fees. However, a sub-servicer may be entitled to a retained interest in mortgage
loans. Each sub-servicer will be reimbursed by the master servicer for
expenditures which it makes, generally to the same extent the master servicer
would be reimbursed under the related servicing agreement. SEE "DESCRIPTION OF
THE SECURITIES--RETAINED INTEREST, SERVICING OR ADMINISTRATION COMPENSATION AND
PAYMENT OF EXPENSES".

     The master servicer may require any sub-servicer to agree to indemnify the
master servicer for any liability or obligation sustained by the master servicer
in connection with any act or failure to act by the sub-servicer in its
servicing capacity. Each sub-servicer is required to maintain a fidelity bond
and an errors and omissions policy with respect to its officers, employees and
other persons acting on its behalf or on behalf of the master servicer.

PROCEDURES FOR REALIZATION UPON DEFAULTED MORTGAGE LOANS

     As servicer of the mortgage loans, the master servicer, on behalf of
itself, the trustee and the securityholders, will present claims to the insurer
under each insurance instrument, and will take reasonable steps as are necessary
to receive payment or to permit recovery thereunder with respect to defaulted
mortgage loans. As set forth above under "-Collection and Other Servicing
Procedures Employed by the Master Servicer", all collections by or on behalf of
the master servicer under any insurance instrument, other than amounts to be
applied to the restoration of a mortgaged property or released to the mortgagor,
are to be deposited in the certificate account for the related trust fund,
subject to withdrawal as previously described. The master servicer or its
designee will not receive payment under any letter of credit included as an
insurance instrument with respect to a defaulted mortgage loan unless all
Liquidation Proceeds and Insurance Proceeds which it deems to be finally
recoverable have been realized; however, the master servicer will be entitled to
reimbursement for any unreimbursed advances and reimbursable expenses
thereunder.

     If any property securing a defaulted mortgage loan is damaged and proceeds,
if any, from the related hazard insurance policy or special hazard insurance
policy are insufficient to restore the damaged property to a condition
sufficient to permit recovery under the related credit insurance instrument, if
any, the master servicer is not required to expend its own funds to restore the
damaged property unless it determines (a) that the restoration will increase the
proceeds to securityholders on liquidation of the mortgage loan after
reimbursement of the master servicer for its expenses and (b) that its expenses
will be recoverable by it from related Insurance Proceeds or Liquidation
Proceeds.


     If recovery on a defaulted mortgage loan under any related credit insurance
instrument is not available for the reasons set forth in the preceding
paragraph, the master servicer nevertheless will be obligated to follow or cause
to be followed the normal practices and procedures as it deems necessary or
advisable to realize upon the defaulted mortgage loan. If the proceeds of any
liquidation of the property securing the defaulted mortgage loan are less than
the outstanding principal balance of the defaulted mortgage loan plus interest
accrued thereon at the interest rate plus the aggregate amount of expenses
incurred by the master servicer in connection with those proceedings and which
are reimbursable under the servicing agreement, the trust fund will realize a
loss in the amount of the difference. The master servicer will be entitled to
withdraw or cause to be withdrawn from the certificate account out of the
Liquidation Proceeds recovered on any defaulted mortgage loan, prior to the
distribution of any Liquidation Proceeds to securityholders, amounts
representing its normal servicing compensation on the mortgage loan,
unreimbursed servicing


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<PAGE>



expenses incurred with respect to the mortgage loan and any unreimbursed
advances of delinquent monthly payments made with respect to the mortgage loan.

     If the master servicer or its designee recovers Insurance Proceeds with
respect to any defaulted mortgage loan, the master servicer will be entitled to
withdraw or cause to be withdrawn from the certificate account out of Insurance
Proceeds, prior to distribution of that amount to securityholders, amounts
representing its normal servicing compensation on that mortgage loan,
unreimbursed servicing expenses incurred with respect to the mortgage loan and
any unreimbursed advances of delinquent monthly payments made with respect to
the mortgage loan. In the event that the master servicer has expended its own
funds to restore damaged property and those funds have not been reimbursed under
any insurance instrument, it will be entitled to withdraw from the certificate
account out of related Liquidation Proceeds or Insurance Proceeds an amount
equal to the expenses incurred by it, in which event the trust fund may realize
a loss up to the amount so charged. Because Insurance Proceeds cannot exceed
deficiency claims and expenses incurred by the master servicer, no payment or
recovery will result in a recovery to the trust fund which exceeds the principal
balance of the defaulted mortgage loan together with accrued interest thereon at
the interest rate net of servicing fees and the retained interest, if any. In
addition, when property securing a defaulted mortgage loan can be resold for an
amount exceeding the outstanding principal balance of the related mortgage loan
together with accrued interest and expenses, it may be expected that, if
retention of any amount is legally permissible, the insurer will exercise its
right under any related mortgage pool insurance policy to purchase the property
and realize for itself any excess proceeds. SEE "DESCRIPTION OF PRIMARY
INSURANCE POLICIES" AND "DESCRIPTION OF CREDIT SUPPORT".

     With respect to collateral securing a cooperative loan, any prospective
purchaser will generally have to obtain the approval of the board of directors
of the relevant cooperative before purchasing the shares and acquiring rights
under the proprietary lease or occupancy agreement securing the cooperative
loan. This approval is usually based on the purchaser's income and net worth and
numerous other factors. The necessity of acquiring board approval could limit
the number of potential purchasers for those shares and otherwise limit the
master servicer's ability to sell, and realize the value of, those shares. SEE
"LEGAL ASPECTS OF MORTGAGE LOANS-FORECLOSURE ON COOPERATIVES".

RETAINED INTEREST; SERVICING OR ADMINISTRATION COMPENSATION AND PAYMENT OF
EXPENSES

     The prospectus supplement for a series of securities will specify whether
there will be any retained interest from the trust fund assets, and, if so, the
owner of the retained interest. If so, the retained interest will be established
on a loan-by-loan basis and will be specified on an exhibit to the related
agreement. A retained interest in a trust fund asset represents a specified
portion of the interest payable thereon. The retained interest will be deducted
from borrower payments as received and will not be part of the related trust
fund. Any partial recovery of interest on a mortgage loan, after deduction of
all applicable servicing fees, will be allocated between retained interest, if
any, and interest at the interest rate on the mortgage loan, net of the rates at
which the servicing fees and the retained interest are calculated, on a pari
passu basis.

     The master servicer's primary compensation with respect to a series of
securities will come from the monthly payment to it, with respect to each
interest payment on a trust fund asset, of an amount equal to one-twelfth of the
servicing fee rate specified in the related prospectus supplement times the


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<PAGE>



scheduled principal balance of the trust fund asset. Since any retained interest
and the master servicer's primary compensation are percentages of the scheduled
principal balance of each trust fund asset, these amounts will decrease in
accordance with the amortization schedule of the trust fund assets. As
additional compensation in connection with a series of securities relating to
mortgage loans, the master servicer or the sub-servicers will retain all
assumption fees, late payment charges and , unless otherwise stated in the
prospectus supplement, prepayment penalties, to the extent collected from
mortgagors. Any interest or other income which may be earned on funds held in
the certificate account or any sub-servicing account may be paid as additional
compensation to the master servicer or the sub-servicers, as the case may be.
Any sub-servicer will receive a portion of the master servicer's primary
compensation as its sub-servicing compensation.

     With respect to a series of securities consisting of mortgage loans, in
addition to amounts payable to any sub-servicer, the master servicer will pay
from its servicing compensation expenses incurred in connection with its
servicing of the mortgage loans, including, without limitation, payment of the
fees and disbursements of the trustee and independent accountants, payment of
expenses incurred in connection with distributions and reports to
securityholders, and payment of any other expenses described in the related
prospectus supplement.

     The master servicer is entitled to reimbursement for expenses incurred by
it in connection with the liquidation of defaulted mortgage loans, including
reimbursement of expenditures incurred by it in connection with the restoration
of mortgaged properties, the right of reimbursement being prior to the rights of
securityholders to receive any related Liquidation Proceeds. The master servicer
is also entitled to reimbursement from the certificate account for advances.

ANNUAL EVIDENCE AS TO THE COMPLIANCE OF THE MASTER SERVICER

     Each servicing agreement with respect to a series of securities, will
provide that on or before a specified date in each year, the first date being at
least six months after the related cut-off date, a firm of independent public
accountants will furnish a statement to the trustee to the effect that, on the
basis of the examination by the firm conducted substantially in compliance with
either the Uniform Single Program for Mortgage Bankers or the Audit Program for
Mortgages serviced for Freddie Mac, the servicing by or on behalf of the master
servicer of mortgage loans under servicing agreements substantially similar to
each other, including the related servicing agreement, was conducted in
compliance with the terms of those agreements except for any significant
exceptions or errors in records that, in the opinion of the firm, either the
Audit Program for Mortgages serviced for Freddie Mac, or paragraph 4 of the
Uniform Single Program for Mortgage Bankers, requires it to report. In rendering
its statement the accounting firm may rely, as to matters relating to the direct
servicing of mortgage loans by sub-servicers, upon comparable statements for
examinations conducted substantially in compliance with the Uniform Single
Attestation Program for Mortgage Bankers or the Audit Program for Mortgages
serviced for Freddie Mac, rendered within one year of the statement, of firms of
independent public accountants with respect to the related sub-servicer.

     Each servicing agreement will also provide for delivery to the trustee, on
or before a specified date in each year, of an annual statement signed by two
officers of the master servicer to the effect that the master servicer has
fulfilled its obligations under the related agreement throughout the preceding
year.


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<PAGE>



     Copies of the annual accountants' statement and the statement of officers
of the master servicer may be obtained by securityholders without charge upon
written request to the master servicer at the address set forth in the related
prospectus supplement.

MATTERS REGARDING THE MASTER SERVICER AND THE DEPOSITOR

     The master servicer under each servicing agreement will be named in the
related prospectus supplement. The entity serving as master servicer may be an
affiliate of the depositor and may have other normal business relationships with
the depositor or the depositor's affiliates.

     Each servicing agreement will provide that the master servicer may resign
from its obligations and duties under the related agreement only if its
resignation, and the appointment of a successor, will not result in a
downgrading of any class of securities or upon a determination that its duties
under the related agreement are no longer permissible under applicable law. No
resignation will become effective until the trustee or a successor servicer has
assumed the master servicer's obligations and duties under the related
agreement.

     Each servicing agreement will further provide that neither the master
servicer, the depositor nor any director, officer, employee, or agent of the
master servicer or the depositor will be under any liability to the related
trust fund or securityholders for any action taken, or for refraining from the
taking of any action, in good faith under the related agreement, or for errors
in judgment; provided, however, that neither the master servicer, the depositor
nor any such person will be protected against any liability which would
otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties thereunder or by reason of reckless
disregard of obligations and duties thereunder. Each servicing agreement will
further provide that the master servicer, the depositor and any director,
officer, employee or agent of the master servicer or the depositor will be
entitled to indemnification by the related trust fund and will be held harmless
against any loss, liability or expense incurred in connection with any legal
action relating to the related agreement or the securities, other than any loss,
liability or expense that is related to any specific mortgage loan or mortgage
loans, unless that loss, liability or expense is otherwise reimbursable under
the related agreement, and other than any loss, liability or expense incurred by
reason of willful misfeasance, bad faith or gross negligence in the performance
of duties thereunder or by reason of reckless disregard of obligations and
duties thereunder. In addition, each servicing agreement will provide that
neither the master servicer nor the depositor will be under any obligation to
appear in, prosecute or defend any legal action which is not incidental to its
respective responsibilities under the related agreement and which in its opinion
may involve it in any expense or liability. The master servicer or the depositor
may, however, in its discretion undertake any action which it may deem necessary
or desirable with respect to the related agreement and the rights and duties of
the parties and the interests of the securityholders. In that event, the legal
expenses and costs of the action and any resulting liability will be expenses,
costs and liabilities of the securityholders, and the master servicer or the
depositor, as the case may be, will be entitled to be reimbursed and to charge
the certificate account for the reimbursement. Except in the case of a series of
Senior/Subordinate securities, any monetary obligation of the securityholders
will be borne among them on a pro rata basis in proportion to the accrued
interest payable to each securityholder, and, notwithstanding any other
provision, their respective distributions will be reduced accordingly.



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<PAGE>



     Any person into which the master servicer may be merged or consolidated, or
any person resulting from any merger or consolidation to which the master
servicer is a party, or any person succeeding to the business of the master
servicer, will be the successor of the master servicer under each agreement, so
long as that person is qualified to sell mortgage loans to, and service mortgage
loans on behalf of, Fannie Mae or Freddie Mac.

EVENTS OF DEFAULT UNDER THE GOVERNING AGREEMENT AND RIGHTS UPON EVENTS OF
DEFAULT

     POOLING AND SERVICING AGREEMENT

     Events of default under each pooling and servicing agreement will include:

         o        any failure by the master servicer to distribute or cause to
                  be distributed to securityholders, or to remit to the trustee
                  for distribution to securityholders, any required payment that
                  continues unremedied for a specified number of business days
                  after the giving of written notice of the failure to the
                  master servicer by the trustee or the depositor, or to the
                  master servicer, the depositor and the trustee by the holders
                  of certificates evidencing not less than 25% of the voting
                  rights;

         o        any failure by the master servicer duly to observe or perform
                  in any material respect any of its other covenants or
                  obligations under the agreement which continues unremedied for
                  a specified number of days after the giving of written notice
                  of the failure to the master servicer by the trustee or the
                  depositor, or to the master servicer, the depositor and the
                  trustee by the holders of certificates evidencing not less
                  than 25% of the Voting rights; and

         o        events of insolvency, readjustment of debt, marshalling of
                  assets and liabilities or similar proceedings and actions by
                  or on behalf of the master servicer indicating its insolvency
                  or inability to pay its obligations.

     So long as an event of default under a pooling and servicing agreement
remains unremedied, the depositor or the trustee may, and at the direction of
holders of certificates evidencing not less than 51% of the voting rights, the
trustee shall, terminate all of the rights and obligations of the master
servicer under the pooling and servicing agreement relating to the trust fund
and in and to the mortgage loans, other than any retained interest of the master
servicer, whereupon the trustee will succeed to all of the responsibilities,
duties and liabilities of the master servicer under the agreement and will be
entitled to similar compensation arrangements. If the trustee is prohibited by
law from obligating itself to make advances regarding delinquent mortgage loans,
then the trustee will not be so obligated.

     If the trustee is unwilling or unable so to act, it may or, at the written
request of the holders of certificates entitled to at least 51% of the voting
rights, it shall appoint, or petition a court of competent jurisdiction for the
appointment of, a loan servicing institution acceptable to the rating agency
with a net worth at the time of the appointment of at least $1,000,000 to act as
successor to the master servicer under the agreement. Pending the appointment of
a successor, the trustee is obligated to act in the capacity of master servicer.
The trustee and any successor master servicer


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<PAGE>



may agree upon the servicing compensation to be paid, which in no event may be
greater than the compensation payable to the master servicer under the related
agreement.

     No certificateholder will have the right under any pooling and servicing
agreement to institute any proceeding under the agreement unless:

     o        the certificateholder previously has given to the trustee written
              notice of default,

     o        the holders of certificates evidencing not less than 25% of the
              voting rights have made written request upon the trustee to
              institute the proceeding in its own name as trustee thereunder,

     o        have offered to the trustee reasonable indemnity, and

     o        the trustee for fifteen days has neglected or refused to institute
              a proceeding. The trustee, however, is under no obligation to
              exercise any of the trusts or powers vested in it by any pooling
              and servicing agreement or to make any investigation of matters
              arising thereunder or to institute, conduct or defend any
              litigation under or in relation to the agreement at the request,
              order or direction of any of the holders of certificates covered
              by the agreement, unless the certificateholders have offered to
              the trustee reasonable security or indemnity against the costs,
              expenses and liabilities which may be incurred.

     SERVICING AGREEMENT

     A servicing default under the related servicing agreement will include:

              o       any failure by the master servicer to make a required
                      deposit to the certificate account or, if the master
                      servicer is so required, to distribute to the holders of
                      any class of notes or equity certificates of the series
                      any required payment which continues unremedied for a
                      specified number of business days after the giving of
                      written notice of the failure to the master servicer by
                      the trustee or the Issuer;

              o       any failure by the master servicer duly to observe or
                      perform in any material respect any other of its covenants
                      or agreements in the servicing agreement with respect to
                      the series of notes which continues unremedied for a
                      specified number of days after the giving of written
                      notice of the failure to the master servicer by the
                      trustee or the issuer;

              o       events of insolvency, readjustment of debt, marshalling of
                      assets and liabilities or similar proceedings regarding
                      the master servicer and actions by the master servicer
                      indicating its insolvency or inability to pay its
                      obligations and

              o       any other servicing default as set forth in the servicing
                      agreement.

     So long as a servicing default remains unremedied, either the depositor or
the trustee may, by written notification to the master servicer and to the
issuer or the trustee or trust fund, as applicable, terminate all of the rights
and obligations of the master servicer under the servicing agreement, other


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<PAGE>



than any right of the master servicer as noteholder or as holder of the equity
certificates and other than the right to receive servicing compensation and
expenses for servicing the mortgage loans during any period prior to the date of
the termination. Upon termination of the master servicer the trustee will
succeed to all responsibilities, duties and liabilities of the master servicer
under the servicing agreement, other than the obligation to repurchase mortgage
loans, and will be entitled to similar compensation arrangements. If the trustee
would be obligated to succeed the master servicer but is unwilling to so act, it
may appoint, or if it is unable to so act, it shall appoint, or petition a court
of competent jurisdiction for the appointment of an approved mortgage servicing
institution with a net worth of at least $1,000,000 to act as successor to the
master servicer under the servicing agreement. Pending the appointment of a
successor, the trustee is obligated to act in the capacity of master servicer.
The trustee and the successor may agree upon the servicing compensation to be
paid, which in no event may be greater than the compensation to the initial
master servicer under the servicing agreement.

     INDENTURE

     An event of default under the indenture will include:

     o        a default for a specified number of days or more in the payment of
              any principal of or interest on any note of the series;

     o        failure to perform any other covenant of the depositor or the
              trust fund in the indenture which continues for a specified number
              of days after notice of failure is given in accordance with the
              procedures described in the related prospectus supplement;

     o        any representation or warranty made by the depositor or the trust
              fund in the indenture or in any certificate or other writing
              having been incorrect in a material respect as of the time made,
              and the breach is not cured within a specified number of days
              after notice of breach is given in accordance with the procedures
              described in the related prospectus supplement;

     o        events of bankruptcy, insolvency, receivership or liquidation of
              the depositor or the issuer; or

     o        any other event of default provided with respect to notes of that
              series.

     If an event of default with respect to the notes of any series occurs and
is continuing, the trustee or the holders of a majority of the then aggregate
outstanding amount of the notes of the series may declare the principal amount,
or, if the notes of that series are Accrual Securities, the portion of the
principal amount as may be specified in the terms of that series, as provided in
the related prospectus supplement, of all the notes of the series to be due and
payable immediately. That declaration may, under the circumstances set forth in
the indenture, be rescinded and annulled by the holders of a majority in
aggregate outstanding amount of the related notes.

     If following an event of default with respect to any series of notes, the
notes of the series have been declared to be due and payable, the trustee may,
in its discretion, notwithstanding the acceleration, elect to maintain
possession of the collateral securing the notes of the series and to


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<PAGE>



continue to apply payments on the collateral as if there had been no declaration
of acceleration if the collateral continues to provide sufficient funds for the
payment of principal of and interest on the notes of the series as they would
have become due if there had not been a declaration. In addition, the trustee
may not sell or otherwise liquidate the collateral securing the notes of a
series following an event of default, unless

     o        the holders of 100% of the then aggregate outstanding amount of
              the notes of the series consent to the sale,

     o        the proceeds of the sale or liquidation are sufficient to pay in
              full the principal of and accrued interest, due and unpaid, on the
              outstanding notes of the series at the date of the sale, or

     o        the trustee determines that the collateral would not be sufficient
              on an ongoing basis to make all payments on the notes as the
              payments would have become due if the notes had not been declared
              due and payable, and the trustee obtains the consent of the
              holders of 66 2/3% of the then aggregate outstanding amount of the
              notes of the series.

     If the trustee liquidates the collateral in connection with an event of
default, the indenture may provide that the trustee will have a prior lien on
the proceeds of any liquidation for unpaid fees and expenses. As a result, upon
the occurrence of an event of default, the amount available for payments to the
noteholders would be less than would otherwise be the case. However, the trustee
may not institute a proceeding for the enforcement of its lien except in
connection with a proceeding for the enforcement of the lien of the indenture
for the benefit of the noteholders after the occurrence of an event of default.

     If the principal of the notes of a series is declared due and payable, the
holders of those notes issued at a discount from par may be entitled to receive
no more than an amount equal to the unpaid principal amount of the note less the
amount of the discount that is unamortized.

     No noteholder or holder of an equity certificate generally will have any
right under an owner trust agreement or indenture to institute any proceeding
with respect to the agreement unless:

     o        the holder previously has given to the trustee written notice of
              default and the default is continuing,

     o        the holders of notes or equity certificates of any class
              evidencing not less than 25% of the aggregate percentage interests
              constituting the class (a) have made written request upon the
              trustee to institute a proceeding in its own name as trustee
              thereunder and (b) have offered to the trustee reasonable
              indemnity,

     o        the trustee has neglected or refused to institute a proceeding for
              60 days after receipt of the request and indemnity, and

     o        no direction inconsistent with the written request has been given
              to the trustee during the 60 day period by the holders of a
              majority of the note balances of the class. However, the trustee
              will be under no obligation to exercise any of the trusts or
              powers vested in it by


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<PAGE>



              the applicable agreement or to institute, conduct or defend any
              litigation at the request, order or direction of any of the
              holders of notes or equity certificates covered by the agreement,
              unless the holders have offered to the trustee reasonable security
              or indemnity against the costs, expenses and liabilities which may
              be incurred therein or thereby.

AMENDMENT OF THE GOVERNING AGREEMENTS

     With respect to each series of certificates, each related pooling and
servicing agreement or trust agreement may be amended by the depositor, the
master servicer, and the trustee, upon consent of the provider of credit
support, if any, without the consent of any of the holders of certificates
covered by the agreement, to cure any ambiguity, to correct, modify or
supplement any provision in the agreement, or to make any other provisions with
respect to matters or questions arising under the agreement which are not
inconsistent with the provisions of the agreement, provided that the action will
not adversely affect in any material respect the interests of any holder of
certificates covered by the agreement. Each agreement may also be amended by the
depositor, the master servicer, if any, and the trustee, with the consent of the
holders of certificates evidencing not less than 66% of the voting rights, for
any purpose; provided, however, that no amendment may

     o        reduce in any manner the amount of or delay the timing of,
              payments received on trust fund assets which are required to be
              distributed on any certificate without the consent of the holder
              of the certificate,

     o        adversely affect in any material respect the interests of the
              holders of any class of certificates in a manner other than as
              described in the above bullet point, without the consent of the
              holders of certificates of that class evidencing not less than 66%
              of the aggregate voting rights of that class, or

     o        reduce the percentage of voting rights required by the preceding
              bullet point for the consent to any amendment without the consent
              of the holders of all certificates covered by the agreement then
              outstanding.

     However, with respect to any series of certificates as to which a REMIC
election is to be made, the trustee will not consent to any amendment of the
agreement unless it shall first have received an opinion of counsel to the
effect that the amendment will not cause the trust fund to fail to qualify as a
REMIC at any time that the related certificates are outstanding. The voting
rights evidenced by any certificate will be the portion of the voting rights of
all of the certificates in the related series allocated in the manner described
in the related prospectus supplement.

     With respect to each series of notes, each related servicing agreement or
indenture may be amended by the parties to the agreement without the consent of
any of the holders of the notes covered by the agreement, to cure any ambiguity,
to correct, modify or supplement any provision in the agreement, or to make any
other provisions with respect to matters or questions arising under the
agreement which are not inconsistent with the provisions of the agreement,
provided that the action will not adversely affect in any material respect the
interests of any holder of notes covered by the agreement. Each agreement may
also be amended by the parties to the agreement with the consent of the holders
of notes evidencing not less than 66% of the voting rights, for any purpose,
that no amendment may


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     o        reduce in any manner the amount of or delay the timing of,
              payments received on trust fund assets which are required to be
              distributed on any note without the consent of the holder of that
              note,

     o        adversely affect in any material respect the interests of the
              holders of any class of notes in a manner other than as described
              in the preceding bullet point, without the consent of the holders
              of notes of that class evidencing not less than 66% of the
              aggregate voting rights of that class, or

     o        reduce the percentage of voting rights required by the preceding
              bullet point for the consent to any amendment without the consent
              of the holders of all notes covered by the agreement then
              outstanding. The voting rights evidenced by any note will be the
              portion of the voting rights of all of the notes in the related
              series allocated in the manner described in the related prospectus
              supplement.

TERMINATION OF THE TRUST FUND AND DISPOSITION OF TRUST FUND ASSETS

     The obligations created by the related agreements for each series of
securities will terminate upon the payment to securityholders of that series of
all amounts held in the certificate account or by the master servicer and
required to be paid to them under the agreements following the earlier of

     o        the final payment or other liquidation of the last asset included
              in the related trust fund or the disposition of all underlying
              property subject to the trust fund assets acquired upon
              foreclosure of the trust fund assets, and

     o        the purchase of all of the assets of the trust fund by the party
              entitled to effect the termination, under the circumstances and in
              the manner set forth in the related prospectus supplement.

     In no event, however, will the trust created by the related agreements
continue beyond the date specified in the related prospectus supplement. Written
notice of termination of the related agreements will be given to each
securityholder, and the final distribution will be made only upon surrender and
cancellation of the securities at an office or agency appointed by the trustee
which will be specified in the notice of termination.

     Any purchase of assets of the trust fund in connection with a termination,
shall be made at the price set forth in the related prospectus supplement which
in most cases will be equal to the greater of:

     o        the sum of (a) 100% of the stated principal balance of each
              mortgage loan as of the day of the purchase plus accrued interest
              thereon at the applicable interest rate net of the rates at which
              the servicing fees and the retained interest, if any, are
              calculated to the first day of the month following the purchase
              plus (b) the appraised value of any underlying property subject to
              the mortgage loans acquired for the benefit of securityholders,
              and

     o        the aggregate fair market value of all of the assets in the trust
              fund, as determined by the trustee, the master servicer, and, if
              different than both such persons, the person entitled to


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              effect the termination, in each case taking into account accrued
              interest at the applicable interest rate net of the rates at which
              the servicing fees and the retained interest, if any, are
              calculated to the first day of the month following the purchase.

     The exercise of an optimal termination right will effect early retirement
of the securities of that series, but the right of the person entitled to effect
the termination is subject to the aggregate principal balance of the outstanding
trust fund assets for the series at the time of purchase being less than the
percentage of the aggregate principal balance of the trust fund assets at the
cut-off date for that series specified in the related prospectus supplement,
which percentage will be between 25% and 0%.

         In addition to the repurchase of the assets in the related trust fund
at the Clean-up Call, if so specified in the related prospectus supplement, a
holder of a non-offered class of securities described in the preceding paragraph
will have the right, solely at its discretion, to terminate the related trust
fund on any distribution date after the 12th distribution date following the
date of initial issuance of the related series of securities and until the date
as the Clean-up Call becomes exercisable and thereby effect early retirement of
the securities of the series. Any call of this type will be of the entire trust
fund at one time; multiple calls with respect to any series of securities will
not be permitted. If the call option is exercised, the Call Class must remit to
the trustee a price equal to 100% of the principal balance of the securities
offered hereby as of the day of the purchase plus accrued interest thereon at
the applicable security interest rate during the related period on which
interest accrues on the securities which the trustee will distribute to
securityholders. If funds to terminate are not deposited with the related
trustee, the securities will remain outstanding. There will not be any
additional remedies available to securityholders. In addition, in the case of a
trust fund for which a REMIC election or elections have been made, an early
termination will constitute a "qualified liquidation" under Section 860F of the
Code. In connection with a call by the Call Class, the final payment to the
securityholders will be made upon surrender of the related securities to the
trustee. Once the securities have been surrendered and paid in full, there will
not be any continuing liability from the securityholders or from the trust fund
to securityholders.

OPTIONAL PURCHASE BY THE MASTER SERVICER OF DEFAULTED MORTGAGE LOANS

     The master servicer under the related servicing agreement will have the
option to purchase from the trust fund any mortgage loan 90 days or more
delinquent at a purchase price generally equal to the outstanding principal
balance of the delinquent mortgage loan as of the date of purchase, plus all
accrued and unpaid interest on that principal balance.

DUTIES OF THE TRUSTEE

     The trustee makes no representations as to the validity or sufficiency of
any agreement, the securities or any mortgage loan or related document and is
not accountable for the use or application by or on behalf of the master
servicer of any funds paid to the master servicer or its designee in respect of
the securities or the mortgage loans, or deposited into or withdrawn from the
certificate account or any other account by or on behalf of the master servicer.
If no event of default has occurred and is continuing, the trustee is required
to perform only those duties specifically required under the related agreement.
However, upon receipt of the various certificates, reports or other


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instruments required to be furnished to it, the trustee is required to examine
the documents and to determine whether they conform to the requirements of the
related agreement.

DESCRIPTION OF THE TRUSTEE

     The trustee or indenture trustee, each referred to as the trustee, under
each pooling and servicing agreement, trust agreement or indenture will be named
in the related prospectus supplement. The owner trustee for each series of notes
will be named in the related prospectus supplement. The commercial bank,
national banking association or trust company serving as trustee or owner
trustee may have normal banking relationships with the depositor and its
affiliates and with the master servicer and its affiliates.

                          DESCRIPTION OF CREDIT SUPPORT

     If so provided in the related prospectus supplement, the trust fund for a
series of securities may include credit support for that series or for one or
more classes of securities comprising the series, which credit support may
consist of any combination of the following separate components, any of which
may be limited to a specified percentage of the aggregate principal balance of
the mortgage loans covered thereby or a specified dollar amount:

     o        coverage with respect to realized losses incurred on liquidated
              loans;

     o        coverage with respect to realized losses that are attributable to
              physical damage to mortgaged properties of a type that is not
              covered by standard hazard insurance policies; and

     o        coverage with respect to specific actions that may be taken by a
              bankruptcy court in connection with a mortgage loan, including a
              reduction of the interest rate on a mortgage loan, an extension
              of its maturity or a reduction in the principal balance of the
              mortgage loan.

     As set forth in the following paragraphs and in the related prospectus
supplement, credit support coverage may be provided by subordination of one or
more classes to other classes of securities in a series, one or more insurance
policies, a bankruptcy bond, a letter of credit, a reserve fund,
overcollateralization, cross support, or another method of credit support
described in the related prospectus supplement or any combination of the
foregoing. The amount and type of any credit support with respect to a series of
securities or with respect to one or more classes of securities comprising that
series, and the obligors on the credit support, will be set forth in the related
prospectus supplement. A copy of the policy or agreement, as applicable,
governing the applicable credit support will be filed with the Commission as an
exhibit to a Current Report on Form 8-K to be filed within 15 days of issuance
of the related series.

SUBORDINATION

     With respect to any Senior/Subordinate Series, in the event of any realized
losses on mortgage loans not in excess of the limitations described in the
following paragraph, the rights of the subordinate securityholders to receive
distributions with respect to the mortgage loans will be


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<PAGE>



subordinate to the rights of the senior securityholders to the extent described
in the related prospectus supplement.

     All realized losses will be allocated to the subordinate securities of the
related series, or, if the series includes more than one class of subordinate
securities, to the outstanding class of subordinate securities having the first
priority for allocation of realized losses and then to additional outstanding
classes of subordinate securities, if any, until the principal balance of the
applicable subordinate securities has been reduced to zero. Any additional
realized losses will be allocated to the senior securities or, if the series
includes more than one class of senior securities, either on a pro rata basis
among all of the senior securities in proportion to their respective outstanding
principal balances or as otherwise provided in the related prospectus
supplement. However, with respect to realized losses that are attributable to
physical damage to mortgaged properties of a type that is not covered by
standard hazard insurance policies, the amount thereof that may be allocated to
the subordinate securities of the related series may be limited to an amount
specified in the related prospectus supplement. If so, any realized losses of
this type in excess of the amount allocable to the subordinate securities will
be allocated among all outstanding classes of securities of the related series,
on a pro rata basis in proportion to their respective outstanding principal
balances, regardless of whether any subordinate securities remain outstanding,
or as otherwise provided in the related prospectus supplement. Any allocation of
a realized loss to a security will be made by reducing the principal balance
thereof as of the distribution date following the Prepayment Period in which the
realized loss was incurred.

     As set forth under "Description of the Securities--Distributions of
Principal of the Securities", the rights of holders of the various classes of
securities of any series to receive distributions of principal and interest is
determined by the aggregate principal balance of each class. The principal
balance of any security will be reduced by all amounts previously distributed on
that security in respect of principal, and by any realized losses allocated to
that security. If there were no realized losses or prepayments of principal on
any of the mortgage loans, the respective rights of the holders of securities of
any series to future distributions would not change. However, to the extent so
provided in the related prospectus supplement, holders of senior securities may
be entitled to receive a disproportionately larger amount of prepayments
received, which will have the effect of accelerating the amortization of the
senior securities and increasing the respective percentage interest in future
distributions evidenced by the subordinate securities in the related trust fund,
with a corresponding decrease in the senior percentage, as well as preserving
the availability of the subordination provided by the subordinate securities. In
addition, as set forth in the paragraph above, realized losses will be first
allocated to subordinate securities by reduction of the principal balance
thereof, which will have the effect of increasing the respective interest in
future distributions evidenced by the senior securities in the related trust
fund.

     If so provided in the related prospectus supplement, amounts otherwise
payable on any distribution date to holders of subordinate securities may be
deposited into a reserve fund. Amounts held in any reserve fund may be applied
as described below under "--Reserve Funds" and in the related prospectus
supplement.

     With respect to any Senior/Subordinate Series, the terms and provisions of
the subordination may vary from those described in the preceding paragraphs and
any variation will be described in the related prospectus supplement.


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<PAGE>



     If so provided in the related prospectus supplement, the credit support for
the senior securities of a Senior/Subordinate Series may include, in addition to
the subordination of the subordinate securities of the series and the
establishment of a reserve fund, any of the other forms of credit support
described in this prospectus supplement. If any of the other forms of credit
support described below is maintained solely for the benefit of the senior
securities of a Senior/Subordinate Series, then that coverage described may be
limited to the extent necessary to make required distributions on the senior
securities or as otherwise specified in the related prospectus supplement. If so
provided in the related prospectus supplement, the obligor on any other forms of
credit support maintained for the benefit of the senior securities of a
Senior/Subordinate Series may be reimbursed for amounts paid thereunder out of
amounts otherwise payable on the subordinate securities.

LETTER OF CREDIT

     As to any series of securities to be covered by a letter of credit, a bank
will deliver to the trustee an irrevocable letter of credit. The master servicer
or trustee will exercise its best reasonable efforts to keep or cause to be kept
the letter of credit in full force and effect, unless coverage thereunder has
been exhausted through payment of claims. The master servicer will agree to pay
the fees for the letter of credit on a timely basis unless, as described in the
related prospectus supplement, the payment of those fees is otherwise provided
for.

     The master servicer or the trustee will make or cause to be made draws on
the letter of credit bank under each letter of credit. Subject to any
differences as will be described in the related prospectus supplement, letters
of credit may cover all or any of the following amounts, in each case up to a
maximum amount set forth in the letter of credit:

                (1) For any mortgage loan that became a liquidated loan during
     the related Prepayment Period, other than mortgage loans as to which
     amounts paid or payable under any related hazard insurance instrument,
     including the letter of credit as described in (2) below, are not
     sufficient either to restore the mortgaged property or to pay the
     outstanding principal balance of the mortgage loan plus accrued interest,
     an amount which, together with all Liquidation Proceeds, Insurance
     Proceeds, and other collections on the liquidated loan, net of amounts
     payable or reimbursable therefrom to the master servicer for related unpaid
     servicing fees and unreimbursed servicing expenses, will equal the sum of
     (A) the unpaid principal balance of the liquidated loan, plus accrued
     interest at the applicable interest rate net of the rates at which the
     servicing fee and retained interest are calculated, plus (B) the amount of
     related servicing expenses, if any, not reimbursed to the master servicer
     from Liquidation Proceeds, Insurance Proceeds and other collections on the
     liquidation loan, which shall be paid to the master servicer;

                (2) For each mortgage loan that is delinquent and as to which
     the mortgaged property has suffered damage, other than physical damage
     caused by hostile or warlike action in time of war or peace, by any weapons
     of war, by any insurrection or rebellion, or by any nuclear reaction or
     nuclear radiation or nuclear contamination whether controlled or
     uncontrolled, or by any action taken by any governmental authority in
     response to any of the foregoing, and for which any amounts paid or payable
     under the related primary hazard insurance policy or any special hazard
     insurance policy are not sufficient to pay either of the following amounts,
     an amount which, together with all Insurance Proceeds paid or payable under
     the related primary hazard insurance policy or any special hazard insurance
     policy, net, if the proceeds are not to be applied


                                       55

<PAGE>



     to restore the mortgaged property, of all amounts payable or reimbursable
     therefrom to the master servicer for related unpaid servicing fees and
     unreimbursed servicing expenses, will be equal to the lesser of (A) the
     amount required to restore the mortgaged property and (B) the sum of (1)
     the unpaid principal balance of the mortgage loan plus accrued interest at
     the applicable interest rate net of the rates at which the servicing fees
     and retained interest, if any, are calculated, plus (2) the amount of
     related servicing expenses, if any, not reimbursed to the master servicer
     from Insurance Proceeds paid under the related primary hazard insurance
     policy or any special hazard insurance policy; and

                (3) For any mortgage loan that has been subject to bankruptcy
     proceedings as described above, the amount of any debt service reduction or
     the amount by which the principal balance of the mortgage loan has been
     reduced by the bankruptcy court.

     If the related prospectus supplement so provides, upon payment by the
letter of credit bank with respect to a liquidated loan, or a payment of the
full amount owing on a mortgage loan as to which the mortgaged property has been
damaged, as described in (2)(B) above, the liquidated loan will be removed from
the related trust fund in accordance with the terms set forth in the related
prospectus supplement and will no longer be subject to the agreement. Unless
otherwise provided in the related prospectus supplement, mortgage loans that
have been subject to bankruptcy proceedings, or as to which payment under the
letter of credit has been made for the purpose of restoring the related
mortgaged property, as described in (2)(A) above, will remain part of the
related trust fund. The maximum dollar coverages provided under any letter of
credit will each be reduced to the extent of related unreimbursed draws
thereunder.

     In the event that the bank that has issued a letter of credit ceases to be
a duly organized commercial bank, or its debt obligations are rated lower than
the highest rating on any class of the securities on the date of issuance by the
rating agency or agencies, the master servicer or trustee will use its best
reasonable efforts to obtain or cause to be obtained, as to each letter of
credit, a substitute letter of credit issued by a commercial bank that meets
these requirements and providing the same coverage; provided, however, that, if
the fees charged or collateral required by the successor bank shall be more than
the fees charged or collateral required by the predecessor bank, each component
of coverage thereunder may be reduced proportionately to a level as results in
the fees and collateral being not more than the fees then charged and collateral
then required by the predecessor bank.

MORTGAGE POOL INSURANCE POLICY

     As to any series of securities to be covered by a mortgage pool insurance
policy with respect to any realized losses on liquidated loans, the master
servicer will exercise its best reasonable efforts to maintain or cause to be
maintained the mortgage pool insurance policy in full force and effect, unless
coverage thereunder has been exhausted through payment of claims. The master
servicer will agree to pay the premiums for each mortgage pool insurance policy
on a timely basis unless, as described in the related prospectus supplement, the
payment of those fees is otherwise provided.

     The master servicer will present or cause to be presented claims to the
insurer under each mortgage pool insurance policy. Mortgage pool insurance
policies, however, are not blanket policies against loss, since claims
thereunder may be made only upon satisfaction of certain


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<PAGE>



conditions, as described in the next paragraph and, if applicable, in the
related prospectus supplement.

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

     Mortgage pool insurance policies in general provide that no claim may
validly be presented thereunder with respect to a mortgage loan unless:

         o        an acceptable primary mortgage insurance policy, if the
                  initial loan-to-value ratio of the mortgage loan exceeded 80%,
                  has been kept in force until the loan-to-value ratio is
                  reduced to 80%;

         o        premiums on the primary hazard insurance policy have been paid
                  by the insured and real estate taxes and foreclosure,
                  protection and preservation expenses have been advanced by or
                  on behalf of the insured, as approved by the insurer;

         o        if there has been physical loss or damage to the mortgaged
                  property, it has been restored to its physical condition at
                  the time the mortgage loan became insured under the mortgage
                  pool insurance policy, subject to reasonable wear and tear;
                  and

         o        the insured has acquired good and merchantable title to the
                  mortgaged property, free and clear of all liens and
                  encumbrances, except permitted encumbrances, including any
                  right of redemption by or on behalf of the mortgagor, and if
                  required by the insurer, has sold the property with the
                  approval of the insurer.

     Assuming the satisfaction of these conditions, the insurer has the option
to either (a) acquire the property securing the defaulted mortgage loan for a
payment equal to the principal balance of the defaulted mortgage loan plus
accrued and unpaid interest at the interest rate on the mortgage loan to the
date of acquisition and expenses described above advanced by or on behalf of the
insured, on condition that the insurer must be provided with good and
merchantable title to the mortgaged property, unless the property has been
conveyed under the terms of the applicable primary mortgage insurance policy, or
(b) pay the amount by which the sum of the principal balance of the defaulted
mortgage loan and accrued and unpaid interest at the interest rate to the date
of the payment of the claim and the expenses exceed the proceeds received from a
sale of the mortgaged property which the insurer has approved. In both (a) and
(b), the amount of payment under a mortgage pool insurance policy will be
reduced by the amount of the loss paid under the primary mortgage insurance
policy.

     Unless earlier directed by the insurer, a claim under a mortgage pool
insurance policy must be filed (a) in the case when a primary mortgage insurance
policy is in force, within a specified number of days (typically, 60 days) after
the claim for loss has been settled or paid thereunder, or after acquisition by
the insured or a sale of the property approved by the insurer, whichever is
later, or (b) in the case when a primary mortgage insurance policy is not in
force, within a specified number of days (typically, 60 days) after acquisition
by the insured or a sale of the property approved by the


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insurer. A claim must be paid within a specified period (typically, 30 days)
after the claim is made by the insured.

     The amount of coverage under each mortgage pool insurance policy will
generally be reduced over the life of the securities of any series by the
aggregate dollar amount of claims paid less the aggregate of the net amounts
realized by the insurer upon disposition of all acquired properties. The amount
of claims paid includes certain expenses incurred by the master servicer as well
as accrued interest on delinquent mortgage loans to the date of payment of the
claim. Accordingly, if aggregate net claims paid under a mortgage pool insurance
policy reach the applicable policy limit, coverage thereunder will be exhausted
and any further losses will be borne by securityholders of the related series.
SEE "LEGAL ASPECTS OF MORTGAGE LOANS--FORECLOSURE ON MORTGAGES" AND
"--REPOSSESSIon WITH RESPECT TO MANUFACTURED HOUSING CONTRACTS".

     If an insurer under a mortgage pool insurance policy ceases to be a private
mortgage guaranty insurance company duly qualified as such under applicable laws
and approved as an insurer by Freddie Mac or Fannie Mae and having a
claims-paying ability acceptable to the rating agency or agencies, the master
servicer will use its best reasonable efforts to obtain or cause to be obtained
from another qualified insurer a replacement insurance policy comparable to the
mortgage pool insurance policy with a total coverage equal to the then
outstanding coverage of the mortgage pool insurance policy; provided, however,
that if the cost of the replacement policy is greater than the cost of the
original mortgage pool insurance policy, the coverage of the replacement policy
may be reduced to the level that its premium rate does not exceed the premium
rate on the original mortgage pool insurance policy. However, if the insurer
ceases to be a qualified insurer solely because it ceases to be approved as an
insurer by Freddie Mac or Fannie Mae, the master servicer will review, or cause
to be reviewed, the financial condition of the insurer with a view towards
determining whether recoveries under the mortgage pool insurance policy are
jeopardized for reasons related to the financial condition of the insurer. If
the master servicer determines that recoveries are so jeopardized, it will
exercise its best reasonable efforts to obtain from another qualified insurer a
replacement policy, subject to the same cost limitation.

     Because each mortgage pool insurance policy will require that the property
subject to a defaulted mortgage loan be restored to its original condition prior
to claiming against the insurer, the policy will not provide coverage against
hazard losses. As set forth in the immediately following paragraph, the primary
hazard insurance policies covering the mortgage loans typically exclude from
coverage physical damage resulting from a number of causes and, even when the
damage is covered, may afford recoveries that are significantly less than the
full replacement cost of the losses. Further, a special hazard insurance policy,
or a letter of credit that covers special hazard realized losses, will not cover
all risks, and the coverage thereunder will be limited in amount. These hazard
risks will, as a result, be uninsured and will therefore be borne by
securityholders.

SPECIAL HAZARD INSURANCE POLICY

     As to any series of securities to be covered by an insurance instrument
that does not cover losses that are attributable to physical damage to the
mortgaged properties of a type that is not covered by standard hazard insurance
policies, in other words, "special hazard realized losses", the related
prospectus supplement may provide that the master servicer will exercise its
best reasonable efforts to maintain or cause to be maintained a special hazard
insurance policy in full force and effect


                                       58

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covering the special hazard amount, unless coverage thereunder has been
exhausted through payment of claims; provided, however, that the master servicer
will be under no obligation to maintain the policy if any insurance instrument
covering the series as to any realized losses on liquidated loans is no longer
in effect. The master servicer will agree to pay the premiums on each special
hazard insurance policy on a timely basis unless, as described in the related
prospectus supplement, payment of those premiums is otherwise provided for.

     Each special hazard insurance policy will, subject to the limitations
described in the next paragraph, protect holders of securities of the related
series from

     o        loss by reason of damage to mortgaged properties caused by certain
              hazards, including earthquakes and mudflows, not insured against
              under the primary hazard insurance policies or a flood insurance
              policy if the property is in a designated flood area, and

     o        loss from partial damage caused by reason of the application of
              the co-insurance clause contained in the primary hazard insurance
              policies.

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

     Subject to the foregoing limitations, each special hazard insurance policy
will provide that, when there has been damage to property securing a defaulted
mortgage loan acquired by the insured and to the extent the damage is not
covered by the related primary hazard insurance policy or flood insurance
policy, the insurer will pay the lesser of:

     (1) the cost of repair to the property and

     (2) upon transfer of the property to the insurer, the unpaid principal
         balance of the mortgage loan at the time of acquisition of the property
         by foreclosure, deed in lieu of foreclosure or repossession, plus
         accrued interest to the date of claim settlement and expenses
         incurred by or on behalf of the master servicer with respect to the
         property.

     The amount of coverage under the special hazard insurance policy will be
reduced by the sum of (a) the unpaid principal balance plus accrued interest and
certain expenses paid by the insurer, less any net proceeds realized by the
insurer from the sale of the property, plus (b) any amount paid as the
cost of repair of the property.

     Restoration of the property with the proceeds described under clause (1) of
the immediately preceding paragraph will satisfy the condition under an
insurance instrument providing coverage as to credit, or other non-hazard risks,
that the property be restored before a claim thereunder may be validly presented
with respect to the defaulted mortgage loan secured by the property. The payment
described under clause (2) of the immediately preceding paragraph will render
unnecessary presentation of a claim in respect of the mortgage loan under an
insurance instrument providing coverage as to credit, or other non-hazard risks,
as to any realized losses on a liquidated loan. Therefore, so long as the
insurance instrument providing coverage as to credit, or other non-hazard


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risks, remains in effect, the payment by the insurer of either of the above
alternative amounts will not affect the total insurance proceeds paid to
securityholders, but will affect the relative amounts of coverage remaining
under any special hazard insurance policy and any credit insurance instrument.

     The sale of a mortgaged property must be approved by the insurer under any
special hazard insurance policy and funds received by the insured in excess of
the unpaid principal balance of the mortgage loan plus interest thereon to the
date of sale plus expenses incurred by or on behalf of the master servicer
with respect to the property, not to exceed the amount actually paid by the
insurer, must be refunded to the insurer and, to that extent, coverage under the
special hazard insurance policy will be restored. If aggregate claim payments
under a special hazard insurance policy reach the policy limit, coverage
thereunder will be exhausted and any further losses will be borne by
securityholders.

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

     If a special hazard insurance policy is canceled or terminated for any
reason, other than the exhaustion of total policy coverage, the master servicer
will use its best reasonable efforts to obtain or cause to be obtained from
another insurer a replacement policy comparable to that special hazard insurance
policy with a total coverage that is equal to the then existing coverage of the
replaced special hazard insurance policy; provided, however, that if the cost of
the replacement policy is greater than the cost of that special hazard insurance
policy, the coverage of the replacement policy may be reduced to a level so that
its premium rate does not exceed the premium rate on that special hazard
insurance policy.

     Since each special hazard insurance policy is designed to permit full
recoveries as to any realized losses on liquidated loans under a credit
insurance instrument in circumstances in which recoveries would otherwise be
unavailable because property has been damaged by a cause not insured against by
a primary hazard insurance policy and thus would not be restored, each agreement
governing the trust fund will provide that, if the related credit insurance
instrument shall have lapsed or terminated or been exhausted through payment of
claims, the master servicer will be under no further obligation to maintain the
special hazard insurance policy.

BANKRUPTCY BOND

     As to any series of securities to be covered by a bankruptcy bond with
respect to actions that may be taken by a bankruptcy court in connection with a
mortgage loan, the master servicer will exercise its best reasonable efforts to
maintain or cause to be maintained the bankruptcy bond in full force and effect,
unless coverage thereunder has been exhausted through payment of claims. The
master


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servicer will pay or cause to be paid the premiums for each bankruptcy bond on a
timely basis, unless, as described in the related prospectus supplement, payment
of those premiums is otherwise provided for. Subject to the limit of the dollar
amount of coverage provided, each bankruptcy bond will cover certain losses
resulting from an extension of the maturity of a mortgage loan, or a reduction
by the bankruptcy court of the principal balance of or the interest rate on a
mortgage loan, and the unpaid interest on the amount of a principal reduction
during the pendency of a proceeding under the Bankruptcy Code. SEE "LEGAL
ASPECTS OF MORTGAGE LOANS--FORECLOSURE ON MORTGAGES" AND "--REPOSSESSION WITH
RESPECT TO MANUFACTURED HOUSING CONTRACTS".

FINANCIAL GUARANTEE INSURANCE

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

RESERVE FUND

     If so provided in the related prospectus supplement, the depositor will
deposit or cause to be deposited in an account, a reserve fund, any combination
of cash, one or more irrevocable letters of credit or one or more permitted
investments in specified amounts, or any other instrument satisfactory to the
rating agency or agencies, which will be applied and maintained in the manner
and under the conditions specified in the prospectus supplement. In the
alternative or in addition to a deposit, the prospectus supplement for a
Senior/Subordinate Series may provide that, a reserve fund be funded through
application of all or a portion of amounts otherwise payable on the subordinate
securities. Amounts in a reserve fund may be distributed to securityholders, or
applied to reimburse the master servicer for outstanding advances, or may be
used for other purposes, in the manner specified in the related prospectus
supplement. A reserve fund will typically not be deemed to be part of the
related trust fund.

     Amounts deposited in any reserve fund for a series will be invested in
permitted investments by, or at the direction of, the master servicer or any
other person named in the related prospectus supplement.

OVERCOLLATERALIZATION

     If so specified in the related prospectus supplement, interest collections
on the mortgage loans may exceed interest payments on the securities for the
related distribution date. The excess interest may be deposited into a reserve
fund or applied as an additional payment of principal on the securities. If
excess interest is applied as principal payments on the securities, the effect
will be to reduce the principal balance of the securities relative to the
outstanding balance of the mortgage


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loans, thereby creating overcollateralization and additional protection to the
securityholders, as specified in the related prospectus supplement. If so
provided in the related prospectus supplement, overcollateralization may also be
provided on the date of issuance of the securities by the issuance of securities
in an initial aggregate principal amount which is less than the aggregate
principal amount of the mortgage loans in the related trust fund.

CROSS-SUPPORT FEATURES

     If the trust fund assets for a series are divided into separate asset
groups, the beneficial ownership of which is evidenced by a separate class or
classes of a series, credit support may be provided by a cross-support feature
which requires that distributions be made on senior securities evidencing the
beneficial ownership of one asset group prior to distributions on subordinate
securities evidencing the beneficial ownership interest in another asset group
within the trust fund. The related prospectus supplement for a series which
includes a cross-support feature will describe the manner and conditions for
applying that cross-support feature. As to any trust fund that includes a
cross-support feature, only assets of the trust fund will be used to provide
cross-support, and cross-support will be provided only to securities issued by
the trust fund. A trust fund will not provide a cross-support feature that
benefits securities issued by any other trust fund, and a trust fund will not
receive cross- support from any other trust fund.

CASH FLOW AGREEMENTS

     If so provided in the related prospectus supplement, the trust fund may
include other agreements, such as guarantees, interest rate exchange agreements,
interest rate cap or floor agreements, currency exchange agreements or similar
agreements designed to reduce the effects of interest rate or currency exchange
rate fluctuations on the trust fund assets and on one or more classes of
securities. The principal terms of any agreement of this type, and the identity
of each obligor, will be described in the prospectus supplement for a series of
securities.

                    DESCRIPTION OF PRIMARY INSURANCE POLICIES

     Each mortgage loan will be covered by a primary hazard insurance policy
and, if required as described in the paragraphs following, a primary mortgage
insurance policy.

PRIMARY MORTGAGE INSURANCE POLICIES

     As set forth under "Description of the Securities--Procedures for
Realization Upon Defaulted Mortgage Loans", the master servicer will maintain or
cause to be maintained with respect to each mortgage loan, a primary mortgage
insurance policy in accordance with the underwriting standards described herein
and in the related prospectus supplement. Although the terms and conditions of
primary mortgage insurance policies differ, each primary mortgage insurance
policy will generally cover losses up to an amount equal to the excess of the
unpaid principal amount of a defaulted mortgage loan, plus accrued and unpaid
interest thereon and approved expenses, over a specified percentage of the
value of the related mortgaged property.

     As conditions to the filing or payment of a claim under a primary mortgage
insurance policy, the insured will typically be required, in the event of
default by the borrower, to:


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     o        advance or discharge (a) hazard insurance premiums and (b) as
              necessary and approved in advance by the insurer, real estate
              taxes, property protection and preservation expenses
              and foreclosure and related costs,

     o        in the event of any physical loss or damage to the mortgaged
              property, have the mortgaged property restored to at least its
              condition at the effective date of the primary mortgage insurance
              policy, ordinary wear and tear excepted, and

     o        tender to the insurer good and merchantable title to, and
              possession of, the mortgaged property.

PRIMARY HAZARD INSURANCE POLICIES

     Each pooling and servicing agreement and servicing agreement will require
the master servicer to cause the borrower on each mortgage loan to maintain a
primary hazard insurance policy providing for coverage of the standard form of
fire insurance policy with extended coverage customary in the state in which the
mortgaged property is located. The primary hazard coverage will be in general in
an amount equal to the lesser of the principal balance owing on the mortgage
loan and the amount necessary to fully compensate for any damage or loss to the
improvements on the mortgaged property on a replacement cost basis, but in
either case not less than the amount necessary to avoid the application of any
co-insurance clause contained in the hazard insurance policy. The ability of the
master servicer to assure that hazard insurance proceeds are appropriately
applied may be dependent upon its being named as an additional insured under any
primary hazard insurance policy and under any flood insurance policy referred to
in the paragraph below, and upon the borrower furnishing information to the
master servicer in respect of a claim. All amounts collected by the master
servicer under any primary hazard insurance policy, except for amounts to be
applied to the restoration or repair of the mortgaged property or released to
the borrower in accordance with the master servicer's normal servicing
procedures, and subject to the terms and conditions of the related Mortgage and
mortgage note, will be deposited in the certificate account. The agreement will
provide that the master servicer may satisfy its obligation to cause each
borrower to maintain a hazard insurance policy by the master servicer's
maintaining a blanket policy insuring against hazard losses on the mortgage
loans. If the blanket policy contains a deductible clause, the master servicer
will deposit in the certificate account all sums that would have been deposited
in the certificate account but for that clause. The master servicer also is
required to maintain a fidelity bond and errors and omissions policy with
respect to its officers and employees that provides coverage against losses that
may be sustained as a result of an officer's or employee's misappropriation of
funds or errors and omissions in failing to maintain insurance, subject to
limitations as to amount of coverage, deductible amounts, conditions, exclusions
and exceptions.

     In general, the standard form of fire and extended coverage policy covers
physical damage to or destruction of the improvements of the property by fire,
lightning, explosion, smoke, windstorm and hail, and riot, strike and civil
commotion, subject to the conditions and exclusions specified in each policy.
Although the policies relating to the mortgage loans will be underwritten by
different insurers under different state laws in accordance with different
applicable state forms, and therefore will not contain identical terms and
conditions, the basic terms thereof are dictated by respective state laws, and
most hazard insurance policies typically do not cover any physical damage
resulting from the following: war, revolution, governmental actions, floods and
other water-related causes,


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earth movement, including earthquakes, landslides and mudflows, nuclear
reactions, wet or dry rot, vermin, rodents, insects or domestic animals, theft
and, in some cases, vandalism. This list is merely indicative of the kinds of
uninsured risks and is not intended to be all-inclusive. When a mortgaged
property is located at origination in a federally designated flood area and
flood insurance is available, each agreement will require the master servicer to
cause the borrower to acquire and maintain flood insurance in an amount equal in
general to the lesser of (a) the amount necessary to fully compensate for any
damage or loss to the improvements which are part of the mortgaged property on a
replacement cost basis and (b) the maximum amount of insurance available under
the federal flood insurance program, whether or not the area is participating in
the program.

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

     The master servicer will not require that a hazard or flood insurance
policy be maintained for any cooperative loan. Generally, the cooperative is
responsible for maintenance of hazard insurance for the property owned by the
cooperative, and the tenant-stockholders of that cooperative do not maintain
individual hazard insurance policies. However, if a cooperative and the related
borrower on a cooperative note do not maintain hazard insurance or do not
maintain adequate coverage or any insurance proceeds are not applied to the
restoration of the damaged property, damage to the related borrower's
cooperative apartment or the cooperative's building could significantly reduce
the value of the collateral securing the cooperative note.

     Since the amount of hazard insurance the master servicer will cause to be
maintained on the improvements securing the mortgage loans declines as the
principal balances owing thereon decrease, and since residential properties have
historically appreciated in value over time, hazard insurance proceeds collected
in connection with a partial loss may be insufficient to restore fully the
damaged property. The terms of the mortgage loans provide that borrowers are
required to present claims to insurers under hazard insurance policies
maintained on the mortgaged properties. The master servicer, on behalf of the
trustee and securityholders, is obligated to present or cause to be presented
claims under any blanket insurance policy insuring against hazard losses on
mortgaged properties. However, the ability of the master servicer to present or
cause to be presented these claims is dependent upon the extent to which
information in this regard is furnished to the master servicer by borrowers.

FHA INSURANCE

     The Federal Housing Administration is responsible for administering various
federal programs, including mortgage insurance, authorized under The Housing Act
and the United States Housing Act of 1937, as amended. If so provided in the
related prospectus supplement, a number of the mortgage loans will be insured by
the FHA.



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

     HUD has the option, in most cases, to pay insurance claims in cash or in
debentures issued by HUD. Presently, claims are being paid in cash, and claims
have not been paid in debentures since 1965. HUD debentures issued in
satisfaction of FHA insurance claims bear interest at the applicable HUD
debenture interest rate. The master servicer will be obligated to purchase any
debenture issued in satisfaction of a defaulted FHA insured mortgage loan
serviced by it for an amount equal to the principal amount of that debenture.

     The master servicer will be required to take steps as are reasonably
necessary to keep FHA insurance in full force and effect.

VA GUARANTEES

     The United States Department of Veterans Affairs is an Executive Branch
Department of the United States, headed by the Secretary of Veterans Affairs.
The VA currently administers a variety of federal assistance programs on behalf
of eligible veterans and their dependents and beneficiaries. The VA administers
a loan guaranty program under which the VA guarantees a portion of loans made to
eligible veterans. If so provided in the prospectus supplement, a number  of the
mortgage loans will be guaranteed by the VA.

     Under the VA loan guaranty program, a VA loan may be made to any eligible
veteran by an approved private sector mortgage lender. The VA guarantees payment
to the holder of that loan of a fixed percentage of the loan indebtedness, up to
a maximum dollar amount, in the event of default by the veteran borrower. When a
delinquency is reported to the VA and no realistic alternative to foreclosure is
developed by the loan holder or through the VA's supplemental servicing of the
loan, the VA determines, through an economic analysis, whether the VA will (a)
authorize the holder to convey the property securing the VA loan to the
Secretary of Veterans Affairs following termination or (b) pay the loan guaranty
amount to the holder. The decision as to disposition of properties securing
defaulted VA loans is made on a case-by-case basis using the procedures set
forth in 38 U.S.C. Section 3732(c), as amended.

     The master servicer will be required to take steps as are reasonably
necessary to keep the VA guarantees in full force and effect.

                         LEGAL ASPECTS OF MORTGAGE LOANS

     The following discussion contains general summaries of legal aspects of
loans secured by residential properties. Because these legal aspects are
governed in part by applicable state law, which laws may differ substantially
from state to state, the summaries do not purport to be complete


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nor to reflect the laws of any particular state, nor to encompass the laws of
all states in which the security for the mortgage loans is situated. If there is
a concentration of the mortgage loans included in a trust fund in a particular
state, the prospectus supplement for the related series of securities will
discuss any laws of that state that could materially impact the interest of the
securityholders.

     All of the mortgage loans, except as described below, are loans to
homeowners. All of the single-family loans are evidenced by notes or bonds and
secured by instruments which may be mortgages, deeds of trust, security deeds or
deeds to secure debt, depending upon the type of security instrument customary
to grant a security interest in real property in the state in which the
single-family property, as the case may be, is located. If specified in the
prospectus supplement relating to a series of securities, a trust fund may also
contain (1) cooperative loans evidenced by promissory notes secured by security
interests in shares issued by private cooperative housing corporations and in
the related proprietary leases or occupancy agreements granting exclusive rights
to occupy specific dwelling units in the related buildings or (2) manufactured
housing contracts evidencing both (a) the obligation of the obligor to repay the
loan evidenced thereby and (b) the grant of a security interest in the related
manufactured home to secure repayment of the loan. Any of the foregoing types of
encumbrance will create a lien upon, or grant a title interest in, the subject
property, the priority of which will depend on the terms of the particular
security instrument as well as the order of recordation or filing of the
instrument in the appropriate public office. A lien of this type is not prior to
the lien for real estate taxes and assessments.

SINGLE-FAMILY LOANS

     The single-family loans will be secured by either mortgages, deeds of
trust, security deeds or deeds to secure debt depending upon the type of
security instrument customary to grant a security interest according to the
prevailing practice in the state in which the property subject to a
single-family loan is located. The filing of a mortgage or a deed of trust
creates a lien upon or conveys title to the real property encumbered by that
instrument and represents the security for the repayment of an obligation that
is customarily evidenced by a promissory note. It is not prior to the lien for
real estate taxes and assessments. Priority with respect to mortgages and deeds
of trust depends on their terms and generally on the order of recording with the
applicable state, county or municipal office. There are two parties to a
mortgage, the mortgagor, who is the borrower/homeowner or the land trustee, and
the mortgagee, who is the lender. Under the mortgage instrument, the mortgagor
delivers to the mortgagee a note or bond and the mortgage. In the case of a land
trust, title to the property is held by a land trustee under a land trust
agreement, while the borrower/homeowner is the beneficiary of the land trust; at
origination of a mortgage loan, the borrower executes a separate undertaking to
make payments on the mortgage note. Although a deed of trust is similar to a
mortgage, a deed of trust normally has three parties, the trustor, similar to a
mortgagor, who may or may not be the borrower, the beneficiary, similar to a
mortgagee, who is the lender, and the trustee, a third-party grantee. Under a
deed of trust, the trustor grants the property, irrevocably until the debt is
paid, in trust, generally with a power of sale, to the trustee to secure payment
of the obligation. A security deed and a deed to secure debt are special types
of deeds which indicate on their face that they are granted to secure an
underlying debt. By executing a security deed or deed to secure debt, the
grantor conveys title to, as opposed to merely creating a lien upon, the subject
property to the grantee until the time as the underlying debt is repaid. The
mortgagee's authority under a mortgage and the trustee's authority under a deed
of trust, security deed or deed to secure debt are governed by


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the law of the state in which the real property is located, the express
provisions of the mortgage, deed of trust, security deed or deed to secure debt
and, in some cases, the directions of the beneficiary.

COOPERATIVE LOANS

     The cooperative owns or has a leasehold interest in all the real property
and owns in fee or leases the building and all separate dwelling units therein.
The cooperative is directly responsible for project management and, in most
cases, payment of real estate taxes, other governmental impositions and hazard
and liability insurance. If there is a blanket mortgage on the cooperative
apartment building and underlying land, or one or the other, the cooperative, as
project mortgagor, is also responsible for meeting these blanket mortgage
obligations. A blanket mortgage is ordinarily incurred by the cooperative in
connection with either the construction or purchase of the cooperative's
apartment building or the obtaining of capital by the cooperative. In some cases
there is a lease on the underlying land and the cooperative, as lessee, is also
responsible for meeting the rental obligation. The interests of the occupants
under proprietary leases or occupancy agreements as to which the cooperative is
the landlord are generally subordinate to the interests of the holder of the
blanket mortgage and to the interest of the holder of a land lease. If the
cooperative is unable to meet the payment obligations (a) arising under its
blanket mortgage, the mortgagee holding the blanket mortgage could foreclose on
that mortgage and terminate all subordinate proprietary leases and occupancy
agreements or (b) arising under its land lease, the holder of the landlord's
interest under the land lease could terminate it and all subordinate proprietary
leases and occupancy agreements. Also, the blanket mortgage on a cooperative may
provide financing in the form of a mortgage that does not fully amortize, with a
significant portion of principal being due in one final payment at final
maturity. The inability of the cooperative to refinance this mortgage and its
consequent inability to make the final payment could lead to foreclosure by the
mortgagee. Similarly, a land lease has an expiration date and the inability of
the cooperative to extend its term or, in the alternative, to purchase the land
could lead to termination of the cooperative's interest in the property and
termination of all proprietary leases and occupancy agreements. In either event,
foreclosure by the holder of the blanket mortgage or the termination of the
underlying lease could eliminate or significantly diminish the value of any
collateral held by the lender that financed the purchase by an individual
tenant-stockholder of cooperative shares or, in the case of the trust fund, the
collateral securing the cooperative loans.

     The cooperative is owned by tenant-stockholders who, through ownership of
stock, shares or membership certificates in the corporation, receive proprietary
leases or occupancy agreements which confer exclusive rights to occupy specific
units. Generally, a tenant-stockholder of a cooperative must make a monthly
payment to the cooperative representing the tenant-stockholder's pro rata share
of the cooperative's payments for its blanket mortgage, real property taxes,
maintenance expenses and other capital or ordinary expenses. An ownership
interest in a cooperative and accompanying occupancy rights is financed through
a cooperative share loan evidenced by a promissory note and secured by an
assignment of and a security interest in the occupancy agreement or proprietary
lease and a security interest in the related cooperative shares. The lender
generally takes possession of the share certificate and a counterpart of the
proprietary lease or occupancy agreement and a financing statement covering the
proprietary lease or occupancy agreement and the cooperative shares is filed in
the appropriate state and local offices to perfect the lender's interest in its
collateral. Upon default of the tenant-stockholder, the lender may sue for
judgment on the promissory note, dispose of the collateral at a public or
private sale or otherwise


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proceed against the collateral or tenant-stockholder as an individual as
provided in the security agreement covering the assignment of the proprietary
lease or occupancy agreement and the pledge of cooperative shares as described
under "Foreclosure on Cooperative Shares" below.

MANUFACTURED HOUSING CONTRACTS

     Under the laws of most states, manufactured housing constitutes personal
property and is subject to the motor vehicle registration laws of the state or
other jurisdiction in which the unit is located. In a few states, where
certificates of title are not required for manufactured homes, security
interests are perfected by the filing of a financing statement under Article 9
of the UCC which has been adopted by all states. Financing statements are
effective for five years and must be renewed at the end of each five years. The
certificate of title laws adopted by the majority of states provide that
ownership of motor vehicles and manufactured housing shall be evidenced by a
certificate of title issued by the motor vehicles department, or a similar
entity, of the state. In the states that have enacted certificate of title laws,
a security interest in a unit of manufactured housing, so long as it is not
attached to land in so permanent a fashion as to become a fixture, is generally
perfected by the recording of the interest on the certificate of title to the
unit in the appropriate motor vehicle registration office or by delivery of the
required documents and payment of a fee to such office, depending on state law.

     The master servicer will be required under the related servicing agreement
to effect the notation or delivery of the required documents and fees, and to
obtain possession of the certificate of title, as appropriate under the laws of
the state in which any manufactured home is registered. If the master servicer
fails, due to clerical errors or otherwise, to effect the notation or delivery,
or files the security interest under the wrong law, for example, under a motor
vehicle title statute rather than under the UCC, in a few states, the trustee
may not have a first priority security interest in the manufactured home
securing a manufactured housing contract. As manufactured homes have become
larger and often have been attached to their sites without any apparent
intention by the borrowers to move them, courts in many states have held that
manufactured homes may become subject to real estate title and recording laws.
As a result, a security interest in a manufactured home could be rendered
subordinate to the interests of other parties claiming an interest in the home
under applicable state real estate law. In order to perfect a security interest
in a manufactured home under real estate laws, the holder of the security
interest must file either a fixture filing under the provisions of the UCC or
a real estate mortgage under the real estate laws of the state where the home is
located. These filings must be made in the real estate records office of the
county where the home is located. Generally, manufactured housing contracts will
contain provisions prohibiting the obligor from permanently attaching the
manufactured home to its site. So long as the obligor does not violate this
agreement, a security interest in the manufactured home will be governed by the
certificate of title laws or the UCC, and the notation of the security interest
on the certificate of title or the filing of a UCC financing statement will be
effective to maintain the priority of the security interest in the manufactured
home. If, however, a manufactured home is permanently attached to its site,
other parties could obtain an interest in the manufactured home that is prior to
the security interest originally retained by the seller and transferred to the
depositor.

     The depositor will assign or cause to be assigned a security interest in
the manufactured homes to the trustee, on behalf of the securityholders. Neither
the depositor, the master servicer nor the trustee will amend the certificates
of title to identify the trustee, on behalf of the securityholders, as


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the new secured party and, accordingly, the depositor or the mortgage loan
seller will continue to be named as the secured party on the certificates of
title relating to the manufactured homes. In most states, an assignment is an
effective conveyance of a security interest in a manufactured home without
amendment of any lien noted on the related certificate of title and the new
secured party succeeds to the depositor's rights as the secured party. However,
in several states there exists a risk that, in the absence of an amendment to
the certificate of title, the assignment of the security interest might not be
held effective against creditors of the depositor or mortgage loan seller.

     In the absence of fraud, forgery or permanent affixation of the
manufactured home to its site by the manufactured home owner, or administrative
error by state recording officials, the notation of the lien of the depositor on
the certificate of title or delivery of the required documents and fees will be
sufficient to protect the trustee against the rights of subsequent purchasers of
a manufactured home or subsequent lenders who take a security interest in the
manufactured home. If there are any manufactured homes as to which the depositor
has failed to perfect or cause to be perfected the security interest assigned to
the trust fund, the security interest would be subordinate to subsequent
purchasers for value of manufactured homes and holders of perfected security
interests. There also exists a risk in not identifying the trustee, on behalf of
the securityholders, as the new secured party on the certificate of title that,
through fraud or negligence, the security interest of the trustee could be
released.

     If the owner of a manufactured home moves it to a state other than the
state in which the manufactured home initially is registered, under the laws of
most states, the perfected security interest in the manufactured home would
continue for four months after the relocation and thereafter until the owner
re-registers the manufactured home in that state. If the owner were to relocate
a manufactured home to another state and re-register the manufactured home in
the new state, and if the depositor did not take steps to re-perfect its
security interest in the new state, the security interest in the manufactured
home would cease to be perfected. A majority of states generally require
surrender of a certificate of title to re-register a manufactured home.
Accordingly, the depositor must surrender possession if it holds the certificate
of title to the manufactured home or, in the case of manufactured homes
registered in states that provide for notation of lien, the depositor would
receive notice of surrender if the security interest in the manufactured home is
noted on the certificate of title. Accordingly, the depositor would have the
opportunity to re-perfect its security interest in the manufactured home in the
state of relocation. In states that do not require a certificate of title for
registration of a manufactured home, re-registration could defeat perfection.
Similarly, when an obligor under a manufactured housing conditional sales
contract sells a manufactured home, the obligee must surrender possession of the
certificate of title or it will receive notice as a result of its lien noted
thereon and accordingly will have an opportunity to require satisfaction of the
related manufactured housing conditional sales contract before release of the
lien. Under each related servicing agreement, the master servicer will be
obligated to take those steps, at the master servicer's expense, as are
necessary to maintain perfection of security interests in the manufactured
homes.

     Under the laws of most states, liens for repairs performed on a
manufactured home take priority even over a perfected security interest. The
depositor will obtain the representation of the mortgage loan seller that it has
no knowledge of any liens of that type with respect to any manufactured home
securing a manufactured home loan. However, liens could arise at any time during
the term of a manufactured home loan. No notice will be given to the trustee or
securityholders in the event a lien for repairs arises.


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FORECLOSURE ON MORTGAGES

     Foreclosure of a deed of trust is generally accomplished by a non-judicial
trustee's sale under a specific provision in the deed of trust, which authorizes
the trustee to sell the property upon any default by the borrower under the
terms of the note or deed of trust. In several states, the trustee must record a
notice of default and send a copy to the borrower-trustor and to any person who
has recorded a request for a copy of a notice of default and notice of sale. In
addition, the trustee in several states must provide notice to any other
individual having an interest in the real property, including any junior
lienholder. The trustor, borrower, or any person having a junior encumbrance on
the real estate, may, during a reinstatement period, cure the default by paying
the entire amount in arrears plus the costs and expenses incurred in enforcing
the obligation. Generally, state law controls the amount of foreclosure expenses
and costs, including attorneys' fees, that may be recovered by a lender. If the
deed of trust is not reinstated, a notice of sale must be posted in a public
place and, in most states, published for a specific period of time in one or
more newspapers. In addition, several state laws require that a copy of the
notice of sale be posted on the property, recorded and sent to all parties
having an interest in the real property.

     An action to foreclose a mortgage is an action to recover the mortgage debt
by enforcing the mortgagee's rights under the mortgage and in the mortgaged
property. It is regulated by statutes and rules and subject throughout to the
court's equitable powers. A mortgagor is usually bound by the terms of the
mortgage note and the mortgage as made and cannot be relieved from its own
default. However, since a foreclosure action is equitable in nature and is
addressed to a court of equity, the court may relieve a mortgagor of a default
and deny the mortgagee foreclosure on proof that the mortgagor's default was
neither willful nor in bad faith and that the mortgagee's action established a
waiver of fraud, bad faith, oppressive or unconscionable conduct warranted a
court of equity to refuse affirmative relief to the mortgagee. A court of equity
may relieve the mortgagor from an entirely technical default where the default
was not willful.

     A foreclosure action or sale in accordance with a power of sale is subject
to most of the delays and expenses of other lawsuits if defenses or
counterclaims are interposed, sometimes requiring up to several years to
complete. Moreover, recent judicial decisions suggest that a non-collusive,
regularly conducted foreclosure sale or sale in accordance with a power of sale
may be challenged as a fraudulent conveyance, regardless of the parties' intent,
if a court determines that the sale was for less than fair consideration and the
sale occurred while the mortgagor was insolvent and within one year, or within
the state statute of limitations if the trustee in bankruptcy elects to proceed
under state fraudulent conveyance law, of the filing of bankruptcy. Similarly, a
suit against the debtor on the mortgage note may take several years.

     In case of foreclosure under either a mortgage or a deed of trust, the sale
by the referee or other designated officer or by the trustee is a public sale.
However, because of the difficulty potential third party purchasers at the sale
have in determining the exact status of title and because the physical condition
of the property may have deteriorated during the foreclosure proceedings, it is
uncommon for a third party to purchase the property at the foreclosure sale.
Rather, it is common for the lender to purchase the property from the trustee or
referee for an amount equal to the principal amount of the mortgage or deed of
trust plus accrued and unpaid interest and the expenses of foreclosure.
Thereafter, the lender will assume the burdens of ownership, including obtaining
casualty insurance, paying taxes and making repairs at its own expense as are
necessary to render the


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property suitable for sale. Depending upon market conditions, the ultimate
proceeds of the sale of the property may not equal the lender's investment in
the property. Any loss may be reduced by the receipt of any mortgage insurance
proceeds.

     A junior mortgagee may not foreclose on the property securing a junior
mortgage unless it forecloses subject to the senior mortgages, in which case it
must either pay the entire amount due on the senior mortgages to the senior
mortgagees prior to or at the time of the foreclosure sale or undertake the
obligation to make payments on the senior mortgages if the mortgagor is in
default thereunder. In either event the amounts expended will be added to the
balance due on the junior loan, and may be subrogated to the rights of the
senior mortgagees. In addition, if the foreclosure of a junior mortgage triggers
the enforcement of a due-on-sale clause in a senior mortgage, the junior
mortgagee may be required to pay the full amount of the senior mortgages to the
senior mortgagees.

Accordingly, with respect to those mortgage loans which are junior mortgage
loans, if the lender purchases the property, the lender's title will be subject
to all senior liens and claims and some governmental liens. The proceeds
received by the referee or trustee from the sale are applied first to the costs,
fees and expenses of sale, real estate taxes and then in satisfaction of the
indebtedness secured by the mortgage or deed of trust under which the sale was
conducted. Any remaining proceeds are generally payable to the holders of junior
mortgages or deeds of trust and other liens and claims in order of their
priority, whether or not the borrower is in default. Any additional proceeds are
generally payable to the mortgagor or trustor. The payment of the proceeds to
the holders of junior mortgages may occur in the foreclosure action of the
senior mortgagee or may require the institution of separate legal proceedings.

     If the master servicer were to foreclose on any junior lien it would do so
subject to any related senior lien. In order for the debt related to the junior
mortgage loan to be paid in full at the sale, a bidder at the foreclosure sale
of the junior mortgage loan would have to bid an amount sufficient to pay off
all sums due under the junior mortgage loan and the senior lien or purchase the
mortgaged property subject to the senior lien. If proceeds from a foreclosure or
similar sale of the mortgaged property are insufficient to satisfy all senior
liens and the junior mortgage loan in the aggregate, the trust fund as the
holder of the junior lien and, accordingly, holders of one or more classes of
related securities bear (1) the risk of delay in distributions while a
deficiency judgment against the borrower is obtained and (2) the risk of loss if
the deficiency judgment is not realized upon. Moreover, deficiency judgments may
not be available in a jurisdiction. In addition, liquidation expenses with
respect to defaulted junior mortgage loans do not vary directly with the
outstanding principal balance of the loans at the time of default. Therefore,
assuming that the master servicer took the same steps in realizing upon a
defaulted junior mortgage loan having a small remaining principal balance as it
would in the case of a defaulted junior mortgage loan having a large remaining
principal balance, the amount realized after expenses of liquidation would be
smaller as a percentage of the outstanding principal balance of the small junior
mortgage loan that would be the case with the defaulted junior mortgage loan
having a large remaining principal balance.

     In foreclosure, courts have imposed general equitable principles. The
equitable principles are generally designed to relieve the borrower from the
legal effect of its defaults under the loan documents. Examples of judicial
remedies that have been fashioned include judicial requirements that the lender
undertake affirmative and expensive actions to determine the causes for the
borrower's default and the likelihood that the borrower will be able to
reinstate the loan. In a few cases, courts have substituted their judgment for
the lender's judgment and have required that


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lenders reinstate loans or recast payment schedules in order to accommodate
borrowers who are suffering from temporary financial disability. In other cases,
courts have limited the right of a lender to foreclose if the default under the
mortgage instrument is not monetary, for example, the borrower's failure to
adequately maintain the property or the borrower's execution of a second
mortgage or deed of trust affecting the property. Finally, a few courts have
been faced with the issue of whether or not federal or state constitutional
provisions reflecting due process concerns for adequate notice require that
borrowers under deeds of trust or mortgages receive notices in addition to the
statutorily-prescribed minimums. For the most part, these cases have upheld the
notice provisions as being reasonable or have found that the sale by a trustee
under a deed of trust, or under a mortgage having a power of sale, does not
involve sufficient state action to afford constitutional protection to the
borrower.

FORECLOSURE ON MORTGAGED PROPERTIES LOCATED IN THE COMMONWEALTH OF PUERTO RICO

     Under the laws of the Commonwealth of Puerto Rico the foreclosure of a real
estate mortgage usually follows an ordinary civil action filed in the Superior
Court for the district where the mortgaged property is located. If the defendant
does not contest the action filed, a default judgment is rendered for the
plaintiff and the mortgaged property is sold at public auction, after
publication of the sale for two weeks, by posting written notice in three public
places in the municipality where the auction will be held, in the tax collection
office and in the public school of the municipality where the mortgagor resides,
if known. If the residence of the mortgagor is not known, publication in one of
the newspapers of general circulation in the Commonwealth of Puerto Rico must be
made at least once a week for two weeks. There may be as many as three public
sales of the mortgaged property.

If the defendant contests the foreclosure, the case may be tried and judgment
rendered based on the merits of the case.

     There are no redemption rights after the public sale of a foreclosed
property under the laws of the Commonwealth of Puerto Rico. Commonwealth of
Puerto Rico law provides for a summary proceeding for the foreclosure of a
mortgage, but it is very seldom used because of concerns regarding the validity
of these actions. The process may be expedited if the mortgagee can obtain the
consent of the defendant to the execution of a deed in lieu of foreclosure.

     Under Commonwealth of Puerto Rico law, in the case of the public sale upon
foreclosure of a mortgaged property that (a) is subject to a mortgage loan that
was obtained for a purpose other than the financing or refinancing of the
acquisition, construction or improvement of the property and (b) is occupied by
the mortgagor as his principal residence, the mortgagor of the property has a
right to be paid the first $1,500 from the proceeds obtained on the public sale
of the property. The mortgagor can claim this sum of money from the mortgagee at
any time prior to the public sale or up to one year after the sale. This payment
would reduce the amount of sales proceeds available to satisfy the mortgage loan
and may increase the amount of the loss.

FORECLOSURE ON COOPERATIVE SHARES

     The cooperative shares and proprietary lease or occupancy agreement owned
by the tenant- stockholder and pledged to the lender are, in almost all cases,
subject to restrictions on transfer as set forth in the cooperative's
certificate of incorporation and by-laws, as well as in the proprietary lease or
occupancy agreement, and may be canceled by the cooperative for failure by the
tenant-


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stockholder to pay rent or other obligations or charges owed by the
tenant-stockholder, including mechanics' liens against the cooperative apartment
building incurred by the tenant-stockholder. Typically, rent and other
obligations and charges arising under a proprietary lease or occupancy agreement
that are owed to the cooperative are made liens upon the shares to which the
proprietary lease or occupancy agreement relates. In addition, the proprietary
lease or occupancy agreement generally permits the cooperative to terminate the
lease or agreement in the event the tenant- stockholder fails to make payments
or defaults in the performance of covenants required thereunder.

Typically, the lender and the cooperative enter into a recognition agreement
that, together with any lender protection provisions contained in the
proprietary lease, establishes the rights and obligations of both parties in the
event of a default by the tenant-stockholder on its obligations under the
proprietary lease or occupancy agreement. A default by the tenant-stockholder
under the proprietary lease or occupancy agreement will usually constitute a
default under the security agreement between the lender and the
tenant-stockholder.

     The recognition agreement generally provides that, in the event that the
tenant-stockholder has defaulted under the proprietary lease or occupancy
agreement, the cooperative will take no action to terminate the lease or
agreement until the lender has been provided with notice of and an opportunity
to cure the default. The recognition agreement typically provides that if the
proprietary lease or occupancy agreement is terminated, the cooperative will
recognize the lender's lien against proceeds from a sale of the cooperative
apartment, subject, however, to the cooperative's right to sums due under the
proprietary lease or occupancy agreement or that have become liens on the shares
relating to the proprietary lease or occupancy agreement. The total amount owed
to the cooperative by the tenant-stockholder, which the lender generally cannot
restrict and does not monitor, could reduce the value of the collateral below
the outstanding principal balance of the cooperative loan and accrued and unpaid
interest thereon.

     Recognition agreements also provide that in the event of a foreclosure on a
cooperative loan, the lender must obtain the approval or consent of the
cooperative as required by the proprietary lease before transferring the
cooperative shares or assigning the proprietary lease. Generally, the lender is
not limited in any rights it may have to dispossess the tenant-stockholders.

     Under the laws applicable in most states, foreclosure on the cooperative
shares is accomplished by a sale in accordance with the provisions of Article 9
of the UCC and the security agreement relating to those shares. Article 9 of the
UCC requires that a sale be conducted in a "commercially reasonable" manner.
Whether a foreclosure sale has been conducted in a commercially reasonable
manner will depend on the facts in each case. In determining commercial
reasonableness, a court will look to the notice given the debtor and the method,
manner, time, place and terms of the foreclosure. Generally, a sale conducted
according to the usual practice of banks selling similar collateral will be
considered reasonably conducted.

     Article 9 of the UCC provides that the proceeds of the sale will be applied
first to pay the costs and expenses of the sale and then to satisfy the
indebtedness secured by the lender's security interest.
 The recognition agreement, however, generally provides that the lender's right
to reimbursement is subject to the right of the cooperative corporation to
receive sums due under the proprietary lease or occupancy agreement. If there
are proceeds remaining, the lender must account to the tenant- stockholder for
the surplus. Conversely, if a portion of the indebtedness remains unpaid, the
tenant-

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stockholder is generally responsible for the deficiency. SEE
"--ANTI-DEFICIENCY LEGISLATION ANd OTHER LIMITATIONS ON LENDERS" BELOW.

REPOSSESSION WITH RESPECT TO MANUFACTURED HOUSING CONTRACTS

     Repossession of manufactured housing is governed by state law. A few states
have enacted legislation that requires that the debtor be given an opportunity
to cure its default (typically 30 days to bring the account current) before
repossession can commence. So long as a manufactured home has not become so
attached to real estate that it would be treated as a part of the real estate
under the law of the state where it is located, repossession of the manufactured
home in the event of a default by the obligor will generally be governed by the
UCC. Article 9 of the UCC provides the statutory framework for the repossession
of manufactured housing. While the UCC as adopted by the various states may vary
in minimal ways, the general repossession procedure established by the UCC is as
follows:

              o       Except in those states where the debtor must receive
                      notice of the right to cure a default, repossession can
                      commence immediately upon default without prior notice.
                      Repossession may be effected either through self-help
                      pursuant to a peaceable retaking without court order,
                      voluntary repossession or through judicial process by
                      means of repossession under a court-issued writ of
                      replevin. The self-help or voluntary repossession methods
                      are more commonly employed, and are accomplished simply by
                      retaking possession of the manufactured home. In cases in
                      which the debtor objects or raises a defense to
                      repossession, a court order must be obtained from the
                      appropriate state court, and the manufactured home must
                      then be repossessed in accordance with that order. Whether
                      the method employed is self-help, voluntary repossession
                      or judicial repossession, the repossession can be
                      accomplished either by an actual physical removal of the
                      manufactured home to a secure location for refurbishment
                      and resale or by removing the occupants and their
                      belongings from the manufactured home and maintaining
                      possession of the manufactured home on the location where
                      the occupants were residing. Various factors may affect
                      whether the manufactured home is physically removed or
                      left on location, such as the nature and term of the lease
                      of the site on which it is located and the condition of
                      the unit. In many cases, leaving the manufactured home on
                      location is preferable if the home is already set up
                      because the expenses of retaking and redelivery will be
                      saved. However, in those cases where the home is left on
                      location, expenses for site rentals will usually be
                      incurred.

              o       Once repossession has been achieved, preparation for the
                      subsequent disposition of the manufactured home can
                      commence. The disposition may be by public or private sale
                      provided the method, manner, time, place and terms of the
                      sale are commercially reasonable.

              o       Sale proceeds are to be applied first to repossession
                      expenses like those expenses incurred in retaking,
                      storage, preparing for sale including refurbishing costs
                      and selling, and then to satisfaction of the indebtedness.
                      While several states impose prohibitions or limitations on
                      deficiency judgments if the net proceeds from


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                      resale do not cover the full amount of the indebtedness,
                      the remainder may be sought from the debtor in the form of
                      a deficiency judgment in those states that do not prohibit
                      or limit deficiency judgments. The deficiency judgment is
                      a personal judgment against the debtor for the shortfall.
                      Occasionally, after resale of a manufactured home and
                      payment of all expenses and indebtedness, there is a
                      surplus of funds. In that case, the UCC requires the party
                      suing for the deficiency judgment to remit the surplus to
                      the debtor. Because the defaulting owner of a manufactured
                      home generally has very little capital or income available
                      following repossession, a deficiency judgment may not be
                      sought in many cases or, if obtained, will be settled at a
                      significant discount in light of the defaulting owner's
                      strained financial condition.

RIGHTS OF REDEMPTION WITH RESPECT TO SINGLE-FAMILY PROPERTIES

     In several states, after sale in accordance with a deed of trust or
foreclosure of a mortgage, the trustor or mortgagor and several foreclosed
junior lienors are given a statutory period in which to redeem the property from
the foreclosure sale. The right of redemption should be distinguished from the
equity of redemption, which is a nonstatutory right that must be exercised prior
to the foreclosure sale. In several states, redemption may occur only upon
payment of the entire principal balance of the loan, accrued interest and
expenses of foreclosure. In other states, redemption may be authorized if the
former borrower pays only a portion of the sums due. The effect of a statutory
right of redemption is to diminish the ability of the lender to sell the
foreclosed property. The right of redemption would defeat the title of any
purchaser acquired at a public sale. Consequently, the practical effect of a
right of redemption is to force the lender to retain the property and pay the
expenses of ownership and maintenance of the property until the redemption
period has expired. In several states, there is no right to redeem property
after a trustee's sale under a deed of trust.

NOTICE OF SALE; REDEMPTION RIGHTS WITH RESPECT TO MANUFACTURED HOMES

     While state laws do not usually require notice to be given to debtors prior
to repossession, many states do require delivery of a notice of default and of
the debtor's right to cure defaults before repossession. The law in most states
also requires that the debtor be given notice of sale prior to the resale of the
home so that the owner may redeem at or before resale. In addition, the sale
must comply with the requirements of the UCC.

ANTI-DEFICIENCY LEGISLATION AND OTHER LIMITATIONS ON LENDERS

     Several states have imposed statutory prohibitions that limit the remedies
of a beneficiary under a deed of trust or a mortgagee under a mortgage. In
several states, statutes limit the right of the beneficiary or mortgagee to
obtain a deficiency judgment against the borrower following foreclosure or sale
under a deed of trust. A deficiency judgment is a personal judgment against the
former borrower equal in most cases to the difference between the net amount
realized upon the public sale of the real property and the amount due to the
lender. Other statutes require the beneficiary or mortgagee to exhaust the
security afforded under a deed of trust or mortgage by foreclosure in an attempt
to satisfy the full debt before bringing a personal action against the borrower.
Finally, other statutory provisions limit any deficiency judgment against the
former borrower following a judicial sale to the excess of the outstanding debt
over the fair market value of the property at the time of the


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public sale. The purpose of these statutes is generally to prevent a beneficiary
or a mortgagee from obtaining a large deficiency judgment against the former
borrower as a result of low or no bids at the judicial sale.

     In addition to laws limiting or prohibiting deficiency judgments, numerous
other statutory provisions, including the federal bankruptcy laws and state laws
affording relief to debtors, may interfere with or affect the ability of the
secured mortgage lender to realize upon collateral or enforce a deficiency
judgment. For example, with respect to federal bankruptcy law, the filing of a
petition acts as a stay against the enforcement of remedies of collection of a
debt. Moreover, a court with federal bankruptcy jurisdiction may permit a debtor
through his or her Chapter 13 rehabilitative plan to cure a monetary default
with respect to a mortgage loan on a debtor's residence by paying arrearages
within a reasonable time period and reinstating the original mortgage loan
payment schedule even though the lender accelerated the mortgage loan and final
judgment of foreclosure had been entered in state court (provided no sale of the
property had yet occurred) prior to the filing of the debtor's Chapter 13
petition. Several courts with federal bankruptcy jurisdiction have approved
plans, based on the particular facts of the reorganization case, that effected
the curing of a mortgage loan default by paying arrearages over a number of
years.

     Courts with federal bankruptcy jurisdiction have also indicated that the
terms of a mortgage loan secured by property of the debtor may be modified if
the borrower has filed a petition under Chapter 13. These courts have suggested
that the modifications may include reducing the amount of each monthly payment,
changing the rate of interest, altering the repayment schedule and reducing the
lender's security interest to the value of the residence, thus leaving the
lender a general unsecured creditor for the difference between the value of the
residence and the outstanding balance of the loan.
 Federal bankruptcy law and limited case law indicate that the foregoing
modifications could not be applied to the terms of a loan secured by property
that is the principal residence of the debtor. In all cases, the secured
creditor is entitled to the value of its security plus post-petition interest,
attorneys' fees and costs to the extent the value of the security exceeds the
debt.

     The Bankruptcy Reform Act of 1994 established the National Bankruptcy
Review Commission for purposes of analyzing the nation's bankruptcy laws and
making recommendations to Congress for legislative changes to the bankruptcy
laws. A similar commission was involved in developing the Bankruptcy Code. The
NBRC delivered its report to Congress, the President of the United States and
the Chief Justice of the Supreme Court on October 20, 1997. Among other topics,
high leverage loans were addressed in the NBRC's report. Despite several
ambiguities, the NBRC's report appears to recommend that Congress amend
Bankruptcy Code section 1322(b)(2) by treating a claim secured only by a junior
security interest in a debtor's principal residence as protected only to the
extent that the claim was secured when the security interest was made if the
value of the property securing the junior security interest is less than that
amount. However, the express language of the report implies that a claim secured
only by a junior security interest in a debtor's principal residence may not be
modified to reduce the claim below the appraised value of the property at the
time the security interest was made. A strong dissent by some members of the
NBRC recommends that the protections of Bankruptcy Code section 1322(b)(2) be
extended to creditors principally secured by the debtor's principal residence.
Additionally, the NBRC's report recommends that a creditor's secured claim in
real property should be determined by the property's fair market value, less
hypothetical costs of sale. The standard advocated by this recommendation would
not apply to mortgages on the primary residence of a Chapter 11 or 13 debtor who
retains the residence if the


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mortgages are protected from modification such as those senior mortgages not
subject to modification under Bankruptcy Code Sections 1322(b)(2) and
1123(b)(5). The final NBRC report may ultimately lead to substantive changes to
the existing Bankruptcy Code, such as reducing outstanding loan balances to the
appraised value of a debtor's principal residence at the time the security
interest in the property was taken, which could affect the mortgage loans
included in a trust fund and the enforcement of rights therein.

     Several tax liens arising under the Code, may provide priority over the
lien of a mortgage or deed of trust. In addition, substantive requirements are
imposed upon mortgage lenders in connection with the origination and the
servicing of single family mortgage loans by numerous federal and state consumer
protection laws. These laws include the Federal Truth- in-Lending Act,
Regulation Z, Real Estate Settlement Procedures Act, Regulation X, Equal Credit
Opportunity Act, Regulation B, Fair Credit Billing Act, Fair Housing Act, Fair
Credit Reporting Act and related statutes. These federal laws impose specific
statutory liabilities upon lenders who originate mortgage loans and who fail to
comply with the provisions of the law. This liability may affect assignees of
the mortgage loans. In particular, the originators' failure to comply with
requirements of the Federal Truth-in-Lending Act, as implemented by Regulation
Z, could subject both originators and assignees of the obligations to monetary
penalties and could result in obligors' rescinding loans against either
originators or assignees.

     In addition, the mortgage loans included in a trust fund may also
be subject to the Home Ownership and Equity Protection Act of 1994, if the
mortgage loans were originated on or after October 1, 1995, are not mortgage
loans made to finance the purchase of the mortgaged property and have interest
rates or origination costs in excess of prescribed levels. The Homeownership Act
requires additional disclosures, specifies the timing of the disclosures and
limits or prohibits inclusion of specific provisions in mortgages subject to the
Homeownership Act. Remedies available to the mortgagor include monetary
penalties, as well as recission rights if the appropriate disclosures were not
given as required or if the particular mortgage includes provisions prohibited
by law. The Homeownership Act also provides that any purchaser or assignee of a
mortgage covered by the Homeownership Act is subject to all of the claims and
defenses to loan payment, whether under the Federal Truth-in-Lending Act, as
amended by the Homeownership Act or other law, which the borrower could assert
against the original lender unless the purchaser or assignee did not know and
could not with reasonable diligence have determined that the mortgage loan was
subject to the provisions of the Homeownership Act. The maximum damages that may
be recovered under the Homeownership Act from an assignee is the remaining
amount of indebtedness plus the total amount paid by the borrower in connection
with the mortgage loan.

     FOR COOPERATIVE LOANS

     Generally, Article 9 of the UCC governs foreclosure on cooperative shares
and the related proprietary lease or occupancy agreement. Several courts have
interpreted Section 9-504 of the UCC to prohibit a deficiency award unless the
creditor establishes that the sale of the collateral, which, in the case of a
cooperative loan, would be the shares of the cooperative and the related
proprietary lease or occupancy agreement, was conducted in a commercially
reasonable manner.

JUNIOR MORTGAGES



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     The mortgage loans may be secured by junior mortgages or deeds of trust,
which are junior to senior mortgages or deeds of trust which are not part of the
trust fund. The rights of the securityholders as the holders of a junior deed of
trust or a junior mortgage are subordinate in lien priority and in payment
priority to those of the holder of the senior mortgage or deed of trust,
including the prior rights of the senior mortgagee or beneficiary to receive and
apply hazard insurance and condemnation proceeds and, upon default of the
mortgagor, to cause a foreclosure on the property. Upon completion of the
foreclosure proceedings by the holder of the senior mortgage or the sale in
accordance with the deed of trust, the junior mortgagee's or junior
beneficiary's lien will be extinguished unless the junior lienholder satisfies
the defaulted senior loan or asserts its subordinate interest in a property in
foreclosure proceedings. SEE "--FORECLOSURE ON MORTGAGES".

     Furthermore, the terms of the junior mortgage or deed of trust are
subordinate to the terms of the senior mortgage or deed of trust. If there is a
conflict between the terms of the senior mortgage or deed of trust and the
junior mortgage or deed of trust, the terms of the senior mortgage or deed of
trust will govern generally. Upon a failure of the mortgagor or trustor to
perform any of its obligations, the senior mortgagee or beneficiary, subject to
the terms of the senior mortgage or deed of trust, may have the right to perform
the obligation itself. Generally, all sums so expended by the mortgagee or
beneficiary become part of the indebtedness secured by the mortgage or deed of
trust. To the extent a senior mortgagee expends sums, these sums will generally
have priority over all sums due under the junior mortgage.

HOME EQUITY LINE OF CREDIT LOANS

     The form of credit line trust deed or mortgage generally used by most
institutional lenders which make home equity line of credit loans typically
contains a 'future advance' clause, which provides, in essence, that additional
amounts advanced to or on behalf of the borrower by the beneficiary or lender
are to be secured by the deed of trust or mortgage. Any amounts so advances
after the cut-off date with respect to any Mortgage will not be included in the
trust fund. The priority of the lien securing any advance made under the clause
may depend in most states on whether the deed of trust or mortgage is called and
recorded as a credit line deed of trust or mortgage. If the beneficiary or
lender advances additional amounts, the advance is entitled to receive the same
priority as amounts initially advanced under the trust deed or mortgage,
notwithstanding the fact that there may be junior trust deeds or mortgages and
other liens which intervene between the date of recording of the trust deed or
mortgage and the date of the future advance, and notwithstanding that the
beneficiary or lender had actual knowledge of the intervening junior trust deeds
or mortgages and other liens at the time of the advance. In most states, the
trust deed or mortgage liens securing mortgage loans of the type which includes
home equity credit lines applies retroactively to the date of the original
recording of the trust deed or mortgage, provided that the total amount of
advances under the home equity credit line does not exceed the maximum specified
principal amount of the recorded trust deed or mortgage, except as to advances
made after receipt by the lender of a written notice of lien from a judgment
lien creditor of the trustor.

CONSUMER PROTECTION LAWS WITH RESPECT TO MANUFACTURED HOUSING CONTRACTS

     Numerous federal and state consumer protection laws impose substantial
requirements upon creditors involved in consumer finance. These laws include the
Federal Truth-in-Lending Act, Regulation Z, the Equal Credit Opportunity Act,
Regulation B, the Fair Credit Reporting Act, the


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Real Estate Settlement Procedures Act, Regulation X, the Fair Housing Act and
related statutes. These laws can impose specific statutory liabilities upon
creditors who fail to comply with their provisions. This liability may affect an
assignee's ability to enforce a contract. In particular, the originators'
failure to comply with requirements of the Federal Truth-in-Lending Act, as
implemented by Regulation Z, could subject both originators and assignees of the
obligations to monetary penalties and could result in obligors' rescinding the
contracts against either the originators or assignees. Further, if the
manufactured housing contracts are deemed High Cost Loans within the meaning of
the Homeownership Act, they would be subject to the same provisions of the
Homeownership Act as mortgage loans as described in "--Anti-Deficiency
Legislation and Other Limitations on Lenders" above.

     Manufactured housing contracts often contain provisions obligating the
obligor to pay late charges if payments are not timely made. Federal and state
law may specifically limit the amount of late charges that may be collected.
Unless the prospectus supplement indicates otherwise, under the related
servicing agreement, late charges will be retained by the master servicer as
additional servicing compensation, and any inability to collect these amounts
will not affect payments to securityholders.

     Courts have imposed general equitable principles upon repossession and
litigation involving deficiency balances. These equitable principles are
generally designed to relieve a consumer from the legal consequences of a
default.

     In several cases, consumers have asserted that the remedies provided to
secured parties under the UCC and related laws violate the due process
protections provided under the 14th Amendment to the Constitution of the United
States. For the most part, courts have upheld the notice provisions of the UCC
and related laws as reasonable or have found that the repossession and resale by
the creditor does not involve sufficient state action to afford constitutional
protection to consumers.

     The so-called Holder-in-Due-Course Rule of the Federal Trade Commission
has the effect of subjecting a seller, and related creditors and their
assignees, in a consumer credit transaction and any assignee of the creditor to
all claims and defenses which the debtor in the transaction could assert against
the seller of the goods. Liability under the FTC Rule is limited to the amounts
paid by a debtor on the contract, and the holder of the contract may also be
unable to collect amounts still due thereunder.

     Most of the manufactured housing contracts in a trust fund will be subject
to the requirements of the FTC Rule. Accordingly, the trustee, as holder of the
manufactured housing contracts, will be subject to any claims or defenses that
the purchaser of the related manufactured home may assert against the seller of
the manufactured home, subject to a maximum liability equal to the amounts paid
by the obligor on the manufactured housing contract. If an obligor is successful
in asserting this type of claim or defense, and if the mortgage loan seller had
or should have had knowledge of that claim or defense, the master servicer will
have the right to require the mortgage loan seller to repurchase the
manufactured housing contract because of a breach of its mortgage loan seller's
representation and warranty that no claims or defenses exist that would affect
the obligor's obligation to make the required payments under the manufactured
housing contract. The mortgage loan seller would then have the right to require
the originating dealer to repurchase the manufactured housing contract from it
and might also have the right to recover from the dealer for any losses


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suffered by the mortgage loan seller with respect to which the dealer would have
been primarily liable to the obligor.

OTHER LIMITATIONS

     In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions including federal bankruptcy laws and
related state laws may interfere with or affect the ability of a lender to
realize upon collateral or enforce a deficiency judgment. For example, in a
Chapter 13 proceeding under the federal bankruptcy law, a court may prevent a
lender from repossessing a home, and as part of the rehabilitation plan reduce
the amount of the secured indebtedness to the market value of the home at the
time of bankruptcy, as determined by the court, leaving the party providing
financing as a general unsecured creditor for the remainder of the indebtedness.
A bankruptcy court may also reduce the monthly payments due under a contract or
change the rate of interest and time of repayment of the indebtedness.

ENFORCEABILITY OF PROVISIONS

     The mortgage loans in a trust fund will in most cases contain due-on-sale
clauses. These clauses permit the lender to accelerate the maturity of the loan
if the borrower sells, transfers, or conveys the property without the prior
consent of the lender. The enforceability of these clauses has been impaired in
various ways in several states by statute or decisional law. The ability of
lenders and their assignees and transferees to enforce due-on-sale clauses was
addressed by the Garn-St Germain Depository Institutions Act of 1982. This
legislation, subject to exceptions, preempts state constitutional, statutory and
case law that prohibits the enforcement of due-on-sale clauses. The Garn-St
Germain Act does encourage lenders to permit assumptions of loans at the
original rate of interest or at another rate less than the average of the
original rate and the market rate.

     The Garn-St Germain Act also sets forth nine specific instances in which a
mortgage lender covered by the Garn-St Germain Act, including federal savings
and loan associations and federal savings banks, may not exercise a due-on-sale
clause, even though a transfer of the property may have occurred. These include
intra-family transfers, some transfers by operation of law, leases of fewer than
three years and the creation of a junior encumbrance. Regulations promulgated
under the Garn-St Germain Act also prohibit the imposition of a prepayment
penalty upon the acceleration of a loan in accordance with a due-on-sale clause.

     The inability to enforce a due-on-sale clause may result in a mortgage loan
bearing an interest rate below the current market rate being assumed by a new
home buyer rather than being paid off, which may have an impact upon the average
life of the mortgage loans related to a series and the number of mortgage loans
that may be outstanding until maturity.

     TRANSFER OF MANUFACTURED HOMES UNDER MANUFACTURED HOUSING CONTRACTS

     Generally, manufactured housing contracts contain provisions prohibiting
the sale or transfer of the related manufactured homes without the consent of
the obligee on the contract and permitting the acceleration of the maturity of
the contracts by the obligee on the contract upon any sale or transfer that is
not consented to. The master servicer will, to the extent it has knowledge of
the conveyance or proposed conveyance, exercise or cause to be exercised its
rights to accelerate the maturity of the


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related manufactured housing contract through enforcement of due-on-sale
clauses, subject to applicable state law. The transfer may be made by a
delinquent obligor in order to avoid a repossession proceeding with respect to a
manufactured home.

     In the case of a transfer of a manufactured home as to which the master
servicer desires to accelerate the maturity of the related manufactured housing
contract, the master servicer's ability to do so will depend on the
enforceability under state law of the due-on-sale clause. The Garn-St Germain
Act preempts, subject to exceptions and conditions, state laws prohibiting
enforcement of due-on-sale clauses applicable to the manufactured homes.
Consequently, the master servicer may be prohibited from enforcing a due-on-sale
clause in respect of those manufactured homes.

     PREPAYMENT CHARGES AND PREPAYMENTS

     Generally, mortgage loans may be prepaid in full or in part without
penalty. The regulations of the Federal Home Loan Bank Board, predecessor to the
Office of Thrift Supervision, prohibit the imposition of a prepayment penalty or
equivalent fee for or in connection with the acceleration of a loan by exercise
of a due-on-sale clause. A mortgagee to whom a prepayment in full has been
tendered may be compelled to give either a release of the mortgage or an
instrument assigning the existing mortgage to a refinancing lender.

SUBORDINATE FINANCING

     When the mortgagor encumbers mortgaged property with one or more junior
liens, the senior lender is subjected to additional risk. First, the mortgagor
may have difficulty servicing and repaying multiple loans. In addition, if the
junior loan permits recourse to the mortgagor, as junior loans often do, and the
senior loan does not, a mortgagor may be more likely to repay sums due on the
junior loan than those on the senior loan. Second, acts of the senior lender
that prejudice the junior lender or impair the junior lender's security may
create a superior equity in favor of the junior lender. For example, if the
mortgagor and the senior lender agree to an increase in the principal amount of
or the interest rate payable on the senior loan, the senior lender may lose its
priority to the extent an existing junior lender is harmed or the mortgagor is
additionally burdened. Third, if the mortgagor defaults on the senior loan or
any junior loan, or both, the existence of junior loans and actions taken by
junior lenders can impair the security available to the senior lender and can
interfere with or delay the taking of action by the senior lender. Moreover, the
bankruptcy of a junior lender may operate to stay foreclosure or similar
proceeds by the senior lender.

APPLICABILITY OF USURY LAWS

     Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980 provides that state usury limitations shall not apply to certain
types of residential first mortgage loans originated by certain lenders after
March 31, 1980. A similar federal statute was in effect with respect to mortgage
loans made during the first three months of 1980. The statute authorized any
state to reimpose interest rate limits by adopting before April 1, 1983 a law or
constitutional provision that expressly rejects application of the federal law.
In addition, even where Title V is not so rejected, any state is authorized by
the law to adopt a provision limiting discount points or other


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charges on mortgage loans covered by Title V. Several states have taken action
to reimpose interest rate limits or to limit discount points or other charges.

     The depositor has been advised by counsel that a court interpreting Title V
would hold that mortgage loans originated on or after January 1, 1980 are
subject to federal preemption. Therefore, in a state that has not taken the
requisite action to reject application of Title V or to adopt a provision
limiting discount points or other charges prior to origination of the mortgage
loans, any such limitation under the state's usury law would not apply to the
mortgage loans.

     In any state in which application of Title V has been expressly rejected or
a provision limiting discount points or other charges is adopted, no mortgage
loans originated after the date of that state action will be eligible for
inclusion in a trust fund if the mortgage loans bear interest or provide for
discount points or charges in excess of permitted levels. No mortgage loan
originated prior to January 1, 1980 will bear interest or provide for discount
points or charges in excess of permitted levels.

     Title V also provides that, subject to the following conditions, state
usury limitations do not apply to any loan that is secured by a first lien on
specific kinds of manufactured housing. The manufactured housing contract would
be covered if they satisfy conditions, among other things, governing the terms
of any prepayments, late charges and deferral fees and requiring a 30-day notice
period prior to instituting any action leading to repossession of or foreclosure
with respect to the related unit. Title V authorized any state to reimpose
limitations on interest rates and finance charges by adopting before April 1,
1983 a law or constitutional provision which expressly rejects application of
the federal law. Fifteen states adopted such a law prior to the April 1, 1983
deadline.

In addition, even where Title V was not so rejected, any state is authorized by
the law to adopt a provision limiting discount points or other charges on loans
covered by Title V. In any state in which application of Title V was expressly
rejected or a provision limiting discount points or other charges has been
adopted, no manufactured housing contract which imposes finance charges or
provides for discount points or charges in excess of permitted levels has been
included in the trust fund.

ALTERNATIVE MORTGAGE INSTRUMENTS

     ARM Loans originated by non-federally chartered lenders have historically
been subject to a variety of restrictions. These restrictions differed from
state to state, resulting in difficulties in determining whether a particular
alternative mortgage instrument originated by a state-chartered lender complied
with applicable law. These difficulties were simplified substantially as a
result of the enactment of Title VIII of the Garn-St Germain Act. Title VIII
provides that, notwithstanding any state law to the contrary,

     o        state-chartered banks may originate alternative mortgage
              instruments, including ARM Loans, in accordance with regulations
              promulgated by the Comptroller of the Currency with respect to
              origination of alternative mortgage instruments by national banks,

     o        state-chartered credit unions may originate alternative mortgage
              instruments in accordance with regulations promulgated by the
              National Credit Union Administration


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              with respect to origination of alternative mortgage instruments by
              federal credit unions, and

     o        all other non-federally chartered housing creditors, including,
              without limitation, state-chartered savings and loan associations,
              savings banks and mutual savings banks and mortgage banking
              companies may originate alternative mortgage instruments in
              accordance with the regulations promulgated by the Federal Home
              Loan Bank Board, predecessor to the Office of Thrift Supervision,
              with respect to origination of alternative mortgage instruments by
              federal savings and loan associations.

     Title VIII further provides that any state may reject applicability of the
provisions of Title VIII by adopting prior to October 15, 1985 a law or
constitutional provision expressly rejecting the applicability of these
provisions. Several states have taken this type of action.

     The depositor has been advised by counsel that a court interpreting Title
VIII would hold that ARM Loans that were originated by state-chartered lenders
before the date of enactment of any state law or constitutional provision
rejecting applicability of Title VIII would not be subject to state laws
imposing restrictions or prohibitions on the ability of state-chartered lenders
to originate alternative mortgage instruments.

     All of the ARM Loans in a trust fund that were originated by a
state-chartered lender after the enactment of a state law or constitutional
provision rejecting the applicability of Title VIII will have complied with
applicable state law. All of the ARM Loans in a trust fund that were originated
by federally chartered lenders or that were originated by state-chartered
lenders prior to enactment of a state law or constitutional provision rejecting
the applicability of Title VIII will have been originated in compliance with all
applicable federal regulations.

FORMALDEHYDE LITIGATION WITH RESPECT TO MANUFACTURED HOUSING CONTRACTS

     A number of lawsuits are pending in the United States alleging personal
injury from exposure to the chemical formaldehyde, which is present in many
building materials including components of manufactured housing such as plywood
flooring and wall paneling. Some of these lawsuits are pending against
manufacturers of manufactured housing, suppliers of component parts, and related
persons in the distribution process. The depositor is aware of a limited number
of cases in which plaintiffs have won judgments in these lawsuits.

     Under the FTC Rule, which is described above under "Consumer Protection
Laws", the holder of any manufactured housing contract secured by a manufactured
home with respect to which a formaldehyde claim has been successfully asserted
may be liable to the obligor for the amount paid by the obligor on the related
manufactured housing contract and may be unable to collect amounts still due
under the manufactured housing contract. The successful assertion of this type
of claim will constitute a breach of a representation or warranty of the
mortgage loan seller, and the securityholders would suffer a loss only to the
extent that:

     o   the mortgage loan seller breached its obligation to repurchase the
         manufactured housing contract in the event an obligor is successful in
         asserting the claim, and



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     o   the mortgage loan seller, the depositor or the trustee were
         unsuccessful in asserting any claim of contribution or subrogation on
         behalf of the securityholders against the manufacturer or other persons
         who were directly liable to the plaintiff for the damages.

     Typical products liability insurance policies held by manufacturers and
component suppliers of manufactured homes may not cover liabilities arising from
formaldehyde in manufactured housing, with the result that recoveries from the
manufacturers, suppliers or other persons may be limited to their corporate
assets without the benefit of insurance.

SOLDIERS' AND SAILORS' CIVIL RELIEF ACT OF 1940

     Under the terms of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended, a borrower who enters military service after the origination of that
borrower's mortgage loan, including a borrower who was in reserve status and is
called to active duty after origination of the mortgage loan, may not be charged
interest, including fees and charges, above an annual rate of 6% during the
period of that borrower's active duty status unless a court orders otherwise
upon application of the lender. The Relief Act applies to borrowers who are
members of the Army, Navy, Air Force, Marines, National Guard, Reserves, Coast
Guard, and officers of the U.S. Public Health Service assigned to duty with the
military. Because the Relief Act applies to borrowers who enter military
service, including reservists who are called to active duty, after origination
of the related mortgage loan no information can be provided as to the number of
loans that may be affected by the Relief Act. Application of the Relief Act
would adversely affect, for an indeterminate period of time, the ability of the
master servicer to collect full amounts of interest on the applicable mortgage
loans. Any shortfalls in interest collections resulting from the application of
the Relief Act would result in a reduction of the amounts distributable to the
holders of the related series of securities, and would not be covered by
advances or, unless specified in the related prospectus supplement, any form of
credit support provided in connection with the securities. In addition, the
Relief Act imposes limitations that would impair the ability of the master
servicer to foreclose on an affected single-family loan, cooperation loan or
enforce rights under a manufactured housing contract during the borrower's
period of active duty status, and, sometimes, during an additional three month
period thereafter. Thus, if the Relief Act applies to any mortgage loan that
goes into default, there may be delays in payment and losses incurred by the
related securityholders.

ENVIRONMENTAL LEGISLATION

     Under the federal Comprehensive Environmental Response, Compensation and
Liability Act, as amended, and under several state laws, a secured party which
takes a deed-in-lieu of foreclosure, purchases a mortgaged property at a
foreclosure sale, or operates a mortgaged property may become liable for the
costs of cleaning up hazardous substances regardless of whether they have
contaminated the property. CERCLA imposes strict, as well as joint and several,
liability on several classes of potentially responsible parties, including
current owners and operators of the property who did not cause or contribute to
the contamination. Furthermore, liability under CERCLA is not limited to the
original or unamortized principal balance of a loan or to the value of the
property securing a loan. Lenders may be held liable under CERCLA as owners or
operators unless they qualify for the secured creditor exemption to CERCLA. This
exemption exempts from the definition of owners and operators those who, without
participating in the management of a facility, hold indicia of ownership
primarily to protect a security interest in the facility. What constitutes


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     sufficient participation in the management of a property securing a loan or
the business of a borrower to render the exemption unavailable to a lender has
been a matter of interpretation by the courts. CERCLA has been interpreted to
impose liability on a secured party, even absent foreclosure, where the party
participated in the financial management of the borrower's business to a degree
indicating a capacity to influence waste disposal decisions. However, court
interpretations of the secured creditor exemption have been inconsistent. In
addition, when lenders foreclose and become owners of collateral property,
courts are inconsistent as to whether that ownership renders the secured
creditor exemption unavailable. Other federal and state laws may impose
liability on a secured party which takes a deed-in-lieu of foreclosure,
purchases a mortgaged property at a foreclosure sale, or operates a mortgaged
property on which contaminants other than CERCLA hazardous substances are
present, including petroleum, agricultural chemicals, hazardous wastes,
asbestos, radon, and lead- based paint. Environmental cleanup costs may be
substantial. It is possible that the cleanup costs could become a liability of a
trust fund and reduce the amounts otherwise distributable to the holders of the
related series of securities. Moreover, there are federal statutes and state
statutes that by statute impose an environmental lien for any cleanup costs
incurred by the state on the property that is the subject of the cleanup costs.
All subsequent liens on a property generally are subordinated to an
environmental lien and in some states even prior recorded liens are subordinated
to environmental liens. In the latter states, the security interest of the trust
fund in a related parcel of real property that is subject to an environmental
lien could be adversely affected.

     Traditionally, many residential mortgage lenders have not taken steps to
evaluate whether contaminants are present with respect to any mortgaged property
prior to the origination of the mortgage loan or prior to foreclosure or
accepting a deed-in-lieu of foreclosure. Accordingly, the master servicer has
not made and will not make these kinds of evaluations prior to the origination
of the mortgage loans. Neither the master servicer nor any replacement servicer
will be required by any servicing agreement to undertake any environmental
evaluations prior to foreclosure or accepting a deed-in-lieu of foreclosure. The
master servicer will not make any representations or warranties or assume any
liability with respect to the absence or effect of contaminants on any related
real property or any casualty resulting from the presence or effect of
contaminants. The master servicer will not be obligated to foreclose on related
real property or accept a deed-in-lieu of foreclosure if it knows or reasonably
believes that there are material contaminated conditions on a property. A
failure so to foreclose may reduce the amounts otherwise available to
securityholders of the related series.

FORFEITURES IN DRUG AND RICO PROCEEDINGS

     Federal law provides that property owned by persons convicted of
drug-related crimes or of criminal violations of the Racketeer Influenced and
Corrupt Organizations statute can be seized by the government if the property
was used in or purchased with the proceeds of these crimes. Under procedures
contained in the Comprehensive Crime Control Act of 1984 the government may
seize the property even before conviction. The government must publish notice of
the forfeiture proceeding and may give notice to all parties "known to have an
alleged interest in the property", including the holders of mortgage loans.

     A lender may avoid forfeiture of its interest in the property if it
establishes that: (1) its mortgage was executed and recorded before commission
of the crime upon which the forfeiture is based, or (2)


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the lender was, at the time of execution of the mortgage, "reasonably without
cause to believe" that the property was used in or purchased with the proceeds
of illegal drug or RICO activities.

NEGATIVE AMORTIZATION LOANS

     A recent case decided by the United States Court of Appeals, First Circuit,
held that state restrictions on the compounding of interest are not preempted by
the provisions of the Depository Institutions Deregulation and Monetary Control
Act of 1980 and as a result, a mortgage loan that provided for negative
amortization violated New Hampshire's requirement that first mortgage loans
provide for computation of interest on a simple interest basis. The holding was
limited to the effect of DIDMC on state laws regarding the compounding of
interest and the court did not address the applicability of the Alternative
Mortgage Transaction Parity Act of 1982, which authorizes lender to make
residential mortgage loans that provide for negative amortization. The First
Circuit's decision is binding authority only on Federal District Courts in
Maine, New Hampshire, Massachusetts, Rhode Island and Puerto Rico.


                         FEDERAL INCOME TAX CONSEQUENCES

GENERAL

     The following discussion is the opinion of Thacher Proffitt & Wood, counsel
to the depositor, with respect to the material federal income tax consequences
of the purchase, ownership and disposition of the securities offered under this
prospectus and the prospectus supplement. This discussion is for securityholders
that hold the securities as capital assets within the meaning of Section 1221 of
the Code and does not purport to discuss all federal income tax consequences
that may be applicable to the individual circumstances of banks, insurance
companies, foreign investors, tax-exempt organizations, dealers in securities or
currencies, mutual funds, real estate investment trusts, S corporations, estates
and trusts, securityholders that hold the securities as part of a hedge,
straddle or, an integrated or conversion transaction, or securityholders whose
functional currency is not the United States dollar.

     The authorities on which this discussion, and the opinion referred to
below, are based are subject to change or differing interpretations, which could
apply retroactively. Prospective investors should note that no rulings have been
or will be sought from the IRS with respect to any of the federal income tax
consequences discussed below, and no assurance can be given that the IRS will
not take contrary positions. Taxpayers and preparers of tax returns should be
aware that under applicable Treasury regulations a provider of advice on
specific issues of law is not considered an income tax return preparer unless
the advice (1) is given with respect to events that have occurred at the time
the advice is rendered and is not given with respect to the consequences of
contemplated actions, and (2) is directly relevant to the determination of an
entry on a tax return. Accordingly, it is suggested that taxpayers consult their
own tax advisors and tax return preparers regarding the preparation of any item
on a tax return, even where the anticipated tax treatment has been discussed in
this prospectus. In addition to the federal income tax consequences described in
this prospectus, potential investors should consider the state and local tax
consequences, if any, of the purchase, ownership and disposition of the
securities. See "State and Other Tax Consequences."



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     The following discussion addresses securities of four general types:

     o   REMIC Certificates representing interests in a trust fund, or a portion
         thereof, that the Trustee will elect to have treated as a REMIC under
         the REMIC Provisions of the Code,

     o   Notes representing indebtedness of an owner trust for federal income
         tax purposes,

     o   Grantor Trust Certificates representing interests in a Grantor Trust
         Fund as to which no REMIC election will be made,

     o   Partnership Certificates representing interests in a Partnership Trust
         Fund which is treated as a partnership for federal income tax purposes,
         and

     o   Debt Certificates representing indebtedness of a Partnership Trust Fund
         for federal income tax purposes.

The prospectus supplement for each series of certificates will indicate whether
one or more REMIC elections will be made for the related trust fund and will
identify all regular interests and residual interests in the REMIC or REMICs.
For purposes of this tax discussion, references to a securityholder or a holder
are to the beneficial owner of a security.

     The following discussion is based in part upon the OID Regulations and in
part upon REMIC Regulations. The OID Regulations do not adequately address
issues relevant to the offered securities. As described at "Taxation of Owners
of REMIC Regular Certificates--Original Issue Discount," in some instances the
OID Regulations provide that they are not applicable to securities like the
offered securities.

REMICS

     CLASSIFICATION OF REMICS. On or prior to the date of the related prospectus
supplement with respect to the issuance of each series of REMIC Certificates,
counsel to the depositor will provide its opinion that, assuming compliance with
all provisions of the related pooling and servicing agreement, for federal
income tax purposes, the related trust fund or each applicable portion of the
related trust fund will qualify as a REMIC and the offered REMIC Certificates
will be considered to evidence ownership of REMIC Regular Certificates or REMIC
Residual Certificates in that REMIC within the meaning of the REMIC Provisions.

     If an entity electing to be treated as a REMIC fails to comply with one or
more of the ongoing requirements of the Code for status as a REMIC during any
taxable year, the Code provides that the entity will not be treated as a REMIC
for that year and for later years. In that event, the entity may be taxable as a
corporation under Treasury regulations, and the related REMIC Certificates may
not be accorded the status or given the tax treatment described under "Taxation
of Owners of REMIC Regular Certificates" and "Taxation of Owners of REMIC
Residual Certificates". Although the Code authorizes the Treasury Department to
issue regulations providing relief in the event of an inadvertent termination of
REMIC status, these regulations have not been issued. If these regulations are
issued, relief in the event of an inadvertent termination may be accompanied by
sanctions, which may include the imposition of a corporate tax on all or a
portion of the REMIC's income for the


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<PAGE>



period in which the requirements for status as a REMIC are not satisfied. The
pooling and servicing agreement with respect to each REMIC will include
provisions designed to maintain the trust fund's status as a REMIC under the
REMIC Provisions. It is not anticipated that the status of any trust fund as a
REMIC will be inadvertently terminated.

     CHARACTERIZATION OF INVESTMENTS IN REMIC CERTIFICATES. Except as provided
in the following sentence, the REMIC Certificates will be real estate assets
within the meaning of Section 856(c)(4)(A) of the Code and assets described in
Section 7701(a)(19)(C) of the Code in the same proportion as the assets of the
REMIC underlying the certificates. If 95% or more of the assets of the REMIC
qualify for either of the treatments described in the previous sentence at all
times during a calendar year, the REMIC Certificates will qualify for the
corresponding status in their entirety for that calendar year. Interest,
including original issue discount, on the REMIC Regular Certificates and income
allocated to the class of REMIC Residual Certificates will be interest described
in Section 856(c)(3)(B) of the Code to the extent that the certificates are
treated as real estate assets within the meaning of Section 856(c)(4)(A) of the
Code. In addition, the REMIC Regular Certificates will be qualified mortgages
within the meaning of Section 860G(a)(3) of the Code if transferred to another
REMIC on its startup day in exchange for regular or residual interests of that
REMIC. The determination as to the percentage of the REMIC's assets that
constitute assets described in these sections of the Code will be made for each
calendar quarter based on the average adjusted basis of each category of the
assets held by the REMIC during the calendar quarter. The Trustee will report
those determinations to certificateholders in the manner and at the times
required by Treasury regulations.

     The assets of the REMIC will include mortgage loans, payments on mortgage
loans held prior to the distribution of these payments to the REMIC Certificates
and any property acquired by foreclosure held prior to the sale of this
property, and may include amounts in reserve accounts. It is unclear whether
property acquired by foreclosure held prior to the sale of this property and
amounts in reserve accounts would be considered to be part of the mortgage
loans, or whether these assets otherwise would receive the same treatment as the
mortgage loans for purposes of all of the Code sections discussed in the
immediately preceding paragraph. The related prospectus supplement will describe
the mortgage loans that may not be treated entirely as assets described in the
sections of the Code discussed in the immediately preceding paragraph. The REMIC
Regulations do provide, however, that cash received from payments on mortgage
loans held pending distribution is considered part of the mortgage loans for
purposes of Section 856(c)(4)(A) of the Code. Furthermore, foreclosure property
will qualify as real estate assets under Section 856(c)(4)(A) of the Code.

     TIERED REMIC STRUCTURES. For a series of REMIC Certificates, two or more
separate elections may be made to treat designated portions of the related trust
fund as REMICs for federal income tax purposes, creating a tiered REMIC
structure. As to each series of REMIC Certificates that is a tiered REMIC
structure, in the opinion of counsel to the depositor, assuming compliance with
all provisions of the related pooling and servicing agreement, each of the
REMICs in that series will qualify as a REMIC and the REMIC Certificates issued
by these REMICs will be considered to evidence ownership of REMIC Regular
Certificates or REMIC Residual Certificates in the related REMIC within the
meaning of the REMIC Provisions.



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<PAGE>



     Solely for purposes of determining whether the REMIC Certificates will be
real estate assets within the meaning of Section 856(c)(4)(A) of the Code, and
loans secured by an interest in real property under Section 7701(a)(19)(C) of
the Code, and whether the income on the certificates is interest described in
Section 856(c)(3)(B) of the Code, all of the REMICs in that series will be
treated as one REMIC.

     TAXATION OF OWNERS OF REMIC REGULAR CERTIFICATES.

     GENERAL. Except as described in "Taxation of Owners of REMIC Residual
Certificates--Possible Pass-Through of Miscellaneous Itemized Deductions," REMIC
Regular Certificates will be treated for federal income tax purposes as debt
instruments issued by the REMIC and not as ownership interests in the REMIC or
its assets. Moreover, holders of REMIC Regular Certificates that ordinarily
report income under a cash method of accounting will be required to report
income for REMIC Regular Certificates under an accrual method.

     ORIGINAL ISSUE DISCOUNT. A REMIC Regular Certificate may be issued with
original issue discount within the meaning of Section 1273(a) of the Code. Any
holder of a REMIC Regular Certificate issued with original issue discount will
be required to include original issue discount in income as it accrues, in
accordance with the constant yield method, in advance of the receipt of the cash
attributable to that income if the original issue discount exceeds a DE MINIMIS
amount. In addition, Section 1272(a)(6) of the Code provides special rules
applicable to REMIC Regular Certificates and other debt instruments issued with
original issue discount. Regulations have not been issued under that section.

     The Code requires that a reasonable Prepayment Assumption be used for
mortgage loans held by a REMIC in computing the accrual of original issue
discount on REMIC Regular Certificates issued by that REMIC, and that
adjustments be made in the amount and rate of accrual of that discount to
reflect differences between the actual prepayment rate and the Prepayment
Assumption. The Prepayment Assumption is to be determined in a manner prescribed
in Treasury regulations; as noted in the preceding paragraph, those regulations
have not been issued. The committee report indicates that the regulations will
provide that the Prepayment Assumption used for a REMIC Regular Certificate must
be the same as that used in pricing the initial offering of the REMIC Regular
Certificate. The Prepayment Assumption used in reporting original issue discount
for each series of REMIC Regular Certificates will be consistent with this
standard and will be disclosed in the related prospectus supplement. However,
none of the depositor, the master servicer or the trustee will make any
representation that the mortgage loans will in fact prepay at a rate conforming
to the Prepayment Assumption or at any other rate.

     The original issue discount, if any, on a REMIC Regular Certificate will be
the excess of its stated redemption price at maturity over its issue price. The
issue price of a particular class of REMIC Regular Certificates will be the
first cash price at which a substantial amount of REMIC Regular Certificates of
that class is sold, excluding sales to bond houses, brokers and underwriters. If
less than a substantial amount of a class of REMIC Regular Certificates is sold
for cash on or prior to the closing date, the issue price for that class will be
the fair market value of that class on the closing date. Under the OID
Regulations, the stated redemption price of a REMIC Regular Certificate is equal
to the total of all payments to be made on the certificate other than qualified
stated interest. Qualified stated interest is interest that is unconditionally
payable at least annually during the entire


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term of the instrument at a single fixed rate, a qualified floating rate, an
objective rate, a combination of a single fixed rate and one or more qualified
floating rates or one qualified inverse floating rate, or a combination of
qualified floating rates that does not operate in a manner that accelerates or
defers interest payments on the REMIC Regular Certificate.

     In the case of REMIC Regular Certificates bearing adjustable interest
rates, the determination of the total amount of original issue discount and the
timing of the inclusion thereof will vary according to the characteristics of
the REMIC Regular Certificates. If the original issue discount rules apply to
the certificates in a particular series, the related prospectus supplement will
describe the manner in which these rules will be applied with respect to the
certificates in that series that bear an adjustable interest rate in preparing
information returns to the certificateholders and the IRS.

     The first interest payment on a REMIC Regular Certificate may be made more
than one month after the date of issuance, which is a period longer than the
subsequent monthly intervals between interest payments. Assuming the accrual
period for original issue discount is each monthly period that ends on the day
prior to each distribution date, as a consequence of this long first accrual
period some or all interest payments may be required to be included in the
stated redemption price of the REMIC Regular Certificate and accounted for as
original issue discount. Because interest on REMIC Regular Certificates must in
any event be accounted for under an accrual method, applying this analysis would
result in only a slight difference in the timing of the inclusion in income of
the yield on the REMIC Regular Certificates.

     If the accrued interest to be paid on the first distribution date is
computed for a period that begins prior to the closing date, a portion of the
purchase price paid for a REMIC Regular Certificate will reflect the accrued
interest. In these cases, information returns to the certificateholders and the
IRS will take the position that the portion of the purchase price paid for the
interest accrued for periods prior to the closing date is part of the overall
cost of the REMIC Regular Certificate, and not a separate asset the cost of
which is recovered entirely out of interest received on the next distribution
date, and that portion of the interest paid on the first distribution date in
excess of interest accrued for a number of days corresponding to the number of
days from the closing date to the first distribution date should be included in
the stated redemption price of the REMIC Regular Certificate. However, the OID
Regulations state that all or a portion of the accrued interest may be treated
as a separate asset the cost of which is recovered entirely out of interest paid
on the first distribution date. It is unclear how an election to do so would be
made under the OID Regulations and whether this election could be made
unilaterally by a certificateholder.

     Notwithstanding the general definition of original issue discount, original
issue discount on a REMIC Regular Certificate will be considered to be de
minimis if it is less than 0.25% of the stated redemption price of the REMIC
Regular Certificate multiplied by its weighted average life. For this purpose,
the weighted average life of a REMIC Regular Certificate is computed as the sum
of the amounts determined, as to each payment included in the stated redemption
price of the REMIC Regular Certificate, by multiplying (1) the number of
complete years from the issue date until that payment is expected to be made,
presumably taking into account the Prepayment Assumption, by (2) a fraction, the
numerator of which is the amount of the payment, and the denominator of which is
the stated redemption price at maturity of the REMIC Regular Certificate. Under
the OID Regulations, original issue discount of only a de minimis amount, other
than de minimis original issue discount attributable to a teaser interest rate
or an initial interest holiday, will be included in income as each


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payment of stated principal is made, based on the product of the total amount of
the de minimis original issue discount attributable to that certificate and a
fraction, the numerator of which is the amount of the principal payment and the
denominator of which is the outstanding stated principal amount of the REMIC
Regular Certificate. The OID Regulations also would permit a certificateholder
to elect to accrue de minimis original issue discount into income currently
based on a constant yield method. See "Taxation of Owners of REMIC Regular
Certificates--Market Discount" for a description of this election under the OID
Regulations.

     If original issue discount on a REMIC Regular Certificate is in excess of a
de minimis amount, the holder of the certificate must include in ordinary gross
income the sum of the daily portions of original issue discount for each day
during its taxable year on which it held the REMIC Regular Certificate,
including the purchase date but excluding the disposition date. In the case of
an original holder of a REMIC Regular Certificate, the daily portions of
original issue discount will be determined as described in the following
paragraph.

     An accrual period is a period that ends on the day prior to a distribution
date and begins on the first day following the immediately preceding accrual
period, except that the first accrual period begins on the closing date. As to
each accrual period, a calculation will be made of the portion of the original
issue discount that accrued during the accrual period. The portion of original
issue discount that accrues in any accrual period will equal the excess of (1)
the sum of (a) the present value, as of the end of the accrual period, of all of
the distributions remaining to be made on the REMIC Regular Certificate in
future periods and (b) the distributions made on the REMIC Regular Certificate
during the accrual period of amounts included in the stated redemption price,
over (2) the adjusted issue price of the REMIC Regular Certificate at the
beginning of the accrual period. The present value of the remaining
distributions referred to in the preceding sentence will be calculated assuming
that distributions on the REMIC Regular Certificate will be received in future
periods based on the mortgage loans being prepaid at a rate equal to the
Prepayment Assumption, using a discount rate equal to the original yield to
maturity of the certificate and taking into account events, including actual
prepayments, that have occurred before the close of the accrual period. For
these purposes, the original yield to maturity of the certificate will be
calculated based on its issue price and assuming that distributions on the
certificate will be made in all accrual periods based on the mortgage loans
being prepaid at a rate equal to the Prepayment Assumption. The adjusted issue
price of a REMIC Regular Certificate at the beginning of any accrual period will
equal the issue price of the certificate, increased by the aggregate amount of
original issue discount that accrued with respect to the certificate in prior
accrual periods, and reduced by the amount of any distributions made on the
certificate in prior accrual periods of amounts included in the stated
redemption price. The original issue discount accruing during any accrual period
will be allocated ratably to each day during the accrual period to determine the
daily portion of original issue discount for that day.

     If a REMIC Regular Certificate issued with original issue discount is
purchased at a cost, excluding any portion of the cost attributable to accrued
qualified stated interest, less than its remaining stated redemption price, the
purchaser will also be required to include in gross income the daily portions of
any original issue discount for the certificate. However, if the cost of the
certificate is in excess of its adjusted issue price, each daily portion will be
reduced in proportion to the ratio the excess bears to the aggregate original
issue discount remaining to be accrued on the REMIC Regular Certificate. The
adjusted issue price of a REMIC Regular Certificate on any given day equals the
sum of (1) the adjusted issue price or, in the case of the first accrual period,
the issue


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price, of the certificate at the beginning of the accrual period which includes
that day and (2) the daily portions of original issue discount for all days
during the accrual period prior to that day.

     MARKET DISCOUNT. A certificateholder that purchases a REMIC Regular
Certificate at a market discount will recognize gain upon receipt of each
distribution representing stated redemption price. A REMIC Regular Certificate
issued without original issue discount will have market discount if purchased
for less than its remaining stated principal amount and a REMIC Regular
Certificate issued with original issue discount will have market discount if
purchased for less than its adjusted issue price. Under Section 1276 of the
Code, a certificateholder that purchases a REMIC Regular Certificate at a market
discount in excess of a DE MINIMIS amount will be required to allocate the
portion of each distribution representing stated redemption price first to
accrued market discount not previously included in income, and to recognize
ordinary income to that extent. A certificateholder may elect to include market
discount in income currently as it accrues rather than including it on a
deferred basis. If made, the election will apply to all market discount bonds
acquired by the certificateholder on or after the first day of the first taxable
year to which the election applies. In addition, the OID Regulations permit a
certificateholder to elect to accrue all interest and discount in income as
interest, and to amortize premium, based on a constant yield method. If such an
election were made with respect to a REMIC Regular Certificate with market
discount, the certificateholder would be deemed to have made an election to
include currently market discount in income with respect to all other debt
instruments having market discount that the certificateholder acquires during
the taxable year of the election or later taxable years, and possibly previously
acquired instruments. Similarly, a certificateholder that made this election for
a certificate that is acquired at a premium would be deemed to have made an
election to amortize bond premium with respect to all debt instruments having
amortizable bond premium that the certificateholder owns or acquires. SEE
"Taxation of Owners of REMIC Regular Certificates--Premium" beloW. Each of these
elections to accrue interest, discount and premium with respect to a certificate
on a constant yield method or as interest would be irrevocable, except with the
approval of the IRS.

     However, market discount with respect to a REMIC Regular Certificate will
be considered to be de minimis for purposes of Section 1276 of the Code if the
market discount is less than 0.25% of the remaining stated redemption price of
the REMIC Regular Certificate multiplied by the number of complete years to
maturity remaining after the date of its purchase. In interpreting a similar
rule with respect to original issue discount on obligations payable in
installments, the OID Regulations refer to the weighted average maturity of
obligations, and it is likely that the same rule will be applied with respect to
market discount, presumably taking into account the Prepayment Assumption. If
market discount is treated as de minimis under this rule, it appears that the
actual discount would be treated in a manner similar to original issue discount
of a de minimis amount. See "Taxation of Owners of REMIC Regular Certificates--
Original Issue Discount" above. This treatment would result in discount being
included in income at a slower rate than discount would be required to be
included in income using the method described above.

     Section 1276(b)(3) of the Code specifically authorizes the Treasury
Department to issue regulations providing for the method for accruing market
discount on debt instruments, the principal of which is payable in more than one
installment. Until regulations are issued by the Treasury Department, the rules
described in the committee report apply. The committee report indicates that in
each accrual period market discount on REMIC Regular Certificates should accrue,
at the certificateholder's option:


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     (1) on the basis of a constant yield method,

     (2) in the case of a REMIC Regular Certificate issued without original
         issue discount, in an amount that bears the same ratio to the total
         remaining market discount as the stated interest paid in the accrual
         period bears to the total amount of stated interest remaining to be
         paid on the REMIC Regular Certificate as of the beginning of the
         accrual period, or

     (3) in the case of a REMIC Regular Certificate issued with original issue
         discount, in an amount that bears the same ratio to the total remaining
         market discount as the original issue discount accrued in the accrual
         period bears to the total original issue discount remaining on the
         REMIC Regular Certificate at the beginning of the accrual period.

     Moreover, the Prepayment Assumption used in calculating the accrual of
original issue discount is also used in calculating the accrual of market
discount. Because the regulations referred to in this paragraph have not been
issued, it is not possible to predict what effect these regulations might have
on the tax treatment of a REMIC Regular Certificate purchased at a discount in
the secondary market.

     To the extent that REMIC Regular Certificates provide for monthly or other
periodic distributions throughout their term, the effect of these rules may be
to require market discount to be includible in income at a rate that is not
significantly slower than the rate at which the discount would accrue if it were
original issue discount. Moreover, in any event a holder of a REMIC Regular
Certificate generally will be required to treat a portion of any gain on the
sale or exchange of the certificate as ordinary income to the extent of the
market discount accrued to the date of disposition under one of these methods,
less any accrued market discount previously reported as ordinary income.

     Further, under Section 1277 of the Code a holder of a REMIC Regular
Certificate may be required to defer a portion of its interest deductions for
the taxable year attributable to any indebtedness incurred or continued to
purchase or carry a REMIC Regular Certificate purchased with market discount.
For these purposes, the de minimis rule applies. Any such deferred interest
expense would not exceed the market discount that accrues during the taxable
year and is, in general, allowed as a deduction not later than the year in which
the market discount is includible in income. If a holder elects to include
market discount in income currently as it accrues on all market discount
instruments acquired by the holder in that taxable year or later taxable years,
the interest deferral rule will not apply.

     PREMIUM. A REMIC Regular Certificate purchased at a cost, excluding any
portion of the cost attributable to accrued qualified stated interest, greater
than its remaining stated redemption price will be considered to be purchased at
a premium. The holder of a REMIC Regular Certificate may elect under Section 171
of the Code to amortize the premium under the constant yield method over the
life of the certificate. If made, the election will apply to all debt
instruments having amortizable bond premium that the holder owns or subsequently
acquires. Amortizable premium will be treated as an offset to interest income on
the related debt instrument, rather than as a separate interest deduction. The
OID Regulations also permit certificateholders to elect to include all interest,
discount and premium in income based on a constant yield method, further
treating the certificateholder as having made the election to amortize premium
generally. See "Taxation of


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Owners of REMIC Regular Certificates--Market Discount" above. The committee
report states that the same rules that apply to accrual of market discount,
which rules will require use of a Prepayment Assumption in accruing market
discount with respect to REMIC Regular Certificates without regard to whether
the certificates have original issue discount, will also apply in amortizing
bond premium under Section 171 of the Code.

     REALIZED LOSSES. Under Section 166 of the Code, both corporate holders of
the REMIC Regular Certificates and noncorporate holders of the REMIC Regular
Certificates that acquire the certificates in connection with a trade or
business should be allowed to deduct, as ordinary losses, any losses sustained
during a taxable year in which their certificates become wholly or partially
worthless as the result of one or more realized losses on the mortgage loans.
However, it appears that a noncorporate holder that does not acquire a REMIC
Regular Certificate in connection with a trade or business will not be entitled
to deduct a loss under Section 166 of the Code until the holder's certificate
becomes wholly worthless, i.e., until its outstanding principal balance has been
reduced to zero, and that the loss will be characterized as a short-term capital
loss.

     Each holder of a REMIC Regular Certificate will be required to accrue
interest and original issue discount with respect to the certificate, without
giving effect to any reduction in distributions attributable to defaults or
delinquencies on the mortgage loans or the certificate underlying the REMIC
Certificates, as the case may be, until it can be established the reduction
ultimately will not be recoverable. As a result, the amount of taxable income
reported in any period by the holder of a REMIC Regular Certificate could exceed
the amount of economic income actually realized by that holder in the period.
Although the holder of a REMIC Regular Certificate eventually will recognize a
loss or reduction in income attributable to previously accrued and included
income that as the result of a realized loss ultimately will not be realized,
the law is unclear with respect to the timing and character of this loss or
reduction in income.

  TAXATION OF OWNERS OF REMIC RESIDUAL CERTIFICATES

     GENERAL. Although a REMIC is a separate entity for federal income tax
purposes, a REMIC is not subject to entity-level taxation, except with regard to
prohibited transactions and some other transactions. See "--Prohibited
Transactions Tax and Other Taxes" below. Rather, the taxable income or net loss
of a REMIC is generally taken into account by the holder of the REMIC Residual
Certificates. Accordingly, the REMIC Residual Certificates will be subject to
tax rules that differ significantly from those that would apply if the REMIC
Residual Certificates were treated for federal income tax purposes as direct
ownership interests in the mortgage loans or as debt instruments issued by the
REMIC.

     A holder of a REMIC Residual Certificate generally will be required to
report its daily portion of the taxable income or, subject to the limitations
noted in this discussion, the net loss of the REMIC for each day during a
calendar quarter that the holder owned the REMIC Residual Certificate. For this
purpose, the taxable income or net loss of the REMIC will be allocated to each
day in the calendar quarter ratably using a 30 days per month/90 days per
quarter/360 days per year convention unless otherwise disclosed in the related
prospectus supplement. The daily amounts so allocated will then be allocated
among the REMIC Residual Certificateholders in proportion to their respective
ownership interests on that day. Any amount included in the gross income or
allowed as a loss of any REMIC Residual Certificateholder by virtue of this
paragraph will be treated as ordinary income or


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loss. The taxable income of the REMIC will be determined under the rules
described below in "Taxable Income of the REMIC" and will be taxable to the
REMIC Residual Certificateholders without regard to the timing or amount of cash
distributions by the REMIC. Ordinary income derived from REMIC Residual
Certificates will be portfolio income for purposes of the taxation of taxpayers
subject to limitations under Section 469 of the Code on the deductibility of
passive losses.

     A holder of a REMIC Residual Certificate that purchased the certificate
from a prior holder of that certificate also will be required to report on its
federal income tax return amounts representing its daily share of the taxable
income, or net loss, of the REMIC for each day that it holds the REMIC Residual
Certificate. Those daily amounts generally will equal the amounts of taxable
income or net loss. The committee report indicates that some modifications of
the general rules may be made, by regulations, legislation or otherwise to
reduce, or increase, the income of a REMIC Residual Certificateholder that
purchased the REMIC Residual Certificate from a prior holder of the certificate
at a price greater than, or less than, the adjusted basis, the REMIC Residual
Certificate would have had in the hands of an original holder of the
certificate. The REMIC Regulations, however, do not provide for any such
modifications.

     Any payments received by a holder of a REMIC Residual Certificate in
connection with the acquisition of the REMIC Residual Certificate will be taken
into account in determining the income of the holder for federal income tax
purposes. Although it appears likely that any of these payments would be
includible in income immediately upon its receipt, the IRS might assert that
these payments should be included in income over time according to an
amortization schedule or according to method. Because of the uncertainty
concerning the treatment of these payments, holders of REMIC Residual
Certificates should consult their tax advisors concerning the treatment of these
payments for income tax purposes.

     The amount of income REMIC Residual Certificateholders will be required to
report, or the tax liability associated with the income, may exceed the amount
of cash distributions received from the REMIC for the corresponding period.
Consequently, REMIC Residual Certificateholders should have other sources of
funds sufficient to pay any federal income taxes due as a result of their
ownership of REMIC Residual Certificates or unrelated deductions against which
income may be offset, subject to the rules relating to excess inclusions, and
noneconomic residual interests discussed at "-Noneconomic REMIC Residual
Certificates". The fact that the tax liability associated with the income
allocated to REMIC Residual Certificateholders may exceed the cash distributions
received by the REMIC Residual Certificateholders for the corresponding period
may significantly adversely affect the REMIC Residual Certificateholders'
after-tax rate of return. This disparity between income and distributions may
not be offset by corresponding losses or reductions of income attributable to
the REMIC Residual Certificateholder until subsequent tax years and, then, may
not be completely offset due to changes in the Code, tax rates or character of
the income or loss.

     TAXABLE INCOME OF THE REMIC. The taxable income of the REMIC will equal the
income from the mortgage loans and other assets of the REMIC plus any
cancellation of indebtedness income due to the allocation of realized losses to
REMIC Regular Certificates, less the deductions allowed to the REMIC for
interest, including original issue discount and reduced by any premium on
issuance, on the REMIC Regular Certificates, whether or not offered by the
prospectus, amortization of any premium on the mortgage loans, bad debt losses
with respect to the mortgage loans and, except as described below, for
servicing, administrative and other expenses.


                                       95

<PAGE>



     For purposes of determining its taxable income, the REMIC will have an
initial aggregate basis in its assets equal to the sum of the issue prices of
all REMIC Certificates, or if a class of REMIC Certificates is not sold
initially, their fair market values. The aggregate basis will be allocated among
the mortgage loans and the other assets of the REMIC in proportion to their
respective fair market values. The issue price of any offered REMIC Certificates
will be determined in the manner described above under "--Taxation of Owners of
REMIC Regular Certificates--Original Issue Discount." The issue price of a REMIC
Certificate received in exchange for an interest in the mortgage loans or other
property will equal the fair market value of the interests in the mortgage loans
or other property. Accordingly, if one or more classes of REMIC Certificates are
retained initially rather than sold, the Trustee may be required to estimate the
fair market value of the interests in order to determine the basis of the REMIC
in the mortgage loans and other property held by the REMIC.

     Subject to possible application of the de minimis rules, the method of
accrual by the REMIC of original issue discount income and market discount
income with respect to mortgage loans that it holds will be equivalent to the
method for accruing original issue discount income for holders of REMIC Regular
Certificates. However, a REMIC that acquires loans at a market discount must
include the market discount in income currently, as it accrues, on a constant
yield basis. See "--Taxation of Owners of REMIC Regular Certificates" above,
which describes a method for accruing discount income that is analogous to that
required to be used by a REMIC as to mortgage loans with market discount that it
holds.

     A mortgage loan will be deemed to have been acquired with either discount
or premium to the extent that the REMIC's basis in the mortgage loan is either
less than or greater than its stated redemption price. Any discount will be
includible in the income of the REMIC as it accrues, in advance of receipt of
the cash attributable to the income, under a method similar to the method
described above for accruing original issue discount on the REMIC Regular
Certificates. It is anticipated that each REMIC will elect under Section 171 of
the Code to amortize any premium on the mortgage loans. Premium on any mortgage
loan to which the election applies may be amortized under a constant yield
method, presumably taking into account a Prepayment Assumption. This election
would not apply to any mortgage loan originated on or before September 27, 1985,
premium on which should be allocated among the principal payments on that
mortgage loan and be deductible by the REMIC as those payments become due or
upon the prepayment of the mortgage loan.

     A REMIC will be allowed deductions for interest, including original issue
discount, on the REMIC Regular Certificates, whether or not offered by this
prospectus, equal to the deductions that would be allowed if these REMIC Regular
Certificates were indebtedness of the REMIC. Original issue discount will be
considered to accrue for this purpose as described above under "--Taxation of
Owners of REMIC Regular Certificates--Original Issue Discount," except that the
de minimis rule and the adjustments for subsequent holders of these REMIC
Regular Certificates will not apply.

     Issue premium is the excess of the issue price of a REMIC Regular
Certificate over its stated redemption price. If a class of REMIC Regular
Certificates is issued with issue premium, the net amount of interest deductions
that are allowed the REMIC in each taxable year for the REMIC Regular
Certificates of that class will be reduced by an amount equal to the portion of
the issue premium that is considered to be amortized or repaid in that year.
Although the matter is not entirely clear, it is likely that issue premium would
be amortized under a constant yield method in a manner


                                       96

<PAGE>



analogous to the method of accruing original issue discount described above
under "--Taxation of Owners of REMIC Regular Certificates--Original Issue
Discount."

     Subject to the exceptions described in the following sentences, the taxable
income of a REMIC will be determined in the same manner as if the REMIC were an
individual having the calendar year as its taxable year and using the accrual
method of accounting. However, no item of income, gain, loss or deduction
allocable to a prohibited transaction will be taken into account. See
"--Prohibited Transactions Tax and Other Taxes" below. Further, the limitation
on miscellaneous itemized deductions imposed on individuals by Section 67 of the
Code, allowing these deductions only to the extent they exceed in the aggregate
two percent of the taxpayer's adjusted gross income, will not be applied at the
REMIC level and the REMIC will be allowed deductions for servicing,
administrative and other non-interest expenses in determining its taxable
income. These expenses will be allocated as a separate item to the holders of
REMIC Certificates, subject to the limitation of Section 67 of the Code. SEE
"--Possible Pass-Through of Miscellaneous Itemized Deductions" beloW. If the
deductions allowed to the REMIC exceed its gross income for a calendar quarter,
the excess will be the net loss for the REMIC for that calendar quarter.

     BASIS RULES, NET LOSSES AND DISTRIBUTIONS. The adjusted basis of a REMIC
Residual Certificate will be equal to the amount paid for the REMIC Residual
Certificate, increased by amounts included in the income of the REMIC Residual
Certificateholder and decreased, but not below zero, by distributions made, and
by net losses allocated, to the REMIC Residual Certificateholder.

     A REMIC Residual Certificateholder is not allowed to take into account any
net loss for any calendar quarter to the extent the net loss exceeds the REMIC
Residual Certificateholder's adjusted basis in its REMIC Residual Certificate as
of the close of the calendar quarter, determined without regard to the net loss.
Any loss that is not currently deductible by reason of this limitation may be
carried forward indefinitely to future calendar quarters and, subject to the
same limitation, may be used only to offset income from the REMIC Residual
Certificate. The ability of REMIC Residual Certificateholders to deduct net
losses may be subject to additional limitations under the Code, as to which
REMIC Residual Certificateholders should consult their tax advisors.

     Any distribution on a REMIC Residual Certificate will be treated as a
non-taxable return of capital to the extent it does not exceed the holder's
adjusted basis in the REMIC Residual Certificate. To the extent a distribution
on a REMIC Residual Certificate exceeds this adjusted basis, it will be treated
as gain from the sale of the REMIC Residual Certificate. Holders of REMIC
Residual Certificates may be entitled to distributions early in the term of the
related REMIC under circumstances in which their bases in the REMIC Residual
Certificates will not be sufficiently large that the distributions will be
treated as nontaxable returns of capital. Their bases in the REMIC Residual
Certificates will initially equal the amount paid for the REMIC Residual
Certificates and will be increased by the REMIC Residual Certificateholders'
allocable shares of taxable income of the REMIC. However, these bases increases
may not occur until the end of the calendar quarter, or perhaps the end of the
calendar year, with respect to which the REMIC taxable income is allocated to
the REMIC Residual Certificateholders. To the extent the REMIC Residual
Certificateholders' initial bases are less than the distributions to the REMIC
Residual Certificateholders, and increases in initial bases either occur after
the distributions or, together with their initial bases, are less than the
amount of the distributions, gain will be recognized by the REMIC Residual
Certificateholders on these distributions and will be treated as gain from the
sale of their REMIC Residual Certificates.


                                       97

<PAGE>



     The effect of these rules is that a REMIC Residual Certificateholder may
not amortize its basis in a REMIC Residual Certificate, but may only recover its
basis through distributions, through the deduction of any net losses of the
REMIC or upon the sale of its REMIC Residual Certificate. See "--Sales of REMIC
Certificates" below. For a discussion of possible modifications of these rules
that may require adjustments to income of a holder of a REMIC Residual
Certificate other than an original holder in order to reflect any difference
between the cost of the REMIC Residual Certificate to the REMIC Residual
Certificateholder and the adjusted basis the REMIC Residual Certificate would
have in the hands of an original holder, see "--Taxation of Owners of REMIC
Residual Certificates--General" above.

     EXCESS INCLUSIONS. Any excess inclusions with respect to a REMIC Residual
Certificate will be subject to federal income tax in all events.

     In general, the excess inclusions with respect to a REMIC Residual
Certificate for any calendar quarter will be the excess, if any, of

     (1) the daily portions of REMIC taxable income allocable to the REMIC
         Residual Certificate over

     (2) the sum of the daily accruals for each day during the quarter that the
         REMIC Residual Certificate was held by the REMIC Residual
         Certificateholder.

     The daily accruals of a REMIC Residual Certificateholder will be determined
by allocating to each day during a calendar quarter its ratable portion of the
product of the adjusted issue price of the REMIC Residual Certificate at the
beginning of the calendar quarter and 120% of the long-term Federal rate in
effect on the closing date. For this purpose, the adjusted issue price of a
REMIC Residual Certificate as of the beginning of any calendar quarter will be
equal to the issue price of the REMIC Residual Certificate, increased by the sum
of the daily accruals for all prior quarters and decreased, but not below zero,
by any distributions made with respect to the REMIC Residual Certificate before
the beginning of that quarter. The issue price of a REMIC Residual Certificate
is the initial offering price to the public, excluding bond houses and brokers,
at which a substantial amount of the REMIC Residual Certificates were sold. The
long-term Federal rate is an average of current yields on Treasury securities
with a remaining term of greater than nine years, computed and published monthly
by the IRS. Although it has not done so, the Treasury has authority to issue
regulations that would treat the entire amount of income accruing on a REMIC
Residual Certificate as an excess inclusion if the REMIC Residual Certificates
are considered to have significant value.

     For REMIC Residual Certificateholders, an excess inclusion:

     (1) will not be permitted to be offset by deductions, losses or loss
         carryovers from other activities,

     (2) will be treated as unrelated business taxable income to an otherwise
         tax-exempt organization and

     (3) will not be eligible for any rate reduction or exemption under any
         applicable tax treaty with respect to the 30% United States withholding
         tax imposed on distributions to REMIC


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         Residual Certificateholders that are foreign investors. See, however,
         "--Foreign Investors in REMIC Certificates," below.

     Furthermore, for purposes of the alternative minimum tax, excess inclusions
will not be permitted to be offset by the alternative tax net operating loss
deduction and alternative minimum taxable income may not be less than the
taxpayer's excess inclusions. The latter rule has the effect of preventing
nonrefundable tax credits from reducing the taxpayer's income tax to an amount
lower than the alternative minimum tax on excess inclusions.

     In the case of any REMIC Residual Certificates held by a real estate
investment trust, the aggregate excess inclusions with respect to the REMIC
Residual Certificates, as reduced, but not below zero, by the real estate
investment trust taxable income, will be allocated among the shareholders of the
trust in proportion to the dividends received by the shareholders from the
trust, and any amount so allocated will be treated as an excess inclusion with
respect to a REMIC Residual Certificate as if held directly by the shareholder.
"Real estate investment trust taxable income" is defined by Section 857(b)(2) of
the Code, and as used in the prior sentence does not include any net capital
gain. Treasury regulations yet to be issued could apply a similar rule to
regulated investment companies, common trust funds and cooperatives; the REMIC
Regulations currently do not address this subject.

     NONECONOMIC REMIC RESIDUAL CERTIFICATES. Under the REMIC Regulations,
transfers of noneconomic REMIC Residual Certificates will be disregarded for all
federal income tax purposes if "a significant purpose of the transfer was to
enable the transferor to impede the assessment or collection of tax." If the
transfer is disregarded, the purported transferor will continue to remain liable
for any taxes due with respect to the income on the noneconomic REMIC Residual
Certificate. The REMIC Regulations provide that a REMIC Residual Certificate is
"noneconomic" unless, based on the Prepayment Assumption and on any required or
permitted clean up calls, or required liquidation provided for in the REMIC's
organizational documents, the present value of the expected future
distributions, discounted using the applicable Federal rate for obligations
whose term ends on the close of the last quarter in which excess inclusions are
expected to accrue with respect to the REMIC Residual Certificate, on the REMIC
Residual Certificate equals at least the present value of the expected tax on
the anticipated excess inclusions, and the transferor reasonably expects that
the transferee will receive distributions with respect to the REMIC Residual
Certificate at or after the time the taxes accrue on the anticipated excess
inclusions in an amount sufficient to satisfy the accrued taxes. Accordingly,
all transfers of REMIC Residual Certificates that may constitute noneconomic
residual interests will be subject to restrictions under the terms of the
related pooling and servicing agreement that are intended to reduce the
possibility of a transfer of REMIC Residual Certificates being disregarded.
These restrictions will require each party to a transfer to provide an affidavit
that no purpose of the transfer is to impede the assessment or collection of
tax, including representations as to the financial condition of the prospective
transferee, for which the transferor is also required to make a reasonable
investigation to determine the transferee's historic payment of its debts and
ability to continue to pay its debts as they come due in the future. Prior to
purchasing a REMIC Residual Certificate, a prospective purchaser should consider
the possibility that a purported transfer of the REMIC Residual Certificate by
that prospective purchaser to another purchaser at a future date may be
disregarded in accordance with the rule described in the first sentence of this
paragraph, which would result in the retention of tax liability by the
purchaser.



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     The related prospectus supplement will disclose whether offered REMIC
Residual Certificates may be considered noneconomic residual interests under the
REMIC Regulations; provided, however, that any disclosure that a REMIC Residual
Certificate will not be considered noneconomic will be based upon assumptions,
and the depositor will make no representation that a REMIC Residual Certificate
will not be considered noneconomic for purposes of the rules described in the
preceding paragraph. See "--Foreign Investors in REMIC Certificates--REMIC
Residual Certificates" below for additional restrictions applicable to transfers
of REMIC Residual Certificates to foreign persons.

     MARK-TO-MARKET RULES. In general, all securities owned by a dealer, except
to the extent that the dealer has specifically identified a security as held for
investment, must be marked to market in accordance with the applicable Code
provision and the related regulations. However, the IRS recently issued
regulations which provide that for purposes of this mark-to-market requirement a
REMIC Residual Certificate acquired after January 4, 1995 is not treated as a
security and thus may not be marked to market. Prospective purchasers of a REMIC
Residual Certificate should consult their tax advisors regarding the possible
application of the mark-to-market requirement to REMIC Residual Certificates.

     POSSIBLE PASS-THROUGH OF MISCELLANEOUS ITEMIZED DEDUCTIONS. Fees and
expenses of a REMIC generally will be allocated to the holders of the related
REMIC Residual Certificates. The applicable Treasury regulations indicate,
however, that in the case of a REMIC that is similar to a single class grantor
trust, all or a portion of these fees and expenses should be allocated to the
holders of the related REMIC Regular Certificates. Except as stated in the
related prospectus supplement, these fees and expenses will be allocated to
holders of the related REMIC Residual Certificates in their entirety and not to
the holders of the related REMIC Regular Certificates.

     With respect to REMIC Residual Certificates or REMIC Regular Certificates
the holders of which receive an allocation of fees and expenses in accordance
with the preceding discussion, if any holder thereof is an individual, estate or
trust, or a pass-through entity beneficially owned by one or more individuals,
estates or trusts,

     o   an amount equal to the individual's, estate's or trust's share of the
         fees and expenses will be added to the gross income of the holder, and

     o   the individual's, estate's or trust's share of the fees and expenses
         will be treated as a miscellaneous itemized deduction allowable subject
         to the limitation of Section 67 of the Code.

     Section 67 of the Code permits these deductions only to the extent they
exceed in the aggregate two percent of a taxpayer's adjusted gross income. In
addition, Section 68 of the Code provides that the amount of itemized deductions
otherwise allowable for an individual whose adjusted gross income exceeds a
specified amount will be reduced by the lesser of (1) 3% of the excess of the
individual's adjusted gross income over that amount or (2) 80% of the amount of
itemized deductions otherwise allowable for the taxable year. The amount of
additional taxable income reportable by REMIC Certificateholders that are
subject to the limitations of either Section 67 or Section 68 of the Code may be
substantial. Furthermore, in determining the alternative minimum taxable income
of a holder of a REMIC Certificate that is an individual, estate or trust, or a
pass-


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through entity beneficially owned by one or more individuals, estates or
trusts, no deduction will be allowed for the holder's allocable portion of
servicing fees and other miscellaneous itemized deductions of the REMIC, even
though an amount equal to the amount of the fees and other deductions will be
included in the holder's gross income. Accordingly, these REMIC Certificates may
not be appropriate investments for individuals, estates, or trusts, or
pass-through entities beneficially owned by one or more individuals, estates or
trusts. Prospective investors should consult with their own tax advisors prior
to making an investment in the certificates.

     SALES OF REMIC CERTIFICATES. If a REMIC Certificate is sold, the selling
Certificateholder will recognize gain or loss equal to the difference between
the amount realized on the sale and its adjusted basis in the REMIC Certificate.
The adjusted basis of a REMIC Regular Certificate generally will be:

     o        equal the cost of the REMIC Regular Certificate to the
              certificateholder,

     o        increased by income reported by such certificateholder with
              respect to the REMIC Regular Certificate, including original issue
              discount and market discount income, and

     o        reduced, but not below zero, by distributions on the REMIC Regular
              Certificate received by the certificateholder and by any amortized
              premium.

     The adjusted basis of a REMIC Residual Certificate will be determined as
described under "--Taxation of Owners of REMIC Residual Certificates--Basis
Rules, Net Losses and Distributions." Except as provided in the following four
paragraphs, gain or loss from the sale of a REMIC Certificate will be capital
gain or loss, provided the REMIC Certificate is held as a capital asset within
the meaning of Section 1221 of the Code.

     Gain from the sale of a REMIC Regular Certificate that might otherwise be
capital gain will be treated as ordinary income to the extent the gain does not
exceed the excess, if any, of (1) the amount that would have been includible in
the seller's income with respect to the REMIC Regular Certificate assuming that
income had accrued thereon at a rate equal to 110% of the applicable Federal
rate, determined as of the date of purchase of the REMIC Regular Certificate,
over (2) the amount of ordinary income actually includible in the seller's
income prior to the sale. In addition, gain recognized on the sale of a REMIC
Regular Certificate by a seller who purchased the REMIC Regular Certificate at a
market discount will be taxable as ordinary income in an amount not exceeding
the portion of the discount that accrued during the period the REMIC Certificate
was held by the holder, reduced by any market discount included in income under
the rules described above under "--Taxation of Owners of REMIC Regular
Certificates--Market Discount" and "--Premium."

     REMIC Certificates will be evidences of indebtedness within the meaning of
Section 582(c)(1) of the Code, so that gain or loss recognized from the sale of
a REMIC Certificate by a bank or thrift institution to which this section
applies will be ordinary income or loss.

     A portion of any gain from the sale of a REMIC Regular Certificate that
might otherwise be capital gain may be treated as ordinary income to the extent
that the certificate is held as part of a conversion transaction within the
meaning of Section 1258 of the Code. A conversion transaction


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includes a transaction in which the taxpayer has taken two or more positions in
the same or similar property that reduce or eliminate market risk, if
substantially all of the taxpayer's return is attributable to the time value of
the taxpayer's net investment in the transaction. The amount of gain so realized
in a conversion transaction that is recharacterized as ordinary income generally
will not exceed the amount of interest that would have accrued on the taxpayer's
net investment at 120% of the appropriate applicable Federal rate at the time
the taxpayer enters into the conversion transaction, subject to appropriate
reduction for prior inclusion of interest and other ordinary income items from
the transaction.

     Finally, a taxpayer may elect to have net capital gain taxed at ordinary
income rates rather than capital gains rates in order to include the net capital
gain in total net investment income for the taxable year, for purposes of the
rule that limits the deduction of interest on indebtedness incurred to purchase
or carry property held for investment to a taxpayer's net investment income.

     Except as may be provided in Treasury regulations yet to be issued, if the
seller of a REMIC Residual Certificate reacquires the REMIC Residual
Certificate, or acquires any other residual interest in a REMIC or any similar
interest in a taxable mortgage pool, as defined in Section 7701(i) of the Code,
during the period beginning six months before, and ending six months after, the
date of the sale, such sale will be subject to the wash sale rules of Section
1091 of the Code. In that event, any loss realized by the REMIC Residual
Certificateholder on the sale will not be deductible, but instead will be added
to the REMIC Residual Certificateholder's adjusted basis in the newly-acquired
asset.

     PROHIBITED TRANSACTIONS AND OTHER POSSIBLE REMIC TAXES. In the event a
REMIC engages in a prohibited transaction, the Code imposes a 100% tax on the
income derived by the REMIC from the prohibited transaction. A prohibited
transaction may occur upon the disposition of a mortgage loan, the receipt of
income from a source other than a mortgage loan or other permitted investments,
the receipt of compensation for services, or gain from the disposition of an
asset purchased with the payments on the mortgage loans for temporary investment
pending distribution on the REMIC Certificates. It is not anticipated that any
REMIC will engage in any prohibited transactions in which it would recognize a
material amount of net income.

     In addition, a contribution to a REMIC made after the day on which the
REMIC issues all of its interests could result in the imposition on the REMIC of
a tax equal to 100% of the value of the contributed property. Each pooling and
servicing agreement will include provisions designed to prevent the acceptance
of any contributions that would be subject to this tax.

     REMICs also are subject to federal income tax at the highest corporate rate
on net income from foreclosure property, determined by reference to the rules
applicable to real estate investment trusts. Net income from foreclosure
property generally means gain from the sale of a foreclosure property that is
inventory property and gross income from foreclosure property other than
qualifying rents and other qualifying income for a real estate investment trust.
It is not anticipated that any REMIC will recognize net income from foreclosure
property subject to federal income tax.

     To the extent permitted by then applicable laws, any tax resulting from a
prohibited transaction, tax resulting from a contribution made after the closing
date, tax on net income from foreclosure property or state or local income or
franchise tax that may be imposed on the REMIC will be borne


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by the related master servicer or trustee in either case out of its own funds,
provided that the master servicer or the trustee has sufficient assets to do so,
and provided that the tax arises out of a breach of the master servicer's or the
trustee's obligations under the related pooling and servicing agreement and in
respect of compliance with applicable laws and regulations. Any of these taxes
not borne by the master servicer or the trustee will be charged against the
related trust fund resulting in a reduction in amounts payable to holders of the
related REMIC Certificates.

     TAX AND RESTRICTIONS ON TRANSFERS OF REMIC RESIDUAL CERTIFICATES TO CERTAIN
ORGANIZATIONS. If a REMIC Residual Certificate is transferred to a disqualified
organization, a tax would be imposed in an amount equal to the product of:

     o   the present value, discounted using the applicable Federal rate for
         obligations whose term ends on the close of the last quarter in which
         excess inclusions are expected to accrue with respect to the REMIC
         Residual Certificate, of the total anticipated excess inclusions with
         respect to the REMIC Residual Certificate for periods after the
         transfer and

     o   the highest marginal federal income tax rate applicable to
         corporations.

     The anticipated excess inclusions must be determined as of the date that
the REMIC Residual Certificate is transferred and must be based on events that
have occurred up to the time of the transfer, the Prepayment Assumption and any
required or permitted clean up calls or required liquidation provided for in the
REMIC's organizational documents. The tax would be imposed on the transferor of
the REMIC Residual Certificate, except that where the transfer is through an
agent for a disqualified organization, the tax would instead be imposed on the
agent. However, a transferor of a REMIC Residual Certificate would in no event
be liable for the tax with respect to a transfer if the transferee furnishes to
the transferor an affidavit that the transferee is not a disqualified
organization and, as of the time of the transfer, the transferor does not have
actual knowledge that the affidavit is false. Moreover, an entity will not
qualify as a REMIC unless there are reasonable arrangements designed to ensure
that

     o   residual interests in the entity are not held by disqualified
         organizations and

     o   information necessary for the application of the tax described herein
         will be made available. Restrictions on the transfer of REMIC Residual
         Certificates and other provisions that are intended to meet this
         requirement will be included in the pooling and servicing agreement,
         and will be discussed more fully in any prospectus supplement relating
         to the offering of any REMIC Residual Certificate.

     In addition, if a pass-through entity includes in income excess inclusions
with respect to a REMIC Residual Certificate, and a disqualified organization is
the record holder of an interest in the entity, then a tax will be imposed on
the entity equal to the product of (1) the amount of excess inclusions on the
REMIC Residual Certificate that are allocable to the interest in the
pass-through entity held by the disqualified organization and (2) the highest
marginal federal income tax rate imposed on corporations. A pass-through entity
will not be subject to this tax for any period, however, if each record holder
of an interest in the pass-through entity furnishes to the pass-through entity



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     o   the holder's social security number and a statement under penalties of
         perjury that the social security number is that of the record holder or

     o   a statement under penalties of perjury that the record holder is not a
         disqualified organization. Notwithstanding the preceding two sentences,
         in the case of a REMIC Residual Certificate held by an electing large
         partnership, as defined in Section 775 of the Code, all interests in
         the partnership shall be treated as held by disqualified organizations,
         without regard to whether the record holders of the partnership furnish
         statements described in the preceding sentence, and the amount that is
         subject to tax under the second preceding sentence is excluded from the
         gross income of the partnership allocated to the partners, in lieu of
         allocating to the partners a deduction for the tax paid by the
         partnership.

     For these purposes, a disqualified organization means:

     o   the United States, any State or political subdivision thereof, any
         foreign government, any international organization, or any agency or
         instrumentality of the foregoing, not including, however,
         instrumentalities described in Section 168(h)(2)(D) of the Code or the
         Federal Home Loan Mortgage Corporation,

     o   any organization, other than a cooperative described in Section 521 of
         the Code, that is exempt from federal income tax, unless it is subject
         to the tax imposed by Section 511 of the Code or

     o   any organization described in Section 1381(a)(2)(C) of the Code.

     For these purposes, a pass-through entity means any regulated investment
company, real estate investment trust, trust, partnership or other entity
described in Section 860E(e)(6)(B) of the Code. In addition, a person holding an
interest in a pass-through entity as a nominee for another person will, with
respect to the interest, be treated as a pass-through entity.

      TERMINATION. A REMIC will terminate immediately after the distribution
date following receipt by the REMIC of the final payment in respect of the
mortgage loans or upon a sale of the REMIC's assets following the adoption by
the REMIC of a plan of complete liquidation. The last distribution on a REMIC
Regular Certificate will be treated as a payment in retirement of a debt
instrument. In the case of a REMIC Residual certificate, if the last
distribution on the REMIC Residual Certificate is less than the REMIC Residual
Certificateholder's adjusted basis in the Certificate, the REMIC Residual
Certificateholder should, but may not, be treated as realizing a loss equal to
the amount of the difference, and the loss may be treated as a capital loss.

      REPORTING AND OTHER ADMINISTRATIVE MATTERS. Solely for purposes of the
administrative provisions of the Code, the REMIC will be treated as a
partnership and REMIC Residual Certificateholders will be treated as partners.
The Trustee or other party specified in the related prospectus supplement will
file REMIC federal income tax returns on behalf of the related REMIC, and under
the terms of the related Agreement, will either (1) be irrevocably appointed by
the holders of the largest percentage interest in the related REMIC Residual
Certificates as their agent to perform all of the duties of the tax matters
person with respect to the REMIC in all respects or (2)


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will be designated as and will act as the tax matters person with respect to the
related REMIC in all respects and will hold at least a nominal amount of REMIC
Residual Certificates.

     The Trustee, as the tax matters person or as agent for the tax matters
person, subject to notice requirements and various restrictions and limitations,
generally will have the authority to act on behalf of the REMIC and the REMIC
Residual Certificateholders in connection with the administrative and judicial
review of items of income, deduction, gain or loss of the REMIC, as well as the
REMIC's classification. REMIC Residual Certificateholders generally will be
required to report such REMIC items consistently with their treatment on the
REMIC's tax return and may be bound by a settlement agreement between the
Trustee, as either tax matters person or as agent for the tax matters person,
and the IRS concerning any REMIC item subject to that settlement agreement.
Adjustments made to the REMIC tax return may require a REMIC Residual
Certificateholder to make corresponding adjustments on its return, and an audit
of the REMIC's tax return, or the adjustments resulting from an audit, could
result in an audit of a REMIC Residual Certificateholder's return. Any person
that holds a REMIC Residual Certificate as a nominee for another person may be
required to furnish the REMIC, in a manner to be provided in Treasury
regulations, with the name and address of the person and other information.

     Reporting of interest income, including any original issue discount, with
respect to REMIC Regular Certificates is required annually, and may be required
more frequently under Treasury regulations. These information reports generally
are required to be sent to individual holders of REMIC regular interests and the
IRS; holders of REMIC Regular Certificates that are corporations, trusts,
securities dealers and some other non-individuals will be provided interest and
original issue discount income information and the information set forth in the
following paragraph upon request in accordance with the requirements of the
applicable regulations. The information must be provided by the later of 30 days
after the end of the quarter for which the information was requested, or two
weeks after the receipt of the request. The REMIC must also comply with rules
requiring a REMIC Regular Certificate issued with original issue discount to
disclose on its face the amount of original issue discount and the issue date,
and requiring the information to be reported to the IRS. Reporting with respect
to the REMIC Residual Certificates, including income, excess inclusions,
investment expenses and relevant information regarding qualification of the
REMIC's assets will be made as required under the Treasury regulations,
generally on a quarterly basis.

     The REMIC Regular Certificate information reports will include a statement
of the adjusted issue price of the REMIC Regular Certificate at the beginning of
each accrual period. In addition, the reports will include information required
by regulations with respect to computing the accrual of any market discount.
Because exact computation of the accrual of market discount on a constant yield
method would require information relating to the holder's purchase price that
the REMIC may not have, Treasury regulations only require that information
pertaining to the appropriate proportionate method of accruing market discount
be provided. See "--Taxation of Owners of REMIC Regular Certificates--Market
Discount."

     The responsibility for complying with the foregoing reporting rules will be
borne by the Trustee or other party designated in the related prospectus
supplement.

     BACKUP WITHHOLDING WITH RESPECT TO REMIC CERTIFICATES. Payments of interest
and principal, as well as payments of proceeds from the sale of REMIC
Certificates, may be subject to the backup


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withholding tax under Section 3406 of the Code at a rate of 31% if recipients of
the payments fail to furnish to the payor information including their taxpayer
identification numbers, or otherwise fail to establish an exemption from the
backup withholding tax. Any amounts deducted and withheld from a distribution to
a recipient would be allowed as a credit against the recipient's federal income
tax. Furthermore, penalties may be imposed by the IRS on a recipient of payments
that is required to supply information but that does not do so in the proper
manner.

       FOREIGN INVESTORS IN REMIC CERTIFICATES. A REMIC Regular
Certificateholder that is not a United States Person and is not subject to
federal income tax as a result of any direct or indirect connection to the
United States in addition to its ownership of a REMIC Regular Certificate, will
not be subject to United States federal income or withholding tax in respect of
a distribution on a REMIC Regular Certificate, provided that the holder complies
to the extent necessary with identification requirements including delivery of a
statement signed by the certificateholder under penalties of perjury, certifying
that the certificateholder is not a United States Person and providing the name
and address of the certificateholder. The IRS may assert that the foregoing tax
exemption should not apply with respect to a REMIC Regular Certificate held by a
REMIC Residual Certificateholder that owns directly or indirectly a 10% or
greater interest in the REMIC Residual Certificates. If the holder does not
qualify for exemption, distributions of interest, including distributions in
respect of accrued original issue discount, to the holder may be subject to a
tax rate of 30%, subject to reduction under any applicable tax treaty.

     In addition, the foregoing rules will not apply to exempt a United States
shareholder of a controlled foreign corporation from taxation on the United
States shareholder's allocable portion of the interest income received by the
controlled foreign corporation.

     Further, it appears that a REMIC Regular Certificate would not be included
in the estate of a non-resident alien individual and would not be subject to
United States estate taxes. However, it is suggested that certificateholders who
are non-resident alien individuals consult their tax advisors concerning this
question.

     Except as stated in the related prospectus supplement, transfers of REMIC
Residual Certificates to investors that are not United States Persons will be
prohibited under the related pooling and servicing agreement.

     NEW WITHHOLDING REGULATIONS

     The IRS has issued new regulations which make certain modifications to the
withholding, backup withholding and information reporting rules described above.
The new regulations attempt to unify certification requirements and modify
reliance standards. These regulations will generally be effective for payments
made after December 31, 2000, subject to transition rules. Prospective investors
are urged to consult their tax advisors regarding these regulations.

NOTES

     On or prior to the date of the related prospectus supplement with respect
to the proposed issuance of each series of notes, counsel to the depositor will
provide its opinion that, assuming compliance with all provisions of the
indenture, owner trust agreement and other related documents,


                                       106

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for federal income tax purposes (1) the notes will be treated as indebtedness
and (2) the issuer, as created under the owner trust agreement, will not be
characterized as an association or publicly traded partnership taxable as a
corporation or as a taxable mortgage pool. For purposes of this tax discussion,
references to a noteholder or a holder are to the beneficial owner of a note.

     STATUS AS REAL PROPERTY LOANS

     Notes held by a domestic building and loan association will not constitute
"loans . . . secured by an interest in real property" within the meaning of Code
section 7701(a)(19)(C)(v); and notes held by a real estate investment trust will
not constitute real estate assets within the meaning of Code section
856(c)(4)(A) and interest on notes will not be considered "interest on
obligations secured by mortgages on real property" within the meaning of Code
section 856(c)(3)(B).

     TAXATION OF NOTEHOLDERS

     Notes generally will be subject to the same rules of taxation as REMIC
Regular Certificates issued by a REMIC, except that (1) income reportable on the
notes is not required to be reported under the accrual method unless the holder
otherwise uses the accrual method and (2) the special rule treating a portion of
the gain on sale or exchange of a REMIC Regular Certificate as ordinary income
is inapplicable to the notes. See "--REMICs --Taxation of Owners of REMIC
Regular Certificates" and "-- Sales of REMIC Certificates."

GRANTOR TRUST FUNDS

  CLASSIFICATION OF GRANTOR TRUST FUNDS

     On or prior to the date of the related prospectus supplement with respect
to the proposed issuance of each series of Grantor Trust Certificates, counsel
to the depositor will provide its opinion that, assuming compliance with all
provisions of the related pooling and servicing agreement, the related Grantor
Trust Fund will be classified as a grantor trust under subpart E, part I of
subchapter J of Chapter 1 of the Code and not as a partnership or an association
taxable as a corporation.

     CHARACTERIZATION OF INVESTMENTS IN GRANTOR TRUST CERTIFICATES

     GRANTOR TRUST FRACTIONAL INTEREST CERTIFICATES. In the case of Grantor
Trust Fractional Interest Certificates, except as disclosed in the related
prospectus supplement, counsel to the depositor will provide its opinion that
Grantor Trust Fractional Interest Certificates will represent interests in
"loans . . . secured by an interest in real property" within the meaning of
Section 7701(a)(19)(C)(v) of the Code; "obligation[s] (including any
participation or certificate of beneficial ownership therein) which . . .[are]
principally secured by an interest in real property" within the meaning of
Section 860G(a)(3) of the Code; and real estate assets within the meaning of
Section 856(c)(4)(A) of the Code. In addition, counsel to the depositor will
deliver its opinion that interest on Grantor Trust Fractional Interest
Certificates will to the same extent be considered "interest on obligations
secured by mortgages on real property or on interests in real property" within
the meaning of Section 856(c)(3)(B) of the Code.



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     The assets constituting certain Grantor Trust Funds may include buydown
mortgage loans. The characterization of an investment in buydown mortgage loans
will depend upon the precise terms of the related buydown agreement, but to the
extent that the buydown mortgage loans are secured by a bank account or other
personal property, they may not be treated in their entirety as assets described
in the preceding paragraph. No directly applicable precedents exist with respect
to the federal income tax treatment or the characterization of investments in
buydown mortgage loans. Accordingly, holders of Grantor Trust Certificates
should consult their own tax advisors with respect to the characterization of
investments in Grantor Trust Certificates representing an interest in a Grantor
Trust Fund that includes buydown mortgage loans.

     GRANTOR TRUST STRIP CERTIFICATES. Even if Grantor Trust Strip Certificates
evidence an interest in a Grantor Trust Fund consisting of mortgage loans that
are "loans . . . secured by an interest in real property" within the meaning of
Section 7701(a)(19)(C)(v) of the Code, and real estate assets within the meaning
of Section 856(c)(4)(A) of the Code, and the interest on the mortgage loans is
"interest on obligations secured by mortgages on real property" within the
meaning of Section 856(c)(3)(B) of the Code, it is unclear whether the Grantor
Trust Strip Certificates, and income from the Grantor Trust Certificates will be
characterized the same way. However, the policies underlying these sections, to
encourage or require investments in mortgage loans by thrift institutions and
real estate investment trusts, suggest that this characterization is
appropriate. Counsel to the depositor will not deliver any opinion on these
questions. It is suggested that prospective purchasers to which the
characterization of an investment in Grantor Trust Strip Certificates is
material consult their tax advisors regarding whether the Grantor Trust Strip
Certificates, and the income therefrom, will be so characterized.

     The Grantor Trust Strip Certificates will be "obligation[s] (including any
participation or certificate of beneficial ownership therein) which . . .[are]
principally secured by an interest in real property" within the meaning of
Section 860G(a)(3)(A) of the Code.

     TAXATION OF OWNERS OF GRANTOR TRUST FRACTIONAL INTEREST CERTIFICATES.
Holders of a particular series of Grantor Trust Fractional Interest Certificates
generally will be required to report on their federal income tax returns their
shares of the entire income from the mortgage loans, including amounts used to
pay reasonable servicing fees and other expenses, and will be entitled to deduct
their shares of any reasonable servicing fees and other expenses. Because of
stripped interests, market or original issue discount, or premium, the amount
includible in income on account of a Grantor Trust Fractional Interest
Certificate may differ significantly from the amount distributable on the same
certificate representing interest on the mortgage loans. Under Section 67 of the
Code, an individual, estate or trust holding a Grantor Trust Fractional Interest
Certificate directly or through some pass-through entities will be allowed a
deduction for the reasonable servicing fees and expenses only to the extent that
the aggregate of the holder's miscellaneous itemized deductions exceeds two
percent of the holder's adjusted gross income. In addition, Section 68 of the
Code provides that the amount of itemized deductions otherwise allowable for an
individual whose adjusted gross income exceeds a specified amount will be
reduced by the lesser of (1) 3% of the excess of the individual's adjusted gross
income over the amount or (2) 80% of the amount of itemized deductions otherwise
allowable for the taxable year. The amount of additional taxable income
reportable by holders of Grantor Trust Fractional Interest Certificates who are
subject to the limitations of either Section 67 or Section 68 of the Code may be
substantial. Further, certificateholders other than corporations subject to the
alternative minimum tax may not deduct


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miscellaneous itemized deductions in determining the holder's alternative
minimum taxable income. Although it is not entirely clear, it appears that in
transactions in which multiple classes of Grantor Trust Certificates, including
Grantor Trust Strip Certificates, are issued, the fees and expenses should be
allocated among the classes of Grantor Trust Certificates using a method that
recognizes that each class benefits from the related services. In the absence of
statutory or administrative clarification as to the method to be used, it is
intended to base information returns or reports to the IRS and
certificateholders on a method that allocates the expenses among classes of
Grantor Trust Certificates with respect to each period on the distributions made
to each class during that period.

     The federal income tax treatment of Grantor Trust Fractional Interest
Certificates of any series will depend on whether they are subject to the
stripped bond rules of Section 1286 of the Code. Grantor Trust Fractional
Interest Certificates may be subject to those rules if (1) a class of Grantor
Trust Strip Certificates is issued as part of the same series of certificates or
(2) the depositor or any of its affiliates retains, for its own account or for
purposes of resale, a right to receive a specified portion of the interest
payable on the mortgage loans. Further, the IRS has ruled that an unreasonably
high servicing fee retained by a seller or servicer will be treated as a
retained ownership interest in mortgages that constitutes a stripped coupon. For
purposes of determining what constitutes reasonable servicing fees for various
types of mortgages the IRS has established safe harbors. The servicing fees paid
with respect to the mortgage loans for a series of Grantor Trust Certificates
may be higher than those safe harbors and, accordingly, may not constitute
reasonable servicing compensation. The related prospectus supplement will
include information regarding servicing fees paid to the master servicer, any
subservicer or their respective affiliates necessary to determine whether the
safe harbor rules apply.

     IF STRIPPED BOND RULES APPLY. If the stripped bond rules apply, each
Grantor Trust Fractional Interest Certificate will be treated as having been
issued with original issue discount within the meaning of Section 1273(a) of the
Code, subject, however, to the discussion in the sixth following paragraph
regarding the possible treatment of stripped bonds as market discount bonds and
the discussion regarding DE MINIMIS market discount. See "--Taxation of Owners
of Grantor Trust Fractional Interest Certificates-- Discount" below. Under the
stripped bond rules, the holder of a Grantor Trust Fractional Interest
Certificate, whether a cash or accrual method taxpayer, will be required to
report interest income from its Grantor Trust Fractional Interest Certificate
for each month in an amount equal to the income that accrues on the certificate
in that month calculated under a constant yield method, in accordance with the
rules of the Code relating to original issue discount.

     The original issue discount on a Grantor Trust Fractional Interest
Certificate will be the excess of the certificate's stated redemption price over
its issue price. The issue price of a Grantor Trust Fractional Interest
Certificate as to any purchaser will be equal to the price paid by the purchaser
for the Grantor Trust Fractional Interest Certificate. The stated redemption
price of a Grantor Trust Fractional Interest Certificate will be the sum of all
payments to be made on the certificate, other than qualified stated interest, if
any, as well as the certificate's share of reasonable servicing fees and other
expenses. See "--Taxation of Owners of Grantor Trust Fractional Interest
Certificates-- Stripped Bond Rules Do Not Apply" for a definition of qualified
stated interest. In general, the amount of the income that accrues in any month
would equal the product of the holder's adjusted basis in the Grantor Trust
Fractional Interest Certificate at the beginning of the month, see "Sales of
Grantor Trust Certificates", and the yield of the Grantor Trust Fractional
Interest Certificate to the


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holder. This yield is equal to a rate that, compounded based on the regular
interval between distribution dates and used to discount the holder's share of
future payments on the mortgage loans, causes the present value of those future
payments to equal the price at which the holder purchased the certificate. In
computing yield under the stripped bond rules, a certificateholder's share of
future payments on the mortgage loans will not include any payments made in
respect of any ownership interest in the mortgage loans retained by the
depositor, the master servicer, any subservicer or their respective affiliates,
but will include the certificateholder's share of any reasonable servicing fees
and other expenses.

     To the extent the Grantor Trust Fractional Interest Certificates represent
an interest in any pool of debt instruments the yield on which may be affected
by reason of prepayments, Section 1272(a)(6) of the Code requires (1) the use of
a reasonable Prepayment Assumption in accruing original issue discount and (2)
adjustments in the accrual of original issue discount when prepayments do not
conform to the Prepayment Assumption. It is unclear whether those provisions
would be applicable to the Grantor Trust Fractional Interest Certificates that
do not represent an interest in any pool of debt instruments the yield on which
may be affected by reason of prepayments, or whether use of a reasonable
Prepayment Assumption may be required or permitted without reliance on these
rules. It is also uncertain, if a Prepayment Assumption is used, whether the
assumed prepayment rate would be determined based on conditions at the time of
the first sale of the Grantor Trust Fractional Interest Certificate or, for a
particular holder, at the time of purchase of the Grantor Trust Fractional
Interest Certificate by that holder. It is suggested that Certificateholders
consult their own tax advisors concerning reporting original issue discount with
respect to Grantor Trust Fractional Interest Certificates and, in particular,
whether a Prepayment Assumption should be used in reporting original issue
discount.

     In the case of a Grantor Trust Fractional Interest Certificate acquired at
a price equal to the principal amount of the mortgage loans allocable to the
certificate, the use of a Prepayment Assumption generally would not have any
significant effect on the yield used in calculating accruals of interest income.
In the case, however, of a Grantor Trust Fractional Interest Certificate
acquired at a price less than or greater than the principal amount of the
certificate, that is, at a discount or a premium, the use of a reasonable
Prepayment Assumption would increase or decrease the yield, and thus accelerate
or decelerate, respectively, the reporting of income.

     If a Prepayment Assumption is not used, then when a mortgage loan prepays
in full, the holder of a Grantor Trust Fractional Interest Certificate acquired
at a discount or a premium generally will recognize ordinary income or loss
equal to the difference between the portion of the prepaid principal amount of
the mortgage loan that is allocable to the certificate and the portion of the
adjusted basis of the certificate that is allocable to the certificateholder's
interest in the mortgage loan. If a Prepayment Assumption is used, it appears
that no separate item of income or loss should be recognized upon a prepayment.
Instead, a prepayment should be treated as a partial payment of the stated
redemption price of the Grantor Trust Fractional Interest Certificate and
accounted for under a method similar to that described for taking account of
original issue discount on REMIC Regular Certificates. See "--REMICs--Taxation
of Owners of REMIC Regular Certificates--Original Issue Discount." It is unclear
whether any other adjustments would be required to reflect differences between
an assumed prepayment rate and the actual rate of prepayments.



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     It is intended to base information reports or returns to the IRS and
certificateholders in transactions subject to the stripped bond rules on a
Prepayment Assumption that will be disclosed in the related prospectus
supplement and on a constant yield computed using a representative initial
offering price for each class of certificates. However, none of the depositor,
the master servicer or the trustee will make any representation that the
mortgage loans will in fact prepay at a rate conforming to the Prepayment
Assumption or any other rate and certificateholders should bear in mind that the
use of a representative initial offering price will mean that the information
returns or reports, even if otherwise accepted as accurate by the IRS, will in
any event be accurate only as to the initial certificateholders of each series
who bought at that price.

     Under Treasury regulation Section 1.1286-1, stripped bonds may to be
treated as market discount bonds and any purchaser of a stripped bond treated as
a market discount bond is to account for any discount on the bond as market
discount rather than original issue discount. This treatment only applies,
however, if immediately after the most recent disposition of the bond by a
person stripping one or more coupons from the bond and disposing of the bond or
coupon (1) there is no, or only a de minimis amount of, original issue discount
or (2) the annual stated rate of interest payable on the original bond is no
more than one percentage point lower than the gross interest rate payable on the
original mortgage loan, before subtracting any servicing fee or any stripped
coupon. If interest payable on a Grantor Trust Fractional Interest Certificate
is more than one percentage point lower than the gross interest rate payable on
the mortgage loans, the related prospectus supplement will disclose that fact.
If the original issue discount or market discount on a Grantor Trust Fractional
Interest Certificate determined under the stripped bond rules is less than 0.25%
of the stated redemption price multiplied by the weighted average maturity of
the mortgage loans, then that original issue discount or market discount will be
considered to be de minimis. Original issue discount or market discount of only
a de minimis amount will be included in income in the same manner as de minimis
original issue and market discount described in "--Characteristics of
Investments in Grantor Trust Certificates-- If Stripped Bond Rules Do Not Apply"
and "--Market Discount" below.

     IF STRIPPED BOND RULES DO NOT APPLY. Subject to the discussion below on
original issue discount, if the stripped bond rules do not apply to a Grantor
Trust Fractional Interest Certificate, the certificateholder will be required to
report its share of the interest income on the mortgage loans in accordance with
the certificateholder's normal method of accounting. The original issue discount
rules will apply to a Grantor Trust Fractional Interest Certificate to the
extent it evidences an interest in mortgage loans issued with original issue
discount.

     The original issue discount, if any, on the mortgage loans will equal the
difference between the stated redemption price of the mortgage loans and their
issue price. Under the OID Regulations, the stated redemption price is equal to
the total of all payments to be made on the mortgage loan other than qualified
stated interest. Qualified stated interest is interest that is unconditionally
payable at least annually at a single fixed rate, a qualified floating rate, an
objective rate, a combination of a single fixed rate and one or more qualified
floating rates or one qualified inverse floating rate, or a combination of
qualified floating rates that does not operate in a manner that accelerates or
defers interest payments on the mortgage loan. In general, the issue price of a
mortgage loan will be the amount received by the borrower from the lender under
the terms of the mortgage loan, less any points paid by the borrower, and the
stated redemption price of a mortgage loan will equal its principal amount,
unless the mortgage loan provides for an initial below-market rate of interest
or


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the acceleration or the deferral of interest payments. The determination as to
whether original issue discount will be considered to be de minimis will be
calculated using the same test described in the REMIC discussion. See
"--Taxation of Owners of REMIC Regular Certificates--Original Issue Discount"
above.

     In the case of mortgage loans bearing adjustable or variable interest
rates, the related prospectus supplement will describe the manner in which the
rules will be applied with respect to those mortgage loans by the master
servicer or the trustee in preparing information returns to the
certificateholders and the IRS.

     If original issue discount is in excess of a de minimis amount, all
original issue discount with respect to a mortgage loan will be required to be
accrued and reported in income each month, based on a constant yield. Section
1272(a)(6) of the Code requires that a Prepayment Assumption be made in
computing yield with respect to any pool of debt instruments the yield on which
may be affected by reason of prepayments. Accordingly, for certificates backed
by these pools, it is intended to base information reports and returns to the
IRS and certificateholders on the use of a Prepayment Assumption. However, in
the case of certificates not backed by these pools, it currently is not intended
to base the reports and returns on the use of a Prepayment Assumption. It is
suggested that certificateholders consult their own tax advisors concerning
whether a Prepayment Assumption should be used in reporting original issue
discount with respect to Grantor Trust Fractional Interest Certificates.
Certificateholders should refer to the related prospectus supplement with
respect to each series to determine whether and in what manner the original
issue discount rules will apply to mortgage loans in the series.

     A purchaser of a Grantor Trust Fractional Interest Certificate that
purchases the Grantor Trust Fractional Interest Certificate at a cost less than
the certificate's allocable portion of the aggregate remaining stated redemption
price of the mortgage loans held in the related trust fund will also be required
to include in gross income the certificate's daily portions of any original
issue discount with respect to the mortgage loans. However, the daily portion
will be reduced, if the cost of the Grantor Trust Fractional Interest
Certificate to the purchaser is in excess of the certificate's allocable portion
of the aggregate adjusted issue prices of the mortgage loans held in the related
trust fund, approximately in proportion to the ratio the excess bears to the
certificate's allocable portion of the aggregate original issue discount
remaining to be accrued on the mortgage loans. The adjusted issue price of a
mortgage loan on any given day equals the sum of (1) the adjusted issue price,
or, in the case of the first accrual period, the issue price, of the mortgage
loan at the beginning of the accrual period that includes that day and (2) the
daily portions of original issue discount for all days during the accrual period
prior to that day. The adjusted issue price of a mortgage loan at the beginning
of any accrual period will equal the issue price of the mortgage loan, increased
by the aggregate amount of original issue discount with respect to the mortgage
loan that accrued in prior accrual periods, and reduced by the amount of any
payments made on the mortgage loan in prior accrual periods of amounts included
in its stated redemption price.

     In addition to its regular reports, the master servicer or the trustee,
except as provided in the related prospectus supplement, will provide to any
holder of a Grantor Trust Fractional Interest Certificate such information as
the holder may reasonably request from time to time with respect to original
issue discount accruing on Grantor Trust Fractional Interest Certificates. See
"Grantor Trust Reporting" below.


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     MARKET DISCOUNT. If the stripped bond rules do not apply to the Grantor
Trust Fractional Interest Certificate, a certificateholder may be subject to the
market discount rules of Sections 1276 through 1278 of the Code to the extent an
interest in a mortgage loan is considered to have been purchased at a market
discount, that is, in the case of a mortgage loan issued without original issue
discount, at a purchase price less than its remaining stated redemption price,
or in the case of a mortgage loan issued with original issue discount, at a
purchase price less than its adjusted issue price. If market discount is in
excess of a de minimis amount, the holder generally will be required to include
in income in each month the amount of the discount that has accrued through the
month that has not previously been included in income, but limited, in the case
of the portion of the discount that is allocable to any mortgage loan, to the
payment of stated redemption price on the mortgage loan that is received by, or,
in the case of accrual basis certificateholders, due to, the trust fund in that
month. A certificateholder may elect to include market discount in income
currently as it accrues under a constant yield method based on the yield of the
certificate to the holder rather than including it on a deferred basis under
rules similar to those described in "--Taxation of Owners of REMIC Regular
Certificates--Market Discount" above.

     Section 1276(b)(3) of the Code authorized the Treasury Department to issue
regulations providing for the method for accruing market discount on debt
instruments, the principal of which is payable in more than one installment.
Until regulations are issued by the Treasury Department, rules described in the
committee report will apply. Under those rules, in each accrual period market
discount on the mortgage loans should accrue, at the certificateholder's option:
(1) on the basis of a constant yield method, (2) in the case of a mortgage loan
issued without original issue discount, in an amount that bears the same ratio
to the total remaining market discount as the stated interest paid in the
accrual period bears to the total stated interest remaining to be paid on the
mortgage loan as of the beginning of the accrual period, or (3) in the case of a
mortgage loan issued with original issue discount, in an amount that bears the
same ratio to the total remaining market discount as the original issue discount
accrued in the accrual period bears to the total original issue discount
remaining at the beginning of the accrual period. The Prepayment Assumption, if
any, used in calculating the accrual of original issue discount is to be used in
calculating the accrual of market discount. The effect of using a Prepayment
Assumption could be to accelerate the reporting of the discount income. Because
the regulations referred to in this paragraph have not been issued, it is not
possible to predict what effect the regulations might have on the tax treatment
of a mortgage loan purchased at a discount in the secondary market.

     Because the mortgage loans will provide for periodic payments of stated
redemption price, the market discount may be required to be included in income
at a rate that is not significantly slower than the rate at which the discount
would be included in income if it were original issue discount.

     Market discount with respect to mortgage loans may be considered to be de
minimis and, if so, will be includible in income under de minimis rules similar
to those described above in "--REMICs--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount" with the exception that it is less likely
that a Prepayment Assumption will be used for purposes of these rules with
respect to the mortgage loans.

     Further, under the rules described in "--REMICs--Taxation of Owners of
REMIC Regular Certificates--Market Discount," above, any discount that is not
original issue discount and exceeds a de minimis amount may require the deferral
of interest expense deductions attributable to accrued


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<PAGE>



market discount not yet includible in income, unless an election has been made
to report market discount currently as it accrues. This rule applies without
regard to the origination dates of the mortgage loans.

     PREMIUM. If a certificateholder is treated as acquiring the underlying
mortgage loans at a premium, that is, at a price in excess of their remaining
stated redemption price, the certificateholder may elect under Section 171 of
the Code to amortize using a constant yield method the portion of the premium
allocable to mortgage loans originated after September 27, 1985. Amortizable
premium is treated as an offset to interest income on the related debt
instrument, rather than as a separate interest deduction. However, premium
allocable to mortgage loans originated before September 28, 1985 or to mortgage
loans for which an amortization election is not made, should be allocated among
the payments of stated redemption price on the mortgage loan and be allowed as a
deduction as these payments are made, or, for a certificateholder using the
accrual method of accounting, when the payments of stated redemption price are
due.

     It is unclear whether a Prepayment Assumption should be used in computing
amortization of premium allowable under Section 171 of the Code. If premium is
not subject to amortization using a Prepayment Assumption and a mortgage loan
prepays in full, the holder of a Grantor Trust Fractional Interest Certificate
acquired at a premium should recognize a loss, equal to the difference between
the portion of the prepaid principal amount of the mortgage loan that is
allocable to the certificate and the portion of the adjusted basis of the
certificate that is allocable to the mortgage loan. If a Prepayment Assumption
is used to amortize this premium, it appears that this loss would be
unavailable. Instead, if a Prepayment Assumption is used, a prepayment should be
treated as a partial payment of the stated redemption price of the Grantor Trust
Fractional Interest Certificate and accounted for under a method similar to that
described for taking account of original issue discount on REMIC Regular
Certificates. See "REMICs--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount." It is unclear whether any other
adjustments would be required to reflect differences between the Prepayment
Assumption used, and the actual rate of prepayments.

     TAXATION OF OWNERS OF GRANTOR TRUST STRIP CERTIFICATES. The stripped coupon
rules of Section 1286 of the Code will apply to the Grantor Trust Strip
Certificates. Except as described above in "Characterization of Investments in
Grantor Trust Certificates--If Stripped Bond Rules Apply," no regulations or
published rulings under Section 1286 of the Code have been issued and
uncertainty exists as to how it will be applied to securities like the Grantor
Trust Strip Certificates. Accordingly, it is suggested that holders of Grantor
Trust Strip Certificates consult their own tax advisors concerning the method to
be used in reporting income or loss with respect to the certificates.

     The OID Regulations do not apply to stripped coupons, although they provide
general guidance as to how the original issue discount sections of the Code will
be applied. In addition, the discussion below is subject to the discussion under
"--Application of Contingent Payment Rules" and assumes that the holder of a
Grantor Trust Strip Certificate will not own any Grantor Trust Fractional
Interest Certificates.

     Under the stripped coupon rules, it appears that original issue discount
will be required to be accrued in each month on the Grantor Trust Strip
Certificates based on a constant yield method. In


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effect, each holder of Grantor Trust Strip Certificates would include as
interest income in each month an amount equal to the product of the holder's
adjusted basis in the Grantor Trust Strip Certificate at the beginning of that
month and the yield of the Grantor Trust Strip Certificate to the holder. The
yield would be calculated based on the price paid for that Grantor Trust Strip
Certificate by its holder and the payments remaining to be made thereon at the
time of the purchase, plus an allocable portion of the servicing fees and
expenses to be paid with respect to the mortgage loans. See "Characterization of
Investments in Grantor Trust Certificates--Stripped Bond Rules Apply" above.

     As noted, Section 1272(a)(6) of the Code requires that a Prepayment
Assumption be used in computing the accrual of original issue discount with
respect to some categories of debt instruments, and that adjustments be made in
the amount and rate of accrual of the discount when prepayments do not conform
to the Prepayment Assumption. To the extent the Grantor Trust Strip Certificates
represent an interest in any pool of debt instruments the yield on which may be
affected by reason of prepayments, those provisions apply to Grantor Trust Strip
Certificates. It is unclear whether those provisions would be applicable to the
Grantor Trust Strip Certificates that do not represent an interest in any such
pool, or whether use of a Prepayment Assumption may be required or permitted in
the absence of these provisions. It is also uncertain, if a Prepayment
Assumption is used, whether the assumed prepayment rate would be determined
based on conditions at the time of the first sale of the Grantor Trust Strip
Certificate or, with respect to any subsequent holder, at the time of purchase
of the Grantor Trust Strip Certificate by that holder.

     The accrual of income on the Grantor Trust Strip Certificates will be
significantly slower if a Prepayment Assumption is permitted to be made than if
yield is computed assuming no prepayments. It currently is intended to base
information returns or reports to the IRS and certificateholders on the
Prepayment Assumption disclosed in the related prospectus supplement and on a
constant yield computed using a representative initial offering price for each
class of certificates. However, none of the depositor, the master servicer or
the trustee will make any representation that the mortgage loans will in fact
prepay at a rate conforming to the Prepayment Assumption or at any other rate
and certificateholders should bear in mind that the use of a representative
initial offering price will mean that the information returns or reports, even
if otherwise accepted as accurate by the IRS, will in any event be accurate only
as to the initial certificateholders of each series who bought at that price.
Prospective purchasers of the Grantor Trust Strip Certificates should consult
their own tax advisors regarding the use of the Prepayment Assumption.

     It is unclear under what circumstances, if any, the prepayment of a
mortgage loan will give rise to a loss to the holder of a Grantor Trust Strip
Certificate. If a Grantor Trust Strip Certificate is treated as a single
instrument rather than an interest in discrete mortgage loans and the effect of
prepayments is taken into account in computing yield with respect to the Grantor
Trust Strip Certificate, it appears that no loss may be available as a result of
any particular prepayment unless prepayments occur at a rate faster than the
Prepayment Assumption. However, if a Grantor Trust Strip Certificate is treated
as an interest in discrete mortgage loans, or if the Prepayment Assumption is
not used, then, when a mortgage loan is prepaid, the holder of a Grantor Trust
Strip Certificate should be able to recognize a loss equal to the portion of the
adjusted issue price of the Grantor Trust Strip Certificate that is allocable to
the mortgage loan.



                                       115

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     POSSIBLE APPLICATION OF CONTINGENT PAYMENT RULES. The coupon stripping
rules' general treatment of stripped coupons is to regard them as newly issued
debt instruments in the hands of each purchaser. To the extent that payments on
the Grantor Trust Strip Certificates would cease if the mortgage loans were
prepaid in full, the Grantor Trust Strip Certificates could be considered to be
debt instruments providing for contingent payments. Under the OID Regulations,
debt instruments providing for contingent payments are not subject to the same
rules as debt instruments providing for noncontingent payments. Regulations were
promulgated on June 14, 1996, regarding contingent payment debt instruments, the
"Contingent Payment Regulations", but it appears that Grantor Trust Strip
Certificates, to the extent subject to Section 1272(a)(6) of the Code as
described above, or due to their similarity to other mortgage-backed securities,
such as REMIC regular interests and debt instruments subject to Section
1272(a)(6) of the Code, that are expressly excepted from the application of the
Contingent Payment Regulations, are or may be excepted from these regulations.
Like the OID Regulations, the Contingent Payment Regulations do not specifically
address securities, like the Grantor Trust Strip Certificates, that are subject
to the stripped bond rules of Section 1286 of the Code.

     If the contingent payment rules under the Contingent Payment Regulations
were to apply, the holder of a Grantor Trust Strip Certificate would be required
to apply the noncontingent bond method. Under the noncontingent bond method, the
issuer of a Grantor Trust Strip Certificate determines a projected payment
schedule on which interest will accrue. Holders of Grantor Trust Strip
Certificates are bound by the issuer's projected payment schedule. The projected
payment schedule consists of all noncontingent payments and a projected amount
for each contingent payment based on the projected yield of the Grantor Trust
Strip Certificate.

     The projected amount of each payment is determined so that the projected
payment schedule reflects the projected yield. The projected amount of each
payment must reasonably reflect the relative expected values of the payments to
be received by the holder of a Grantor Trust Strip Certificate. The projected
yield referred to above is a reasonable rate, not less than the applicable
Federal rate that, as of the issue date, reflects general market conditions, the
credit quality of the issuer, and the terms and conditions of the mortgage
loans. The holder of a Grantor Trust Strip Certificate would be required to
include as interest income in each month the adjusted issue price of the Grantor
Trust Strip Certificate at the beginning of the period multiplied by the
projected yield, and would add to, or subtract from, the income any variation
between the payment actually received in that month and the payment originally
projected to be made in that month.

     Assuming that a Prepayment Assumption were used, if the Contingent Payment
Regulations or their principles were applied to Grantor Trust Strip
Certificates, the amount of income reported with respect thereto would be
substantially similar to that described under "Taxation of Owners of Grantor
Trust Strip Certificates". Certificateholders should consult their tax advisors
concerning the possible application of the contingent payment rules to the
Grantor Trust Strip Certificates.

     SALES OF GRANTOR TRUST CERTIFICATES. Any gain or loss equal to the
difference between the amount realized on the sale or exchange of a Grantor
Trust Certificate and its adjusted basis recognized on the sale or exchange of a
Grantor Trust Certificate by an investor who holds the Grantor Trust Certificate
as a capital asset will be capital gain or loss, except to the extent of accrued
and unrecognized market discount, which will be treated as ordinary income, and,
in the case of banks and other financial institutions, except as provided under
Section 582(c) of the Code. The adjusted


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basis of a Grantor Trust Certificate generally will equal its cost, increased by
any income reported by the seller, including original issue discount and market
discount income, and reduced, but not below zero, by any previously reported
losses, any amortized premium and by any distributions with respect
to the Grantor Trust Certificate.

     Gain or loss from the sale of a Grantor Trust Certificate may be partially
or wholly ordinary and not capital in some circumstances. Gain attributable to
accrued and unrecognized market discount will be treated as ordinary income, as
will gain or loss recognized by banks and other financial institutions subject
to Section 582(c) of the Code. Furthermore, a portion of any gain that might
otherwise be capital gain may be treated as ordinary income to the extent that
the Grantor Trust Certificate is held as part of a conversion transaction within
the meaning of Section 1258 of the Code. A conversion transaction generally is
one in which the taxpayer has taken two or more positions in the same or similar
property that reduce or eliminate market risk, if substantially all of the
taxpayer's return is attributable to the time value of the taxpayer's net
investment in the transaction. The amount of gain realized in a conversion
transaction that is recharacterized as ordinary income generally will not exceed
the amount of interest that would have accrued on the taxpayer's net investment
at 120% of the appropriate applicable Federal rate at the time the taxpayer
enters into the conversion transaction, subject to appropriate reduction for
prior inclusion of interest and other ordinary income items from the
transaction. Finally, a taxpayer may elect to have net capital gain taxed at
ordinary income rates rather than capital gains rates in order to include the
net capital gain in total net investment income for that taxable year, for
purposes of the rule that limits the deduction of interest on indebtedness
incurred to purchase or carry property held for investment to a taxpayer's net
investment income.

     GRANTOR TRUST REPORTING. The master servicer or the trustee will furnish to
each holder of a Grantor Trust Fractional Interest Certificate with each
distribution a statement setting forth the amount of the distribution allocable
to principal on the underlying mortgage loans and to interest thereon at the
related pass-through rate. In addition, the master servicer or the trustee will
furnish, within a reasonable time after the end of each calendar year, to each
holder of a Grantor Trust Certificate who was a holder at any time during that
year, information regarding the amount of any servicing compensation received by
the master servicer and subservicer and any other customary factual information
as the master servicer or the trustee deems necessary or desirable to enable
holders of Grantor Trust Certificates to prepare their tax returns and will
furnish comparable information to the IRS as and when required by law to do so.
Because the rules for accruing discount and amortizing premium with respect to
the Grantor Trust Certificates are uncertain in various respects, there is no
assurance the IRS will agree with the trust fund's information reports of these
items of income and expense. Moreover, these information reports, even if
otherwise accepted as accurate by the IRS, will in any event be accurate only as
to the initial certificateholders that bought their certificates at the
representative initial offering price used in preparing the reports.

     Except as disclosed in the related prospectus supplement, the
responsibility for complying with the foregoing reporting rules will be borne by
the master servicer or the trustee.

     BACKUP WITHHOLDING. In general, the rules described in "--REMICS--Backup
Withholding with Respect to REMIC Certificates" will also apply to Grantor Trust
Certificates.



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     FOREIGN INVESTORS. In general, the discussion with respect to REMIC Regular
Certificates in "REMICS--Foreign Investors in REMIC Certificates" applies to
Grantor Trust Certificates except that Grantor Trust Certificates will, except
as disclosed in the related prospectus supplement, be eligible for exemption
from U.S. withholding tax, subject to the conditions described in the
discussion, only to the extent the related mortgage loans were originated after
July 18, 1984 and only to the extent such mortgage loans have not been converted
to real property.

     To the extent that interest on a Grantor Trust Certificate would be exempt
under Sections 871(h)(1) and 881(c) of the Code from United States withholding
tax, and the Grantor Trust Certificate is not held in connection with a
certificateholder's trade or business in the United States, the Grantor Trust
Certificate will not be subject to United States estate taxes in the estate of a
non-resident alien individual.

PARTNERSHIP TRUST FUNDS

     CLASSIFICATION OF PARTNERSHIP TRUST FUNDS. With respect to each series of
Partnership Certificates, counsel to the depositor will provide its opinion that
the trust fund will not be a taxable mortgage pool or an association, or
publicly traded partnership, taxable as a corporation for federal income tax
purposes. This opinion will be based on the assumption that the terms of the
related pooling and servicing agreement and related documents will be complied
with, and on counsel's conclusions that the nature of the income of the trust
fund will exempt it from the rule that certain publicly traded partnerships are
taxable as corporations.

     If the trust fund were taxable as a corporation for federal income tax
purposes, the trust fund would be subject to corporate income tax on its taxable
income. The trust fund's taxable income would include all its income on the
related mortgage loans, possibly reduced by its interest expense on any
outstanding debt securities. Any corporate income tax could materially reduce
cash available to make distributions on the Partnership Certificates and
certificateholders could be liable for any tax that is unpaid by the trust fund.

     CHARACTERIZATION OF INVESTMENTS IN PARTNERSHIP CERTIFICATES. For federal
income tax purposes,

     (1) Partnership Certificates held by a thrift institution taxed as a
         domestic building and loan association will not constitute "loans ...
         secured by an interest in real property" within the meaning of Code
         Section 7701(a)(19)(C)(v);

     (2) Partnership Certificates held by a real estate investment trust will
         constitute real estate assets within the meaning of Code Section
         856(c)(4)(A) and interest on Partnership Certificates will be treated
         as "interest on obligations secured by mortgages on real property or on
         interests in real property" within the meaning of Code Section
         856(c)(3)(B), based on the real estate investments trust's
         proportionate interest in the assets of the Partnership Trust Fund
         based on capital accounts; and

     (3) Partnership Certificates held by a regulated investment company will
         not constitute Government securities within the meaning of Code Section
         851(b)(3)(A)(i).

     TAXATION OF OWNERS OF PARTNERSHIP CERTIFICATES


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     TREATMENT OF THE PARTNERSHIP TRUST FUND AS A PARTNERSHIP. If specified in
the prospectus supplement, the depositor will agree, and the certificateholders
will agree by their purchase of Certificates, to treat the Partnership Trust
Fund as a partnership for purposes of federal and state income tax, franchise
tax and any other tax measured in whole or in part by income, with the assets of
the partnership being the assets held by the Partnership Trust Fund, the
partners of the partnership being the certificateholders, including the
depositor. However, the proper characterization of the arrangement involving the
Partnership Trust Fund, the Partnership Certificates and the depositor is not
clear, because there is no authority on transactions closely comparable to that
contemplated in the prospectus.

     A variety of alternative characterizations are possible. For example,
because one or more of the classes of Partnership Certificates have certain
features characteristic of debt, the Partnership Certificates might be
considered debt of the depositor or the Partnership Trust Fund. Any alternative
characterization would not result in materially adverse tax consequences to
Certificateholders as compared to the consequences from treatment of the
Partnership Certificates as equity in a partnership. The following discussion
assumes that the Partnership Certificates represent equity interests in a
partnership.

     PARTNERSHIP TAXATION. As a partnership, the Partnership Trust Fund will not
be subject to federal income tax. Rather, each Certificateholder will be
required to separately take into account the holder's allocated share of income,
gains, losses, deductions and credits of the Partnership Trust Fund. It is
anticipated that the Partnership Trust Fund's income will consist primarily of
interest earned on the mortgage loans, including appropriate adjustments for
market discount, original issue discount and bond premium, as described above
under "-- Grantor Trust Funds -- Taxation of Owners of Grantor Trust Fractional
Interest Certificates - If Stripped Bond Ruled Do Not Apply--", "-- Market
Discount" and "--Premium", and any gain upon collection or disposition of
mortgage loans. The Partnership Trust Fund's deductions will consist primarily
of interest accruing with respect to any outstanding debt securities, servicing
and other fees, and losses or deductions upon collection or disposition of any
outstanding debt securities.

     The tax items of a partnership are allocable to the partners in accordance
with the Code, Treasury regulations and the partnership agreement, which will
include a pooling and servicing agreement and related documents. The pooling and
servicing agreement will provide, in general, that the Certificateholders will
be allocated taxable income of the Partnership Trust Fund for each due period
equal to the sum of (1) the interest that accrues on the Partnership
Certificates in accordance with their terms for the due period, including
interest accruing at the applicable pass-through rate for the due period and
interest on amounts previously due on the Partnership Certificates but not yet
distributed; (2) any Partnership Trust Fund income attributable to discount on
the mortgage loans that corresponds to any excess of the principal amount of the
Partnership Certificates over their initial issue price; and (3) any other
amounts of income payable to the certificateholders for the due period. The
allocation will be reduced by any amortization by the Partnership Trust Fund of
premium on mortgage loans that corresponds to any excess of the issue price of
Partnership Certificates over their principal amount. All remaining taxable
income of the Partnership Trust Fund will be allocated to the depositor. Based
on the economic arrangement of the parties, this approach for allocating
Partnership Trust Fund income should be permissible under applicable Treasury
regulations, although no assurance can be given that the IRS would not require a
greater amount of income to be allocated to certificateholders. Moreover, even
under that method of


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allocation, certificateholders may be allocated income equal to the entire
pass-through rate plus the other items described under that method even though
the Trust Fund might not have sufficient cash to make current cash distributions
of these amounts. Thus, cash basis holders will in effect be required to report
income from the Partnership Certificates on the accrual basis and
certificateholders may become liable for taxes on Partnership Trust Fund income
even if they have not received cash from the Partnership Trust Fund to pay these
taxes.

     All of the taxable income allocated to a certificateholder that is a
pension, profit sharing or employee benefit plan or other tax-exempt entity,
including an individual retirement account, will constitute unrelated business
taxable income generally taxable to that holder under the Code.

     A share of expenses of the Partnership Trust Fund, including fees of the
master servicer but not interest expense, allocable to an individual, estate or
trust certificateholder would be miscellaneous itemized deductions subject to
the limitations described above under "--Grantor Trust Funds -- Taxation of
Owners of Grantor Trust Fractional Interest Certificates." Accordingly,
deductions for these expenses might be disallowed to the individual in whole or
in part and might result in that holder being taxed on an amount of income that
exceeds the amount of cash actually distributed to the holder over the life of
the Partnership Trust Fund.

     Discount income or premium amortization with respect to each mortgage loan
would be calculated in a manner similar to the description under "-- Grantor
Trust Funds -- Taxation of Owners of Grantor Trust Fractional Interest
Certificates - If Stripped Bond Rules Do Not Apply." Notwithstanding this
description, it is intended that the Partnership Trust Fund will make all tax
calculations relating to income and allocations to certificateholders on an
aggregate basis for all mortgage loans held by the Partnership Trust Fund rather
than on a mortgage loan-by-mortgage loan basis. If the IRS were to require that
these calculations be made separately for each mortgage loan, the Partnership
Trust Fund might be required to incur additional expense, but it is believed
that there would not be a material adverse effect on certificateholders.

     DISCOUNT AND PREMIUM. Unless indicated otherwise in the applicable
prospectus supplement, it is not anticipated that the mortgage loans will have
been issued with original issue discount and, therefore, the Partnership Trust
Fund should not have original issue discount income. However, the purchase price
paid by the Partnership Trust Fund for the mortgage loans may be greater or less
than the remaining principal balance of the mortgage loans at the time of
purchase. If so, the mortgage loans will have been acquired at a premium or
discount, as the case may be. See "--Grantor Trust Funds -- Taxation of Owners
of Grantor Trust Fractional Interest Certificates -- Market Discount" and
"Premium." As stated in the previous paragraph, the Partnership Trust Fund
intends to make any calculation of original issue discount on an aggregate
basis, but might be required to recompute it on a mortgage loan-by-mortgage loan
basis.

     If the Partnership Trust Fund acquires the mortgage loans at a market
discount or premium, the Partnership Trust Fund will elect to include any
discount in income currently as it accrues over the life of the mortgage loans
or to offset any premium against interest income on the mortgage loans. As
stated in the second preceding paragraph, a portion of the market discount
income or premium deduction may be allocated to certificateholders.



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     SECTION 708 TERMINATION. Under Section 708 of the Code, the Partnership
Trust Fund will be deemed to terminate for federal income tax purposes if 50% or
more of the capital and profits interests in the Partnership Trust Fund are sold
or exchanged within a 12-month period. A 50% or greater transfer would cause a
deemed contribution of the assets of a Partnership Trust Fund, the old
partnership, to a new Partnership Trust Fund, the new partnership, in exchange
for interests in the new partnership. These interests would be deemed
distributed to the partners of the old partnership in liquidation thereof, which
would not constitute a sale or exchange.

     DISPOSITION OF CERTIFICATES. Generally, capital gain or loss will be
recognized on a sale of Partnership Certificates in an amount equal to the
difference between the amount realized and the seller's tax basis in the
Partnership Certificates sold. A certificateholder's tax basis in an Partnership
Certificate will generally equal the holder's cost increased by the holder's
share of Partnership Trust Fund income includible in income and decreased by any
distributions received with respect to the Partnership Certificate. In addition,
both the tax basis in the Partnership Certificates and the amount realized on a
sale of an Partnership Certificate would include the holder's share of any
liabilities of the Partnership Trust Fund. A holder acquiring Partnership
Certificates at different prices may be required to maintain a single aggregate
adjusted tax basis in such Partnership Certificates, and, upon sale or other
disposition of some of the Partnership Certificates, allocate a portion of the
aggregate tax basis to the Partnership Certificates sold, rather than
maintaining a separate tax basis in each Partnership Certificate for purposes of
computing gain or loss on a sale of that Partnership Certificate.

     Any gain on the sale of an Partnership Certificate attributable to the
holder's share of unrecognized accrued market discount on the mortgage loans
would generally be treated as ordinary income to the holder and would give rise
to special tax reporting requirements. The Partnership Trust Fund does not
expect to have any other assets that would give rise to such special reporting
considerations. Thus, to avoid those special reporting requirements, the
Partnership Trust Fund will elect to include market discount in income as it
accrues.

     If a certificateholder is required to recognize an aggregate amount of
income, not including income attributable to disallowed itemized deductions,
over the life of the Partnership Certificates that exceeds the aggregate cash
distributions with respect thereto, the excess will generally give rise to a
capital loss upon the retirement of the Partnership Certificates.

     ALLOCATIONS BETWEEN TRANSFERORS AND TRANSFEREES. In general, the
Partnership Trust Fund's taxable income and losses will be determined each due
period and the tax items for a particular due period will be apportioned among
the certificateholders in proportion to the principal amount of Partnership
Certificates owned by them as of the close of the last day of such due period.
As a result, a holder purchasing Partnership Certificates may be allocated tax
items which will affect its tax liability and tax basis attributable to periods
before the actual transaction.

     The use of a due period convention may not be permitted by existing
regulations. If a due period convention is not allowed or only applies to
transfers of less than all of the partner's interest, taxable income or losses
of the Partnership Trust Fund might be reallocated among the certificateholders.
The depositor will be authorized to revise the Partnership Trust Fund's method
of allocation between transferors and transferees to conform to a method
permitted by future regulations.



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     SECTION 731 DISTRIBUTIONS. In the case of any distribution to a
certificateholder, no gain will be recognized to that certificateholder to the
extent that the amount of any money distributed with respect to the Partnership
Certificate exceeds the adjusted basis of the certificateholder's interest in
the Partnership Certificate. To the extent that the amount of money distributed
exceeds the certificateholder's adjusted basis, gain will be currently
recognized. In the case of any distribution to a certificateholder, no loss will
be recognized except upon a distribution in liquidation of a certificateholder's
interest. Any gain or loss recognized by a certificateholder will be capital
gain or loss.

     SECTION 754 ELECTION. In the event that a certificateholder sells its
Partnership Certificates at a profit, the purchasing certificateholder will have
a higher basis in the Partnership Certificates than the selling
certificateholder had. An opposite result will follow if the Partnership
Certificate is sold at a loss. The tax basis of the Partnership Trust Fund's
assets would not be adjusted to reflect that higher or lower basis unless the
Partnership Trust Fund were to file an election under Section 754 of the Code.
In order to avoid the administrative complexities that would be involved in
keeping accurate accounting records, as well as potentially onerous information
reporting requirements, the Partnership Trust Fund will not make such election.
As a result, a certificateholder might be allocated a greater or lesser amount
of Partnership Trust Fund income than would be appropriate based on their own
purchase price for Partnership Certificates.

     ADMINISTRATIVE MATTERS. The trustee is required to keep or have kept
complete and accurate books of the Partnership Trust Fund. Such books will be
maintained for financial reporting and tax purposes on an accrual basis and the
fiscal year of the Partnership Trust Fund will be the calendar year. The trustee
will file a partnership information return, IRS Form 1065, with the IRS for each
taxable year of the Partnership Trust Fund and will report each
certificateholder's allocable share of items of Partnership Trust Fund income
and expense to holders and the IRS on Schedule K-1. The trustee will provide the
Schedule K-1 information to nominees that fail to provide the Partnership Trust
Fund with the information statement described below and the nominees will be
required to forward this information to the beneficial owners of the Partnership
Certificates. Generally, holders must file tax returns that are consistent with
the information return filed by the Partnership Trust Fund or be subject to
penalties unless the holder notifies the IRS of all such inconsistencies.

     Under Section 6031 of the Code, any person that holds Partnership
Certificates as a nominee at any time during a calendar year is required to
furnish the Partnership Trust Fund with a statement containing information on
the nominee, the beneficial owners and the Partnership Certificates so held.
Such information includes (1) the name, address and taxpayer identification
number of the nominee and (2) as to each beneficial owner (x) the name, address
and identification number of that person, (y) whether that person is a United
States Person, a tax-exempt entity or a foreign government, an international
organization, or any wholly-owned agency or instrumentality of either of the
foregoing, and (z) information relating to Partnership Certificates that were
held, bought or sold on behalf of that person throughout the year. In addition,
brokers and financial institutions that hold Partnership Certificates through a
nominee are required to furnish directly to the trustee information as to
themselves and their ownership of Partnership Certificates. A clearing agency
registered under Section 17A of the Exchange Act is not required to furnish any
information statement to the Partnership Trust Fund. The information referred to
above for any calendar year must be furnished to the Partnership Trust Fund on
or before the following January 31. Nominees,


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brokers and financial institutions that fail to provide the Partnership Trust
Fund with the information described above may be subject to penalties.

     The depositor will be designated as the tax matters partner in the pooling
and servicing agreement and will be responsible for representing the
certificateholders in any dispute with the IRS. The Code provides for
administrative examination of a partnership as if the partnership were a
separate and distinct taxpayer. Generally, the statute of limitations for
partnership items does not expire until three years after the date on which the
partnership information return is filed. Any adverse determination following an
audit of the return of the Partnership Trust Fund by the appropriate taxing
authorities could result in an adjustment of the returns of the
certificateholders, and a certificateholder may be precluded from separately
litigating a proposed adjustment to the items of the Partnership Trust Fund. An
adjustment could also result in an audit of a certificateholder's returns and
adjustments of items not related to the income and losses of the Partnership
Trust Fund.

     TAX CONSEQUENCES TO FOREIGN CERTIFICATEHOLDERS. It is not clear whether the
Partnership Trust Fund would be considered to be engaged in a trade or business
in the United States for purposes of federal withholding taxes with respect to
non-United States Persons, because there is no clear authority dealing with that
issue under facts substantially similar to those in this case. Although it is
not expected that the Partnership Trust Fund would be engaged in a trade or
business in the United States for these purposes, the Partnership Trust Fund
will withhold as if it were so engaged in order to protect the Partnership Trust
Fund from possible adverse consequences of a failure to withhold. The
Partnership Trust Fund expects to withhold on the portion of its taxable income
that is allocable to foreign certificateholders pursuant to Section 1446 of the
Code as if this income were effectively connected to a U.S. trade or business,
at a rate of 35% for foreign holders that are taxable as corporations and 39.6%
for all other foreign holders. Amounts withheld will be deemed distributed to
the foreign certificateholders. Subsequent adoption of Treasury regulations or
the issuance of other administrative pronouncements may require the Partnership
Trust Fund to change its withholding procedures. In determining a holder's
withholding status, the Partnership Trust Fund may rely on IRS Form W-8, IRS
Form W-9 or the holder's certification of nonforeign status signed under
penalties of perjury.

     Each foreign holder might be required to file a U.S. individual or
corporate income tax return, including, in the case of a corporation, the branch
profits tax, on its share of the Partnership Trust Fund's income. Each foreign
holder must obtain a taxpayer identification number from the IRS and submit that
number to the Partnership Trust Fund on Form W-8 in order to assure appropriate
crediting of the taxes withheld. A foreign holder generally would be entitled to
file with the IRS a claim for refund with respect to taxes withheld by the
Partnership Trust Fund, taking the position that no taxes were due because the
Partnership Trust Fund was not engaged in a U.S. trade or business. However,
interest payments made or accrued to a certificateholder who is a foreign person
generally will be considered guaranteed payments to the extent such payments are
determined without regard to the income of the Partnership Trust Fund. If these
interest payments are properly characterized as guaranteed payments, then the
interest will not be considered portfolio interest. As a result,
certificateholders who are foreign persons will be subject to United States
federal income tax and withholding tax at a rate of 30 percent, unless reduced
or eliminated pursuant to an applicable treaty. In that event, a foreign holder
would only be entitled to claim a refund for that portion of the taxes in excess
of the taxes that should be withheld with respect to the guaranteed payments.


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     BACKUP WITHHOLDING. Distributions made on the Partnership Certificates and
proceeds from the sale of the Partnership Certificates will be subject to a
backup withholding tax of 31% if the certificateholder fails to comply with
certain identification procedures, unless the holder is an exempt recipient
under applicable provisions of the Code.

     It is suggested that prospective purchasers consult their tax advisors with
respect to the tax consequences to them of the purchase, ownership and
disposition of REMIC Certificates, Notes, Grantor Trust Certificates and
Partnership Certificates, including the tax consequences under state, local,
foreign and other tax laws and the possible effects of changes in federal or
other tax laws.


                        STATE AND OTHER TAX CONSEQUENCES

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


                    CONSIDERATIONS FOR BENEFIT PLAN INVESTORS


INVESTORS AFFECTED

     A federal law called the Employee Retirement Income Security Act of 1974,
as amended, the Code and a variety of state laws may affect your decision
whether to invest in the securities if you are investing for:

     o   a pension or other employee benefit plan of employers in the private
         sector that are regulated under ERISA, referred to as an ERISA plan,

     o   an individual retirement account or annuity, called an IRA, or a
         pension or other benefit plan for self-employed individuals, called a
         Keogh plan,

     o   a pension and other benefit plan for the employees of state and local
         governments, called a government plan, or

     o   an insurance company general or separate account, a bank collective
         investment fund or other pooled investment vehicle which includes the
         assets of ERISA plans, IRAs, Keogh plans, and/or government plans.

A summary of the effects of those laws follows.

FIDUCIARY STANDARDS FOR ERISA PLANS AND RELATED INVESTMENT VEHICLES


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     ERISA imposes standards of fiduciary conduct on those who are responsible
for operating ERISA plans or investing their assets. These standards include
requirements that fiduciaries act prudently in making investment decisions and
diversify investments so as to avoid large losses unless under the circumstances
it is clearly prudent not to do so. If you are a fiduciary of an ERISA plan, you
are subject to these standards in deciding whether to invest the plan's assets
in securities. You may find the full text of the applicable standards of
fiduciary conduct in section 404 of ERISA. If you are a fiduciary of an ERISA
Plan, you should consult with your advisors concerning your investment decision
in the context of section 404 of ERISA.

PROHIBITED TRANSACTION ISSUES FOR ERISA PLANS, KEOGH PLANS, IRAS AND RELATED
INVESTMENT VEHICLES

         GENERAL. Transactions involving the assets of an ERISA plan, a Keogh
plan or an IRA, called prohibited transactions, may result in the imposition
of excise taxes and, in the case of an ERISA plan, civil money penalties and
certain other extraordinary remedies. A prohibited transaction occurs when a
person with a pre-existing relationship to an ERISA plan, a Keogh plan or IRA,
known as a party in interest or a disqualified person, engages in a transaction
involving the assets of the plan or IRA. You may find the laws applicable to
prohibited transactions in section 406 of ERISA and section 4975 of the Code.
There are statutory and regulatory prohibited transaction exemptions, as well as
administrative exemptions granted by the United States Department of Labor.
Prohibited transactions exemptions waive the excise taxes, civil money penalties
and other remedies for certain prohibited transactions which are structured to
satisfy prescribed conditions.

     PURCHASE AND SALE OF SECURITIES. If an ERISA plan, a Keogh plan, an IRA or
a related investment vehicle acquires securities from, or sells securities to, a
party in interest or a disqualified person, a prohibited transaction may occur.
In such a case, the party in interest or disqualified person might be liable for
excise taxes unless a prohibited transaction exemption is available. Where a
prohibited transaction involves an ERISA plan or related investment vehicle, the
fiduciary who causes or permits the prohibited transaction may also be liable
for civil money penalties.

     TRANSACTIONS INCIDENTAL TO THE OPERATION OF THE TRUST. Transactions
involving the assets of the trust may also give rise to prohibited transactions
to the extent that an investment in securities causes the assets of a trust to
be considered assets, commonly known as plan assets, of an ERISA plan, a Keogh
plan, an IRA or a related investment vehicle. Whether an investment in
securities will cause a trust's assets to be treated as plan assets depends on
whether the securities are debt or equity investments for purposes of ERISA. The
United States Department of Labor has issued regulations, commonly known as the
plan asset regulations, which define debt and equity investments. The plan
asset regulations appear at 29 C.F.R. ss.2510.3-101.

     Under the plan asset regulations, a trust's assets will not be plan
assets of an ERISA plan, Keogh plan, IRA or related investment vehicle that
purchases securities if the securities are considered debt. For this purpose,
the securities will be debt only if they are treated as indebtedness under
applicable local law and do not have any substantial equity features. The term
substantial equity features has no definition under the plan asset regulations.
In the absence of such a definition, we cannot assure you that the securities,
either when they are issued or at any later date, will have no substantial
equity features. The prospectus supplement for a particular offering of
securities may tell you whether we believe the securities are debt for ERISA
purposes.


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     To the extent that the securities do not constitute debt for purposes of
ERISA, they will constitute equity investments. In this case, an ERISA plan,
Keogh plan, IRA or related investment vehicle that acquires securities would
also acquire an undivided interest in each asset of the trust unless (1) the
trust is an operating company or a venture capital operating company as defined
in the plan asset regulations, (2) the securities are publicly offered
securities as defined in the plan asset regulations, or (3) benefit plan
investors as defined in the plan asset regulations do not own 25% or more of
the securities or any other class of equity security issued by the trust. If the
securities may be treated as an equity investment under the plan asset
regulations, the prospectus supplement may tell you whether we believe any of
these exceptions will apply.

POSSIBLE EXEMPTIVE RELIEF

     The United States Department of Labor has issued prohibited transaction
exemptions, which conditionally waive excise taxes and civil money penalties
that might otherwise apply to a type of transactions.

     CLASS EXEMPTIONS. The United States Department of Labor has issued
Prohibited Transaction Class Exemptions, or PTCEs, which provide exemptive
relief is available to any party to any transaction which satisfies the
conditions of the exemption. A partial listing of the PTCEs which may be
available for investments in securities follows. Each of these exemptions is
available only if specified conditions are satisfied and may provide relief for
some, but not all, of the prohibited transactions that a particular transaction
may cause. The prospectus supplement for a particular offering of securities may
tell you whether the securities themselves satisfy the conditions of these
exemptions. You should consult with your advisors regarding the specific scope,
terms and conditions of an exemption as it applies to you, as an investor,
before relying on that exemption's availability.

     CLASS EXEMPTIONS FOR PURCHASES AND SALES OF SECURITIES. The following
exemptions may apply to a purchase or sale of securities between an ERISA plan,
a Keogh plan, an IRA or related investment vehicle, on the one hand, and a party
in interest or disqualified person, on the other hand:

     o   PTCE 84-14, which exempts certain transactions approved on behalf of
         the plan by a qualified professional asset manager, or QPAM.

     o   PTCE 86-128, which exempts certain transactions between a plans and
         certain broker-dealers.

     o   PTCE 90-1, which exempts certain transactions entered into by insurance
         company pooled separate accounts in which plans have made investments.

     o   PTCE 91-38, which exempts certain transactions entered into by bank
         collective investment funds in which plans have made investments.

     o   PTCE 96-23, which exempts certain transaction approved on behalf of a
         plan by an in-house investment manager, or INHAM.



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These exemptions do not expressly address prohibited transactions that might
result from transactions incidental to the operation of a trust. We cannot
assure you that a purchase or sale of securities in reliance on one of these
exemptions will not give rise to indirect, non-exempt prohibited transactions.

     CLASS EXEMPTIONS FOR PURCHASES AND SALES OF SECURITIES AND TRANSACTIONS
INCIDENTAL TO THE OPERATION OF THE TRUST. The following exemptions may apply to
a purchase or sale of securities between an ERISA plan, a Keogh plan, an IRA or
related investment vehicle, on the one hand, and a party in interest or
disqualified person, on the other hand, and may also apply to prohibited
transactions that may result from transactions incident to the operation of the
trust

     o   PTCE 95-60, which exempts certain transactions involving insurance
         company general accounts.

     o   PTCE 83-1, which exempts certain transactions involving the purchase of
         pass-through certificates in mortgage pool investment trusts from, and
         the sale of such certificates to, the pool sponsor, as well as
         transactions in connection with the servicing and operation of the
         pool.

     ADMINISTRATIVE EXEMPTION FOR OFFERINGS MANAGED BY CERTAIN UNDERWRITERS. The
DOL has also issued exemptions to several underwriters of securities, for
specific offerings in which that underwriter or any person directly or
indirectly, through one or more intermediaries, controlling, controlled by or
under common control with that underwriter is an underwriter, placement agent or
a manager or co-manager of the underwriting syndicate or selling group where the
trust and the offered certificates meet specified conditions. This is called the
Underwriters' Exemption. An amendment to the Underwriters' Exemptions may be
found at 62 Fed. Reg. 39021 (July 21, 1997). The Underwriters' Exemptions, as
amended, provides a partial exemption for transactions involving certificates
representing a beneficial interest in a trust and entitling the holder to
pass-through payments of principal, interest and/or other payments with respect
to the trust's assets. When applicable, the Underwriters' Exemptions applies to
the initial purchase, holding and subsequent resale of certificates, and certain
transactions incidental to the servicing and operation of the assets of such a
trust.

     In order for the Underwriters' Exemptions to be available to a purchase of
securities, the trust's assets must consist solely of certain types of assets,
including obligations that bear interest or are purchased at a discount and
which are secured by single-family residential, multi-family residential and
commercial property (including certain obligations secured by leasehold
interests on commercial property); fractional undivided interests in any of
these obligations; property which had secured any of these obligations;
undistributed cash; rights under any insurance policies, third-party guarantees,
contracts of suretyship or other credit support arrangements with respect to any
of the these obligations; and a pre-funding account.

     CONDITIONS FOR PRE-FUNDING ACCOUNTS. If the trust includes a pre-funding
account, the following conditions also apply:

     o   The ratio of the amount allocated to the pre-funding account to the
         total principal amount of the securities being offered must be less
         than or equal to 25%.


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    o    All additional obligations transferred to the trust after the closing
         date of the offering of securities must meet the same terms and
         conditions of eligibility for inclusion in the trust as the obligations
         placed in the trust at or prior to the closing date, and these terms
         and conditions must have been approved by Standard & Poor's Structured
         Rating Group, Moody's Investors Service, Inc., Duff & Phelps Credit
         Rating Co. or Fitch IBCA, Inc., called the Exemption Rating Agencies.
         These terms and conditions may be changed if the changes receive prior
         approval of either an Exemption Rating Agency or a majority vote of
         outstanding certificateholders.

     o   After the transfer of additional obligations to the trust, the
         securities must have a credit rating from one of the Exemption Rating
         Agencies at least a high as the rating assigned at the time of the
         initial issuance of the securities.

     o   The use of pre-funding does not, in and of itself, cause a reduction of
         100 basis points or more in the weighted average annual percentage
         interest rate of all of the obligations included in the trust between
         the time of initial issuance of the securities and the end of the
         pre-funding period.

     o   Either the characteristics of the obligations added to the trust during
         the pre-funding period must be monitored by an independent insurer or
         other independent credit support provider, or an independent accountant
         must furnish a letter, prepared using the same type of procedures as
         were applicable to the obligations which were transferred to the trust
         as of the closing date of the initial offering of securities, stating
         whether or not the characteristics of the additional obligations
         conform to the characteristics described in the prospectus or
         prospectus supplement.

     o   The pre-funding period must end no later than three months, or 90 days
         if later, after the closing date of the initial issuance of securities,
         or earlier in certain circumstances if the unused balance in the
         pre-funding account falls below a specified minimum level or an event
         of default occurs.

    o    Amounts transferred to any pre-funding account and/or capitalized
         interest account used in connection with the pre-funding may be
         invested only in investments which are described in the pooling and
         servicing agreement, are permitted by the Exemption Rating Agencies
         rating the securities and have been rated, or the obligor has been
         rated, in one of the three highest generic rating categories by one of
         the Exemption Rating Agencies or else are either 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, provided that such obligations are backed by the full faith
         and credit of the United States.

     o   The prospectus or prospectus supplement must describe the duration of
         the pre-funding period.

     o   The trustee, or any agent with which the trustee contracts to provide
         trust services, must be a substantial financial institution or trust
         company experienced in trust activities and familiar with its duties,
         responsibilities and liabilities with ERISA and the trustee, as


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         legal owner of the assets of the trust, must enforce all the rights
         created in favor of Securityholders of the trust, including ERISA
         plans.

     ADDITIONAL CONDITIONS FOR THE UNDERWRITERS' EXEMPTION. If the requirements
applicable to the trust and pre-funding account are met, the Underwriters'
Exemption will apply to a particular transaction only if the transaction meets
the following additional conditions:

     o   The acquisition of securities by an ERISA Plan, a Keogh Plan, an IRA or
         a related investment vehicle is on terms, including price, that are at
         least as favorable to the buyer as they would be in an arm's-length
         transaction with an unrelated party.

     o   The rights and interests evidenced by the securities acquired by the
         ERISA Plan, Keogh Plan, IRA or related investment vehicle are not
         subordinated to the rights and interests evidenced by other securities
         of the same trust.

     o   The securities acquired by the ERISA Plan, Keogh Plan, IRA or related
         investment vehicle have received a rating that is in one of three
         highest generic rating categories from the Exemption Rating Agencies.

     o   The trustee of the trust is not an affiliate of the trust sponsor, any
         servicer, any underwriter, any insurer or any obligor with respect to
         obligations or receivables constituting more than 5% of the aggregate
         unamortized principal balance of the assets in the trust, determined on
         the date of initial issuance of securities, or any affiliate of any of
         these entities.

     o   The sum of all payments made to and retained by the underwriter(s) or
         selling agents must represent not more than reasonable compensation for
         underwriting the securities; the sum of all payments made to and
         retained by the sponsor pursuant to the assignment of the assets to the
         trust must represent not more than the fair market value of such
         obligations; and the sum of all payments made to and retained by all
         servicers must represent not more than reasonable compensation for such
         persons' services and reimbursement of such person's reasonable
         expenses in connection with such services.

     o   The investing ERISA plan, Keogh plan, IRA or related investment vehicle
         must be an accredited investor as defined in Rule 501(a)(1) of
         Regulation D of the Commission under the Securities Act of 1933, as
         amended.

     LIMITS ON SCOPE OF THE UNDERWRITERS' EXEMPTIONS. The Underwriters'
Exemptions will not provide complete exemptive relief even where a trust
satisfies all of the conditions applicable to the trust and all of the general
conditions are met. It does not provide relief for the purchase of securities
from, or the sale of securities to, a party in interest or disqualified person
where the party in interest or disqualified person is a fiduciary of the
purchaser or seller in which the fiduciary receives consideration for its
personal account from any party other than the purchaser or the seller.

     The Underwriters' Exemptions also will not provide exemptive relief for the
purchase and holding of securities by a fiduciary on behalf of a plan sponsored
by the trust's sponsor, the trustee, any insurer, any servicer, any obligor with
respect to obligations or receivables included in the trust


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constituting more than 5% of the aggregate unamortized principal balance of the
assets in the trust, determined on the date of initial issuance of the
securities, and any affiliate of any of these entities. The Underwriters'
Exemptions generally provides exemptive relief in other cases for the purchase
of securities from, or the sale of securities to, a party in interest or
disqualified person where the party in interest or disqualified person is a
fiduciary of the purchaser or seller and is also an obligor with respect to 5%
or less of the fair market value of obligations or receivables contained in the
trust or an affiliate only when the following additional conditions are met:

     o   The purchaser or seller is not an ERISA plan, an IRA or a Keogh plan
         that is sponsored by an underwriter or selling agent, a trust's
         sponsor, the trustee, any insurer, any servicer or any obligor with
         respect to obligations or receivables included in the trust
         constituting more than 5% of the aggregate unamortized principal
         balance of the assets in the trust, determined on the date of initial
         issuance of the securities, or any affiliate of any of these entities.

     o   Solely in the case of initial issuance of securities, at least 50% of
         each class of securities issued by the trust is acquired by persons
         independent of the underwriters or selling agents, the trust's sponsor,
         the trustee, any insurer, any servicer, any obligor with respect to
         obligations or receivables included in the trust constituting more than
         5% of the aggregate unamortized principal balance of the assets in the
         trust, determined on the date of initial issuance of the securities,
         and any affiliate of any of these entities.

     o   The purchaser's investment in each class of securities issued by the
         trust does not exceed 25% of all of the securities in such class
         outstanding at the time of the issuance.

     o   Immediately after the acquisition, no more than 25% of the purchaser's
         assets are invested in securities issued by trusts containing assets
         sold or serviced by an entity that has discretionary authority or over
         the purchaser or renders investment advice to the purchaser for a fee.

The Underwriters' Exemptions provide relief for transactions in connection with
the servicing, operation and management of a trust only if:

     o   The transactions are carried out in accordance with the terms of a
         binding pooling and servicing agreement.

     o   The pooling and servicing agreement is provided to, or fully described
         in the prospectus or offering memorandum provided to, investing ERISA
         plans, Keogh plans, IRAs and related investment vehicles before they
         purchase securities issued by the trust.

     STATUTORY EXEMPTION FOR INSURANCE COMPANY GENERAL ACCOUNTS. In addition to
the PTCEs and the Underwriters' Exemptions, a temporary statutory exemption may
be available if you are investing on behalf of an insurance company general
account that includes plan assets. This exemption appears in section 401(c) of
ERISA. Section 401(c) of ERISA requires the United States Department of Labor to
issue regulations defining when an insurance company general account will be
deemed to include plan assets and, hence, be subject to the ERISA prohibited
transaction rules. Generally, until 18 months after the issuance of such
regulations, no person will be subject to


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liability for prohibited transactions that result from the inclusion of plan
assets in an insurance company general account. If you are investing on behalf
of an insurance company general account, section 401(c) generally provides an
exemption for your purchases and sales of securities, as well as prohibited
transactions resulting from transactions incident to the operation of the trust,
until 18 months after the issuance of regulations. This will be the case as long
as you have not acted to avoid the regulations or committed a breach of
fiduciary responsibilities which would also constitute a violation of federal or
state criminal law. If you are investing on behalf of an insurance company
general account, we cannot assure that the purchase or sale of securities, the
continued holding of securities previously purchased, or transactions incidental
to the operation of the trust, more than 18 months after the issuance of final
regulations would qualify for further statutory exemptive relief.

CONSULTATION WITH COUNSEL

     There can be no assurance that any DOL exemption will apply with respect to
any particular Plan that acquires the securities or, even if all the conditions
specified therein were satisfied, that any such exemption would apply to
transactions involving the trust fund. Prospective Plan investors should consult
with their legal counsel concerning the impact of ERISA and the Code and the
potential consequences to their specific circumstances prior to making an
investment in the securities. Neither the Depositor, the Trustee, the Servicer
nor any of their respective affiliates will make any representation to the
effect that the securities satisfy all legal requirements with respect to the
investment therein by Plans generally or any particular Plan or to the effect
that the securities are an appropriate investment for Plans generally or any
particular Plan.

GOVERNMENT PLANS

         Government plans are generally not subject to the fiduciary standards
of ERISA or the prohibited transaction rules of ERISA or the Code. However, many
states have enacted laws which established standards of fiduciary conduct, legal
investment rules, or other requirements for investment transactions involving
the assets of government plans. If you are considering investing in securities
on behalf of a government plan, you should consult with your advisors regarding
the requirements of applicable state law.

REQUIRED DEEMED REPRESENTATIONS OF INVESTORS

     Any purchaser of the Certificates will be deemed to have represented that
either (a) it is not an ERISA Plan, an IRA or a Keogh Plan and is not purchasing
such securities by or on behalf of or with plan assets of an ERISA Plan, an IRA
or a Keogh Plan or (b) the purchase of any such securities by or on behalf of or
with plan assets of an ERISA Plan, an IRA or a Keogh Plan is permissible under
applicable law, will not result in any non-exempt prohibited transaction under
ERISA or Section 4975 of the Code and will not subject the Servicer, the
Depositor or the Trustee to any obligation in addition to those undertaken in
the related Agreement. A fiduciary of a Plan or any person investing plan assets
to purchase securities must make its own determination that the conditions for
purchase will be satisfied with respect to such securities.

     THIS DISCUSSION IS A GENERAL DISCUSSION OF SOME OF THE RULES WHICH APPLY TO
ERISA PLANS, KEOGH PLANS, IRAS, GOVERNMENT PLANS AND THEIR RELATED INVESTMENT
VEHICLES. PRIOR TO MAKING AN INVESTMENT IN SECURITIES, PROSPECTIVE PLAN
INVESTORS SHOULD CONSULT WITH THEIR LEGAL AND OTHER


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ADVISORS CONCERNING THE IMPACT OF ERISA AND THE CODE AND, PARTICULARLY IN THE
CASE OF GOVERNMENT PLANS AND RELATED INVESTMENT VEHICLES, ANY ADDITIONAL STATE
LAW CONSIDERATIONS, AND THE POTENTIAL CONSEQUENCES IN THEIR SPECIFIC
CIRCUMSTANCES.


                                LEGAL INVESTMENT

     The prospectus supplement for each series of securities will specify which
classes of securities of the series, if any, will constitute mortgage related
securities for purposes of the Secondary Mortgage Market Enhancement Act of
1984. Any class of securities that is not rated in one of the two highest rating
categories by one or more nationally recognized statistical rating agencies or
that represents an interest in a trust fund that includes junior mortgage loans
will not constitute mortgage related securities for purposes of SMMEA Mortgage
related securities are legal investments to the same extent that, under
applicable law, obligations issued by or guaranteed as to principal and interest
by the United States or any agency or instrumentality thereof constitute legal
investments for persons, trusts, corporations, partnerships, associations,
business trusts and business entities, including depository institutions,
insurance companies and pension funds created pursuant to or existing under the
laws of the United States or of any state, the authorized investments of which
are subject to state regulation. Under SMMEA, if a state enacted legislation
prior to October 3, 1991 specifically limiting the legal investment authority of
any entities with respect to mortgage related securities, the securities would
constitute legal investments for entities subject to that legislation only to
the extent provided in that legislation. SMMEA provides, however, that in no
event will the enactment of any legislation of this kind affect the validity of
any contractual commitment to purchase, hold or invest in mortgage related
securities, or require the sale or other disposition of such securities, so long
as that contractual commitment was made or the securities were acquired prior to
the enactment of that legislation.

     SMMEA also amended the legal investment authority of federally chartered
depository institutions as follows: federal savings and loan associations and
federal savings banks may invest in, sell or otherwise deal with mortgage
related securities without limitation as to the percentage of their assets
represented thereby, federal credit unions may invest in those securities, and
national banks may purchase those securities for their own account without
regard to the limitations generally applicable to investment securities set
forth in 12 U.S.C. 24 (Seventh), subject in each case to regulations as the
applicable federal regulatory authority may prescribe.

     On April 23, 1998, the Federal Financial Institutions Examination Council
issued a revised supervisory policy statement applicable to all depository
institutions, setting forth guidelines for investments in high-risk mortgage
securities. The 1998 policy statement has been adopted by the Federal Reserve
Board, the Office of the Comptroller of the Currency, the FDIC, the National
Credit Union Administration and the Office of Thrift Supervision with an
effective date of May 26, 1998. The 1998 policy statement rescinds a 1992 policy
statement that had required, prior to purchase, a depository institution to
determine whether a mortgage derivative product that it is considering acquiring
is high-risk, and, if so, that the proposed acquisition would reduce the
institution's overall interest rate risk. The 1998 policy statement eliminates
former constraints on investing in certain high-risk mortgage derivative
products and substitutes broader guidelines for evaluating and monitoring
investment risk.



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     On December 1, 1998, the Office of Thrift Supervision issued Thrift
Bulletin 13a, entitled, "Management of Interest Rate Risk, Investment
Securities, and Derivatives Activities", which is applicable to thrift
institutions regulated by the OTS. Thrift Bulletin 13a has an effective date of
December 1, 1998. One of the primary purposes of Thrift Bulletin 13a is to
require thrift institutions, prior to taking any investment position, to (1)
conduct a pre-purchase portfolio sensitivity analysis for any significant
transaction involving securities or financial derivatives and (2) conduct a
pre-purchase price sensitivity analysis of any complex security or financial
derivative. For the purposes of Thrift Bulletin 13a, complex security includes
among other things any collateralized mortgage obligation or REMIC security,
other than any plain vanilla mortgage pass-through security, that is, securities
that are part of a single class of securities in the related pool, that are
non-callable and do not have any special features. Accordingly, the offered
securities may be viewed as complex securities. The OTS recommends that while a
thrift institution should conduct its own in-house pre-acquisition analysis, it
may rely on an analysis conducted by an independent third-party as long as
management understands the analysis and its key assumptions. Further, Thrift
Bulletin 13a recommends that the use of complex securities with high price
sensitivity be limited to transactions and strategies that lower a thrift
institution's portfolio interest rate risk. Thrift Bulletin 13a warns that an
investment in complex securities by thrift institutions that do not have
adequate risk measurement, monitoring and control systems may be viewed by the
OTS examiners as an unsafe and unsound practice.

     Prospective investors in the securities, including in particular the
classes of securities that do not constitute mortgage related securities for
purposes of SMMEA should consider the matters discussed in the following
paragraph.

     There may be other restrictions on the ability of certain investors,
including depository institutions, either to purchase securities or to purchase
securities representing more than a specified percentage of the investor's
assets. INVESTORS SHOULD CONSULT THEIR OWN LEGAL ADVISORS IN DETERMINING WHETHER
AND TO WHAT EXTENT THE SECURITIES CONSTITUTE LEGAL INVESTMENTS FOR THOSE
INVESTORS OR ARE SUBJECT TO INVESTMENT, CAPITAL OR OTHER RESTRICTIONS, AND, IF
APPLICABLE, WHETHER SMMEA HAS BEEN OVERRIDDEN IN ANY JURISDICTION RELEVANT TO
THAT INVESTOR.

                             METHODS OF DISTRIBUTION

     The securities offered hereby and by the related prospectus supplements
will be offered in series through one or more of the methods described in the
paragraph below. The prospectus supplement prepared for each series will
describe the method of offering being utilized for that series and will state
the net proceeds to the depositor from the sale.

     The depositor intends that securities will be offered through the following
methods from time to time and that offerings may be made concurrently through
more than one of these methods or that an offering of the securities of a
particular series may be made through a combination of two or more of these
methods. These methods are as follows:

         1. By negotiated firm commitment or best efforts underwriting and
     public re-offering by underwriters;

         2. By placements by the depositor with institutional investors through
     dealers; and


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         3. By direct placements by the depositor with institutional investors.

     If underwriters are used in a sale of any securities, other than in
connection with an underwriting on a best efforts basis, the securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at fixed
public offering prices or at varying prices to be determined at the time of sale
or at the time of commitment therefor. The underwriters may be broker-dealers
affiliated with the depositor whose identities and relationships to the
depositor will be as set forth in the related prospectus supplement. The
managing underwriter or underwriters with respect to the offer and sale of the
securities of a particular series will be set forth on the cover of the
prospectus supplement relating to the series and the members of the underwriting
syndicate, if any, will be named in the prospectus supplement.

     In connection with the sale of the securities offered, underwriters may
receive compensation from the depositor or from purchasers of such securities in
the form of discounts, concessions or commissions. Underwriters and dealers
participating in the distribution of the securities may be deemed to be
underwriters in connection with the securities, and any discounts or commissions
received by them from the depositor and any profit on the resale of offered
securities by them may be deemed to be underwriting discounts and commissions
under the Securities Act of 1933, as amended.

     It is anticipated that the underwriting agreement pertaining to the sale of
offered securities of any series will provide that the obligations of the
underwriters will be subject to conditions precedent, that the underwriters will
be obligated to purchase all the securities if any are purchased, other than in
connection with an underwriting on a best efforts basis, and that, in limited
circumstances, the depositor will indemnify the several underwriters and the
underwriters will indemnify the depositor against certain civil liabilities,
including liabilities under the Securities Act of 1933 or will contribute to
payments required to be made in respect thereof.

     The prospectus supplement with respect to any series offered by placements
through dealers will contain information regarding the nature of the offering
and any agreements to be entered into between the depositor and purchasers of
offered securities of the series.

     The depositor anticipates that the securities offered hereby will be sold
primarily to institutional investors or sophisticated non-institutional
investors. Purchasers of offered securities, including dealers, may, depending
on the facts and circumstances of such purchases, be deemed to be underwriters
within the meaning of the Securities Act of 1933 in connection with reoffers and
sales by them of the offered securities. Holders of offered securities should
consult with their legal advisors in this regard prior to any reoffer or sale.

                                  LEGAL MATTERS

     Certain legal matters in connection with the securities will be passed upon
for the depositor by Thacher Proffitt & Wood, New York, New York.



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                              FINANCIAL INFORMATION

     The depositor has determined that its financial statements are not material
to the offering made hereby. Any prospective purchaser that desires to review
financial information concerning the depositor will be provided by the depositor
on request with a copy of the most recent financial statements of the depositor.

                                     RATING

     It is a condition to the issuance of any class of securities that they
shall have been rated not lower than investment grade, that is, in one of the
four highest rating categories, by at least one nationally
recognized statistical rating organization.

     Any ratings on the securities address the likelihood of receipt by the
holders thereof of all collections on the underlying mortgage assets to which
such holders are entitled. These ratings address the structural, legal and
issuer-related aspects associated with the securities, the nature of the
underlying mortgage assets and the credit quality of the guarantor, if any. The
ratings do not represent any assessment of the likelihood of principal
prepayments by borrowers or of the degree by which prepayments might differ from
those originally anticipated. As a result, securityholders might suffer a lower
than anticipated yield, and, in addition, holders of Strip Securities in extreme
cases might fail to recoup their initial investments.

                              AVAILABLE INFORMATION

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

     This prospectus does not contain all of the information set forth in the
registration statement, of which this prospectus forms a part, and exhibits
thereto which the depositor has filed with the Commission under the securities
Act of 1933 and to which reference is hereby made.



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                INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

     There are incorporated into this prospectus by reference all documents and
reports filed or caused to be filed by the depositor with respect to a trust
fund under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, prior to the termination of the offering of securities offered hereby
evidencing interest in a trust fund. The depositor will provide or cause to be
provided without charge to each person to whom this prospectus is delivered in
connection with the offering of one or more classes of securities offered
hereby, a copy of any or all documents or reports incorporated herein by
reference, in each case to the extent those documents or reports relate to one
or more of the classes of those offered securities, other than the exhibits to
those documents (unless the exhibits are specifically incorporated by reference
in the documents). Requests to the depositor should be directed in writing to
its principal executive office at 18400 Von Karman, Suite 1000, Irvine,
California 92612, Attention: Secretary, or by telephone at 949-440-7030. The
depositor has determined that its financial statements are not material to the
offering of any securities offered hereby.




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                                    GLOSSARY

ACCRUAL SECURITIES: A class of securities as to which accrued interest or a
portion thereof will not be distributed but rather will be added to the
principal balance of the security on each distribution date in the manner
described in the related prospectus supplement.

APPLICABLE FEDERAL RATE: A rate based on the average of current yields on
Treasury securities, which rate is computed and published monthly by the IRS.

ARM LOAN: A mortgage loan with an interest rate that adjusts periodically, with
a corresponding adjustment in the amount of the monthly payment, to equal the
sum of a fixed percentage amount and an index.

CALL CLASS: The holder of a non-offered class of securities that has the right,
at its discretion, to terminate the related trust fund on and effect early
retirement of the securities of such series in the manner described under
"Description of the Securities--Termination" in this prospectus.

CERCLA: The Comprehensive Environmental Response, Compensation and Liability
Act, as amended.

CLEAN-UP CALL: The right of the party entitled to effect a termination of a
trust fund upon the aggregate principal balance of the outstanding trust fund
assets for the series at that time being less than the percentage, as specified
in the related prospectus supplement, of the aggregate principal balance of the
trust fund assets at the cut-off date for that series and which percentage will
be between 25% and 0%.

CLOSING DATE: With respect to any series of securities, the date on which the
securities are issued.

CODE:  The Internal Revenue Code of 1986, as amended.

COMMISSION: The Securities and Exchange Commission.

CPR: The Constant Prepayment Rate model, which assumes that the outstanding
principal balance of a pool of mortgage loans prepays at a specified constant
annual rate. In generating monthly cash flows, this rate is converted to an
equivalent constant monthly rate.

CRIME CONTROL ACT:  The Comprehensive Crime Control Act of 1984.

DIDMC: The Depository Institutions Deregulation and Monetary Control Act of
1980.

DOL:  The U.S. Department of Labor.

DOL REGULATIONS: The regulations promulgated by the U.S. Department of Labor at
29 C.F.R. ss.2510. 3-101

DUE PERIOD: The second day of the month immediately preceding the month in which
the distribution date occurs, or the day after the cut-off date in the case of
the first Due Period, and


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ending on the first day of the month of the related distribution date, unless
the prospectus supplement specifies otherwise.

EQUITY CERTIFICATES: Where the issuer is an owner trust, the certificates
evidencing ownership of the trust fund.

ERISA PERMITTED INVESTMENTS: The types of investments permitted by the rating
agencies named in the Prohibited Transaction Exemption 91-23 issued by the DOL
in which funds in a pre-funding account may be invested.

FTC RULE: The "Holder in the Due Course" Rule of the Federal Trade Commission.

GARN-ST. GERMAIN ACT:  The Garn-St. Germain Depositor Institutions Act of 1982.

GRANTOR TRUST CERTIFICATE: A certificate representing an interest in a Grantor
Trust Fund.

GRANTOR TRUST FRACTIONAL CERTIFICATE: A Grantor Trust Certificate representing
an undivided equitable ownership interest in the principal of the mortgage loans
constituting the related Grantor Trust Fund, together with interest on the
Grantor Trust Certificates at a pass-through rate.

GRANTOR TRUST STRIP CERTIFICATE: A certificate representing ownership of all or
a portion of the difference between interest paid on the mortgage loans
constituting the related Grantor Trust Fund (net of normal administration fees
and any retained interest of the depositor) and interest paid to the holders of
Grantor Trust Fractional Interest Certificates issued with respect to the
Grantor Trust Fund. A Grantor Trust Strip Certificate may also evidence a
nominal ownership interest in the principal of the mortgage loans constituting
the related Grantor Trust Fund.

GRANTOR TRUST FUND: A trust fund as to which no REMIC election will be made and
which qualifies as a grantor trust within the meaning of Subpart E, part I,
subchapter J of Chapter 1 of the Code.

HIGH COST LOAN: A mortgage loan subject to the Home Ownership and Equity
Protection Act of 1994.

HOMEOWNERSHIP ACT: The Home Ownership and Equity Protection Act of 1994.

INSURANCE PROCEEDS: Proceeds received with respect to a mortgage loan under any
hazard insurance policy, special insurance policy, primary insurance policy, FHA
insurance policy, VA guarantee, bankruptcy bond or mortgage pool insurance
policy, to the extent such proceeds are not applied to the restoration of the
property or released to the mortgagor in accordance with normal servicing
procedures.

LIQUIDATED LOAN: A defaulted mortgage loan that is finally liquidated, through
foreclosure sale or otherwise.

LIQUIDATION PROCEEDS: All amounts, other than Insurance Proceeds, received and
retained in connection with the liquidation of a defaulted mortgage loan, by
foreclosure or otherwise.


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LOCKOUT DATE: The date of expiration of the Lockout Period with respect to a
mortgage loan.

LOCKOUT PERIOD: The period specified in a mortgage note during which prepayment
of the mortgage loan is prohibited.

MORTGAGE: The mortgage, deed of trust or similar instrument securing a mortgage
loan.

NBRC: The National Bankruptcy Review Commission.

NCUA:  The National Credit Union Administration.

NONRECOVERABLE ADVANCE: An advance made or to be made with respect to a mortgage
loan which the master servicer determines is not ultimately recoverable from
Related Proceeds.

OID REGULATIONS: The rules governing original issue discount that are set forth
in Sections 1271-1273 and 1275 of the Code and in the related Treasury
regulations.

PARTNERSHIP CERTIFICATE: A certificate representing an interest in a Partnership
Trust Fund.

PARTNERSHIP TRUST FUND: A trust fund as to which no REMIC election will be made
and which qualifies as a partnership within the meaning of subchapter K of
Chapter 1 of the Code.

PLANS: Employee pension and welfare benefit plans subject to ERISA and
tax-qualified retirement plans described in Section 401(a) of the Code or
Individual Retirement Accounts described in Section 408 of the Code.

PREPAYMENT ASSUMPTION: With respect to a REMIC Regular Certificate or a Grantor
Trust Certificate, the assumption as to the rate of prepayments of the principal
balances of mortgage loans held by the trust fund used in pricing the initial
offering of that security.

PREPAYMENT PERIOD: The calendar month immediately preceding the month in which
the distribution date occurs, unless the prospectus supplement specifies
otherwise.

PTCE: Prohibited Transaction Class Exemption

PURCHASE PRICE: As to any mortgage loan, an amount equal to the sum of (1) the
unpaid principal balance of the mortgage loan, (2) unpaid accrued interest on
the Stated Principal Balance at the rate at which interest accrues on the
mortgage loan, net of the servicing fee and any retained interest, from the date
as to which interest was last paid to the calendar month in which the relevant
purchase is to occur, (3) any unpaid servicing fees and unreimbursed servicing
expenses payable or reimbursable to the master servicer with respect to that
mortgage loan, (4) any unpaid retained interest with respect to that mortgage
loan, (5) any realized losses incurred with respect to that mortgage loan and
(6) if applicable, any expenses reasonably incurred or to be incurred by the
master servicer or the trustee in respect of the breach or defect giving rise to
a purchase obligation.

RECORD DATE: The last business day of the month preceding the month in which a
distribution date occurs, unless the prospectus supplement specifies otherwise.


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RELATED PROCEEDS: Recoveries on a mortgage loan related to amounts which the
master servicer has previously advanced to the related trust fund.

RELIEF ACT: The Soldiers' and Sailors' Civil Relief Act of 1940.

REMIC: A real estate mortgage investment conduit as defined in Sections 860A
through 860G of the Code.

REMIC CERTIFICATES: Certificates evidencing interests in a trust fund as to
which a REMIC election has been made.

REMIC PROVISIONS:  Sections 860A through 860G of the Code.

REMIC REGULAR CERTIFICATE: A REMIC Certificate designated as a regular interest
in the related REMIC.

REMIC RESIDUAL CERTIFICATE: A REMIC Certificate designated as a residual
interest in the related REMIC.

REMIC REGULATIONS: The REMIC Provisions and the related Treasury regulations.

RETAINED INTEREST: A portion of the interest payments on a trust fund asset that
may be retained by the depositor or any previous owner of the asset.

RICO: The Racketeer Influenced and Corrupt Organizations statute.

SAIF:  The Savings Association Insurance Fund.

SCHEDULED PRINCIPAL BALANCE: As to any mortgage loan or manufactured housing
contract, the unpaid principal balance thereof as of the date of determination,
reduced by the principal portion of all monthly payments due but unpaid as of
the date of determination.

SENIOR/SUBORDINATE SERIES: A series of securities of which one or more classes
is senior in right of payment to one or more other classes to the extent
described in the related prospectus supplement.

SINGLE FAMILY PROPERTIES: One- to four-family residential properties including
detached and attached dwellings, townhouses, rowhouses, individual condominium
units, individual units in planned-unit developments and individual units in de
minimus planned-unit developments.

SPECIAL HAZARD SUBORDINATION AMOUNT: The amount of any Special Hazard Realized
Loss that is allocated to the subordinate securities of a series.

STATED PRINCIPAL BALANCE: As to any mortgage loan or manufactured housing
contract, the principal balance of the mortgage loan or manufactured housing
contract as of the cut-off date, after application of all scheduled principal
payments due on or before the cut-off date, whether or not received, reduced by
all amounts, including advances by the master servicer, allocable to principal
that are distributed to securityholders on or before the date of determination,
and as further reduced


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to the extent that any realized loss thereon has been, or had it not been
covered by a form of credit support, would have been, allocated to one or more
classes of securities on or before the determination date.

STRIP SECURITIES: A class of securities which are entitled to (a) principal
distributions, with disproportionate, nominal or no interest distributions, or
(b) interest distributions, with disproportionate, nominal or no principal
distributions.

STRIPPED INTEREST: The distributions of interest on a Strip Security with no or
a nominal principal balance.

UNITED STATES PERSON: A citizen or resident of the United States; a corporation
or partnership, including an entity treated as a corporation or partnership for
federal income tax purposes, created or organized in, or under the laws of, the
United States or any state thereof or the District of Columbia, except, in the
case of a partnership, to the extent provided in Treasury regulations; an estate
whose income is subject to United States federal income tax regardless of its
source; or a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one or more United
States persons have the authority to control all substantial decisions of the
trust. To the extent prescribed in regulations by the Secretary of the Treasury,
which have not yet been issued, a trust which was in existence on August 20,
1996, other than a trust treated as owned by the grantor under subpart E of part
I of subchapter J of chapter 1 of the Code, and which was treated as a United
States person on August 20, 1996 may elect to continue to be treated as a United
States person notwithstanding the previous sentence.






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               NEW CENTURY HOME EQUITY LOAN TRUST, SERIES 2000-NCA


                           $207,468,000 (Approximate)

                     ASSET BACKED PASS-THROUGH CERTIFICATES

                        NEW CENTURY MORTGAGE CORPORATION
                         Originator and Master Servicer

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

                      NEW CENTURY MORTGAGE SECURITIES, INC.
                                    Depositor

                             ----------------------
                              PROSPECTUS SUPPLEMENT
                              --------------------

GREENWICH CAPITAL MARKETS, INC.                            CHASE SECURITIES INC.

         You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We have
not authorized anyone to provide you with different information.

         We are not offering the New Century Home Equity Loan Trust, Series
2000-NCA, Asset Backed Pass-Through Certificates in any state where the offer is
not permitted.

         We do not claim that the information in this prospectus supplement and
prospectus is accurate as of any date other than the dates stated on the
respective covers.

         Dealers will deliver a prospectus supplement and prospectus when acting
as underwriters of the New Century Home Equity Loan Trust, Series 2000-NCA,
Asset Backed Pass-Through Certificates and with respect to their unsold
allotments or subscriptions. In addition, all dealers selling the New Century
Home Equity Loan Trust, Series 2000-NCA, Asset Backed Pass-Through Certificates
will be required to deliver a prospectus supplement and prospectus for ninety
days following the date of this prospectus supplement.

June 27, 2000


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