PRUDENTIAL HOME MORTGAGE SECURITIES COMPANY INC
424B5, 1996-02-07
MORTGAGE BANKERS & LOAN CORRESPONDENTS
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<PAGE>
SUPPLEMENT
(To Prospectus dated April 8, 1993 and Prospectus Supplement dated May 7, 1993)

THE PRUDENTIAL HOME MORTGAGE SECURITIES COMPANY, INC.                     [LOGO]

                                     Seller

               MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1993-18
        PRINCIPAL AND INTEREST PAYABLE MONTHLY, COMMENCING IN MARCH 1996

                    VARIABLE RATE(1) CLASS A-11 CERTIFICATES
                     (1) ON THE CLASS A-11 NOTIONAL AMOUNT
                            ------------------------

    The  Series 1993-18 Mortgage Pass-Through  Certificates (the "Series 1993-18
Certificates") are the Series 1993-18 Certificates described in the accompanying
Prospectus Supplement dated May  7, 1993 (the  "Prospectus Supplement") and  the
accompanying  Prospectus  dated April  8,  1993 (the  "Prospectus").  The Series
1993-18 Certificates consist of one class  of senior certificates (the "Class  A
Certificates")  and  two  classes  of subordinated  certificates  (the  "Class M
Certificates"  and   "Class  B   Certificates,"  respectively).   The  Class   A
Certificates consist of thirteen subclasses (each, a "Subclass") of Certificates
designated  as the Class A-1, Class A-2,  Class A-3, Class A-4, Class A-5, Class
A-6, Class A-7,  Class A-8, Class  A-9, Class  A-10, Class A-11,  Class A-R  and
Class  A-LR Certificates. The Class  M and Class B  Certificates are not divided
into subclasses. Only the Class A-11 Certificates are being offered hereby.  The
Series  1993-18  Certificates evidence  in the  aggregate the  entire beneficial
ownership interest  in a  trust fund  (the "Trust  Estate") established  by  The
Prudential  Home Mortgage Securities Company, Inc. (the "Seller") and consisting
of a pool of fixed interest  rate, conventional, monthly pay, fully  amortizing,
one-  to four-family, residential first mortgage  loans having original terms to
stated maturity of approximately 30 years (the "Mortgage Loans"), together  with
certain related property. Certain of the Mortgage Loans may be secured primarily
by  shares issued  by cooperative housing  corporations. The  Mortgage Loans are
serviced by  The Prudential  Home Mortgage  Company, Inc.  (in its  capacity  as
servicer,  the "Servicer," otherwise "PHMC"). The Mortgage Loans will consist of
mortgage loans  originated in  connection with  the relocation  of employees  of
various  corporate employers participating  in PHMC's relocation  program and of
employees of various  non-participant employers  ("Relocation Mortgage  Loans").
See "Description of the Mortgage Loans" herein and in the Prospectus Supplement.

    PROSPECTIVE  INVESTORS IN  THE CLASS  A-11 CERTIFICATES  SHOULD CONSIDER THE
FACTORS DISCUSSED UNDER "RISK FACTORS AND SPECIAL CONSIDERATIONS" HEREIN ON PAGE
S1-3.

    The credit  enhancement  for the  Series  1993-18 Certificates  is  provided
through  the  use of  a "shifting  interest" type  subordination, which  has the
effect of allocating all or  a disproportionate amount of principal  prepayments
and  other unscheduled receipts of principal to  the Class A Certificates for at
least nine  years  beginning  on  the  first  Distribution  Date.  See  "Summary
Information--  Credit Enhancement"  and "--Effects of  Prepayments on Investment
Expectations," "Description  of  the  Certificates" and  "Prepayment  and  Yield
Considerations" in the Prospectus Supplement.

    THE  YIELD  TO  MATURITY  OF  THE CLASS  A-11  CERTIFICATES  WILL  BE HIGHLY
SENSITIVE TO THE RATE AND  TIMING OF PRINCIPAL PAYMENTS (INCLUDING  PREPAYMENTS)
ON  THE  MORTGAGE LOANS,  WHICH  MAY BE  PREPAID  AT ANY  TIME  WITHOUT PENALTY.
INVESTORS SHOULD CONSIDER THE  ASSOCIATED RISKS THAT  A FASTER THAN  ANTICIPATED
RATE  OF  PRINCIPAL  PAYMENTS  (INCLUDING PREPAYMENTS)  ON  THE  MORTGAGE LOANS,
PARTICULARLY THOSE MORTGAGE LOANS WITH A  HIGHER RATE OF INTEREST, COULD  RESULT
IN  AN ACTUAL  YIELD THAT  IS LOWER THAN  ANTICIPATED AND  THAT A  RAPID RATE OF
PAYMENTS IN RESPECT  OF PRINCIPAL  (INCLUDING PREPAYMENTS) COULD  RESULT IN  THE
FAILURE   OF  INVESTORS  TO   FULLY  RECOVER  THEIR   INITIAL  INVESTMENTS.  See
"Sensitivity of the Pre-Tax  Yield and Weighted Average  Life of the Class  A-11
Certificates"  herein and "Description of the Certificates--Principal (Including
Prepayments)" and  "Prepayment  and  Yield  Considerations"  in  the  Prospectus
Supplement and in the Prospectus.

                                                        (CONTINUED ON NEXT PAGE)
                            ------------------------
THESE SECURITIES DO NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF THE PRUDENTIAL
   HOME MORTGAGE SECURITIES COMPANY, INC. OR ANY AFFILIATE THEREOF. NEITHER
      THESE SECURITIES NOR THE UNDERLYING MORTGAGE LOANS WILL BE INSURED
          OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.

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

    The  Class A-11  Certificates will  be purchased  from the  Seller by Lehman
Brothers Inc. (the "Underwriter")  and will be offered  by the Underwriter  from
time  to time in  negotiated transactions or  otherwise at varying  prices to be
determined, in each case, at the time of sale.

    Proceeds to the Seller are expected  to be approximately 1.075% of the  Pool
Scheduled  Principal Balance as  of the Distribution Date  in March 1996 without
giving effect  to  partial  principal prepayments  or  net  partial  liquidation
proceeds  received on  or after  the Determination  Date in  February 1996, plus
accrued interest from February 1, 1996 to (but not including) February 8,  1996,
before  deducting expenses  payable by the  Seller estimated to  be $45,000. See
"Underwriting" herein.

    The Class A-11  Certificates are offered  when, as and  if delivered to  and
accepted  by the Underwriter, subject to  prior sale, withdrawal or modification
of the offer without notice, the approval of counsel and other conditions. It is
expected that the Class A-11 Certificates will be available for delivery at  the
offices  of Lehman  Brothers Inc., New  York, New  York on or  about February 8,
1996.
                            ------------------------
                                LEHMAN BROTHERS

February 6, 1996
<PAGE>
(CONTINUED FROM PREVIOUS PAGE)

    The  Class  A-11  Certificates  may  not  be  appropriate  investments   for
individual  investors. The  Class A-11 Certificates  are offered  in the minimum
denomination of  $74,000,000 initial  Class A-11  Notional Amount  as  described
herein under "Description of the Certificates." Except as set forth below, it is
intended  that the Class A-11 Certificates not be directly or indirectly held or
beneficially  owned  by  any   person  in  amounts   lower  than  such   minimum
denomination.  The  Class A-11  Certificates may  be  transferred to  persons in
amounts lower than the minimum denomination but only if any such person delivers
to the Trustee an affidavit concerning certain matters related to the  financial
sophistication   and  net  worth  of  such   person.  See  "Description  of  the
Certificates" and  "Restrictions on  Transfer of  the Class  A-11  Certificates"
herein.

    There  is currently no secondary market  for the Class A-11 Certificates and
there can be no assurance  that a secondary market will  develop or, if it  does
develop, that it will provide Certificateholders with liquidity of investment at
any  particular  time  or for  the  life  of the  Class  A-11  Certificates. The
Underwriter intends to  act as a  market maker in  the Class A-11  Certificates,
subject  to applicable provisions of federal and state securities laws and other
regulatory requirements, but is under no obligation to do so and any such market
making may be  discontinued at  any time.  There can  be no  assurance that  any
investor  will be able to sell  a Class A-11 Certificate at  a price equal to or
greater than the price at which such Certificate was purchased.

    Distributions in respect of interest and  of principal are made on the  25th
day  of each month or the next succeeding  business day to the holders of record
of the Class A-11 Certificates on the last business day of the preceding  month,
to  the extent that their allocable portion  of the Pool Distribution Amount (as
defined in  the Prospectus  Supplement) is  sufficient therefor.  Interest  will
accrue  monthly on the Class A-11 Certificates at  a per annum rate equal to the
weighted average of the Net Mortgage  Interest Rates (as defined herein) of  the
Mortgage Loans as of the first day of such period minus 7.00%, on the Class A-11
Notional  Amount (as defined herein),  less any Non-Supported Interest Shortfall
(as defined in  the Prospectus  Supplement) and  other losses  allocable to  the
Class  A-11  Certificates  as  described  in  the  Prospectus  Supplement  under
"Description of  the Certificates--Interest."  The  Class A  Subclass  Principal
Balance  of the Class A-11 Certificates as of the Determination Date in February
1996 will be approximately $1,000. The Class A Subclass Principal Balance as  of
the  Determination Date in  March 1996 will be  equal to such  balance as of the
Determination Date in February 1996 reduced  by the amount of any  distributions
or  other reductions  of principal  on the  Distribution Date  in February 1996.
Distributions in reduction of the principal balance of the Class A  Certificates
will  be made monthly on each Distribution  Date in an aggregate amount equal to
the Class  A  Principal  Distribution  Amount  (as  defined  in  the  Prospectus
Supplement).  Distributions in reduction of the principal balance of the Class A
Certificates each  month will  be  allocated among  the  Subclasses of  Class  A
Certificates  in  the  manner  described  in  the  Prospectus  Supplement  under
"Description   of   the   Certificates--Principal   (Including    Prepayments)."
Distributions  on  the  Class A-11  Certificates  will  be made  pro  rata among
Certificateholders of  such Subclass  based on  their Percentage  Interests  (as
defined in the Prospectus Supplement).

    This  Supplement does not  contain complete information  regarding the Class
A-11 Certificates and  should be read  only in conjunction  with the  Prospectus
Supplement  and the Prospectus. Sales of the  Class A-11 Certificates may not be
consummated unless the  purchaser has received  this Supplement, the  Prospectus
Supplement  and  the  Prospectus. Capitalized  terms  used herein  that  are not
otherwise defined shall  have the  meanings ascribed thereto  in the  Prospectus
Supplement or the Prospectus, as applicable.

    UNTIL  MAY 7,  1996, ALL  DEALERS EFFECTING  TRANSACTIONS IN  THE CLASS A-11
CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED
TO DELIVER THIS SUPPLEMENT, THE  PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.  THIS
IS  IN ADDITION  TO THE  OBLIGATION OF DEALERS  TO DELIVER  THIS SUPPLEMENT, THE
PROSPECTUS SUPPLEMENT AND THE  PROSPECTUS WHEN ACTING  AS UNDERWRITERS AND  WITH
RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

                                      S1-2
<PAGE>
                                    GENERAL

    The  following is  qualified in  its entirety  by reference  to the detailed
information appearing in the Prospectus  Supplement and in the Prospectus,  both
of  which should be read in  conjunction with this Supplement. Capitalized terms
used in  this Supplement  and not  otherwise defined  herein have  the  meanings
assigned  in  the Prospectus  Supplement  or in  the  Prospectus. See  "Index of
Significant Prospectus Supplement Definitions" in the Prospectus Supplement  and
"Index of Significant Definitions" in the Prospectus.

    The  Series 1993-18 Certificates were issued on May 14, 1993. The Class A-11
Certificates were not offered to the public  at the time of the issuance of  the
Series 1993-18 Certificates.

                    RISK FACTORS AND SPECIAL CONSIDERATIONS

YIELD CONSIDERATIONS

    The  yield  to maturity  of  the Class  A-11  Certificates will  be directly
related to the rate of payments of principal on the Mortgage Loans in the  Trust
Estate,  particularly with respect to those  Mortgage Loans with higher rates of
interest. The rate of principal payments on  the Mortgage Loans will in turn  be
affected  by  the amortization  schedules  of the  Mortgage  Loans, the  rate of
principal prepayments (including  partial prepayments and  those resulting  from
refinancing)  thereon by  mortgagors, liquidations of  defaulted Mortgage Loans,
repurchases  by  the  Seller  of  Mortgage  Loans  as  a  result  of   defective
documentation or breaches of representations and warranties, optional repurchase
by  the Seller of defaulted Mortgage Loans and optional purchase by the Servicer
of all of the  Mortgage Loans in  connection with the  termination of the  Trust
Estate. See "Description of the Mortgage Loans--Optional Repurchase of Defaulted
Mortgage  Loans" and "Pooling and  Servicing Agreement--Optional Termination" in
the Prospectus Supplement and "The Trust Estates--Mortgage Loans--Assignment  of
Mortgage  Loans to the  Trustee," "--Optional Repurchases"  and "The Pooling and
Servicing Agreement--Termination; Purchase of Mortgage Loans" in the Prospectus.
Mortgagors are permitted to prepay the Mortgage  Loans, in whole or in part,  at
any time without penalty.

    The  rate of payments (including prepayments)  on pools of mortgage loans is
influenced by a variety  of economic, geographic, social  and other factors.  If
prevailing  rates for  similar mortgage loans  fall below  the Mortgage Interest
Rates on the Mortgage Loans, the rate of prepayment would generally be  expected
to  increase. Conversely, if interest rates on similar mortgage loans rise above
the Mortgage Interest Rates on the Mortgage Loans, the rate of prepayment  would
generally be expected to decrease.

    The  yield to maturity on the Class A-11 Certificates may be affected by the
geographic concentration  of  the  Mortgaged Properties  securing  the  Mortgage
Loans.  As of  January 17, 1996,  Mortgaged Properties located  in the following
states secured at least 5.00% of  the Aggregate Unpaid Principal Balance of  the
Mortgage  Loans: California (27.26%), Connecticut (12.79%), New Jersey (11.98%),
Pennsylvania (5.76%) and Texas (5.34%). In recent years, California and  several
other  regions in  the United  States have  experienced significant  declines in
housing prices. In addition, California, as  well as certain other regions,  has
experienced  natural disasters, including  earthquakes, hurricanes and flooding,
which may adversely affect property values.  Any direct damage to the  Mortgaged
Properties  caused  by  such  disasters,  deterioration  in  housing  prices  in
California (and  to a  lesser extent  the other  states in  which the  Mortgaged
Properties  are located)  or the  deterioration of  economic conditions  in such
regions which adversely affects the ability of borrowers to make payments on the
Mortgage Loans may increase the likelihood of losses on the Mortgage Loans. Such
losses,  if  they  occur,  may  increase  the  likelihood  of  liquidations  and
prepayments  which may have  an adverse effect  on the yield  to maturity of the
Class A-9 Certificates. See "Description of the Mortgage Loans" herein.

    AN INVESTOR THAT PURCHASES CLASS A-11 CERTIFICATES, WHICH ARE EXPECTED TO BE
OFFERED AT A SUBSTANTIAL  PREMIUM, SHOULD CONSIDER THE  RISK THAT A FASTER  THAN
ANTICIPATED  RATE OF PRINCIPAL PAYMENTS ON THE  MORTGAGE LOANS WILL RESULT IN AN
ACTUAL YIELD THAT IS LOWER THAN SUCH INVESTOR'S EXPECTED YIELD AND MAY RESULT IN
THE FAILURE  OF SUCH  INVESTOR  TO FULLY  RECOVER  ITS INITIAL  INVESTMENT.  See
"Sensitivity  of the Pre-Tax Yield  and Weighted Average Life  of the Class A-11
Certificates" herein and "Prepayment and Yield Considerations" in the Prospectus
Supplement.

                                      S1-3
<PAGE>
RECENT DEVELOPMENTS AFFECTING THE SELLER AND SERVICER

    The  Seller  and  the  Servicer  are  each  either  a  direct  or  indirect,
wholly-owned subsidiary of Residential Services Corporation of America, which is
a  direct,  wholly-owned  subsidiary  of  The  Prudential  Insurance  Company of
America, a mutual insurance company organized under the laws of the State of New
Jersey ("Prudential  Insurance").  On  January 29,  1996,  Prudential  Insurance
announced that it had entered into a definitive agreement (the "Sale Agreement")
to  sell a substantial portion of its residential mortgage operations to Norwest
Mortgage, Inc., a California corporation ("Norwest Mortgage"), and Norwest  Bank
Minnesota  National Association, a national  banking association ("Norwest Bank"
and, collectively with Norwest Mortgage, "Norwest"). In connection therewith, on
the closing date  specified pursuant to  the Sale Agreement  (the "Sale  Date"),
which  is currently expected to be on  or about April 30, 1996, Norwest Mortgage
will acquire from the Servicer substantially  all of its assets and  businesses,
other  than certain mortgage loans and  the Servicer's right to service mortgage
loans underlying  series  of  mortgage  pass-through  certificates  representing
interests in trusts formed by the Seller or by Securitized Asset Sales, Inc., an
affiliate  of the Seller and the Servicer ("SASI"), including the Mortgage Loans
in the  Trust Estate,  and certain  other mortgage  servicing rights  (all  such
servicing  rights  collectively, the  "Retained Servicing").  It is  the present
intention of the Servicer to sell the  Retained Servicing, from time to time  as
market  conditions  warrant,  in  one  or  more  transactions  to  one  or  more
purchasers, which  may include  Norwest Mortgage,  and to  effectively exit  the
mortgage loan origination and servicing business as of the Sale Date.

    In order to assure the performance of the Servicer's obligations as servicer
under  the Pooling and  Servicing Agreement as  well as under  other pooling and
servicing agreements pursuant to which  various series of the Seller's  mortgage
pass-through certificates were issued and other agreements pursuant to which the
Servicer  performs Retained Servicing with  respect to mortgage loans underlying
series of mortgage  pass-through certificates representing  interests in  trusts
formed  by the  Seller or  SASI (each, a  "Servicing Agreement")  and under each
other agreement pursuant to which the Servicer performs Retained Servicing  with
respect  to  mortgage  loans  not  underlying  series  of  mortgage pass-through
certificates representing  interests in  trusts  formed by  the Seller  or  SASI
(each,  an "Other Servicing Agreement"),  the Servicer, Prudential Insurance and
Norwest intend to enter into the following arrangements:

    1.  SUBSERVICING AGREEMENT.  The Servicer, Prudential Insurance and  Norwest
Mortgage   will  enter   into  a   subservicing  agreement   (the  "Subservicing
Agreement"), pursuant to which the  Servicer will delegate to Norwest  Mortgage,
and  Norwest Mortgage will  agree to perform,  all of the  Servicer's duties and
obligations as mortgage loan servicer under the Pooling and Servicing  Agreement
and  each  Servicing Agreement  and Other  Servicing  Agreement, other  than the
Servicer's duties with  respect to  the administration and  disposition of  real
estate   acquired  upon  foreclosure,  which   latter  duties  will  remain  the
responsibility of the Servicer with the particular functions to be delegated  by
the Servicer to Prudential Asset Recovery, Inc., an affiliate of the Seller, the
Servicer,  SASI and Prudential Insurance, or other third party contractors. With
respect to the Series  1993-18 Certificates, such  duties include collection  of
mortgage  payments,  maintenance of  tax  and insurance  escrows,  advancing for
borrower delinquencies and unpaid taxes, to  the extent required by the  Pooling
and  Servicing  Agreement, and  foreclosure or  other realization  activities in
connection with defaulted Mortgage Loans.

    Under the Subservicing Agreement, Norwest Mortgage will be obligated to make
any principal and interest or other advances required to be made by the Servicer
under the  Pooling and  Servicing  Agreement as  well  as under  each  Servicing
Agreement or Other Servicing Agreement, provided that the aggregate unreimbursed
amount  of such advances at any time  does not exceed $100 million. The Servicer
will be  obligated to  reimburse Norwest  Mortgage for  the amount  of any  such
advances,  plus interest, from its own funds. The Servicer will remain obligated
under the Pooling and Servicing Agreement and each Servicing Agreement and Other
Servicing Agreement for  all required  advances which  are not  made by  Norwest
Mortgage for any reason. In order to provide for its obligation to make advances
after  the  Sale  Date, the  Servicer  will  enter into  a  Loan  Agreement with
Prudential Funding Corporation, an affiliate  of the Seller, the Servicer,  SASI
and Prudential Insurance ("Funding"), pursuant to which Funding will provide the
Servicer  with a  committed borrowing  line (the  "Loan Facility")  in an amount
required  by  each  rating  agency  which  has  assigned  ratings  to   mortgage
pass-through  certificates representing interests in trusts formed by the Seller
or SASI, for the  sole purpose of supporting  advances required of the  Servicer
under the Pooling and Servicing Agreement and Servicing Agreements. Although the
Servicer  expects that the combination  of Norwest Mortgage's advance obligation
under   the   Subservicing   Agreement   and   the   Loan   Facility   will   be

                                      S1-4
<PAGE>
adequate  to provide for the continuation of  all such advances, there can be no
assurance that such mechanisms will be  sufficient, or that after the Sale  Date
the  Servicer will  have sufficient  other assets,  to ensure  that all required
advances will be made.

    The Servicer will pay Norwest Mortgage a portion of the Servicer's servicing
compensation under the  Pooling and  Servicing Agreement for  its activities  as
subservicer.  The Subservicing Agreement will have an initial term of five years
from the Sale Date and may be  extended for consecutive three year terms by  the
Servicer,  at its option, provided that the Servicer and Norwest Mortgage agree,
in the exercise of  good faith, on the  subservicing compensation for each  such
renewal  term. The  Subservicing Agreement will  be terminable  by the Servicer,
from time to time, with respect to  any Mortgage Loans as to which the  Servicer
arranges to sell the Retained Servicing.

    2.   CERTIFICATE  ADMINISTRATION AGREEMENT.   The Servicer  and Norwest Bank
will enter  into  an  agreement (the  "Certificate  Administration  Agreement"),
pursuant  to which the Servicer will delegate  to Norwest Bank, and Norwest Bank
will agree  to  perform, all  of  the  Servicer's obligations  with  respect  to
administrative   and  reporting  functions  under   the  Pooling  and  Servicing
Agreement. Such  duties include  calculation of  distributions, preparation  and
filing  of tax returns, preparation of  reports to investors and preparation and
filing of  periodic  reports under  the  Securities  Exchange Act  of  1934,  as
amended.

    The Subservicing Agreement and the Certificate Administration Agreement will
collectively  provide for the delegation of  substantially all of the Servicer's
duties and  obligations under  the Pooling  and Servicing  Agreement. While  the
Pooling  and Servicing Agreement  provides that the  Servicer will remain liable
for  its  obligations  thereunder  until  the  related  Retained  Servicing   is
transferred  in the manner permitted  thereby, from and after  the Sale Date the
Servicer is not  expected to  have any  servicing capability  or employees  with
which to perform such obligations.

    Under  the Pooling  and Servicing  Agreement, the  Seller is  required, with
respect to any Mortgage Loan found to have defective documentation or in respect
of which  the  Seller has  breached  a  representation or  warranty,  either  to
repurchase  such Mortgage  Loan or to  substitute a new  mortgage loan therefor.
Each such Mortgage Loan was, in turn,  acquired by the Seller from the  Servicer
pursuant  to an agreement under which the  Servicer is required to repurchase or
substitute for any such Mortgage Loan  so repurchased or substituted for by  the
Seller.  Although after  the Sale  Date the  Servicer will  continue to  own the
Retained Servicing,  the Servicer  intends  to sell  the Retained  Servicing  as
expeditiously  as  market  conditions  permit.  Accordingly,  there  can  be  no
assurance that  at any  time after  the Sale  Date the  Servicer will  have  any
material  assets with which to  satisfy such obligations to  the Seller. In such
event, the Seller  would be  unable to  fulfill its  repurchase or  substitution
obligations  under the Pooling and Servicing  Agreement. However with respect to
any Mortgage Loan subserviced pursuant to the Subservicing Agreement, Prudential
Insurance will  agree in  the Subservicing  Agreement to  provide the  funds  to
repurchase such Mortgage Loan.

    According to information provided by Norwest Mortgage, at December 31, 1995,
Norwest  Mortgage  was  the  nation's  largest  mortgage  originator  and  had a
servicing portfolio  of  more  than  $107 billion.  In  1995,  Norwest  Mortgage
orginated  over $33 billion of residential  mortgage loans. Headquartered in Des
Moines, Iowa, Norwest Mortgage has more than 700 loan production offices in  all
50 states.

                                      S1-5
<PAGE>
                        DESCRIPTION OF THE CERTIFICATES

    The   Class  A-11  Certificates   will  be  offered   in  fully  registered,
certificated form in  minimum denominations  of $74,000,000  initial Class  A-11
Notional  Amount;  provided, however  that the  Class  A-11 Certificates  may be
issued in minimum denominations of $3,700,000 initial Class A-11 Notional Amount
to persons who  deliver to the  Trustee an affidavit  stating that such  person;
(a)(i)  is a substantial, sophisticated, institutional investor having knowledge
and experience in  financial and  business matters,  and in  particular in  such
matters  related to securities similar to the Class A-11 Certificates, such that
such investor is capable of evaluating the merits and risks of an investment  in
the  Class A-11 Certificates, and (ii) has  a net worth of at least $10,000,000;
or (b) will  hold the Class  A-11 Certificates  solely as nominee  for a  person
meeting the criteria set forth in clause (a). The Class A-11 Certificates may be
issued  in any amounts in excess of  any such minimum denominations. The Class A
Subclass  Principal  Balance  of   the  Class  A-11   Certificates  as  of   the
Determination  Date in February  1996 will be approximately  $1,000. The Class A
Subclass  Principal  Balance  of   the  Class  A-11   Certificates  as  of   the
Determination  Date  in March  1996  will be  equal to  such  balance as  of the
Determination Date in February  1996 reduced by the  amount of distributions  or
other reductions of principal on the Distribution Date in February 1996.

    Distributions  of interest and in reduction  of principal balance to holders
of Class A-11 Certificates will be made monthly, to the extent of such Subclass'
entitlement thereto, on  the 25th day  of each month  or, if such  day is not  a
business  day, on  the succeeding  business day  (each, a  "Distribution Date"),
beginning in March 1996.

    Distributions (other than the final distribution in retirement of the  Class
A-11  Certificates, as described  in the Prospectus Supplement)  will be made by
check mailed to the address of the person entitled thereto as it appears on  the
Certificate  Register.  However,  with  respect  to  any  holder  of  Class A-11
Certificates evidencing at least a  25% Percentage Interest, distributions  will
be  made  on the  Distribution Date  by wire  transfer in  immediately available
funds, provided that the Servicer, or the  paying agent acting on behalf of  the
Servicer,  shall have  been furnished  with appropriate  wiring instructions not
less than seven business days prior to the related Distribution Date.

    The Class A-11 Certificates will be entitled to a distribution in respect of
interest each month in an amount up to such Subclass' Class A Subclass  Interest
Accrual  Amount. The Class A Subclass Interest Accrual Amount for the Class A-11
Certificates will equal the product of (i) 1/12th of the difference between  (a)
the  weighted average of the  Net Mortgage Interest Rates  of the Mortgage Loans
(based on the  Scheduled Principal  Balances of the  Mortgage Loans  as of  such
Distribution Date) and (b) 7.00% and (ii) the Class A-11 Notional Amount.

    The Class A Subclass Interest Accrual Amount for the Class A-11 Certificates
will  be  reduced by  the portion  of (i)  any Non-Supported  Interest Shortfall
allocable to  such Subclass  and (ii)  the interest  portion of  Excess  Special
Hazard  Losses, Excess  Fraud Losses and  Excess Bankruptcy  Losses allocable to
such Subclass as described under "Description of the Certificates--Interest"  in
the Prospectus Supplement.

    The  "Net Mortgage  Interest Rate"  on each  Mortgage Loan  is equal  to the
Mortgage Interest Rate on such Mortgage  Loan as stated in the related  Mortgage
Note minus the Servicing Fee rate of 0.20% per annum. See "Pooling and Servicing
Agreement--Servicing  Compensation and  Payment of  Expenses" in  the Prospectus
Supplement.

    The "Class A-11 Notional Amount" with respect to each Distribution Date will
be equal to the Pool Scheduled Principal Balance, as defined under  "Description
of  the  Certificates--Principal  (Including  Prepayments)"  in  the  Prospectus
Supplement, as of such  Distribution Date. The Class  A-11 Notional Amount  with
respect to the Distribution Date in January 1996 was approximately $146,002,846.
The  Class A-11 Notional Amount  with respect to the  Distribution Date in March
1996 will  be equal  to  the Class  A-11 Notional  Amount  with respect  to  the
Distribution  Date  in  January  1996,  less  the  difference  between  the Pool
Scheduled Principal Balance  with respect  to the Distribution  Date in  January
1996  and the Pool Scheduled Principal  Balance with respect to the Distribution
Date in March  1996. A  notional amount  does not  entitle a  holder to  receive
distributions  of principal on the basis of  such notional amount, but is solely
used for the purpose of computing the amount of interest accrued on a  Subclass.
The initial Class A-11 Notional Amount was approximately $224,156,291.

    The  Prospectus Supplement and the Prospectus contain significant additional
information concerning  the  characteristics  of the  Class  A-11  Certificates.
Investors  are urged to read "Description of the Certificates" in the Prospectus
Supplement and in the Prospectus.

                                      S1-6
<PAGE>
                       DESCRIPTION OF THE MORTGAGE LOANS

    As  of January 17, 1996, the Mortgage Loans in the Trust Estate consisted of
fixed interest  rate,  conventional,  monthly pay,  fully  amortizing,  one-  to
four-family, residential first mortgage loans originated or acquired by PHMC for
its  own account  or for the  account of  an affiliate having  original terms to
stated maturity of approximately 30 years.  The "Unpaid Principal Balance" of  a
Mortgage  Loan as of January 17, 1996 is its unpaid principal balance as of such
date assuming  no delinquencies.  As of  January 17,  1996, the  Mortgage  Loans
included 525 promissory notes, having an aggregate Unpaid Principal Balance (the
"Aggregate  Unpaid Principal Balance") of approximately $143,850,539, secured by
first liens (the "Mortgages") on one- to four-family residential properties (the
"Mortgaged Properties")  and  having the  additional  characteristics  described
below and in the Prospectus.

    No Mortgage Loan is a Buy-Down Loan. See "The Trust Estates--Mortgage Loans"
in the Prospectus.

    Each  of the Mortgage Loans is subject to a due-on-sale clause. See "Certain
Legal Aspects of the Mortgage Loans--'Due-on-Sale' Clause" and "Servicing of the
Mortgage Loans--Enforcement of Due-on-Sale  Clauses; Realization Upon  Defaulted
Mortgage Loans" in the Prospectus.

    As  of January 17, 1996, each Mortgage  Loan had an Unpaid Principal Balance
of not less than $39,478 or more than $827,272, and the average Unpaid Principal
Balance of  the Mortgage  Loans was  approximately $274,001.  The latest  stated
maturity  date of any of the Mortgage Loans was May 1, 2023; however, the actual
date on which any Mortgage Loan is paid  in full may be earlier than the  stated
maturity  date due  to unscheduled payments  of principal.  Based on information
supplied by  the  mortgagors  in  connection with  their  loan  applications  at
origination,  all  of  the  Mortgaged  Properties  were  owner  occupied primary
residences. See "PHMC--Mortgage Loan Underwriting" in the Prospectus.

    All of the Mortgage Loans are Relocation Mortgage Loans. Relocation Mortgage
Loans are  mortgage  loans  originated  in connection  with  the  relocation  of
employees  of  various corporate  employers  participating in  PHMC's relocation
program  ("Sponsored  Relocation  Loans")  and  mortgage  loans  originated   in
connection  with the  relocation of employees  whose employers  generally do not
participate in  PHMC's relocation  program ("Non-sponsored  Relocation  Loans").
Non-sponsored Relocation Loans are generated as a result of the referral of loan
applicants  to PHMC  by various  mortgage brokers  and similar  entities and the
acquisition of  mortgage  loans by  PHMC  from various  other  originators.  See
"PHMC--Mortgage  Loan Production Sources"  in the Prospectus.  The persons being
relocated may be existing or newly hired employees. The Seller has not verified,
and makes  no representation  as to,  whether any  individual mortgagor  of  any
Relocation Mortgage Loan continues to be employed by the same employer as at the
time  of  origination.  As of  January  17,  1996, 307  of  the  Mortgage Loans,
representing approximately 56.02% of the  Aggregate Unpaid Principal Balance  of
the  Mortgage Loans,  were Sponsored Relocation  Loans, and 218  of the Mortgage
Loans, representing  approximately  43.98%  of the  Aggregate  Unpaid  Principal
Balance of the Mortgage Loans, were Non-sponsored Relocation Loans.

    As of January 17, 1996, 61 of the Mortgage Loans, representing approximately
11.50%  of the  Aggregate Unpaid Principal  Balance of the  Mortgage Loans, were
subject  to   subsidy   agreements,   which,  except   under   certain   limited
circumstances,  require the employers of the mortgagors to make a portion of the
payments on the related Mortgage Loans ("Subsidy Loans") for specified  periods.
All  of the Subsidy Loans are Sponsored Relocation Loans. The subsidy agreements
relating to Subsidy Loans  generally provide that monthly  payments made by  the
related  mortgagors will  be less  than the  scheduled monthly  payments on such
Mortgage Loans, with the present value  of the resulting difference in  payments
being  provided by the employers  of the mortgagors in  advance, generally on an
annual basis.  The Subsidy  Loans  are offered  by employers  generally  through
either  a graduated or fixed subsidy loan program, or a combination thereof. See
"The Trust Estates--Mortgage Loans" in the Prospectus. The effective  subsidized
rates  under  the various  programs  offered generally  range  from one  to five
percentage points  below the  interest rate  specified in  the related  mortgage
note. These subsidized rates are used to calculate the applicable debt-to-income
ratios  that are used to evaluate the creditworthiness of prospective borrowers.
This procedure may enable certain mortgagors who otherwise would not meet PHMC's
underwriting guidelines  to obtain  mortgage loans.  See "Prepayment  and  Yield
Considerations"   in  the  Prospectus  Supplement   and  "PHMC--  Mortgage  Loan
Underwriting" in the Prospectus.

                                      S1-7
<PAGE>
    Subsidy accounts paid by the employers  have been deposited by the  Servicer
in  an account (the "Subsidy Account") maintained  by the Servicer, which is not
part of the Trust Estate, or the Upper-Tier REMIC or the Lower-Tier REMIC. Funds
in the Subsidy Account with  respect to each Subsidy  Loan will be withdrawn  by
the  Servicer  and deposited  in  the Certificate  Account  on the  business day
following the receipt  by the  Servicer of  the mortgagor's  monthly payment  to
which  such funds relate. Funds in the Subsidy Account with respect to a Subsidy
Loan will not be withdrawn by the Servicer, and are not permitted to be  applied
under  the related  subsidy agreement, during  any period in  which such Subsidy
Loan is  in  default.  Despite  the existence  of  the  subsidy  agreement,  the
mortgagor  remains liable for  making all scheduled payments  on a Subsidy Loan.
From time to  time, the amount  of a subsidy  payment or the  term of a  subsidy
agreement  may, upon the request of a  corporate employer, be modified. See "The
Trust Estates--Mortgage Loans" in the Prospectus.

                                      S1-8
<PAGE>
    Set forth below is  a description of  certain additional characteristics  of
the Mortgage Loans as of January 17, 1996 (except as otherwise indicated).

                            MORTGAGE INTEREST RATES

<TABLE>
<CAPTION>
                                                                       PERCENTAGE OF
                                                         AGGREGATE       AGGREGATE
                                          NUMBER OF       UNPAID           UNPAID
                                          MORTGAGE       PRINCIPAL       PRINCIPAL
MORTGAGE INTEREST RATES                     LOANS         BALANCE         BALANCE
- ----------------------------------------  ---------   ---------------  --------------
<S>                                       <C>         <C>              <C>
7.250%..................................      32      $  8,386,095.56        5.83   %
7.375%..................................      58        16,386,477.47       11.39
7.500%..................................      74        20,999,090.34       14.60
7.625%..................................      74        20,265,744.80       14.09
7.750%..................................      69        18,295,235.68       12.72
7.875%..................................      55        15,011,499.87       10.44
8.000%..................................      53        14,779,635.67       10.27
8.125%..................................      43        11,197,859.81        7.78
8.250%..................................      22         6,035,321.83        4.20
8.375%..................................      20         5,725,727.96        3.98
8.500%..................................      14         4,104,061.07        2.85
8.625%..................................       4           878,502.99        0.61
8.750%..................................       5         1,284,306.08        0.89
9.000%..................................       1           281,850.36        0.20
9.250%..................................       1           219,129.64        0.15
                                             ---      ---------------     -------
        Total...........................     525      $143,850,539.13      100.00   %
                                             ---      ---------------     -------
                                             ---      ---------------     -------
</TABLE>

As  of January  17, 1996,  the weighted  average Mortgage  Interest Rate  of the
Mortgage Loans was  approximately 7.778%  per annum. The  Net Mortgage  Interest
Rate  of  each Mortgage  Loan is  equal to  the Mortgage  Interest Rate  of such
Mortgage Loan minus the Servicing Fee rate of 0.20% per annum. As of January 17,
1996, the weighted average Net Mortgage Interest Rate of the Mortgage Loans  was
approximately 7.578% per annum.

                      REMAINING MONTHS TO STATED MATURITY

<TABLE>
<CAPTION>
                                                                       PERCENTAGE OF
                                                         AGGREGATE       AGGREGATE
                                          NUMBER OF       UNPAID           UNPAID
                                          MORTGAGE       PRINCIPAL       PRINCIPAL
REMAINING STATED TERM (MONTHS)              LOANS         BALANCE         BALANCE
- ----------------------------------------  ---------   ---------------  --------------
<S>                                       <C>         <C>              <C>
318.....................................       1      $    337,729.47        0.23   %
319.....................................       1           240,842.11        0.17
320.....................................       7         1,787,304.54        1.24
321.....................................       6         1,625,075.04        1.13
322.....................................       7         2,038,401.17        1.42
323.....................................      17         4,414,948.25        3.07
324.....................................      45        11,940,604.97        8.30
325.....................................     108        28,434,256.39       19.77
326.....................................     117        33,561,131.53       23.33
327.....................................     166        44,857,397.61       31.18
328.....................................      50        14,612,848.05       10.16
                                             ---      ---------------     -------
        Total...........................     525      $143,850,539.13      100.00   %
                                             ---      ---------------     -------
                                             ---      ---------------     -------
</TABLE>

As  of January 17, 1996, the weighted  average remaining term to stated maturity
of the Mortgage Loans was approximately 326 months.

                                      S1-9
<PAGE>
                              YEARS OF ORIGINATION

<TABLE>
<CAPTION>
                                                                       PERCENTAGE OF
                                                         AGGREGATE       AGGREGATE
                                          NUMBER OF       UNPAID           UNPAID
                                          MORTGAGE       PRINCIPAL       PRINCIPAL
YEAR OF ORIGINATION                         LOANS         BALANCE         BALANCE
- ----------------------------------------  ---------   ---------------  --------------
<S>                                       <C>         <C>              <C>
1992....................................      84      $ 22,384,905.55       15.56   %
1993....................................     441       121,465,633.58       84.44
                                             ---      ---------------     -------
        Total...........................     525      $143,850,539.13      100.00   %
                                             ---      ---------------     -------
                                             ---      ---------------     -------
</TABLE>

As of  January 17,  1996, the  earliest month  and year  of origination  of  any
Mortgage Loan was March 1992 and the latest month and year of origination of any
Mortgage Loan was April 1993.

                         ORIGINAL LOAN-TO-VALUE RATIOS

<TABLE>
<CAPTION>
                                                                       PERCENTAGE OF
                                                         AGGREGATE       AGGREGATE
                                          NUMBER OF       UNPAID           UNPAID
                                          MORTGAGE       PRINCIPAL       PRINCIPAL
ORIGINAL LOAN-TO-VALUE RATIO                LOANS         BALANCE         BALANCE
- ----------------------------------------  ---------   ---------------  --------------
<S>                                       <C>         <C>              <C>
50.0% or less...........................      10      $  1,762,928.98        1.23   %
50.1-55.0%..............................       8         2,206,900.23        1.53
55.1-60.0%..............................      13         3,428,892.61        2.38
60.1-65.0%..............................      16         4,986,597.75        3.47
65.1-70.0%..............................      27         8,027,305.52        5.58
70.1-75.0%..............................      46        12,737,087.03        8.85
75.1-80.0%..............................     239        68,354,185.44       47.52
80.1-85.0%..............................      23         5,096,078.03        3.54
85.1-90.0%..............................     143        37,250,563.54       25.90
                                             ---      ---------------     -------
        Total...........................     525      $143,850,539.13      100.00   %
                                             ---      ---------------     -------
                                             ---      ---------------     -------
</TABLE>

As  of  January  17,  1996,  the minimum  and  maximum  Loan-to-Value  Ratios at
origination of the Mortgage  Loans were 29.9% and  90.0%, respectively, and  the
weighted  average Loan-to-Value Ratio  at origination of  the Mortgage Loans was
approximately 78.9%. The Loan-to-Value  Ratio of a  Mortgage Loan is  calculated
using  the lesser of (i) the appraised  value of the related Mortgaged Property,
as established by an appraisal obtained  by the originator from an appraiser  at
the  time of  origination and  (ii) the  sale price  for such  property. In some
instances, the  Loan-to-Value  Ratio may  be  based  on an  appraisal  that  was
obtained  by the originator more than four months prior to origination, provided
that (i) a recertification  of the original appraisal  is obtained and (ii)  the
original appraisal was obtained no more than twelve months prior to origination.
For the purpose of calculating the Loan-to-Value Ratio of any Mortgage Loan that
is  the result of the refinancing (including a refinancing for "equity take-out"
purposes) of  an existing  mortgage loan,  the appraised  value of  the  related
Mortgaged Property is generally determined by reference to an appraisal obtained
in  connection  with the  origination of  the replacement  loan. See  "The Trust
Estates-- Mortgage Loans" in the Prospectus. As of January 17, 1996, 127 of  the
Mortgage  Loans having  Loan-to-Value Ratios  at origination  in excess  of 80%,
representing approximately 22.45% of the  Aggregate Unpaid Principal Balance  of
the  Mortgage  Loans, were  originated without  primary mortgage  insurance. See
"PHMC--Mortgage Loan Underwriting" in the Prospectus.

                                     S1-10
<PAGE>
                       MORTGAGE LOAN DOCUMENTATION LEVELS

<TABLE>
<CAPTION>
                                                                       PERCENTAGE OF
                                                         AGGREGATE       AGGREGATE
                                          NUMBER OF       UNPAID           UNPAID
                                          MORTGAGE       PRINCIPAL       PRINCIPAL
DOCUMENTATION LEVELS                        LOANS         BALANCE         BALANCE
- ----------------------------------------  ---------   ---------------  --------------
<S>                                       <C>         <C>              <C>
Full Documentation......................     334      $ 93,359,616.88       64.91   %
Asset & Income Verification.............       1           360,077.28        0.25
Asset & Mortgage Verification...........      66        16,904,870.57       11.75
Income & Mortgage Verification..........       0                 0.00        0.00
Asset Verification......................       0                 0.00        0.00
Income Verification.....................       1           178,022.63        0.12
Mortgage Verification...................     118        31,765,972.21       22.08
Preferred Processing....................       5         1,281,979.56        0.89
                                             ---      ---------------     -------
        Total...........................     525      $143,850,539.13      100.00   %
                                             ---      ---------------     -------
                                             ---      ---------------     -------
</TABLE>

Documentation levels vary depending upon several factors, including loan amount,
Loan-to-Value Ratio and the type and purpose of the Mortgage Loan. Asset, income
and mortgage verifications were obtained for Mortgage Loans processed with "full
documentation." In the case of "preferred processing," neither asset, income nor
mortgage verifications were obtained.  However, for all  of the Mortgage  Loans,
verification of the borrower's employment, a credit report on the borrower and a
property  appraisal were obtained. See "PHMC--Mortgage Loan Underwriting" in the
Prospectus.

                   ORIGINAL MORTGAGE LOAN PRINCIPAL BALANCES

<TABLE>
<CAPTION>
                                                                       PERCENTAGE OF
                                                         AGGREGATE       AGGREGATE
                ORIGINAL                  NUMBER OF       UNPAID           UNPAID
             MORTGAGE LOAN                MORTGAGE       PRINCIPAL       PRINCIPAL
           PRINCIPAL BALANCE                LOANS         BALANCE         BALANCE
          --------------------            ---------   ---------------  --------------
<S>                                       <C>         <C>              <C>
Less than or equal to $200,000..........      27      $  3,372,178.88        2.34   %
$200,001-$250,000.......................     200        44,360,240.94       30.85
$250,001-$300,000.......................     140        36,916,483.23       25.66
$300,001-$350,000.......................      58        18,244,783.00       12.68
$350,001-$400,000.......................      59        21,422,055.39       14.89
$400,001-$450,000.......................      17         7,098,956.45        4.93
$450,001-$500,000.......................       9         4,002,504.43        2.78
$500,001-$550,000.......................       7         3,575,922.78        2.49
$550,001-$600,000.......................       6         3,437,525.64        2.39
$600,001-$650,000.......................       1           592,617.01        0.41
$800,001-$850,000.......................       1           827,271.38        0.58
                                             ---      ---------------     -------
        Total...........................     525      $143,850,539.13      100.00   %
                                             ---      ---------------     -------
                                             ---      ---------------     -------
</TABLE>

As of January  17, 1996, the  average Unpaid Principal  Balance of the  Mortgage
Loans  was approximately $274,001. As of  January 17, 1996, the weighted average
Loan-to-Value Ratio  at  origination  and the  maximum  Loan-to-Value  Ratio  at
origination  of  the Mortgage  Loans which  had  original principal  balances in
excess of $600,000 were  approximately 76.3% and  77.2%, respectively. See  "The
Trust  Estates--Mortgage Loans"  and "PHMC--Mortgage  Loan Underwriting"  in the
Prospectus.

                                     S1-11
<PAGE>
                              MORTGAGED PROPERTIES

<TABLE>
<CAPTION>
                                                                       PERCENTAGE OF
                                                         AGGREGATE       AGGREGATE
                                          NUMBER OF       UNPAID           UNPAID
                                          MORTGAGE       PRINCIPAL       PRINCIPAL
PROPERTY                                    LOANS         BALANCE         BALANCE
- ----------------------------------------  ---------   ---------------  --------------
<S>                                       <C>         <C>              <C>
Single-family Detached..................     513      $140,927,421.63       97.97   %
Two- to four-family Units...............       0                 0.00        0.00
Condominiums............................      10         2,516,028.30        1.75
Cooperative Units.......................       0                 0.00        0.00
Townhouses..............................       1           121,550.95        0.08
Planned Unit Developments...............       1           285,538.25        0.20
                                             ---      ---------------     -------
        Total...........................     525      $143,850,539.13      100.00   %
                                             ---      ---------------     -------
                                             ---      ---------------     -------
</TABLE>

                                     S1-12
<PAGE>
                GEOGRAPHIC DISTRIBUTION OF MORTGAGED PROPERTIES

<TABLE>
<CAPTION>
                                                                       PERCENTAGE OF
                                                         AGGREGATE       AGGREGATE
                                          NUMBER OF       UNPAID           UNPAID
                                          MORTGAGE       PRINCIPAL       PRINCIPAL
GEOGRAPHIC AREA                             LOANS         BALANCE         BALANCE
- ----------------------------------------  ---------   ---------------  --------------
<S>                                       <C>         <C>              <C>
Arizona.................................       3      $    892,236.04        0.62   %
California..............................     127        39,221,424.52       27.26
Colorado................................       8         1,663,428.10        1.16
Connecticut.............................      61        18,399,525.93       12.79
Delaware................................       2           421,285.24        0.29
District of Columbia....................       2           528,747.01        0.37
Florida.................................      18         4,318,015.28        3.00
Georgia.................................      22         5,338,945.16        3.71
Illinois................................      24         6,426,466.36        4.47
Indiana.................................       4           914,405.32        0.64
Kentucky................................       1           218,905.40        0.15
Louisiana...............................       1           271,855.87        0.19
Maryland................................      12         3,231,053.07        2.25
Massachusetts...........................      23         6,569,919.75        4.57
Michigan................................       5         1,276,916.20        0.89
Minnesota...............................       5           994,909.45        0.69
Missouri................................       1           220,340.55        0.15
Montana.................................       1           205,283.62        0.14
Nevada..................................       1           281,850.36        0.20
New Jersey..............................      67        17,236,884.70       11.98
New York................................      18         4,462,242.72        3.10
North Carolina..........................      13         3,052,934.93        2.12
Ohio....................................       8         2,033,537.74        1.41
Oklahoma................................       1           204,549.60        0.14
Oregon..................................       2           503,734.94        0.35
Pennsylvania............................      31         8,286,469.68        5.76
Tennessee...............................       3           815,671.01        0.57
Texas...................................      29         7,680,786.47        5.34
Utah....................................       3           726,325.59        0.50
Virginia................................      19         5,043,155.32        3.51
Washington..............................       8         1,955,334.06        1.36
Wisconsin...............................       2           453,399.14        0.32
                                             ---      ---------------     -------
        Total...........................     525      $143,850,539.13      100.00   %
                                             ---      ---------------     -------
                                             ---      ---------------     -------
</TABLE>

As of January 17, 1996, no more than approximately 2.03% of the Aggregate Unpaid
Principal Balance  of the  Mortgage Loans  was secured  by Mortgaged  Properties
located in any one zip code.

                                     S1-13
<PAGE>
                         ORIGINATORS OF MORTGAGE LOANS

<TABLE>
<CAPTION>
                                                                       PERCENTAGE OF
                                                         AGGREGATE       AGGREGATE
                                          NUMBER OF       UNPAID           UNPAID
                                          MORTGAGE       PRINCIPAL       PRINCIPAL
ORIGINATOR                                  LOANS         BALANCE         BALANCE
- ----------------------------------------  ---------   ---------------  --------------
<S>                                       <C>         <C>              <C>
PHMC or Affiliate.......................     383      $103,004,491.10       71.61   %
Other Originators.......................     142        40,846,048.03       28.39
                                             ---      ---------------     -------
        Total...........................     525      $143,850,539.13      100.00   %
                                             ---      ---------------     -------
                                             ---      ---------------     -------
</TABLE>

                           PURPOSES OF MORTGAGE LOANS

<TABLE>
<CAPTION>
                                                                       PERCENTAGE OF
                                                         AGGREGATE       AGGREGATE
                                          NUMBER OF       UNPAID           UNPAID
                                          MORTGAGE       PRINCIPAL       PRINCIPAL
LOAN PURPOSE                                LOANS         BALANCE         BALANCE
- ----------------------------------------  ---------   ---------------  --------------
<S>                                       <C>         <C>              <C>
Purchase................................     525      $143,850,539.13      100.00   %
                                             ---      ---------------     -------
        Total...........................     525      $143,850,539.13      100.00   %
                                             ---      ---------------     -------
                                             ---      ---------------     -------
</TABLE>

                             SUBSIDY LOAN PROGRAMS

<TABLE>
<CAPTION>
                                                                     PERCENTAGE OF
                                                       AGGREGATE       AGGREGATE
                                         NUMBER OF       UNPAID          UNPAID
                                         MORTGAGE      PRINCIPAL       PRINCIPAL
PROGRAM AND TERM                           LOANS        BALANCE         BALANCE
- ---------------------------------------  ---------   --------------  --------------
<S>                                      <C>         <C>             <C>
Fixed (five years or longer)...........      0       $         0.00        0.00   %
  (less than five years)...............      0                 0.00        0.00
Graduated (five years or longer).......     27         6,932,786.81        4.82
  (less than five years)...............     34         9,613,836.14        6.68
Combination (five years or longer).....      0                 0.00        0.00
  (less than five years)...............      0                 0.00        0.00
                                            --
                                                     --------------     -------
        Total..........................     61       $16,546,622.95       11.50   %
                                            --
                                            --
                                                     --------------     -------
                                                     --------------     -------
</TABLE>

As  of January 17,  1996, no Subsidy Loan  had a subsidy  agreement which had an
original term of less than two years or more than ten years.

                               DELINQUENCY STATUS

<TABLE>
<CAPTION>
                                                                      PERCENTAGE OF
                                                                        AGGREGATE
                                                         ACTUAL          UNPAID
                                          NUMBER OF      UNPAID         PRINCIPAL
                                           MORTGAGE     PRINCIPAL    BALANCE OF THE
STATUS                                     LOANS(1)    BALANCE(1)   MORTGAGE LOANS(2)
- ----------------------------------------  ----------   -----------  -----------------
<S>                                       <C>          <C>          <C>
30 to 59 days...........................       1       $112,353.04              0.08%
60 to 89 days...........................       0              0.00              0.00
90 days or more.........................       0              0.00              0.00
Loans in Foreclosure....................       0              0.00              0.00
REO Mortgage Loans......................       1        248,361.80              0.17
                                               -
                                                       -----------               ---
        Total...........................       2       $360,714.84              0.25%
                                               -
                                               -
                                                       -----------               ---
                                                       -----------               ---
</TABLE>

- ------------
(1) Reflects the  number of  delinquent  Mortgage Loans  and the  actual  unpaid
    principal  balances of such Mortgage Loans based on information available to
    the Servicer as of January 17, 1996.

(2) As of January 17, 1996.

The indicated periods of delinquency are based  on the number of days past  due,
based  on a 30-day  month. No Mortgage  Loan is considered  delinquent for these
purposes until one month has passed since its contractual due date.

                                     S1-14
<PAGE>
    On January  17, 1994,  southern California  experienced an  earthquake  (the
"Earthquake")  and  thereafter  a number  of  aftershocks.  As a  result  of the
Earthquake, Los Angeles  and Ventura Counties  (the "Earthquake Counties")  were
declared  federal disaster  areas eligible  for federal  disaster assistance. In
addition to the Earthquake  Counties, other counties may  have been affected  by
the  Earthquake. As  of January 17,  1996, approximately 7.12%  of the Aggregate
Unpaid Principal  Balance  of  the  Mortgage  Loans  was  secured  by  Mortgaged
Properties  that  are located  in the  Earthquake Counties.  The Seller  has not
undertaken the physical  inspection of  any Mortgaged Properties.  As a  result,
there  can be no assurance that material damage to any Mortgaged Property in the
affected region has not occurred.

    As of January 16, 1995 and March 16,  1995, as a result of flooding, 38  and
49  counties in California, respectively, (the "January 1995 Flood Counties" and
"March 1995  Flood  Counties,"  respectively,  and  together,  the  "1995  Flood
Counties")  were declared federal  disaster areas eligible  for federal disaster
assistance. As of January 17, 1996, approximately 27.05% of the Aggregate Unpaid
Principal Balance of the Mortgage Loans was secured by Mortgaged Properties that
are located in the January 1995  Flood Counties and approximately 20.52% of  the
Aggregate  Unpaid  Principal  Balance  of  the  Mortgage  Loans  was  secured by
Mortgaged Properties that  are located  in the  March 1995  Flood Counties.  The
Seller  has not undertaken the physical  inspection of any Mortgaged Properties.
As a result, there  can be no  assurance that material  damage to any  Mortgaged
Property in the affected region has not occurred.

    As  of  October 12,  1995, as  a  result of  a hurricane  affecting Georgia,
Alabama and  Florida (the  "Hurricane"), 28,  20 and  11 counties,  in  Georgia,
Alabama  and  Florida, respectively  (the  "Hurricane Counties"),  were declared
federal disaster areas eligible for  federal disaster assistance. As of  January
17,  1996, 3.42% of the Aggregate Unpaid Principal Balance of the Mortgage Loans
was secured by Mortgage Properties that  are located in the Hurricane  Counties.
The  Seller  has  not  undertaken  the  physical  inspection  of  any  Mortgaged
Properties. As a result, there can be  no assurance that material damage to  any
Mortgaged Property in the affected region has not occurred.

    As  of February 1, 1996, as a result of recent flooding (the "1996 Floods"),
all counties of the Commonwealth of  Pennsylvania, all counties in the State  of
Maryland, 25 counties in the State of New York, 21 counties in the State of West
Virginia,  6 counties in the State of Ohio and 5 counties in the Commonwealth of
Virginia (the  "1996  Flood  Counties") were  declared  federal  disaster  areas
eligible  for federal disaster assistance. As of January 17, 1996, approximately
8.52% of  the Aggregate  Unpaid  Principal Balance  of  the Mortgage  Loans  was
secured  by Mortgaged Properties that are located in the 1996 Flood Counties. In
addition, other  counties may  have been  and may  become affected  by the  1996
Floods.  The Seller has not undertaken  the physical inspection of any Mortgaged
Properties. As a result, there can be  no assurance that material damage to  any
Mortgaged Property in the affected region has not occurred.

    Based  on information available to the Servicer  as of January 17, 1996, one
of the  delinquent Mortgage  Loans  shown in  the preceding  table  representing
approximately  0.17% of the  Aggregate Unpaid Principal  Balance of the Mortgage
Loans or approximately $248,362, was secured by a Mortgaged Property located  in
the Earthquake Counties, the Hurricane Counties, the 1995 Flood Counties, or the
1996 Flood Counties.

              ORIGINATION, DELINQUENCY AND FORECLOSURE EXPERIENCE

    During  the years ended December 31, 1993 and December 31, 1994 and the nine
months ended  September 30,  1995, PHMC  originated or  purchased, for  its  own
account  or for the account of  an affiliate, conventional mortgage loans having
an aggregate principal balance of approximately $35,805,498,813, $16,201,648,701
and $8,078,459,769, respectively.

    Certain information concerning PHMC's delinquency, foreclosure and loan loss
experience on  certain  categories of  the  mortgage loans  included  in  PHMC's
mortgage  loan  servicing  portfolio  for the  years  ended  December  31, 1991,
December 31, 1992  and the three  months ended March  31, 1993 is  set forth  in
"Origination,    Delinquency   and   Foreclosure   Experience--Delinquency   and
Foreclosure Experience" in the Prospectus  Supplement. The following tables  set
forth  such information as of December 31, 1993, December 31, 1994 and September
30, 1995.

                                     S1-15
<PAGE>
                              TOTAL PROGRAM LOANS

<TABLE>
<CAPTION>
                           AS OF                   AS OF                   AS OF
                     DECEMBER 31, 1993       DECEMBER 31, 1994       SEPTEMBER 30, 1995
                   ----------------------  ----------------------  ----------------------
                               BY DOLLAR               BY DOLLAR               BY DOLLAR
                    BY NO.      AMOUNT      BY NO.      AMOUNT      BY NO.      AMOUNT
                   OF LOANS    OF LOANS    OF LOANS    OF LOANS    OF LOANS    OF LOANS
                   --------   -----------  --------   -----------  --------   -----------
<S>                <C>        <C>          <C>        <C>          <C>        <C>
                                       (DOLLAR AMOUNTS IN THOUSANDS)

Total Portfolio
 of Program
 Loans...........   337,156   $57,687,887   379,075   $62,175,544   415,103   $64,820,412
                   --------   -----------  --------   -----------  --------   -----------
                   --------   -----------  --------   -----------  --------   -----------
Period of
 Delinquency(1)
  30 to 59
  days...........     3,190   $   489,235     3,548   $   548,524     4,036   $   563,777
  60 to 89
  days...........       703       109,529       797       128,053       899       134,115
  90 days or
  more...........     1,398       271,637     1,418       308,124     1,086       190,010
                   --------   -----------  --------   -----------  --------   -----------
Total Delinquent
 Loans...........     5,291   $   870,401     5,763   $   984,701     6,021   $   887,902
                   --------   -----------  --------   -----------  --------   -----------
                   --------   -----------  --------   -----------  --------   -----------
Percent of
 Portfolio.......      1.57%         1.51%     1.52%         1.58%     1.45%         1.37%
</TABLE>
<TABLE>
<CAPTION>
                               AS OF                AS OF                AS OF
                         DECEMBER 31, 1993    DECEMBER 31, 1994    SEPTEMBER 30, 1995
                         ------------------   ------------------   ------------------
<S>                      <C>                  <C>                  <C>
                                        (DOLLAR AMOUNTS IN THOUSANDS)

Foreclosures(2)........  $     277,533        $     354,028        $     340,162
Foreclosure Ratio(3)...           0.48%                0.57%                0.52%

<CAPTION>

                             YEAR ENDED           YEAR ENDED       NINE MONTHS ENDED
                         DECEMBER 31, 1993    DECEMBER 31, 1994    SEPTEMBER 30, 1995
                         ------------------   ------------------   ------------------
                                        (DOLLAR AMOUNTS IN THOUSANDS)
<S>                      <C>                  <C>                  <C>

Net Gain (Loss)(4).....  $    (112,510)       $    (194,940)       $    (118,939)
Net Gain (Loss)
 Ratio(5)..............          (0.20)%              (0.31)%              (0.18)%
</TABLE>

- -------------
(1) The indicated periods of  delinquency are based on  the number of days  past
    due,  based on a 30-day month. No mortgage loan is considered delinquent for
    these purposes until one month has passed since its contractual due date.  A
    mortgage   loan  is   no  longer  considered   delinquent  once  foreclosure
    proceedings have commenced.

(2) Includes loans in the applicable portfolio for which foreclosure proceedings
    had been instituted or with respect  to which the related property had  been
    acquired as of the dates indicated.

(3) Foreclosures  as a percentage of total  loans in the applicable portfolio at
    the end of each period.

(4) Does not  include gain  or loss  with  respect to  loans in  the  applicable
    portfolio  for  which foreclosure  proceedings had  been instituted  but not
    completed as of  the dates indicated,  or for which  the related  properties
    have been acquired in foreclosure proceedings but not yet sold.

(5) Net  gain (loss) as a percentage of  total loans in the applicable portfolio
    at the end of each period.

                                     S1-16
<PAGE>
                               RELO PROGRAM LOANS

<TABLE>
<CAPTION>
                                                                      AS OF                  AS OF                  AS OF
                                                                DECEMBER 31, 1993      DECEMBER 31, 1994      SEPTEMBER 30, 1995
                                                              ---------------------  ---------------------  ----------------------
                                                                         BY DOLLAR              BY DOLLAR               BY DOLLAR
                                                               BY NO.      AMOUNT     BY NO.      AMOUNT     BY NO.      AMOUNT
                                                              OF LOANS    OF LOANS   OF LOANS    OF LOANS   OF LOANS    OF LOANS
                                                              --------   ----------  --------   ----------  --------   -----------
<S>                                                           <C>        <C>         <C>        <C>         <C>        <C>
                                                                                 (DOLLAR AMOUNTS IN THOUSANDS)

Total Portfolio of RELO Program Loans.......................   47,083    $7,298,795   60,224    $9,543,339   68,628    $10,780,362
                                                              --------   ----------  --------   ----------  --------   -----------
                                                              --------   ----------  --------   ----------  --------   -----------
Period of Delinquency(1)
  30 to 59 days.............................................      330    $   43,295      361    $   52,474      432    $    60,477
  60 to 89 days.............................................       43         4,967       68         9,612       80         10,482
  90 days or more...........................................       69         9,687       74        10,965       65          8,277
                                                              --------   ----------  --------   ----------  --------   -----------
Total Delinquent Loans......................................      442    $   57,949      503    $   73,052      577    $    79,236
                                                              --------   ----------  --------   ----------  --------   -----------
                                                              --------   ----------  --------   ----------  --------   -----------
Percent of RELO Program Loan Portfolio......................     0.94%         0.79%    0.84%         0.77%    0.84%          0.74%
</TABLE>
<TABLE>
<CAPTION>
                                                                                    AS  AS
                                                                                    OF  OF
                                                                     AS OF          DECEMBER SEPTEMBER
                                                               DECEMBER 31, 1993    31, 1994 30, 1995
                                                              --------------------  --  --
<S>                                                           <C>                   <C>
                                                                   (DOLLAR AMOUNTS IN
                                                                       THOUSANDS)

Foreclosures(2).............................................  $        5,346        $10,743 $11,866
Foreclosure Ratio(3)........................................            0.07%       0.11% 0.11%

<CAPTION>

                                                                                        NINE
                                                                                    YEAR MONTHS
                                                                                    ENDED ENDED
                                                                   YEAR ENDED       DECEMBER SEPTEMBER
                                                               DECEMBER 31, 1993    31, 1994 30, 1995
                                                              --------------------  --  --
                                                                   (DOLLAR AMOUNTS IN
                                                                       THOUSANDS)
<S>                                                           <C>                   <C>

Net Gain (Loss)(4)..........................................  $       (2,776      ) $(1,791) $(2,111)
Net Gain (Loss) Ratio(5)....................................           (0.04      )% (0.02)% (0.02)%
</TABLE>

- -------------
(1) The indicated periods of  delinquency are based on  the number of days  past
    due,  based on a 30-day month. No mortgage loan is considered delinquent for
    these purposes until one month has passed since its contractual due date.  A
    mortgage   loan  is   no  longer  considered   delinquent  once  foreclosure
    proceedings have commenced.

(2) Includes loans in the applicable portfolio for which foreclosure proceedings
    had been instituted or with respect  to which the related property had  been
    acquired as of the dates indicated.

(3) Foreclosures  as a percentage of total  loans in the applicable portfolio at
    the end of each period.

(4) Does not  include gain  or loss  with  respect to  loans in  the  applicable
    portfolio  for  which foreclosure  proceedings had  been instituted  but not
    completed as of  the dates indicated,  or for which  the related  properties
    have been acquired in foreclosure proceedings but not yet sold.

(5) Net  gain (loss) as a percentage of  total loans in the applicable portfolio
    at the end of each period.

            RESTRICTIONS ON TRANSFER OF THE CLASS A-11 CERTIFICATES

    The Class  A-11 Certificates  with denominations  of less  than  $74,000,000
initial  Class A-11 Notional Amount may be transferred to persons who deliver to
the Trustee an  affidavit stating  that such  person: (a)(i)  is a  substantial,
sophisticated,   institutional  investor  having  knowledge  and  experience  in
financial and business  matters, and in  particular in such  matters related  to
securities  similar to the  Class A-11 Certificates, such  that such investor is
capable of evaluating the merits  and risks of an  investment in the Class  A-11
Certificates, and (ii) has a net worth of at least $10,000,000; or (b) will hold
the  Class A-11 Certificates solely as nominee for a person meeting the criteria
set forth in clause (a).

                                     S1-17
<PAGE>
                             HISTORICAL PREPAYMENTS

    The prepayment  model used  in  the Prospectus  Supplement is  the  Standard
Prepayment  Assumption ("SPA"). See "Prepayment and Yield Considerations" in the
Prospectus Supplement. An alternative  model is a conditional  (also known as  a
constant)  prepayment  rate  ("CPR").  CPR  represents  a  rate  of  payment  of
unscheduled principal on mortgage loans,  expressed as an annualized  percentage
of  the outstanding principal balance of such mortgage loans at the beginning of
each period. CPR DOES NOT PURPORT  TO BE A HISTORICAL DESCRIPTION OF  PREPAYMENT
EXPERIENCE  OR A PREDICTION OF THE ANTICIPATED RATE OF PREPAYMENT OF ANY POOL OF
MORTGAGE LOANS, INCLUDING THE MORTGAGE LOANS.

    The Series 1993-18 Certificates were issued on May 14, 1993. Set forth below
are the approximate annualized prepayment rates of the Mortgage Loans underlying
the Series 1993-18 Certificates  as a percentage of  CPR as of the  Distribution
Dates occurring in the indicated months.

                          HISTORICAL PREPAYMENT RATES
<TABLE>
<CAPTION>
MONTH                                                           PERCENTAGE OF CPR
- --------------------------------------------------------------  -----------------
<S>                                                             <C>
June 1993.....................................................        4.23%
July 1993.....................................................        5.14%
August 1993...................................................       11.69%
September 1993................................................       12.76%
October 1993..................................................       23.60%
November 1993.................................................       24.02%
December 1993.................................................       17.56%
January 1994..................................................       45.76%
February 1994.................................................       19.93%
March 1994....................................................        8.39%
April 1994....................................................       21.23%
May 1994......................................................       11.42%
June 1994.....................................................        9.43%
July 1994.....................................................       22.94%
August 1994...................................................       18.38%
September 1994................................................       15.13%

<CAPTION>
MONTH                                                           PERCENTAGE OF CPR
- --------------------------------------------------------------  -----------------
<S>                                                             <C>
October 1994..................................................        7.22%
November 1994.................................................        5.75%
December 1994.................................................        4.99%
January 1995..................................................       11.46%
February 1995.................................................        5.93%
March 1995....................................................        9.28%
April 1995....................................................        3.63%
May 1995......................................................       11.34%
June 1995.....................................................        6.73%
July 1995.....................................................       18.11%
August 1995...................................................       23.48%
September 1995................................................       23.44%
October 1995..................................................        8.51%
November 1995.................................................       12.73%
December 1995.................................................        9.47%
January 1996..................................................       15.51%
</TABLE>

    The prepayment rates described above were calculated based upon the weighted
average  Mortgage Interest Rate  of the Mortgage Loans  for the applicable month
and an assumed  weighted average  remaining term  to maturity  for the  Mortgage
Loans  equal to the weighted  average remaining term to  maturity at the date of
the initial issuance  of the Series  1993-18 Certificates with  respect to  June
1993,  reduced by one month for each month thereafter. The prepayment history of
the Mortgage  Loans underlying  the Series  1993-18 Certificates  is  relatively
short  and cannot be relied  upon as an indicator of  the rate of prepayments on
the  Mortgage  Loans  to  be  experienced  over  the  life  of  the  Class  A-11
Certificates. Further, the rate of prepayment of a pool of mortgage loans during
any period should be considered in light of the amount of time elapsed since the
origination  of such mortgage loans and the  absolute levels of, and changes in,
prevailing market interest rates during such period. For a further discussion of
the factors affecting the rate of prepayments on mortgage loans, see "Prepayment
and Yield Considerations" in the  Prospectus Supplement. INVESTORS ARE URGED  TO
MAKE  AN INDEPENDENT DECISION AS TO THE APPROPRIATE PREPAYMENT ASSUMPTIONS TO BE
USED IN DECIDING WHETHER TO PURCHASE A CLASS A-11 CERTIFICATE.

                                     S1-18
<PAGE>
                 SENSITIVITY OF THE PRE-TAX YIELD AND WEIGHTED
                  AVERAGE LIFE OF THE CLASS A-11 CERTIFICATES

    The  Prospectus Supplement and the  Prospectus contain important information
concerning factors that will affect the  yield and weighted average life of  the
Class  A-11  Certificates. Investors  are urged  to  read "Prepayment  and Yield
Considerations" in the Prospectus Supplement and the Prospectus.

    THE YIELD TO INVESTORS IN THE CLASS A-11 CERTIFICATES, WHICH ARE EXPECTED TO
BE OFFERED AT A SUBSTANTIAL PREMIUM, WILL BE HIGHLY SENSITIVE TO BOTH THE TIMING
OF RECEIPT OF PREPAYMENTS  AND THE OVERALL RATE  OF PRINCIPAL PREPAYMENT ON  THE
MORTGAGE  LOANS, PARTICULARLY WITH  RESPECT TO THOSE  MORTGAGE LOANS WITH HIGHER
RATES OF INTEREST, WHICH OVERALL RATE  MAY FLUCTUATE SIGNIFICANTLY FROM TIME  TO
TIME.  AN  INVESTOR IN  THE CLASS  A-11 CERTIFICATES  SHOULD FULLY  CONSIDER THE
ASSOCIATED RISKS, INCLUDING  THE RISK THAT  A RAPID RATE  OF PRINCIPAL  PAYMENTS
(INCLUDING  PREPAYMENTS) COULD RESULT  IN THE FAILURE OF  SUCH INVESTOR TO FULLY
RECOVER ITS INITIAL INVESTMENT.

    For purposes of the table  set forth below, the  weighted average life of  a
Class  A-11 Certificate  is the  average amount  of time  that will  elapse from
February 8, 1996 until each dollar in reduction of the principal balance of  the
Series  1993-18 Certificates is distributed to the holders thereof. The weighted
average life of the Class A-11  Certificates will be influenced by, among  other
things,  the rate and timing of principal  payments on the Mortgage Loans, which
may be in the form of scheduled amortization or prepayments.

    The following table has been prepared on the basis of the characteristics of
the Mortgage Loans  included in  the Trust  Estate as  of January  17, 1996,  as
described  above under "Description of the  Mortgage Loans," adjusted to reflect
calculated payments  of  principal  on  February 1,  1996  assuming  a  constant
prepayment  rate equal to 0% CPR for  the month of January 1996. This adjustment
has the  effect of  reducing the  remaining  terms to  stated maturity  of  each
Mortgage  Loan  by  one month  from  the table  shown  on page  S1-9.  The table
indicates the sensitivity to various rates  of prepayment on the Mortgage  Loans
of  the pre-tax yield to maturity, on a corporate bond equivalent ("CBE") basis,
and of  the weighted  average life  of the  Class A-11  Certificates at  various
percentages  of  CPR.  Such  calculations are  based  on  distributions  made in
accordance with "Description of the  Certificates" herein and in the  Prospectus
Supplement,  on the assumptions described  in clauses (i), (iii)  and (v) of the
last paragraph beginning on page S-63  of the Prospectus Supplement, and on  the
further  assumptions that (i)  the Class A-11 Certificates  will be purchased on
February 8,  1996  for  an  aggregate  purchase  price  equal  to  approximately
$1,561,160,  which includes accrued  interest from February 1,  1996 to (but not
including) February  8,  1996,  (ii)  distributions to  holders  of  Class  A-11
Certificates  will be  made on the  25th day  of each month  commencing in March
1996, (iii) scheduled monthly payments of principal and interest on the Mortgage
Loans will be timely received on the first day of each month (with no  defaults)
commencing  in March 1996, (iv) principal prepayments on the Mortgage Loans will
be received on the  last day of  each month commencing in  February 1996 at  the
respective percentages of CPR set forth in the table and there are no Prepayment
Interest  Shortfalls,  (v)  the Class  A-11  Notional Amount  applicable  to the
Distribution Date occurring in March 1996 will be approximately $143,720,995 and
(vi) the Class A Subclass Principal Balance of the Class A-11 Certificates as of
the Determination Date occurring in March 1996 will be $1,000.00.

           SENSITIVITY OF THE PRE-TAX YIELD AND WEIGHTED AVERAGE LIFE
                 OF THE CLASS A-11 CERTIFICATES TO PREPAYMENTS

<TABLE>
<CAPTION>
                                                      PERCENTAGES OF CPR
                                        ----------------------------------------------
                                         2%     10%    15%    20%    25%    30%   40%
                                        -----  -----  -----  -----  -----  -----  ----
<S>                                     <C>    <C>    <C>    <C>    <C>    <C>    <C>
Pre-Tax Yield to Maturity (CBE).......  53.98% 44.06% 37.62% 30.99% 24.13% 17.03% 2.00%
Weighted Average Life (years).........  14.78   7.62   5.54   4.24   3.39   2.78  2.00
</TABLE>

    The pre-tax yields set forth in  the preceding table were calculated by  (i)
determining the monthly discount rates which, when applied to the assumed stream
of  cash  flows to  be  paid on  the Class  A-11  Certificates, would  cause the
discounted present  value of  such assumed  stream  of cash  flows to  equal  an
assumed  purchase  price  for  the  Class  A-11  Certificates  of  approximately
$1,561,160 which includes  accrued interest from  February 1, 1996  to (but  not
including) February 8, 1996, and (ii) converting such monthly rates to corporate
bond equivalent rates. Such

                                     S1-19
<PAGE>
calculation  does not take into account the  interest rates at which an investor
may be able to reinvest funds received by such investor as distributions on  the
Class  A-11 Certificates and consequently does not purport to reflect the return
on any investment in  the Class A-11 Certificates  when such reinvestment  rates
are considered.

    The  weighted average lives of the Class  A-11 Certificates set forth in the
preceding  table  were  determined  by  (i)  multiplying  the  amount  of   each
distribution  in  reduction  of  the principal  balance  of  the  Series 1993-18
Certificates by  the  number of  years  from February  8,  1996 to  the  related
Distribution  Date, (ii) adding  the results and  (iii) dividing the  sum by the
aggregate distributions  in reduction  of the  principal balance  of the  Series
1993-18 Certificates referred to in clause (i).

    NOTWITHSTANDING  THE  ASSUMED PREPAYMENT  RATES  REFLECTED IN  THE PRECEDING
TABLE, IT IS HIGHLY UNLIKELY THAT THE MORTGAGE LOANS WILL PREPAY AT ANY CONSTANT
RATE, THAT THE MORTGAGE LOANS WILL PREPAY AT THE SAME RATE OR THAT THE  MORTGAGE
LOANS  WILL NOT EXPERIENCE ANY LOSSES.  The Mortgage Loans currently included in
the Trust Estate may  be changed as  a result of  permitted substitutions. As  a
result  of these  factors, the  pre-tax yield and  weighted average  life of the
Class A-11 Certificates  are likely to  differ from those  shown in such  table,
even if all of the Mortgage Loans prepay at the indicated percentages of CPR.

                    CERTAIN FEDERAL INCOME TAX CONSEQUENCES

    An  election has  been made  to treat  the Trust  Estate as  two REMICs (the
"Upper-Tier REMIC" and the "Lower-Tier REMIC") for federal income tax  purposes.
The Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7,
Class  A-8,  Class A-9,  Class A-10  and  Class A-11  Certificates, the  Class M
Certificates and  the  Class  B  Certificates  are  designated  as  the  regular
interests  in the Upper-Tier REMIC and the Class A-R and Class A-LR Certificates
are designated as the residual interests in the Upper-Tier REMIC and  Lower-Tier
REMIC, respectively.

    The  Class A-11 Certificates are treated as "qualifying real property loans"
for mutual savings banks and  domestic building and loan associations,  "regular
interests  in a  REMIC" for  domestic building  and loan  associations and "real
estate assets" for real estate investment trusts, to the extent described in the
Prospectus.

    The Class  A-11  Certificates  generally are  treated  as  debt  instruments
originated  on the date of original  issuance of the Series 1993-18 Certificates
for federal income tax purposes. Holders of the Class A-11 Certificates will  be
required  to  report income  thereon in  accordance with  the accrual  method of
accounting. Final and  temporary Treasury regulations  regarding original  issue
discount  (the "OID  Regulations") were issued  on February  2, 1994, indicating
that either the OID Regulations or the Proposed OID Regulations (as defined  and
discussed  in the Prospectus)  may be relied  upon as authority  with respect to
debt instruments issued on the date  of original issuance of the Series  1993-18
Certificates. Although not free from doubt, the Seller believes that, under both
the   OID  Regulations  and  the  Proposed   OID  Regulations,  the  Class  A-11
Certificates are considered to have been issued with original issue discount  in
an  amount equal to  the excess of  all distributions of  principal and interest
expected to  be  received thereon  over  their issue  price  (including  accrued
interest).  Any "negative" amounts of original  issue discount on the Class A-11
Certificates attributable to rapid prepayments will not be deductible currently,
but may be offset against future  positive accruals of original issue  discount,
if  any.  The holder  of a  Class A-11  Certificate  may be  entitled to  a loss
deduction to the extent it becomes certain  that such holder will not recover  a
portion  of its basis in such  Certificate, assuming no further prepayments. The
Seller makes no representation  as to the  timing or amount  of such losses,  if
any,  or  how any  such losses  will be  reported to  the holders.  See "Certain
Federal Income  Tax  Consequences--Federal  Income Tax  Consequences  for  REMIC
Certificates--Taxation  of Regular Certificates--Original Issue Discount" in the
Prospectus. The adjusted issue price of a Class A-11 Certificate as of the  date
of  purchase by  an investor  is its original  issue price,  plus original issue
discount accrued  since the  date of  original issuance  of the  Series  1993-18
Certificates,  less distributions  made, and  losses, if  any, incurred,  on the
Class A-11  Certificates since  the  date of  original  issuance of  the  Series
1993-18 Certificates. A purchase price for a Class A-11 Certificate that is less
than  or greater than  the adjusted issue  price of such  Class A-11 Certificate
will result  in market  discount or  acquisition premium,  respectively, to  the
beneficial  owner thereof, as discussed in the Prospectus under "Certain Federal
Income   Tax   Consequences--Federal   Income   Tax   Consequences   for   REMIC
Certificates--Taxation of Regular Certificates."

                                     S1-20
<PAGE>
    The  Prepayment Assumption  that is  to be used  in determining  the rate of
accrual of original  issue discount is  set forth in  the Prospectus  Supplement
under    "Federal   Income   Tax   Considerations--Regular   Certificates."   No
representation is made as to  the actual rate at  which the Mortgage Loans  will
prepay.

    See "Summary Information--Federal Income Tax Status" and "Federal Income Tax
Considerations"  in the  Prospectus Supplement  and "Certain  Federal Income Tax
Consequences--Federal Income  Tax Consequences  for REMIC  Certificates" in  the
Prospectus.

                                  UNDERWRITING

    Subject to the terms and conditions of an underwriting agreement and a terms
agreement  (together, the "Underwriting  Agreement") among the  Seller, PHMC and
Lehman Brothers  Inc.,  as  underwriter  (the  "Underwriter"),  the  Class  A-11
Certificates  offered  hereby  are  being  purchased  from  the  Seller  by  the
Underwriter on  or about  February  8, 1996.  The  Underwriter is  committed  to
purchase  all of the  Class A-11 Certificates  offered hereby if  any Class A-11
Certificates are  purchased. The  Underwriter  has advised  the Seller  that  it
proposes  to offer the Class  A-11 Certificates, from time  to time, for sale in
negotiated transactions or otherwise at prices  determined at the time of  sale.
Proceeds to the Seller from the sale of the Class A-11 Certificates are expected
to  be approximately 1.075%  of the Pool  Scheduled Principal Balance  as of the
Distribution Date  in March  1996  without giving  effect to  partial  principal
prepayments  or  net  partial  liquidation proceeds  received  on  or  after the
Determination Date in February 1996, plus accrued interest from February 1, 1996
to (but not including)  February 8, 1996. The  Underwriter and any dealers  that
participate  with  the  Underwriter  in  the  distribution  of  the  Class  A-11
Certificates may be deemed to be underwriters, and any discounts or  commissions
received by them and any profit on the resale of Class A-11 Certificates by them
may  be deemed to be underwriting  discounts or commissions under the Securities
Act of 1933, as amended (the "Securities Act").

    The Underwriting Agreement provides that the Seller and PHMC will  indemnify
the  Underwriter against certain  civil liabilities under  the Securities Act or
contribute to payments which the Underwriter may be required to make in  respect
thereof.

                                SECONDARY MARKET

    There  will  not be  any secondary  market for  the Class  A-11 Certificates
offered hereby prior to the offering thereof. The Underwriter intends to act  as
a  market maker in the Class A-11 Certificates, subject to applicable provisions
of federal and state securities laws  and other regulatory requirements, but  is
under  no obligation to do so. There can be no assurance that a secondary market
in the Class A-11 Certificates will develop  or, if such a market does  develop,
that  it  will provide  holders  of Class  A-11  Certificates with  liquidity of
investment  at  any  particular  time  or  for  the  life  of  the  Class   A-11
Certificates.

                              ERISA CONSIDERATIONS

    As  described in the Prospectus under  "ERISA Considerations," ERISA and the
Code impose certain duties and restrictions  on any person which is an  employee
benefit  plan  within the  meaning of  Section 3(3)  of the  Employee Retirement
Income Security Act of 1974, as amended  ("ERISA"), or Code Section 4975 or  any
person  utilizing the assets of such employee benefit plan (an "ERISA Plan") and
certain persons  who perform  services for  ERISA Plans.  Comparable duties  and
restrictions may exist under federal, state or local laws ("Similar Law"), which
are,  to a material  extent, similar to  the foregoing sections  of ERISA or the
Code, on governmental  plans and  on certain  persons who  perform services  for
governmental plans. For example, unless exempted, investment by an ERISA Plan in
the Class A-11 Certificates may constitute a prohibited transaction under ERISA,
the  Code or  Similar Law.  There are  certain exemptions  issued by  the United
States Department of Labor (the "DOL")  that may be applicable to an  investment
by  an  ERISA Plan  in  the Class  A-11  Certificates, including  the individual
administrative  exemption  described  below  and  Prohibited  Transaction  Class
Exemption 83-1 ("PTE 83-1"). For a further discussion of PTE 83-1, including the
necessary  conditions to  its applicability, and  other important  factors to be
considered  by  an  ERISA  Plan  contemplating  investing  in  the  Class   A-11
Certificates, see "ERISA Considerations" in the Prospectus.

                                     S1-21
<PAGE>
    On  February  22, 1991,  the  DOL issued  to  the Underwriter  an individual
administrative exemption, Prohibited Transaction  Exemption 91-14, 56 Fed.  Reg.
7413  (the "Exemption"),  from certain  of the  prohibited transaction  rules of
ERISA with  respect to  the initial  purchase, the  holding and  the  subsequent
resale  by an ERISA  Plan of certificates  in pass-through trusts  that meet the
considerations and requirements of the  Exemption. The Exemption might apply  to
the  acquisition, holding and resale of the  Class A-11 Certificates by an ERISA
Plan, provided that specified conditions are met.

    Among the conditions which would have  to be satisfied for the Exemption  to
apply to the acquisition by an ERISA Plan of the Class A-11 Certificates, is the
condition  that the ERISA  Plan investing in  the Class A-11  Certificates be an
"accredited investor"  as defined  in  Rule 501(a)(1)  of  Regulation D  of  the
Securities and Exchange Commission under the Securities Act.

    Before  purchasing a  Class A-11 Certificate,  a fiduciary of  an ERISA Plan
should make its own determination as to the availability of the exemptive relief
provided  in  the  Exemption  or  the  availability  of  any  other   prohibited
transaction  exemptions (including PTE 83-1), and  whether the conditions of any
such exemption will be applicable to the Class A-11 Certificates. Any  fiduciary
of an ERISA Plan considering whether to purchase a Class A-11 Certificate should
also  carefully  review with  its own  legal advisors  the applicability  of the
fiduciary duty and prohibited  transaction provisions of ERISA  and the Code  to
such investment. See "ERISA Considerations" in the Prospectus.

                                LEGAL INVESTMENT

    The  Class A-11  Certificates will constitute  "mortgage related securities"
for purposes  of the  Secondary Mortgage  Market Enhancement  Act of  1984  (the
"Enhancement  Act") so long as  they are rated in one  of the two highest rating
categories  by   at  least   one   nationally  recognized   statistical   rating
organization.  As such,  the Class A-11  Certificates are  legal investments for
certain entities  to  the  extent  provided in  the  Enhancement  Act.  However,
institutions subject to the jurisdiction of the Office of the Comptroller of the
Currency,  the Board  of Governors  of the  Federal Reserve  System, the Federal
Deposit Insurance Corporation,  the Office of  Thrift Supervision, the  National
Credit  Union Administration  or state  banking or  insurance authorities should
review applicable rules, supervisory policies  and guidelines of these  agencies
before  purchasing a Class A-11 Certificate,  as such Certificates may be deemed
to be unsuitable  investments under  one or more  of these  rules, policies  and
guidelines  and certain restrictions may apply  to investments in the Class A-11
Certificates. It should also be noted that certain states recently have enacted,
or have proposed enacting, legislation  limiting to varying extents the  ability
of  certain entities (in  particular insurance companies)  to invest in mortgage
related securities. Investors should  consult with their  own legal advisors  in
determining  whether and to  what extent the  Class A-11 Certificates constitute
legal investments for such investors. See "Legal Investment" in the Prospectus.

                                 LEGAL MATTERS

    The validity of  the Class A-11  Certificates and certain  tax matters  with
respect  thereto will be passed upon for  the Seller by Cadwalader, Wickersham &
Taft, New York,  New York. Certain  legal matters  will be passed  upon for  the
Underwriter by Brown & Wood, New York, New York.

                                USE OF PROCEEDS

    The net proceeds to be received from the sale of the Class A-11 Certificates
will  be applied by  the Seller to the  purchase from an  affiliate of the Class
A-11 Certificates.

                                    RATINGS

    The Class A-11 Certificates have been  rated "Aaa" by Moody's and "AAAr"  by
S&P.  See "Ratings" in the Prospectus Supplement for a further discussion of the
ratings of  the  Certificates. S&P  assigns  the  additional rating  of  "r"  to
highlight classes of securities that S&P believes may experience high volatility
or high variability in expected returns due to non-credit risks.

                                     S1-22
<PAGE>
    The  ratings of  Moody's on  mortgage pass-through  certificates address the
likelihood  of  the  receipt  by  certificateholders  of  all  distributions  of
principal  and interest to  which such certificateholders  are entitled. Moody's
rating opinions address the structural, legal and issuer aspects associated with
the certificates, including the nature of the underlying mortgage loans and  the
credit  quality of the credit support provider, if any. Moody's ratings on pass-
through certificates  do not  represent any  assessment of  the likelihood  that
principal   prepayments  may  differ  from   those  originally  anticipated  and
consequently any adverse effect the timing of such prepayments could have on  an
investor's anticipated yield.

    S&P's  ratings on mortgage pass-through  certificates address the likelihood
of receipt by  certificateholders of  timely payments of  interest and  ultimate
return of principal. S&P's ratings take into consideration the credit quality of
the  mortgage pool including any credit  support providers, structural and legal
aspects associated with the  certificates, and the extent  to which the  payment
stream  of the  mortgage pool  is adequate  to make  payment required  under the
certificates. S&P's ratings on  the certificates do  not, however, constitute  a
statement  regarding the frequency  of prepayments on  the mortgage loans. S&P's
rating does not address the possibility  that investors may suffer a lower  than
anticipated  yield as  a result of  prepayments of the  underlying mortgages. In
addition, it should be noted that in some structures a default on a mortgage  is
treated as a prepayment and may have the same effect on yield as a prepayment.

    The  ratings of Moody's  and S&P do  not address the  possibility that, as a
result of principal  prepayments, Certificateholders  may receive  a lower  than
anticipated yield or the possibility that, as a result of prepayments, investors
in  the  Class  A-11  Certificates  may  fail  to  fully  recoup  their  initial
investment.

               INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

    There are incorporated herein by  reference all documents and reports  filed
or caused to be filed by the Seller with respect to the Trust Estate pursuant to
Section  13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the termination
of the offering of the Class A-11 Certificates. The Seller will provide or cause
to be  provided  without  charge to  each  person  to whom  this  Supplement  is
delivered  in connection with the offering of the Class A-11 Certificates a list
identifying all  filings with  respect to  a Trust  Estate pursuant  to  Section
13(a),  13(c), 14 or 15(d) of the  Exchange Act since the Seller's latest fiscal
year covered  by its  annual  report on  Form 10-K  and  a copy  of any  or  all
documents  or  reports incorporated  herein by  reference, in  each case  to the
extent such documents or  reports relate to the  Class A-11 Certificates,  other
than  the  exhibits to  such documents  (unless  such exhibits  are specifically
incorporated by reference in such documents).  Requests to the Seller should  be
directed  to:  The  Prudential  Home  Mortgage  Securities  Company,  Inc., 5325
Spectrum Drive, Frederick, Maryland 21701, telephone number (301) 846-8199.

                                     S1-23
<PAGE>
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED APRIL 8, 1993)

                                  $209,690,000
                                 (APPROXIMATE)

THE PRUDENTIAL HOME MORTGAGE SECURITIES COMPANY, INC. r

                                     SELLER

               MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1993-18
        PRINCIPAL AND INTEREST PAYABLE MONTHLY, COMMENCING IN JUNE 1993
                               -----------------

    THE  SERIES 1993-18 MORTGAGE PASS-THROUGH  CERTIFICATES (THE "SERIES 1993-18
CERTIFICATES") WILL CONSIST OF  ONE CLASS OF SENIOR  CERTIFICATES (THE "CLASS  A
CERTIFICATES")  AND  TWO  CLASSES  OF SUBORDINATED  CERTIFICATES  (THE  "CLASS M
CERTIFICATES" AND  "CLASS  B  CERTIFICATES,"  RESPECTIVELY,  AND  TOGETHER,  THE
"SUBORDINATED CERTIFICATES"). THE CLASS A CERTIFICATES ARE ENTITLED TO A CERTAIN
PRIORITY,  RELATIVE TO THE CLASS M CERTIFICATES AND THE CLASS B CERTIFICATES, IN
RIGHT  OF  DISTRIBUTIONS  ON  THE  MORTGAGE  LOANS.  AS  BETWEEN  THE  CLASS   M
CERTIFICATES AND THE CLASS B CERTIFICATES, THE CLASS M CERTIFICATES ARE ENTITLED
TO A CERTAIN PRIORITY IN RIGHT OF DISTRIBUTIONS ON THE MORTGAGE LOANS. THE CLASS
A  CERTIFICATES  WILL CONSIST  OF THIRTEEN  SUBCLASSES  (EACH, A  "SUBCLASS") OF
CERTIFICATES DESIGNATED AS THE CLASS A-1, CLASS A-2, CLASS A-3, CLASS A-4, CLASS
A-5, CLASS A-6, CLASS A-7, CLASS A-8,  CLASS A-9, CLASS A-10, CLASS A-11,  CLASS
A-R  AND CLASS A-LR CERTIFICATES.  THE CLASS M CERTIFICATES  WILL NOT BE DIVIDED
INTO  SUBCLASSES.  THE  CLASS  A   CERTIFICATES,  OTHER  THAN  THE  CLASS   A-11
CERTIFICATES,  AND  THE  CLASS  M  CERTIFICATES  ARE  THE  ONLY  SERIES  1993-18
CERTIFICATES OFFERED  HEREBY AND  ARE  REFERRED TO  HEREIN COLLECTIVELY  AS  THE
"OFFERED CERTIFICATES."

    THE  CLASS A-1, CLASS  A-2, CLASS A-3,  CLASS A-4, CLASS  A-5, CLASS A-6 AND
CLASS A-10  CERTIFICATES ARE  PLANNED AMORTIZATION  CLASS CERTIFICATES  AND  ARE
REFERRED  TO  HEREIN  COLLECTIVELY  AS THE  "PAC  CERTIFICATES."  THE  CLASS A-8
CERTIFICATES ARE TARGETED  AMORTIZATION CLASS CERTIFICATES  AND ARE REFERRED  TO
HEREIN  AS  THE  "TAC CERTIFICATES."  THE  CLASS A-7  CERTIFICATES  WILL EXHIBIT
PRINCIPAL  PAYMENT   CHARACTERISTICS   OF  BOTH   PLANNED   AMORTIZATION   CLASS
CERTIFICATES  AND  TARGETED  AMORTIZATION  CLASS  CERTIFICATES.  SOLELY  FOR THE
PURPOSE OF  DETERMINING DISTRIBUTIONS  IN REDUCTION  OF PRINCIPAL  BALANCE,  THE
CLASS  A-7 CERTIFICATES WILL BE  DEEMED TO CONSIST OF  TWO COMPONENTS: THE CLASS
A-7 PAC COMPONENT AND  THE CLASS A-7 TAC  COMPONENT. THE CLASS A-9  CERTIFICATES
ARE  COMPANION CERTIFICATES. SOLELY FOR THE PURPOSE OF DETERMINING DISTRIBUTIONS
OF INTEREST AND IN REDUCTION OF PRINCIPAL BALANCE OF THE CLASS A-9 CERTIFICATES,
THE CLASS A-9  CERTIFICATES WILL  BE DEEMED TO  CONSIST OF  TWO COMPONENTS:  THE
CLASS  A-9 COMPANION  COMPONENT AND THE  CLASS A-9  ACCRUAL COMPANION COMPONENT,
REFERRED TO HEREIN  COLLECTIVELY AS  THE "COMPANION COMPONENTS."  THE CLASS  A-9
ACCRUAL  COMPANION  COMPONENT WILL  ACCRETE  INTEREST AS  DESCRIBED  HEREIN. THE
BENEFICIAL OWNER  OF A  CLASS  A-7 OR  CLASS A-9  CERTIFICATE  WILL NOT  HAVE  A
SEVERABLE  INTEREST IN ANY COMPONENT, BUT WILL HAVE AN UNDIVIDED INTEREST IN THE
ENTIRE SUBCLASS.

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

THESE SECURITIES DO NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF THE  PRUDENTIAL
HOME  MORTGAGE  SECURITIES COMPANY,  INC. OR  ANY AFFILIATE  THEREOF. NEITHER
   THESE SECURITIES NOR THE UNDERLYING  MORTGAGE LOANS WILL BE INSURED  OR
      GUARANTEED  BY ANY                          GOVERNMENTAL AGENCY OR
                                INSTRUMENTALITY.
                              -------------------

THESE SECURITIES HAVE  NOT BEEN APPROVED  OR DISAPPROVED BY  THE SECURITIES  AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
   AND  EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
      THE ACCURACY  OR ADEQUACY  OF THIS  PROSPECTUS SUPPLEMENT  OR  THE
        PROSPECTUS.  ANY         REPRESENTATION  TO THE CONTRARY IS A
                               CRIMINAL OFFENSE.
                              -------------------
<TABLE>
<CAPTION>
                             INITIAL SUBCLASS OR
       SUBCLASS OR                  CLASS            PASS-THROUGH
    CLASS DESIGNATION       PRINCIPAL BALANCE (1)        RATE
- -------------------------  -----------------------  ---------------
<S>                        <C>                      <C>
CLASS A-1................       $  28,913,000            5.75%
CLASS A-2................       $  33,775,000            5.90%
CLASS A-3................  $            3,000             (2)
CLASS A-4................  $       20,175,000            6.70%
CLASS A-5................  $       14,037,000            7.00%
CLASS A-6................  $        6,072,000            7.00%
CLASS A-7................  $       70,000,000            7.00%

<CAPTION>
                             INITIAL SUBCLASS OR
       SUBCLASS OR                  CLASS            PASS-THROUGH
    CLASS DESIGNATION       PRINCIPAL BALANCE (1)        RATE
- -------------------------  -----------------------  ---------------
<S>                        <C>                      <C>
CLASS A-8................       $   6,613,000            7.00%
CLASS A-9................  $       27,293,000            7.00%
CLASS A-10...............  $            3,000       (3)
CLASS A-R................  $            1,000            7.00%
CLASS A-LR...............  $            1,000          7.00%(4)
CLASS M..................  $        2,804,000            7.00%
</TABLE>

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

    (1) APPROXIMATE. THE INITIAL SUBCLASS OR CLASS PRINCIPAL BALANCES ARE
        SUBJECT TO ADJUSTMENT AS DESCRIBED HEREIN.

    (2) INTEREST WILL ACCRUE  ON THE  CLASS A-3  CERTIFICATES EACH  MONTH IN  AN
        AMOUNT  EQUAL TO THE SUM  OF (I) THE PRODUCT OF  1/12TH OF 1.10% AND THE
        CLASS A SUBCLASS PRINCIPAL BALANCE  OF THE CLASS A-2 CERTIFICATES,  (II)
        THE  PRODUCT  OF 1/12TH  OF  7.00% AND  THE  CLASS A  SUBCLASS PRINCIPAL
        BALANCE OF THE CLASS A-3 CERTIFICATES AND (III) THE PRODUCT OF 1/12TH OF
        0.30% AND  THE CLASS  A  SUBCLASS PRINCIPAL  BALANCE  OF THE  CLASS  A-4
        CERTIFICATES.

    (3) INTEREST  WILL ACCRUE  ON THE CLASS  A-10 CERTIFICATES EACH  MONTH IN AN
        AMOUNT EQUAL TO THE SUM  OF (I) THE PRODUCT OF  1/12TH OF 1.25% AND  THE
        CLASS  A SUBCLASS  PRINCIPAL BALANCE OF  THE CLASS  A-1 CERTIFICATES AND
        (II) THE PRODUCT OF 1/12TH OF  7.00% AND THE CLASS A SUBCLASS  PRINCIPAL
        BALANCE OF THE CLASS A-10 CERTIFICATES.

    (4) ON THE CLASS A-LR NOTIONAL AMOUNT.
                          ---------------------------

    THE  OFFERED  CERTIFICATES  WILL  BE  PURCHASED  BY  MORGAN  STANLEY  &  CO.
INCORPORATED (THE "UNDERWRITER")  FROM THE  SELLER AND  WILL BE  OFFERED BY  THE
UNDERWRITER  FROM  TIME TO  TIME  TO THE  PUBLIC  IN NEGOTIATED  TRANSACTIONS OR
OTHERWISE AT VARYING PRICES TO  BE DETERMINED AT THE  TIME OF SALE. PROCEEDS  TO
THE  SELLER  FROM THE  SALE OF  THE OFFERED  CERTIFICATES WILL  BE APPROXIMATELY
100.5625%  OF  THE   AGGREGATE  INITIAL   PRINCIPAL  BALANCE   OF  THE   OFFERED
CERTIFICATES,  PLUS  ACCRUED INTEREST  THEREON  AND ON  AN  AMOUNT EQUAL  TO THE
AGGREGATE INITIAL PRINCIPAL BALANCE OF THE  CLASS A-11 CERTIFICATES AT THE  RATE
OF  7.00% PER ANNUM FROM MAY 1, 1993 TO (BUT NOT INCLUDING) MAY 14, 1993, BEFORE
DEDUCTING  EXPENSES  PAYABLE  BY  THE  SELLER  ESTIMATED  TO  BE  $285,000.  SEE
"UNDERWRITING" HEREIN.
                            ------------------------
    THE OFFERED CERTIFICATES ARE OFFERED, SUBJECT TO PRIOR SALE, WHEN, AS AND IF
ACCEPTED  BY THE UNDERWRITER AND SUBJECT TO APPROVAL OF CERTAIN LEGAL MATTERS BY
BROWN & WOOD, COUNSEL FOR THE UNDERWRITER.  IT IS EXPECTED THAT DELIVERY OF  THE
OFFERED  CERTIFICATES  WILL  BE  MADE  ON OR  ABOUT  MAY  14,  1993  THROUGH THE
FACILITIES OF THE DEPOSITORY  TRUST COMPANY, OR  IN THE CASE  OF THE CLASS  A-3,
CLASS  A-10, CLASS A-R,  CLASS A-LR AND  CLASS M CERTIFICATES,  AT THE OFFICE OF
MORGAN STANLEY & CO.  INCORPORATED, NEW YORK, N.Y.  AGAINST PAYMENT THEREFOR  IN
IMMEDIATELY AVAILABLE FUNDS.
                            ------------------------

                              MORGAN STANLEY & CO.
                                  INCORPORATED

MAY 7, 1993.
<PAGE>
(CONTINUED FROM PREVIOUS PAGE)

    The  Series 1993-18 Certificates  will evidence in  the aggregate the entire
beneficial ownership interest in a trust fund (the "Trust Estate") consisting of
a pool of fixed interest rate, conventional, monthly pay, fully amortizing, one-
to four-family, residential first mortgage loans having original terms to stated
maturity of approximately 30  years, which may include  loans secured by  shares
issued by cooperative housing corporations (the "Mortgage Loans"), together with
certain  related  property,  sold  by The  Prudential  Home  Mortgage Securities
Company, Inc.  (the  "Seller") and  serviced  by The  Prudential  Home  Mortgage
Company,  Inc. (in its capacity as  servicer, the "Servicer," otherwise "PHMC").
The Mortgage Loans will consist of mortgage loans originated in connection  with
the  relocation  of employees  of various  corporate employers  participating in
PHMC's relocation program and of employees of various non-participant  employers
("Relocation  Mortgage Loans"). See "Description  of the Mortgage Loans" herein.
The Class A Certificates will initially evidence in the aggregate an approximate
92.25% undivided interest in  the principal balance of  the Mortgage Loans.  The
Class  M Certificates  will initially evidence  in the  aggregate an approximate
1.25% undivided interest  in the principal  balance of the  Mortgage Loans.  The
remaining  approximate 6.50% undivided interest in  the principal balance of the
Mortgage Loans will be evidenced by the Class B Certificates.

    Distributions in respect of  interest and of principal  will be made on  the
25th  day of each month or, if such day is not a business day, on the succeeding
business day (each,  a "Distribution  Date"), commencing  in June  1993, to  the
holders of Offered Certificates, as described herein. The Class A-9 Certificates
will  not  receive  distributions of  interest  until the  Cross-Over  Date with
respect to interest accrued on the Class A-9 Accrual Companion Component.  Prior
to  such time,  accrued interest  otherwise available  on the  Class A-9 Accrual
Companion Component will be  added to the  Component Principal Balance  thereof.
The  Class A-9 Certificates will receive  current distributions of interest with
respect to interest accrued on the Class A-9 Companion Component. The amount  of
interest  accrued  on any  Subclass  or Class  of  Offered Certificates  will be
reduced by prepayment interest  shortfalls and certain  other shortfalls in  the
collection  of interest from mortgagors, as well as certain losses, as described
herein under "Description  of the Certificates--Interest."  On any  Distribution
Date,  the holders  of the  Class M  Certificates will  receive distributions of
interest only  if the  holders of  the Class  A Certificates  have received  all
amounts  of interest  and principal  to which  they are  entitled on  such date.
Distributions of principal to holders of  the Class M Certificates will be  made
only  after the Class  M Certificates have  received the amount  of interest due
them with respect to such Distribution  Date. Distributions in reduction of  the
principal  balance of the Class A Certificates  on any Distribution Date will be
allocated among the Subclasses of Class  A Certificates in the manner  described
herein   under   "Description   of  the   Certificates--   Principal  (Including
Prepayments)." Distributions  to each  Subclass or  undivided Class  of  Offered
Certificates  will be made pro rata among Certificateholders of such Subclass or
Class.

    THE YIELD  TO MATURITY  OF THE  OFFERED CERTIFICATES  WILL BE  SENSITIVE  IN
VARYING  DEGREES  TO  THE  RATE  AND  TIMING  OF  PRINCIPAL  PAYMENTS (INCLUDING
PREPAYMENTS) ON THE  MORTGAGE LOANS, WHICH  MAY BE PREPAID  AT ANY TIME  WITHOUT
PENALTY.  INVESTORS IN THE  OFFERED CERTIFICATES SHOULD  CONSIDER THE ASSOCIATED
RISKS, INCLUDING, IN THE CASE OF  OFFERED CERTIFICATES PURCHASED AT A  DISCOUNT,
THE RISK THAT A SLOWER THAN ANTICIPATED RATE OF PAYMENTS IN RESPECT OF PRINCIPAL
(INCLUDING  PREPAYMENTS) ON THE  MORTGAGE LOANS COULD RESULT  IN AN ACTUAL YIELD
THAT IS  LOWER  THAN  ANTICIPATED  AND, IN  THE  CASE  OF  OFFERED  CERTIFICATES
PURCHASED  AT A PREMIUM, PARTICULARLY THE CLASS A-3 AND CLASS A-10 CERTIFICATES,
THE RISK THAT A FASTER THAN ANTICIPATED RATE OF PAYMENTS IN RESPECT OF PRINCIPAL
(INCLUDING PREPAYMENTS) ON THE  MORTGAGE LOANS COULD RESULT  IN AN ACTUAL  YIELD
THAT  IS  LOWER THAN  ANTICIPATED. INVESTORS  IN  THE CLASS  A-3 AND  CLASS A-10
CERTIFICATES SHOULD ALSO  CONSIDER THE  RISK THAT A  RAPID RATE  OF PAYMENTS  IN
RESPECT OF PRINCIPAL (INCLUDING PREPAYMENTS) COULD RESULT IN THE FAILURE OF SUCH
INVESTORS  TO FULLY RECOVER THEIR INITIAL  INVESTMENTS. THE YIELD TO MATURITY OF
THE CLASS M  CERTIFICATES WILL BE  MORE SENSITIVE  TO THE AMOUNT  AND TIMING  OF
LOSSES  DUE TO LIQUIDATIONS OF THE MORTGAGE LOANS THAN THE CLASS A CERTIFICATES,
IN THE EVENT THAT THE  CLASS B PRINCIPAL BALANCE HAS  BEEN REDUCED TO ZERO.  SEE
"DESCRIPTION    OF   THE    CERTIFICATES--INTEREST",   "--PRINCIPAL   (INCLUDING
PREPAYMENTS)" AND "--SUBORDINATION OF CLASS  M AND CLASS B CERTIFICATES"  HEREIN
AND "PREPAYMENT AND YIELD CONSIDERATIONS" HEREIN AND IN THE PROSPECTUS.

    THE WEIGHTED AVERAGE LIFE OF THE CLASS A-9 CERTIFICATES WILL BE PARTICULARLY
SENSITIVE  TO THE RATE OF  PREPAYMENT ON THE MORTGAGE  LOANS AT OR ABOVE CERTAIN
PREPAYMENT LEVELS  BECAUSE  PAYMENTS  OF  PRINCIPAL ALLOCATED  TO  THE  CLASS  A
CERTIFICATES  IN EXCESS OF AMOUNTS RESULTING FROM SUCH PREPAYMENT LEVELS WILL BE
PAID IN RESPECT OF THE  COMPANION COMPONENTS PRIOR TO  BEING PAID IN RESPECT  OF
THE  PAC CERTIFICATES, THE TAC CERTIFICATES, THE CLASS A-7 PAC COMPONENT AND THE
CLASS A-7 TAC COMPONENT. SEE "PREPAYMENT AND YIELD CONSIDERATIONS" HEREIN.

    The Offered Certificates, other than the  Class A-3, Class A-10, Class  A-R,
Class A-LR and Class M Certificates, will be issued only in book-entry form (the
"Book-Entry  Certificates")  and  purchasers  thereof will  not  be  entitled to
receive definitive certificates  except in the  limited circumstances set  forth
herein.  The Book-Entry Certificates  will be registered  in the name  of Cede &
Co., as nominee of The Depository Trust  Company, which will be the "holder"  or
"Certificateholder"  of such  Certificates, as such  terms are  used herein. See
"Description of the Certificates" herein.

    The Offered Certificates  may not be  appropriate for individual  investors.
There  is currently no  secondary market for the  Offered Certificates and there
can be no assurance that a secondary market will develop or, if it does develop,
that it  will provide  Certificateholders with  liquidity of  investment at  any
particular  time or  for the life  of the Offered  Certificates. The Underwriter
intends to  act  as a  market  maker in  the  Offered Certificates,  subject  to
applicable  provisions of federal and state securities laws and other regulatory
requirements, but is under no obligation to do so and any such market making may
be discontinued at any time. There can be no assurance that any investor will be
able to sell an Offered Certificate at a price which is equal to or greater than
the price at which such Certificate was purchased. THE CLASS M CERTIFICATES  MAY
NOT  BE PURCHASED  BY OR TRANSFERRED  TO A PLAN  EXCEPT UPON THE  DELIVERY OF AN
OPINION OF COUNSEL AS PROVIDED HEREIN. IN ADDITION, THE CLASS A-R AND CLASS A-LR
CERTIFICATES MAY  NOT BE  PURCHASED BY  OR TRANSFERRED  TO (I)  A  "DISQUALIFIED
ORGANIZATION,"  (II) EXCEPT UNDER CERTAIN LIMITED CIRCUMSTANCES, A PERSON WHO IS
NOT A  "U.S.  PERSON," (III)  A  PLAN  OR (IV)  ANY  PERSON OR  ENTITY  WHO  THE
TRANSFEROR  KNOWS OR HAS REASON TO KNOW WILL  BE UNWILLING OR UNABLE TO PAY WHEN
DUE ANY  FEDERAL,  STATE  OR  LOCAL  TAXES  WITH  RESPECT  THERETO.  See  "ERISA
Considerations"  and "Description of  the Certificates--Restrictions on Transfer
of the Class  A-R, Class  A-LR and Class  M Certificates"  herein, and  "Certain
Federal  Income  Tax  Consequences--Federal Income  Tax  Consequences  for REMIC
Certificates--Taxation of  Residual  Certificates--Tax-Related  Restrictions  on
Transfer of Residual Certificates" in the Prospectus.

    For  federal income tax purposes, the Trust  Estate will consist of two real
estate mortgage investment conduits (each a "REMIC" or, in the alternative,  the
"Lower-Tier  REMIC" and the "Upper-Tier REMIC," respectively). As described more
fully herein and in the Prospectus, the  Class A-1, Class A-2, Class A-3,  Class
A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10 and Class
A-11  Certificates, the Class  M Certificates and the  Class B Certificates will
constitute "regular interests"  in the Upper-Tier  REMIC and the  Class A-R  and
Class  A-LR  Certificates  will  constitute  the  "residual  interests"  in  the
Upper-Tier REMIC and Lower-Tier  REMIC, respectively. PROSPECTIVE INVESTORS  ARE
CAUTIONED  THAT THE CLASS  A-R CERTIFICATEHOLDER'S REMIC  TAXABLE INCOME AND THE
TAX LIABILITY THEREON WILL, AND THE CLASS A-LR CERTIFICATEHOLDER'S REMIC TAXABLE
INCOME AND THE  TAX LIABILITY  THEREON MAY,  EXCEED CASH  DISTRIBUTIONS TO  SUCH
HOLDERS DURING CERTAIN PERIODS, IN WHICH EVENT SUCH HOLDERS MUST HAVE SUFFICIENT
ALTERNATIVE   SOURCES  OF  FUNDS  TO  PAY   SUCH  TAX  LIABILITY.  See  "Summary
Information--Federal Income Tax Status" and "Federal Income Tax  Considerations"
herein   and  "Certain  Federal  Income  Tax  Consequences--Federal  Income  Tax
Consequences for REMIC Certificates" in the Prospectus.

    The Class A Certificates, other than the Class A-11 Certificates,  represent
twelve Subclasses of a Class and the Class M Certificates represent a Class, all
of  which are  part of a  separate Series  of Certificates being  offered by the
Seller pursuant  to  the  Prospectus  dated  April  8,  1993  accompanying  this
Prospectus  Supplement. Any prospective investor should not purchase any Offered
Certificates described herein unless it  shall have received the Prospectus  and
this  Prospectus  Supplement. The  Prospectus shall  not be  considered complete
without  this   Prospectus  Supplement.   The  Prospectus   contains   important
information   regarding  this  offering  which  is  not  contained  herein,  and
prospective investors  are urged  to  read, in  full,  the Prospectus  and  this
Prospectus Supplement.
                             ---------------------

    UNTIL  AUGUST 7,  1993, ALL  DEALERS EFFECTING  TRANSACTIONS IN  THE OFFERED
CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED
TO DELIVER A PROSPECTUS  SUPPLEMENT AND PROSPECTUS. THIS  IS IN ADDITION TO  THE
OBLIGATION  OF DEALERS  TO DELIVER A  PROSPECTUS SUPPLEMENT  AND PROSPECTUS WHEN
ACTING  AS  UNDERWRITERS  AND  WITH  RESPECT  TO  THEIR  UNSOLD  ALLOTMENTS   OR
SUBSCRIPTIONS.

                                      S-2
<PAGE>
                               TABLE OF CONTENTS

                             PROSPECTUS SUPPLEMENT

<TABLE>
<CAPTION>
                                                                                                                PAGE
                                                                                                              ---------
<S>                                                                                                           <C>
Summary Information.........................................................................................  S-4
Description of the Certificates.............................................................................  S-20
  General...................................................................................................  S-20
  Book-Entry Registration...................................................................................  S-20
  Definitive Certificates...................................................................................  S-21
  Distributions.............................................................................................  S-22
  Interest..................................................................................................  S-24
  Principal (Including Prepayments).........................................................................  S-28
    CALCULATION OF AMOUNT TO BE DISTRIBUTED TO THE CLASS A CERTIFICATES.....................................  S-29
    CALCULATION OF AMOUNT TO BE DISTRIBUTED TO THE CLASS M CERTIFICATES.....................................  S-31
    ALLOCATION OF AMOUNT TO BE DISTRIBUTED TO THE CLASS A AND CLASS M CERTIFICATES..........................  S-32
    PRINCIPAL PAYMENT CHARACTERISTICS OF THE PAC CERTIFICATES, THE TAC CERTIFICATES, THE CLASS A-7 PAC
     COMPONENT, THE CLASS A-7 TAC COMPONENT AND THE COMPANION COMPONENTS....................................  S-40
  Additional Rights of the Class A-R and Class A-LR Certificateholders......................................  S-42
  Periodic Advances.........................................................................................  S-43
  Restrictions on Transfer of the Class A-R, Class A-LR and Class M Certificates............................  S-44
  Reports...................................................................................................  S-45
  Subordination of Class M and Class B Certificates.........................................................  S-45
    ALLOCATION OF LOSSES....................................................................................  S-46
Description of the Mortgage Loans...........................................................................  S-49
  Mandatory Repurchase or Substitution of Mortgage Loans....................................................  S-56
  Optional Repurchase of Defaulted Mortgage Loans...........................................................  S-56
Origination, Delinquency and Foreclosure Experience.........................................................  S-57
  Loan Origination..........................................................................................  S-57
  Delinquency and Foreclosure Experience....................................................................  S-57
Prepayment and Yield Considerations.........................................................................  S-60
  Sensitivity of the Class A-3 and Class A-10 Certificates..................................................  S-68
Pooling and Servicing Agreement.............................................................................  S-69
  General...................................................................................................  S-69
  Voting....................................................................................................  S-69
  Trustee...................................................................................................  S-70
  Servicing Compensation and Payment of Expenses............................................................  S-70
  Optional Termination......................................................................................  S-70
Federal Income Tax Considerations...........................................................................  S-71
  Regular Certificates......................................................................................  S-71
  Residual Certificates.....................................................................................  S-72
ERISA Considerations........................................................................................  S-73
Legal Investment............................................................................................  S-74
Secondary Market............................................................................................  S-75
Underwriting................................................................................................  S-75
Legal Matters...............................................................................................  S-75
Use of Proceeds.............................................................................................  S-75
Ratings.....................................................................................................  S-75
Index of Significant Prospectus Supplement Definitions......................................................  S-77
</TABLE>

                                      S-3
<PAGE>
                              SUMMARY INFORMATION

    THE  FOLLOWING IS  QUALIFIED IN  ITS ENTIRETY  BY REFERENCE  TO THE DETAILED
INFORMATION APPEARING  ELSEWHERE  IN  THIS  PROSPECTUS  SUPPLEMENT  AND  IN  THE
ACCOMPANYING  PROSPECTUS  (THE  "PROSPECTUS"). CAPITALIZED  TERMS  USED  IN THIS
PROSPECTUS SUPPLEMENT  AND  NOT  OTHERWISE  DEFINED  HEREIN  HAVE  THE  MEANINGS
ASSIGNED  IN  THE PROSPECTUS.  SEE "INDEX  OF SIGNIFICANT  PROSPECTUS SUPPLEMENT
DEFINITIONS" HEREIN AND "INDEX OF SIGNIFICANT DEFINITIONS" IN THE PROSPECTUS.

<TABLE>
<S>                                 <C>
Title of Securities...............  Mortgage Pass-Through Certificates, Series 1993-18  (the
                                    "Series 1993-18 Certificates" or the "Certificates").

Seller............................  The  Prudential Home  Mortgage Securities  Company, Inc.
                                    (the "Seller"). See "The Seller" in the Prospectus.

Servicer..........................  The Prudential  Home  Mortgage  Company,  Inc.  (in  its
                                    capacity   as   servicer,  the   "Servicer,"  otherwise,
                                    "PHMC"). See  "Servicing  of  the  Mortgage  Loans"  and
                                    "PHMC--General" in the Prospectus.

Trustee...........................  First  Trust  National Association,  a  national banking
                                    association (the "Trustee"). See "Pooling and  Servicing
                                    Agreement--Trustee" in this Prospectus Supplement.

Rating of Certificates............  It  is  a  condition  to the  issuance  of  the  Class A
                                    Certificates offered by  this Prospectus Supplement  and
                                    the  Prospectus that they shall have been rated "Aaa" by
                                    Moody's Investors Service, Inc. ("Moody's") and "AAA" by
                                    Standard & Poor's Corporation ("S&P"). It is a condition
                                    to the issuance  of the Class  M Certificates that  they
                                    shall  have been rated "Aa2" by Moody's and "AA" by S&P.
                                    The ratings by Moody's  and S&P are not  recommendations
                                    to  buy,  sell  or  hold such  Certificates  and  may be
                                    subject to revision  or withdrawal  at any  time by  the
                                    assigning  rating agency. The ratings do not address the
                                    possibility that, as a result of principal  prepayments,
                                    holders  of such  Certificates may receive  a lower than
                                    anticipated yield.  See  "--Effects  of  Prepayments  on
                                    Investment  Expectations"  below and  "Ratings"  in this
                                    Prospectus Supplement.

Description of Certificates.......  The Series 1993-18 Certificates will consist of Class  A
                                    Certificates,   Class   M  Certificates   and   Class  B
                                    Certificates. The Class A Certificates represent a  type
                                    of  interest referred  to in  the Prospectus  as "Senior
                                    Certificates" and the Class  M Certificates and Class  B
                                    Certificates represent a type of interest referred to in
                                    the  Prospectus as "Subordinated Certificates." As these
                                    designations suggest, the Class A Certificates are enti-
                                    tled to  a certain  priority, relative  to the  Class  M
                                    Certificates  and  Class  B  Certificates,  in  right of
                                    distributions  on  the  mortgage  loans  underlying  the
                                    Series  1993-18 Certificates (the  "Mortgage Loans"). As
                                    between  the  Class  M  Certificates  and  the  Class  B
                                    Certificates, the Class M Certificates are entitled to a
                                    certain  priority  in  right  of  distributions  on  the
                                    Mortgage Loans.  See "--Distributions  of Principal  and
                                    Interest" below.

                                    Initially, the Class A Certificates will evidence in the
                                    aggregate    an   approximate    92.25%   (approximately
                                    $206,887,000)  undivided  interest   in  the   aggregate
                                    initial  principal  balance of  the Mortgage  Loans; the
                                    Class M Certificates will  evidence in the aggregate  an
</TABLE>

                                      S-4
<PAGE>

<TABLE>
<S>                                 <C>
                                    approximate  1.25% (approximately  $2,804,000) undivided
                                    interest in the aggregate  initial principal balance  of
                                    the  Mortgage Loans;  and the Class  B Certificates will
                                    evidence  in   the   aggregate  an   approximate   6.50%
                                    (approximately  $14,577,758)  undivided interest  in the
                                    aggregate initial  principal  balance  of  the  Mortgage
                                    Loans.  The  relative  interests in  the  aggregate out-
                                    standing  principal  balance   of  the  Mortgage   Loans
                                    represented  by  the  Class  A,  Class  M  and  Class  B
                                    Certificates are subject to change over time because  of
                                    the  disproportionate allocation  of certain unscheduled
                                    principal payments  to the  Class A  Certificates for  a
                                    specified  period and  the allocation  of certain losses
                                    and certain shortfalls first to the Class B Certificates
                                    until the aggregate principal  balance thereof has  been
                                    reduced  to zero  and then  to the  Class M Certificates
                                    until the aggregate principal  balance thereof has  been
                                    reduced  to zero, prior to the allocation of such losses
                                    and shortfalls to the Class A Certificates, as discussed
                                    in "--Distributions of Principal  and Interest" and  "--
                                    Credit Enhancement" below.
                                    The  Class  A  Certificates  will  consist  of  thirteen
                                    subclasses, designated  as  the Class  A-1,  Class  A-2,
                                    Class  A-3, Class A-4, Class  A-5, Class A-6, Class A-7,
                                    Class A-8, Class A-9, Class A-10, Class A-11, Class  A-R
                                    and  Class A-LR  Certificates. The  Class M Certificates
                                    will  not  be  divided  into  subclasses.  The  Class  A
                                    Certificates,  other than  the Class  A-11 Certificates,
                                    and  Class  M  Certificates  are  referred  to  in  this
                                    Prospectus  Supplement  as  the  "Offered Certificates."
                                    References to the "Subordinated Certificates" are to the
                                    Class M and  Class B  Certificates. The  Class A-11  and
                                    Class  B Certificates are not  offered hereby and may be
                                    retained or sold by the Seller.
                                    The Class A-1,  Class A-2, Class  A-3, Class A-4,  Class
                                    A-5,  Class A-6 and Class  A-10 Certificates are planned
                                    amortization class  certificates  and  are  referred  to
                                    herein collectively as the "PAC Certificates." The Class
                                    A-8   Certificates   are  targeted   amortization  class
                                    certificates and  are referred  to  herein as  the  "TAC
                                    Certificates."  The Class A-7  Certificates will exhibit
                                    principal  payment  characteristics   of  both   planned
                                    amortization class certificates and targeted
                                    amortization  class certificates. Solely for the purpose
                                    of determining distributions  in reduction of  principal
                                    balance,  the Class  A-7 Certificates will  be deemed to
                                    consist of two components as described herein: the Class
                                    A-7 PAC Component and the  Class A-7 TAC Component.  The
                                    Class  A-7 PAC Component  has characteristics similar to
                                    the PAC Certificates.  The Class A-7  TAC Component  has
                                    characteristics  similar  to the  TAC  Certificates. The
                                    Class A-9  Certificates are  companion certificates  and
                                    will  receive  payments  of principal  allocated  to the
                                    Class A  Certificates in  excess of  certain  prepayment
                                    levels  prior  to payments  of  such excess  to  the PAC
                                    Certificates, the TAC  Certificates, the  Class A-7  PAC
                                    Component  and the  Class A-7 TAC  Component. Solely for
                                    the purpose of determining distributions of interest and
                                    in  reduction  of  principal  balance,  the  Class   A-9
                                    Certificates  will be  deemed to  consist of  two compo-
                                    nents: the Class A-9  Companion Component and the  Class
                                    A-9
</TABLE>

                                      S-5
<PAGE>

<TABLE>
<S>                                 <C>
                                    Accrual  Companion  Component,  which  are  referred  to
                                    herein  collectively  as  the  "Companion   Components."
                                    Unless   the  principal  balances  of  the  Subordinated
                                    Certificates have  been reduced  to zero,  the  interest
                                    that  accrues on the principal  balance of the Class A-9
                                    Accrual Companion Component will  not be distributed  to
                                    the  holders  of  the  Class  A-9  Certificates  on  any
                                    Distribution Date  but, instead,  such amounts  will  be
                                    added   to  the  component  principal  balance  of  such
                                    component. The  holder  of  a Class  A-7  or  Class  A-9
                                    Certificate  will not  have a severable  interest in any
                                    component, but will  have an undivided  interest in  the
                                    entire subclass. See "Description of the
                                    Certificates--Principal (Including
                                    Prepayments)--Allocation  of Amount to be Distributed to
                                    the Class A and  Class M Certificates" and  "--Principal
                                    Payment Characteristics of the PAC Certificates, the TAC
                                    Certificates, the Class A-7 PAC Component, the Class A-7
                                    TAC  Component  and  the Companion  Components"  in this
                                    Prospectus Supplement.

                                    The Offered Certificates have the approximate  aggregate
                                    initial  principal balances  set forth  on the  cover of
                                    this Prospectus Supplement.  Any difference between  the
                                    aggregate  principal balance of the  Class A and Class M
                                    Certificates as of  the date of  issuance of the  Series
                                    1993-18   Certificates  and  the  approximate  aggregate
                                    initial principal balance  of the  Class A  and Class  M
                                    Certificates   as  of   the  date   of  this  Prospectus
                                    Supplement,  (i)   with   respect   to   the   Class   A
                                    Certificates,  other than  the Class  A-11 Certificates,
                                    will not exceed  5% of the  aggregate initial  principal
                                    balance of such Class A Certificates stated on the cover
                                    of  this Prospectus Supplement and  (ii) with respect to
                                    the Class  M  Certificates,  will depend  on  the  final
                                    subordination    levels    for   the    Series   1993-18
                                    Certificates. Any difference  allocated to  the Class  A
                                    Certificates  will be allocated  among the subclasses of
                                    Class A Certificates  other than the  Class A-11,  Class
                                    A-R and Class A-LR Certificates.

Forms of Certificates;
  Denominations...................  BOOK-ENTRY  FORM.  The  Offered Certificates, other than
                                    the Class A-3,  Class A-10,  Class A-R,  Class A-LR  and
                                    Class M Certificates, will be issued in book-entry form,
                                    through  the facilities of  The Depository Trust Company
                                    ("DTC").   These   Certificates    are   referred    to,
                                    collectively,  in  this  Prospectus  Supplement  as  the
                                    "Book-Entry Certificates." An investor in a subclass  of
                                    Book-Entry  Certificates  will  not  receive  a physical
                                    certificate representing its ownership interest in  such
                                    Book-Entry   Certificates,  except  under  extraordinary
                                    circumstances, which  are discussed  in "Description  of
                                    the   Certificates--Definitive  Certificates"   in  this
                                    Prospectus Supplement. Instead, DTC will effect payments
                                    and transfers by means  of its electronic  recordkeeping
                                    services,    acting   through    certain   participating
                                    organizations. This  may  result in  certain  delays  in
                                    receipt of distributions by an investor and may restrict
                                    an  investor's  ability  to pledge  its  securities. The
                                    rights of investors in  the Book-Entry Certificates  may
                                    generally   only  be  exercised   through  DTC  and  its
                                    participating organizations.  See  "Description  of  the
                                    Certificates--Book-Entry Registration" in this
                                    Prospectus Supplement.
</TABLE>

                                      S-6
<PAGE>

<TABLE>
<S>                                 <C>
                                    The  Book-Entry Certificates  will be  issued in minimum
                                    denominations of $100,000 initial principal balance. Any
                                    amounts in  excess  of  $100,000  will  be  in  integral
                                    multiples  of  $1,000  initial  principal  balance.  See
                                    "Description  of  the  Certificates--General"  in   this
                                    Prospectus Supplement.

                                    CERTIFICATED  FORM.   The Class  A-3, Class  A-10, Class
                                    A-R, Class A-LR and Class M Certificates will be offered
                                    in fully registered, certificated form. Accordingly,  an
                                    investor  in any such subclass or class will be issued a
                                    physical   certificate   representing   its    ownership
                                    interest.

                                    The  Class A-3  Certificates will  be issued  in minimum
                                    denominations of $1,000  initial principal balance.  Any
                                    amounts   in  excess  of  $1,000  will  be  in  integral
                                    multiples of  $1 initial  principal balance.  The  Class
                                    A-10 Certificates will be issued as a single certificate
                                    with  a  denomination  equal  to  the  initial principal
                                    balance  thereof.   The  Class   A-R  and   Class   A-LR
                                    Certificates will each be issued as a single certificate
                                    with a denomination of $1,000 initial principal balance.
                                    The  Class  M  Certificates will  be  issued  in minimum
                                    denominations of $100,000 initial principal balance. Any
                                    amounts in  excess  of  $100,000  will  be  in  integral
                                    multiples  of  $1,000  initial  principal  balance.  See
                                    "Description  of  the  Certificates--General"  in   this
                                    Prospectus Supplement.

Mortgage Loans....................  MORTGAGE  LOAN DATA.  The  Mortgage Loans, which are the
                                    source of distributions to holders of the Series 1993-18
                                    Certificates, are expected  to consist of  conventional,
                                    fixed interest rate, monthly pay, fully amortizing, one-
                                    to four-family, residential first mortgage loans, having
                                    original  terms to  stated maturity  of approximately 30
                                    years, which may include loans secured by shares  issued
                                    by cooperative housing corporations.

                                    The  Mortgage  Loans  will  consist  of  mortgage  loans
                                    originated  in   connection  with   the  relocation   of
                                    employees  of various  corporate employers participating
                                    in PHMC's relocation program and of employees of various
                                    non-participant employers.  Some of  the Mortgage  Loans
                                    are  expected to be subject to subsidy agreements which,
                                    except under certain limited circumstances, require  the
                                    employers  of the mortgagors to provide for a portion of
                                    the monthly payments on  the related Mortgage Loans  for
                                    specified periods.

                                    The  Mortgage  Loans are  expected  to have  the further
                                    specifications set  forth  in the  following  table  and
                                    under the heading "Description of the Mortgage Loans" in
                                    this Prospectus Supplement.
</TABLE>

                                      S-7
<PAGE>

<TABLE>
<S>                                 <C>
SELECTED MORTGAGE LOAN DATA
(AS OF THE CUT-OFF DATE)
Cut-Off Date:                         May 1, 1993
Number of Mortgage Loans:             780
Aggregate Unpaid Principal
  Balance 1:                          $224,268,758
Range of Unpaid Principal             $44,685 to $997,084
  Balances 1:
Average Unpaid Principal Balance 1:   $287,524
Aggregate  Unpaid  Principal Balance
  of Subsidy Loans 1:                 $24,602,743
Subsidy Loans  as  a  Percentage  of
  the   Aggregate  Unpaid  Principal
  Balance 1:                          10.97%
Range of Interest Rates:              7.250% to 9.250%
Weighted Average Interest Rate 1:     7.850%
Range of Remaining  Terms to  Stated
  Maturity:                           306 months to 360 months
Weighted  Average Remaining  Term to
  Stated Maturity 1:                  358 months
Range  of   Original   Loan-to-Value
  Ratios:                             27.62% to 90.00%
Weighted  Average  Original Loan-to-
  Value Ratio 1:                      79.11%
Geographic Concentration of
  Mortgaged   Properties    Securing
  Mortgage  Loans in Excess of 5% of
  the  Aggregate  Unpaid   Principal
  Balance(1):                         California       29.30%
                                      New  Jersey      11.79%
                                      Connecticut      10.96%
                                      Massachusetts     6.10%
                                      Texas           5.48%
1 approximate
- --------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<S>                                 <C>
                                    CHANGES TO POOL.  A number of Mortgage Loans may be  re-
                                    moved  from the pool, or a  substitution may be made for
                                    certain Mortgage Loans,  in advance of  the issuance  of
                                    the  Series 1993-18  Certificates (which  is expected to
                                    occur on  or about  May 14,  1993). This  may result  in
                                    changes in certain of the pool characteristics set forth
                                    in  the  table above  and  elsewhere in  this Prospectus
                                    Supplement. See "Description of  the Mortgage Loans"  in
                                    this Prospectus Supplement.
                                    Subsequent   to  the  issuance  of  the  Series  1993-18
                                    Certificates, certain Mortgage Loans may be removed from
                                    the  pool   through   repurchase   or,   under   certain
                                    circumstances,   substitution  by  the  Seller,  if  the
                                    Mortgage  Loans   are  discovered   to  have   defective
                                    documentation or if they otherwise do not conform to the
                                    standards  established  by the  Seller's representations
                                    and  warranties  concerning  the  Mortgage  Loans.   See
                                    "Description of the Mortgage Loans--Mandatory Repurchase
                                    or  Substitution of  Mortgage Loans"  in this Prospectus
                                    Supplement. The  Seller  may also  repurchase  defaulted
                                    Mortgage   Loans.  See  "Description   of  the  Mortgage
                                    Loans--Optional Repurchase of Defaulted Mortgage  Loans"
                                    in this Prospectus Supplement.
</TABLE>

                                      S-8
<PAGE>

<TABLE>
<S>                                 <C>
                                    The  Servicer is entitled, subject to certain conditions
                                    relating to  the then-remaining  size  of the  pool,  to
                                    purchase  all outstanding Mortgage Loans in the pool and
                                    thereby effect early  retirement of  the Series  1993-18
                                    Certificates. See "Pooling and Servicing
                                    Agreement--Optional   Termination"  in  this  Prospectus
                                    Supplement.
Distributions of Principal and
  Interest........................  DISTRIBUTIONS IN  GENERAL. Distributions  on the  Series
                                    1993-18  Certificates will  be made  on the  25th day of
                                    each month or, if such day is not a business day, on the
                                    succeeding business day (each  such date is referred  to
                                    in this Prospectus Supplement as a "Distribution Date"),
                                    commencing  in June  1993, to  holders of  record at the
                                    close of  business  on  the last  business  day  of  the
                                    preceding  month who are entitled to such distributions.
                                    In the case of  the Book-Entry Certificates, the  holder
                                    of record will be DTC.
                                    The   amount   available   for   distribution   on   any
                                    Distribution Date  is primarily  a function  of (i)  the
                                    amount  remitted by mortgagors of  the Mortgage Loans in
                                    payment of their scheduled installments of principal and
                                    interest, (ii)  the amount  of prepayments  made by  the
                                    mortgagors  and (iii) proceeds  from liquidations of de-
                                    faulted Mortgage Loans.
                                    On  any  Distribution  Date,  holders  of  the  Class  A
                                    Certificates will be entitled to receive all amounts due
                                    them before any distributions are made to holders of the
                                    Class  M and  Class B Certificates  on that Distribution
                                    Date. The amount that is available to be distributed  on
                                    any  Distribution Date  will be  allocated first  to pay
                                    interest due  holders of  the Class  A Certificates  and
                                    then,  if the amount  available for distribution exceeds
                                    the amount  of  interest  due holders  of  the  Class  A
                                    Certificates,   to  reduce   the  outstanding  principal
                                    balance of the Class A Certificates. Amounts accrued  in
                                    respect  of interest on the  Class A-9 Accrual Companion
                                    Component will  be distributed  as  a reduction  of  the
                                    outstanding   principal   balance   of   the   Class   A
                                    Certificates   then   entitled   to   distributions   of
                                    principal, rather than as interest to the holders of the
                                    Class A-9 Certificates, unless the principal balances of
                                    the Subordinated Certificates have been reduced to zero,
                                    as described under "--Interest Distributions" below. The
                                    likelihood that a holder of a particular subclass of the
                                    Class    A    Certificates   will    receive   principal
                                    distributions on any  Distribution Date  will depend  on
                                    the  priority  in  which such  subclass  is  entitled to
                                    principal distributions, as set forth under the  heading
                                    "Description  of the  Certificates--Principal (Including
                                    Prepayments)--Allocation of Amount to be Distributed  to
                                    the Class A and Class M Certificates" in this Prospectus
                                    Supplement.
                                    After  all amounts due  on the Class  A Certificates for
                                    any  Distribution  Date  have  been  paid,  the   amount
                                    remaining  will be distributed,  in the following order,
                                    to (i) pay interest  due to the holders  of the Class  M
                                    Certificates,  (ii) pay principal due  to the holders of
                                    the Class M Certificates, (iii) pay interest due to  the
                                    holders  of  the  Class  B  Certificates  and  (iv)  pay
                                    principal  due   to  the   holders   of  the   Class   B
                                    Certificates.
</TABLE>

                                      S-9
<PAGE>

<TABLE>
<S>                                 <C>
                                    If  any  mortgagor  is  delinquent  in  the  payment  of
                                    principal or interest on a  Mortgage Loan in any  month,
                                    the  Servicer  will  advance  such  payment  unless  the
                                    Servicer determines that the delinquent amount will  not
                                    be  recoverable by it from liquidation proceeds or other
                                    recoveries   on   the   related   Mortgage   Loan.   See
                                    "Description  of the Certificates--Periodic Advances" in
                                    this Prospectus Supplement.
                                    INTEREST DISTRIBUTIONS. The amount of interest to  which
                                    holders   of   each   subclass  or   class   of  Offered
                                    Certificates, other than the Class A-3, Class A-9, Class
                                    A-10 and Class A-LR Certificates, will be entitled  each
                                    month  is calculated based  on the outstanding principal
                                    balance of that  subclass or  class, as  of the  related
                                    Distribution  Date. Interest  will accrue  each month on
                                    each such subclass or  class according to the  following
                                    formula:  1/12th  of  the  pass-through  rate  for  such
                                    subclass  or   class  multiplied   by  the   outstanding
                                    principal  balance of such  subclass or class  as of the
                                    related Distribution  Date.  The pass-through  rate  for
                                    each  such subclass or class is the percentage set forth
                                    on the cover of this Prospectus Supplement.
                                    The amount of interest to which the holders of the Class
                                    A-3 and Class A-10 Certificates are entitled each  month
                                    is   calculated  based  on   the  outstanding  principal
                                    balances of certain subclasses of Class A  Certificates.
                                    Interest  will accrue on the Class A-3 Certificates each
                                    month in an amount equal to  the sum of (i) the  product
                                    of 1/12th of 1.10% and the outstanding principal balance
                                    of  the  Class  A-2 Certificates,  (ii)  the  product of
                                    1/12th of 7.00% and the outstanding principal balance of
                                    the Class  A-3 Certificates  and  (iii) the  product  of
                                    1/12th of 0.30% and the outstanding principal balance of
                                    the  Class A-4 Certificates. Interest will accrue on the
                                    Class A-10 Certificates each month in an amount equal to
                                    the sum of (i)  the product of 1/12th  of 1.25% and  the
                                    outstanding   principal   balance  of   the   Class  A-1
                                    Certificates and (ii) the product of 1/12th of 7.00% and
                                    the outstanding  principal  balance of  the  Class  A-10
                                    Certificates.  In each  case, the  outstanding principal
                                    balance  will   be   calculated  as   of   the   related
                                    Distribution    Date   before    taking   into   account
                                    distributions of principal for such Distribution Date.
                                    Interest will accrue on the Class A-9 Certificates  each
                                    month  in an  amount equal  to the  sum of  the interest
                                    accrued on its components.  Interest will accrue and  be
                                    distributed  each  month  on  the  Class  A-9  Companion
                                    Component  at  the  rate  of  1/12th  of  7.00%  on  the
                                    outstanding   principal   balance  of   such  component.
                                    Interest will accrue each month on the Class A-9 Accrual
                                    Companion Component at  the rate of  1/12th of 7.00%  on
                                    the  outstanding  principal balance  of  such component.
                                    However, the amount of interest accrued on the Class A-9
                                    Accrual Companion Component will  not be distributed  as
                                    interest  to the  holders of the  Class A-9 Certificates
                                    unless  the  principal  balances  of  the   Subordinated
                                    Certificates have been reduced to zero, but instead will
                                    be added to the component principal balance of the Class
                                    A-9 Accrual Companion Component.
                                    The  amount of interest to which the holder of the Class
                                    A-LR Certificate is  entitled each  month is  calculated
                                    based on a
</TABLE>

                                      S-10
<PAGE>

<TABLE>
<S>                                 <C>
                                    "notional  amount," which  is an  amount other  than the
                                    actual outstanding principal  balance of such  subclass.
                                    The  method of  determining the  notional amount  of the
                                    Class A-LR Certificate  is described under  "Description
                                    of   the  Certificates--Interest"   in  this  Prospectus
                                    Supplement. Interest  will  accrue  on  the  Class  A-LR
                                    Certificate each month in an amount equal to the product
                                    of  (i) 1/12th of 7.00% and  (ii) the notional amount of
                                    the Class A-LR Certificate.
                                    When mortgagors prepay  principal or  when principal  is
                                    recovered  through foreclosures or other liquidations of
                                    defaulted Mortgage Loans,  a full  month's interest  for
                                    the  month of  payment or  recovery may  not be  paid or
                                    recovered, resulting  in interest  shortfalls. Any  such
                                    shortfalls  that  result from  principal  prepayments IN
                                    FULL will be offset  from aggregate servicing fees  that
                                    would  otherwise  be  payable  to  the  Servicer  on any
                                    Distribution Date, but only  to the extent of  servicing
                                    fees  payable  with respect  to that  Distribution Date.
                                    Shortfalls in  collections  of interest  resulting  from
                                    principal prepayments IN FULL, to the extent they exceed
                                    the aggregate servicing fees, will be allocated pro rata
                                    among  all classes  of the  Series 1993-18 Certificates,
                                    based on their then-outstanding principal balances,  and
                                    will be allocated pro rata among the subclasses of Class
                                    A   Certificates,   based  on   interest   accrued.  Any
                                    shortfalls of interest  that result from  the timing  of
                                    PARTIAL   principal   prepayments  or   liquidations  of
                                    defaulted Mortgage  Loans  will  not be  offset  by  the
                                    servicing  fees and will  not be allocated  pro rata but
                                    instead will be borne first by the Class B Certificates,
                                    second by the  Class M Certificates  and finally by  the
                                    Class   A   Certificates.   See   "Description   of  the
                                    Certificates--Subordination of the Class  M and Class  B
                                    Certificates" in this Prospectus Supplement.
                                    In  addition,  the  amount of  interest  required  to be
                                    distributed   to   holders   of   the   Series   1993-18
                                    Certificates  will be  reduced by  a portion  of certain
                                    special  hazard  losses,  fraud  losses  and  bankruptcy
                                    losses  attributable to  interest. See  "Credit Enhance-
                                    ment--Extent of Loss Coverage" below and "Description of
                                    the   Certificates--Interest"    in   this    Prospectus
                                    Supplement.
                                    To the extent that the amount available for distribution
                                    on  any Distribution Date is  insufficient to permit the
                                    distribution  of  the   applicable  amount  of   accrued
                                    interest  on  the  Class  A  Certificates  (which amount
                                    includes any  interest  to  be added  to  the  component
                                    principal  balance  of the  Class A-9  Accrual Companion
                                    Component  and  excludes   any  shortfalls  and   losses
                                    allocable  to the  Class A Certificates  as described in
                                    the two immediately preceding paragraphs), the amount of
                                    interest to  be  distributed  (or to  be  added  to  the
                                    component  principal  balance of  the Class  A-9 Accrual
                                    Companion  Component)  will   be  allocated  among   the
                                    outstanding  subclasses of Class A Certificates pro rata
                                    in accordance  with  their  respective  entitlements  to
                                    interest,  and the  amount of  any deficiencies  will be
                                    added to  the  amount  of  interest  that  the  Class  A
                                    Certificates  are  entitled  to  receive  on  subsequent
                                    Distribution Dates.  No  interest will  accrue  on  such
                                    deficiencies.
</TABLE>

                                      S-11
<PAGE>

<TABLE>
<S>                                 <C>
                                    To the extent that the amount available for distribution
                                    on  any  Distribution  Date, after  the  payment  of all
                                    amounts due the Class A  Certificates has been made,  is
                                    insufficient  to permit distribution  in full of accrued
                                    interest  on  the  Class  M  Certificates  (net  of  any
                                    shortfalls   and  losses   allocable  to   the  Class  M
                                    Certificates as  described  above), the  amount  of  any
                                    deficiency  will be added to the amount of interest that
                                    the Class  M Certificates  are  entitled to  receive  on
                                    subsequent  Distribution Dates. No  interest will accrue
                                    on such deficiencies.
                                    Interest on the Class A and Class M Certificates will be
                                    calculated on the basis of a 360-day year consisting  of
                                    twelve 30-day months.
                                    See  "Description of the Certificates--Interest" in this
                                    Prospectus Supplement.
                                    PRINCIPAL  DISTRIBUTIONS.    The  aggregate  amount   of
                                    principal   to  which   the  holders  of   the  Class  A
                                    Certificates are entitled each  month will be  comprised
                                    of  a percentage of the  scheduled payments of principal
                                    on the  Mortgage  Loans  and  a  percentage  of  certain
                                    unscheduled payments of principal on the Mortgage Loans.
                                    The  percentage of scheduled payments  will be equal, on
                                    each Distribution Date, to the fraction that  represents
                                    the  ratio of the  then-outstanding principal balance of
                                    the Class A  Certificates to  the aggregate  outstanding
                                    principal  balance of the Mortgage Loans (based on their
                                    amortization schedules then  in effect). The  percentage
                                    of  certain unscheduled  payments will  be equal  to the
                                    percentage described in the  preceding sentence plus  an
                                    additional amount equal to a percentage of the principal
                                    otherwise   distributable   to   the   holders   of  the
                                    Subordinated Certificates. During  the first five  years
                                    beginning on the first Distribution Date, the percentage
                                    of  certain  unscheduled  principal  payments  otherwise
                                    distributable  to  the   holders  of  the   Subordinated
                                    Certificates   that  is  instead  distributable  to  the
                                    holders of the  Class A  Certificates will  be equal  to
                                    100%,  and it  will decline  during the  subsequent four
                                    years, as described  under the  heading "Description  of
                                    the Certificates--Principal (Including
                                    Prepayments)--Calculation of Amount to be Distributed to
                                    the Class A Certificates" in this Prospectus Supplement,
                                    until  in year ten and each  year thereafter it is equal
                                    to zero.  On each  Distribution Date,  the  Subordinated
                                    Certificates  will collectively  be entitled  to receive
                                    the percentages of the scheduled and certain unscheduled
                                    payments of principal  on the Mortgage  Loans equal,  in
                                    each  case, to  100% less the  applicable percentage for
                                    the Class A Certificates described above.
                                    Except   as   described   below   under   "--Effect   of
                                    Subordination Level on Principal Distributions," on each
                                    Distribution  Date,  the  Class M  Certificates  will be
                                    entitled to a portion of scheduled payments and  certain
                                    unscheduled  payments of principal on the Mortgage Loans
                                    allocable  to   the   Subordinated   Certificates   that
                                    represents  the ratio of  the then-outstanding principal
                                    balance   of   the   Class   M   Certificates   to   the
                                    then-outstanding  principal balance  of the Subordinated
                                    Certificates.
</TABLE>

                                      S-12
<PAGE>

<TABLE>
<S>                                 <C>
                                    The amount  that is  available for  distribution to  the
                                    holders  of the Class A Certificates on any Distribution
                                    Date as a distribution  of principal is  the sum of  (i)
                                    the  amount  remaining  after  deducting  the  amount of
                                    interest  distributable  on  the  Class  A  Certificates
                                    (including  the amount added  to the component principal
                                    balance of the  Class A-9  Accrual Companion  Component)
                                    from  the total amount collected that is available to be
                                    distributed   to   holders   of   the   Series   1993-18
                                    Certificates  on  such  Distribution Date  and  (ii) the
                                    amount of  interest,  if  any, added  to  the  component
                                    principal  balance  of the  Class A-9  Accrual Companion
                                    Component  with  respect  to  such  Distribution   Date.
                                    Principal  will  be distributed  to  the holders  of the
                                    Class A  Certificates  in accordance  with  the  payment
                                    priorities  described under the  heading "Description of
                                    the Certificates--Principal (Including Prepay-
                                    ments)--Allocation of Amount  to be  Distributed to  the
                                    Class  A and  Class M  Certificates" in  this Prospectus
                                    Supplement.
                                    The amount  that is  available for  distribution to  the
                                    holders  of the Class M Certificates on any Distribution
                                    Date as  a  distribution  of  principal  is  the  amount
                                    remaining after all interest and principal distributions
                                    due  on the Class A Certificates and interest due on the
                                    Class M Certificates have  been deducted from the  total
                                    amount  collected that is available to be distributed to
                                    holders of the Series 1993-18 Certificates.
                                    EFFECT   OF    SUBORDINATION    LEVEL    ON    PRINCIPAL
                                    DISTRIBUTIONS.  In order to preserve the availability of
                                    the original subordination  level as protection  against
                                    losses   on  the  Class  M  Certificates,  the  Class  B
                                    Certificates, as described below, may not be entitled on
                                    certain   Distribution   Dates   to   distributions   of
                                    principal.
                                    If  on any Distribution Date  the percentage obtained by
                                    dividing the outstanding principal balance of the  Class
                                    B  Certificates by the sum  of the outstanding principal
                                    balances  of  the   Class  A,  Class   M  and  Class   B
                                    Certificates  is less than such  percentage was upon the
                                    initial issuance  of  the Series  1993-18  Certificates,
                                    then  the Class B  Certificates will not  be entitled to
                                    distributions of principal on such Distribution Date and
                                    the  Class  M  Certificates  will  be  entitled  to  all
                                    distributions of principal allocable to the Subordinated
                                    Certificates for such Distribution Date.
                                    In  such case, the  Class M Certificates  will receive a
                                    greater portion of scheduled and unscheduled payments of
                                    principal  on  the  Mortgage  Loans  allocable  to   the
                                    Subordinated  Certificates than the Class M Certificates
                                    would have received  had the Class  B Certificates  been
                                    entitled  to their  portion of  such principal payments.
                                    See   "Description   of   the    Certificates--Principal
                                    (Including  Prepayments)--Calculation  of  Amount  to be
                                    Distributed  to  the  Class  M  Certificates"  in   this
                                    Prospectus Supplement.
Credit Enhancement................  DESCRIPTION  OF "SHIFTING-INTEREST"  SUBORDINATION.  The
                                    rights of the  holders of  the Class  M Certificates  to
                                    receive distributions will be subordinated to the rights
                                    of  the holders of  the Class A  Certificates to receive
                                    distributions,  to  the  extent  described  herein.  The
                                    rights  of the  holders of  the Class  B Certificates to
                                    receive distributions will be subordinated to the rights
                                    of the holders of the  Class A and Class M  Certificates
                                    to   receive  distributions,  to  the  extent  described
                                    herein. This subordination provides a certain amount  of
                                    protection to the holders of
</TABLE>

                                      S-13
<PAGE>

<TABLE>
<S>                                 <C>
                                    the   Class  A  Certificates  (to   the  extent  of  the
                                    subordination of the Class  M and Class B  Certificates)
                                    and  the  Class M  Certificates  (to the  extent  of the
                                    subordination  of  the  Class  B  Certificates)  against
                                    delays  in the receipt of scheduled payments of interest
                                    and principal  and against  losses associated  with  the
                                    liquidation  of  defaulted  Mortgage  Loans  and certain
                                    losses resulting from the bankruptcy of a mortgagor.
                                    The protection  afforded  the  holders of  the  Class  A
                                    Certificates  by  means  of this  subordination  will be
                                    effected in two ways: (i)  by the preferential right  of
                                    the  holders  of the  Class  A Certificates  to receive,
                                    prior to any distribution being made on any Distribution
                                    Date in respect of the Class M and Class B Certificates,
                                    the amounts of interest and principal due the holders of
                                    the Class A Certificates on such date and, if necessary,
                                    by  the  right  of   such  holders  to  receive   future
                                    distributions on the Mortgage Loans that would otherwise
                                    have  been allocated to  the holders of  the Class M and
                                    Class B Certificates and (ii)  by the allocation to  the
                                    holders  of  the Class  M  and Class  B  Certificates of
                                    certain  losses  resulting   from  the  liquidation   of
                                    defaulted Mortgage Loans or the bankruptcy of mortgagors
                                    prior to the allocation of such losses to the holders of
                                    the Class A Certificates.
                                    The  protection  afforded  the holders  of  the  Class M
                                    Certificates by means of this subordination will also be
                                    effected in two ways: (i)  by the preferential right  of
                                    the  holders  of the  Class  M Certificates  to receive,
                                    prior to any distribution being made on any Distribution
                                    Date in respect of the Class B Certificates, the amounts
                                    of interest and principal due the holders of the Class M
                                    Certificates on  such date  and,  if necessary,  by  the
                                    right of such holders to receive future distributions on
                                    the  Mortgage  Loans  that  would  otherwise  have  been
                                    allocated to the holders of the Class B Certificates and
                                    (ii) by the  allocation to  the holders of  the Class  B
                                    Certificates   of  certain  losses  resulting  from  the
                                    liquidation of  defaulted Mortgage  Loans or  the  bank-
                                    ruptcy  of mortgagors  prior to  the allocation  of such
                                    losses to the holders of the Class M Certificates.
                                    In addition,  in order  to  increase the  period  during
                                    which  the principal balances of the Class M and Class B
                                    Certificates remain available  as credit enhancement  to
                                    the  Class A Certificates,  a disproportionate amount of
                                    prepayments  and  certain  unscheduled  recoveries  with
                                    respect  to the Mortgage Loans  will be allocated to the
                                    Class A Certificates. This allocation has the effect  of
                                    accelerating  the amortization  of the  Class A Certifi-
                                    cates while, in the absence of losses in respect of  the
                                    liquidation   of  defaulted  Mortgage  Loans  or  losses
                                    resulting from the bankruptcy of mortgagors,  increasing
                                    the  respective  percentage  interest  in  the principal
                                    balance  of  the   Mortgage  Loans   evidenced  by   the
                                    Subordinated Certificates.
                                    EXTENT  OF LOSS  COVERAGE.  Realized  losses on Mortgage
                                    Loans, other than  losses that are  (i) attributable  to
                                    "special  hazards" not insured  against under a standard
                                    hazard insurance  policy,  (ii)  incurred  on  defaulted
                                    Mortgage  Loans  as  to  which there  was  fraud  in the
                                    origination of such Mortgage Loans or (iii) attributable
                                    to certain actions  which may be  taken by a  bankruptcy
                                    court  in  connection  with a  Mortgage  Loan, including
</TABLE>

                                      S-14
<PAGE>

<TABLE>
<S>                                 <C>
                                    a reduction  by  a  bankruptcy court  of  the  principal
                                    balance of or the interest rate on a Mortgage Loan or an
                                    extension  of its maturity, will not be allocated to the
                                    Class  A  Certificates  until  the  date  on  which  the
                                    aggregate  principal balance of the  Class M and Class B
                                    Certificates  (which  aggregate   balance  is   expected
                                    initially  to  be  approximately  $17,381,758)  has been
                                    reduced to zero and will not be allocated to the Class M
                                    Certificates until  the  date  on  which  the  aggregate
                                    principal  balance  of the  Class B  Certificates (which
                                    aggregate  balance   is   expected   initially   to   be
                                    approximately $14,577,758) has been reduced to zero.
                                    With  respect to any Distribution Date subsequent to the
                                    first Distribution Date, the availability of the  credit
                                    enhancement   provided  by  the  Class  M  and  Class  B
                                    Certificates will be affected by the prior reduction  of
                                    the  principal  balances  of  the Class  M  and  Class B
                                    Certificates. Reduction of the principal balance of  the
                                    Class  M Certificates and the  Class B Certificates will
                                    result from (i)  the prior allocation  of losses due  to
                                    the  liquidation of defaulted  Mortgage Loans, including
                                    losses due to special hazards and fraud losses up to the
                                    respective limits  referred  to below,  (ii)  the  prior
                                    allocation of bankruptcy losses up to the limit referred
                                    to  below  and  (iii)  the  prior  receipt  of principal
                                    distributions by  the  holders  of such  class  or  sub-
                                    classes.  As  of  the  date of  issuance  of  the Series
                                    1993-18 Certificates, the amount of losses  attributable
                                    to  special hazards,  fraud and bankruptcy  that will be
                                    absorbed  solely  by   the  holders  of   the  Class   B
                                    Certificates and then solely by the holders of the Class
                                    M  Certificates will  be approximately  1.36%, 2.00% and
                                    0.31%, respectively, of the aggregate principal  balance
                                    of   the  Mortgage   Loans  as   of  the   Cut-Off  Date
                                    (approximately  $3,052,293,  $4,485,375  and   $704,155,
                                    respectively).  If losses due  to special hazards, fraud
                                    or bankruptcy exceed  any of such  amounts prior to  the
                                    principal   balances  of   the  Class  M   and  Class  B
                                    Certificates being reduced to zero, such losses will  be
                                    shared pro rata by the Class A Certificates, the Class M
                                    Certificates and the Class B Certificates based on their
                                    then-outstanding   principal  balances   and  among  the
                                    subclasses  of  Class  A  Certificates  based  on  their
                                    then-outstanding  principal balances or,  in the case of
                                    the   Class   A-9   Certificates,   the   sum   of   the
                                    then-outstanding principal balance of the Class A-9 Com-
                                    panion  Component and the  lower of the then-outstanding
                                    principal balance or  the initial  principal balance  of
                                    the  Class  A-9 Accrual  Companion Component.  After the
                                    principal  balances  of   the  Class  M   and  Class   B
                                    Certificates have been reduced to zero, such losses will
                                    be  shared  pro  rata  by  the  subclasses  of  Class  A
                                    Certificates based on  their then-outstanding  principal
                                    balances  or in the case  of the Class A-9 Certificates,
                                    the sum of the then-outstanding principal balance of the
                                    Class A-9  Companion  Component  and the  lower  of  the
                                    then-outstanding   principal  balance   or  the  initial
                                    principal balance  of the  Class A-9  Accrual  Companion
                                    Component.  Under certain circumstances,  the limits set
                                    forth  above   may  be   reduced  as   described   under
                                    "Description  of the  Certificates--Subordination of the
                                    Class M and Class B Certificates--Allocation of  Losses"
                                    in this Prospectus Supplement.
</TABLE>

                                      S-15
<PAGE>
<TABLE>
<S>                                 <C>
                                    THE  YIELD TO MATURITY ON  THE CLASS M CERTIFICATES WILL
                                    BE MORE SENSITIVE TO LOSSES  DUE TO LIQUIDATIONS OF  THE
                                    MORTGAGE LOANS (AND THE TIMING THEREOF) THAN THE CLASS A
                                    CERTIFICATES, IN THE EVENT THAT THE PRINCIPAL BALANCE OF
                                    THE CLASS B CERTIFICATES HAS BEEN REDUCED TO ZERO.
                                    See  "Description of  the Certificates--Subordination of
                                    Class M  and Class  B Certificates"  in this  Prospectus
                                    Supplement.
Effects of Prepayments on
  Investment Expectations.........  The  actual  rate  of  prepayment  of  principal  on the
                                    Mortgage  Loans  cannot  be  predicted.  The  investment
                                    performance   of  the  Offered   Certificates  may  vary
                                    materially   and   adversely    from   the    investment
                                    expectations  of  investors  due to  prepayments  on the
                                    Mortgage Loans being higher or lower than anticipated by
                                    investors. The actual yield to the holder of an  Offered
                                    Certificate may not be equal to the yield anticipated at
                                    the   time   of   purchase   of   the   Certificate  or,
                                    notwithstanding that the  actual yield is  equal to  the
                                    yield  anticipated  at that  time,  the total  return on
                                    investment expected  by  the investor  or  the  expected
                                    weighted  average  life of  the  Certificate may  not be
                                    realized.  These  effects   are  summarized  below.   IN
                                    DECIDING  WHETHER TO PURCHASE  ANY OFFERED CERTIFICATES,
                                    AN INVESTOR SHOULD  MAKE AN INDEPENDENT  DECISION AS  TO
                                    THE APPROPRIATE PREPAYMENT ASSUMPTIONS TO BE USED.
                                    YIELD.   If an investor purchases an Offered Certificate
                                    at an amount equal to its unpaid principal balance (that
                                    is, at  "par"), the  effective  yield to  that  investor
                                    (assuming  that  there  are no  interest  shortfalls and
                                    assuming the  full return  of the  purchaser's  invested
                                    principal)  will  approximate the  pass-through  rate on
                                    that Certificate. If an investor pays less or more  than
                                    the  unpaid principal  balance of  the Certificate (that
                                    is, buys the Certificate  at a "discount" or  "premium,"
                                    respectively),  then, based on the assumptions set forth
                                    in the preceding  sentence, the effective  yield to  the
                                    investor will be higher or lower, respectively, than the
                                    stated  interest rate  on the  Certificate, because such
                                    discount or premium will be  amortized over the life  of
                                    the  Certificate. Any  deviation in  the actual  rate of
                                    prepayments on the Mortgage Loans from the rate  assumed
                                    by  the  investor will  affect the  period of  time over
                                    which, or the  rate at  which, the  discount or  premium
                                    will  be  amortized and,  consequently, will  change the
                                    investor's  actual  yield  from  that  anticipated.  The
                                    timing  of receipt  of prepayments  may also  affect the
                                    investor's actual yield. AN INVESTOR THAT PURCHASES  ANY
                                    OFFERED  CERTIFICATES  AT  A  DISCOUNT  SHOULD CAREFULLY
                                    CONSIDER THE RISK THAT A SLOWER THAN ANTICIPATED RATE OF
                                    PRINCIPAL PAYMENTS ON THE MORTGAGE LOANS WILL RESULT  IN
                                    AN  ACTUAL  YIELD  THAT IS  LOWER  THAN  SUCH INVESTOR'S
                                    EXPECTED YIELD. AN INVESTOR  THAT PURCHASES ANY  OFFERED
                                    CERTIFICATES  AT A  PREMIUM, PARTICULARLY  THE CLASS A-3
                                    AND CLASS A-10  CERTIFICATES, SHOULD  CONSIDER THE  RISK
                                    THAT   A  FASTER  THAN  ANTICIPATED  RATE  OF  PRINCIPAL
                                    PAYMENTS ON THE MORTGAGE LOANS WILL RESULT IN AN  ACTUAL
                                    YIELD THAT IS LOWER THAN SUCH INVESTOR'S EXPECTED YIELD.
</TABLE>

                                      S-16
<PAGE>

<TABLE>
<S>                                 <C>
                                    The  yield to investors in the  Class A-3 and Class A-10
                                    Certificates, which  are expected  to  be offered  at  a
                                    substantial   premium   over  their   initial  principal
                                    balances, will  be  sensitive  to  both  the  timing  of
                                    receipt   of  prepayments   and  the   overall  rate  of
                                    prepayment on the Mortgage  Loans. The sensitivities  of
                                    the Class A-3 and Class A-10 Certificates to prepayments
                                    on  the Mortgage  Loans are separately  displayed in the
                                    tables appearing under the heading "Prepayment and Yield
                                    Considerations" in this Prospectus Supplement. INVESTORS
                                    IN THE  CLASS A-3  AND  CLASS A-10  CERTIFICATES  SHOULD
                                    CONSIDER  THE  RISK  THAT  A  RAPID  RATE  OF  PRINCIPAL
                                    PAYMENTS ON  THE  MORTGAGE  LOANS COULD  RESULT  IN  THE
                                    FAILURE OF SUCH INVESTORS TO FULLY RECOVER THEIR INITIAL
                                    INVESTMENTS.
                                    REINVESTMENT RISK.  As stated above, if a Certificate is
                                    purchased  at an  amount equal  to its  unpaid principal
                                    balance, fluctuations in  the rate  of distributions  of
                                    principal   will  generally  not  affect  the  yield  to
                                    maturity of that Certificate. However, the total  return
                                    on any purchaser's investment, including an investor who
                                    purchases  at par,  will be  reduced to  the extent that
                                    principal  distributions  received  on  its  Certificate
                                    cannot  be reinvested  at a rate  as high  as the stated
                                    interest rate  of  the  Certificate.  Investors  in  the
                                    Offered Certificates should consider the risk that rapid
                                    rates  of prepayments on the Mortgage Loans may coincide
                                    with periods of  low prevailing  market interest  rates.
                                    During  periods of low prevailing market interest rates,
                                    mortgagors  may  be  expected  to  prepay  or  refinance
                                    Mortgage  Loans that carry  interest rates significantly
                                    higher than  then-current  interest rates  for  mortgage
                                    loans.    Consequently,   the    amount   of   principal
                                    distributions available to an investor for  reinvestment
                                    at  such low prevailing interest rates may be relatively
                                    large. Conversely,  slow  rates of  prepayments  on  the
                                    Mortgage   Loans  may  coincide  with  periods  of  high
                                    prevailing market interest  rates. During such  periods,
                                    it  is less likely that  mortgagors will elect to prepay
                                    or refinance Mortgage Loans  and, therefore, the  amount
                                    of  principal distributions available to an investor for
                                    reinvestment at such high prevailing interest rates  may
                                    be relatively small.
                                    WEIGHTED AVERAGE LIFE VOLATILITY.  One indication of the
                                    impact  of varying prepayment rates on a security is the
                                    change in  its  weighted  average  life.  The  "weighted
                                    average  life" of an Offered  Certificate is the average
                                    amount of  time that  will elapse  between the  date  of
                                    issuance  of the Certificate and  the date on which each
                                    dollar in  reduction of  the  principal balance  of  the
                                    Certificate is distributed to the investor. Low rates of
                                    prepayment  may result in the  extension of the weighted
                                    average life of a Certificate; high rates may result  in
                                    the   shortening  of  such  weighted  average  life.  In
                                    general, if the weighted  average life of a  Certificate
                                    purchased  at  par  is  extended  beyond  that initially
                                    anticipated, such  Certificate's  market  value  may  be
                                    adversely  affected even though the yield to maturity on
                                    the Certificate is unaffected. The weighted average life
                                    of the  Class  A-9  Certificates  will  be  particularly
                                    sensitive  to the  rate of  prepayments on  the Mortgage
                                    Loans at  rates at  or above  certain prepayment  levels
                                    because  payments of principal allocated  to the Class A
                                    Certificates in excess of such prepayment levels will be
                                    paid to
</TABLE>

                                      S-17
<PAGE>

<TABLE>
<S>                                 <C>
                                    holders of  the Class  A-9  Certificates in  respect  of
                                    their  Companion  Components,  while  such  Certificates
                                    remain outstanding, prior  to being paid  to holders  of
                                    the  PAC Certificates,  the TAC  Certificates, the Class
                                    A-7 PAC Component and the  Class A-7 TAC Component.  The
                                    weighted  average  lives  of  the  Offered Certificates,
                                    under various prepayment scenarios, are displayed in the
                                    tables appearing under the heading "Prepayment and Yield
                                    Considerations" in this Prospectus Supplement.
                                    See   "Prepayment   and   Yield   Considerations"    and
                                    "Description  of the  Certificates--Principal (Including
                                    Prepayments)--Principal Payment  Characteristics of  the
                                    PAC  Certificates, the  TAC Certificates,  the Class A-7
                                    PAC Component,  the  Class  A-7 TAC  Component  and  the
                                    Companion Components" in this Prospectus Supplement.
Federal Income Tax Status.........  For  federal income tax purposes,  the Trust Estate will
                                    consist of two real estate mortgage investment  conduits
                                    (the "Upper-Tier REMIC" and the "Lower-Tier REMIC"). The
                                    Class  A-1, Class A-2, Class  A-3, Class A-4, Class A-5,
                                    Class A-6, Class A-7, Class  A-8, Class A-9, Class  A-10
                                    and  Class A-11  Certificates, the  Class M Certificates
                                    and the Class B Certificates  will be designated as  the
                                    regular interests in the Upper-Tier REMIC, and the Class
                                    A-R  Certificate  and  Class  A-LR  Certificate  will be
                                    designated as the residual  interests in the  Upper-Tier
                                    REMIC and Lower-Tier REMIC, respectively.
                                    The  Regular Certificates (as  defined herein) generally
                                    will be treated as newly originated debt instruments for
                                    federal income tax  purposes. Beneficial  owners of  the
                                    Regular  Certificates will be  required to report income
                                    thereon  in  accordance  with  the  accrual  method   of
                                    accounting.  The Class  A-9 Certificates  will be issued
                                    with original issue discount in  an amount equal to  the
                                    excess  of all  distributions of  principal and interest
                                    thereon (whether current  or accrued)  over their  issue
                                    price  (including accrued  interest). The  Class A-3 and
                                    Class A-10  Certificates will  be issued  with  original
                                    issue  discount in an amount equal  to the excess of all
                                    distributions of  principal  and interest  thereon  over
                                    their  issue prices (including  accrued interest). It is
                                    anticipated that the Class M Certificates will be issued
                                    with original issue discount in  an amount equal to  the
                                    excess  of all  distributions of  principal thereon over
                                    their issue price  (including accrued  interest). It  is
                                    further anticipated that the Class A-1, Class A-2, Class
                                    A-4,  Class A-5,  Class A-7  and Class  A-8 Certificates
                                    will be  issued at  a  premium and  that the  Class  A-6
                                    Certificates  will  be issued  with DE  MINIMIS original
                                    issue discount  for  federal income  tax  purposes.  The
                                    Class  A-11 Certificates, which  are not offered hereby,
                                    also will  be  treated  as issued  with  original  issue
                                    discount for federal income tax purposes.
                                    Holders  of the  Class A-R  and Class  A-LR Certificates
                                    will be required to include  the taxable income or  loss
                                    of  the  Upper-Tier  REMIC  and  the  Lower-Tier  REMIC,
                                    respectively,  in  determining  their  federal   taxable
                                    income.  It  is anticipated  that  all or  a substantial
                                    portion of the  taxable income of  the Upper-Tier  REMIC
                                    and the Lower-Tier REMIC includible by the Class A-R and
                                    Class  A-LR  Certificateholders,  respectively,  will be
                                    treated as "excess inclusion" income subject to  special
                                    limitations for
</TABLE>

                                      S-18
<PAGE>

<TABLE>
<S>                                 <C>
                                    federal   income  tax   purposes.  FURTHER,  SIGNIFICANT
                                    RESTRICTIONS APPLY TO THE TRANSFER OF THE CLASS A-R  AND
                                    CLASS A-LR CERTIFICATES. THE CLASS A-R CERTIFICATE WILL,
                                    AND  THE  CLASS  A-LR  CERTIFICATE  MAY,  BE  CONSIDERED
                                    "NONECONOMIC RESIDUAL INTERESTS,"  CERTAIN TRANSFERS  OF
                                    WHICH   MAY  BE  DISREGARDED   FOR  FEDERAL  INCOME  TAX
                                    PURPOSES.
                                    See "Description  of the  Certificates--Restrictions  on
                                    Transfer  of  the  Class  A-R, Class  A-LR  and  Class M
                                    Certificates" and "Federal Income Tax Considerations" in
                                    this Prospectus Supplement  and "Certain Federal  Income
                                    Tax  Consequences--Federal  Income Tax  Consequences for
                                    REMIC Certificates" in the Prospectus.
ERISA Considerations..............  A fiduciary of any employee benefit plan subject to  the
                                    Employee  Retirement  Income  Security Act  of  1974, as
                                    amended ("ERISA"),  or  Section  4975  of  the  Internal
                                    Revenue  Code  of 1986,  as  amended (the  "Code")  or a
                                    governmental plan,  subject  to any  federal,  state  or
                                    local  law  ("Similar  Law"), which  is,  to  a material
                                    extent, similar to the foregoing provisions of ERISA  or
                                    the  Code  (collectively,  a  "Plan")  should  carefully
                                    review with its legal  advisors whether the purchase  or
                                    holding  of Class A  or Class M  Certificates could give
                                    rise  to  a  transaction  prohibited  or  not  otherwise
                                    permissible  under  ERISA,  the  Code  or  Similar  Law.
                                    BECAUSE THE CLASS M CERTIFICATES ARE SUBORDINATED TO THE
                                    CLASS A CERTIFICATES, THE  CLASS M CERTIFICATES MAY  NOT
                                    BE PURCHASED BY OR TRANSFERRED TO A PLAN EXCEPT UPON THE
                                    DELIVERY  OF AN  OPINION OF  COUNSEL AS  DESCRIBED UNDER
                                    "ERISA CONSIDERATIONS"  IN THIS  PROSPECTUS  SUPPLEMENT.
                                    NEITHER  THE CLASS  A-R CERTIFICATE  NOR THE  CLASS A-LR
                                    CERTIFICATE MAY  BE PURCHASED  BY  OR TRANSFERRED  TO  A
                                    PLAN.  See  "ERISA  Considerations"  in  this Prospectus
                                    Supplement and in the Prospectus.
Legal Investment..................  The Offered  Certificates constitute  "mortgage  related
                                    securities"  for  purposes  of  the  Secondary  Mortgage
                                    Market Enhancement Act of 1984 so long as they are rated
                                    in one of the two highest rating categories by at  least
                                    one nationally recognized statistical rating
                                    organization.  As  such,  the  Offered  Certificates are
                                    legal investments  for certain  entities to  the  extent
                                    provided  in  such  act. However,  there  are regulatory
                                    requirements and considerations applicable to  regulated
                                    financial  institutions and restrictions  on the ability
                                    of such  institutions  to  invest in  certain  types  of
                                    mortgage  related securities.  Prospective purchasers of
                                    the Offered Certificates should consult their own legal,
                                    tax and  accounting advisors  in determining  the  suit-
                                    ability  of and  consequences to  them of  the purchase,
                                    ownership and disposition  of the Offered  Certificates.
                                    See "Legal Investment" in this Prospectus Supplement.
</TABLE>

                                      S-19
<PAGE>
                        DESCRIPTION OF THE CERTIFICATES

GENERAL

    The  Book-Entry Certificates will be issued  only in book-entry form, except
as described  below.  The Book-Entry  Certificates  will be  issued  in  minimum
denominations  of $100,000 initial  principal balance and  integral multiples of
$1,000 initial principal balance in excess thereof.

    Offered Certificates  issued  in  fully registered,  certificated  form  are
referred to herein as "Definitive Certificates." The Class A-3 Certificates will
be  issued as Definitive Certificates in minimum denominations of $1,000 initial
principal balance  and integral  multiples of  $1 initial  principal balance  in
excess  thereof.  The  Class  A-10  Certificates  will  be  issued  as  a single
Definitive Certificate  with  a  denomination equal  to  the  initial  principal
balance  thereof. The Class A-R and Class  A-LR Certificates will each be issued
as a  single  Definitive  Certificate  with a  denomination  of  $1,000  initial
principal  balance.  The  Class  M Certificates  will  be  issued  as Definitive
Certificates in minimum denominations of $100,000 initial principal balance  and
integral multiples of $1,000 initial principal balance in excess thereof.

    Each  Subclass of Book-Entry Certificates initially will be represented by a
single physical certificate registered  in the name of  Cede & Co. ("Cede"),  as
nominee  of  DTC, which  will  be the  "holder"  or "Certificateholder"  of such
Certificates, as such terms are used herein. No person acquiring an interest  in
the Book-Entry Certificates (a "Beneficial Owner") will be entitled to receive a
certificate  representing such person's interest in the Book-Entry Certificates,
except as set forth below under
"--Definitive Certificates." Unless and until Definitive Certificates are issued
under the  limited circumstances  described herein,  all references  to  actions
taken  by Certificateholders  or holders  shall, in  the case  of the Book-Entry
Certificates,  refer  to  actions  taken  by  DTC  upon  instructions  from  its
Participants  (as defined  below), and  all references  herein to distributions,
notices, reports and statements to  Certificateholders or holders shall, in  the
case  of the Book-Entry  Certificates, refer to  distributions, notices, reports
and statements  to DTC  or Cede,  as  the registered  holder of  the  Book-Entry
Certificates,  as  the case  may be,  for distribution  to Beneficial  Owners in
accordance with DTC procedures. See "--Book-Entry Registration" below.

BOOK-ENTRY REGISTRATION

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

    Under the rules, regulations and  procedures creating and affecting DTC  and
its  operations (the "Rules"),  DTC is required to  make book-entry transfers of
Book-Entry Certificates among Participants on whose behalf it acts with  respect
to  the Book-Entry  Certificates and  to receive  and transmit  distributions of
principal of  and  interest on  the  Book-Entry Certificates.  Participants  and
Indirect Participants with which Beneficial Owners have accounts with respect to
the  Book-Entry Certificates similarly are required to make book-entry transfers
and receive and transmit such payments on behalf of their respective  Beneficial
Owners.

    Beneficial  Owners that  are not  Participants or  Indirect Participants but
desire to purchase, sell or otherwise transfer ownership of, or other  interests
in,  Book-Entry Certificates  may do so  only through  Participants and Indirect
Participants. In addition, Beneficial Owners  will receive all distributions  of
principal  and interest from  the Servicer, or  a paying agent  on behalf of the
Servicer, through DTC Participants. DTC  will forward such distributions to  its
Participants, which thereafter will forward them to

                                      S-20
<PAGE>
Indirect  Participants  or  Beneficial  Owners. Beneficial  Owners  will  not be
recognized  by   the   Trustee,   the   Servicer  or   any   paying   agent   as
Certificateholders, as such term is used in the Pooling and Servicing Agreement,
and   Beneficial  Owners   will  be   permitted  to   exercise  the   rights  of
Certificateholders only indirectly through DTC and its Participants.

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

    DTC  has advised  the Seller that  it will  take any action  permitted to be
taken by a Certificateholder under the  Pooling and Servicing Agreement only  at
the  direction  of one  or  more Participants  to  whose accounts  with  DTC the
Book-Entry Certificates are credited. Additionally,  DTC has advised the  Seller
that  it will take such actions with  respect to specified Voting Interests only
at the direction of and on  behalf of Participants whose holdings of  Book-Entry
Certificates  evidence such specified Voting Interests. DTC may take conflicting
actions with respect to Voting Interests  to the extent that Participants  whose
holdings  of Book-Entry  Certificates evidence  such Voting  Interests authorize
divergent action.

    Neither  the  Seller,   the  Servicer   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, as  nominee for  DTC, or  for maintaining,  supervising or  reviewing  any
records  relating to  such beneficial ownership  interests. In the  event of the
insolvency of  DTC  or a  Participant  or  Indirect Participant  in  whose  name
Book-Entry  Certificates are registered, the ability of the Beneficial Owners of
such Book  Entry Certificates  to  obtain timely  payment  may be  impaired.  In
addition,  in such event, if the limits  of applicable insurance coverage by the
Securities Investor Protection Corporation are  exceeded or if such coverage  is
otherwise unavailable, ultimate payment of amounts distributable with respect to
such Book-Entry Certificates may be impaired.

DEFINITIVE CERTIFICATES

    The  Class A-3, Class A-10,  Class A-R, Class A-LR  and Class M Certificates
will be issued as Definitive Certificates. Further, Book-Entry Certificates will
be converted to Definitive  Certificates and re-issued  to Beneficial Owners  or
their  nominees, rather  than to DTC  or its  nominee, only if  (i) the Servicer
advises the  Trustee  in writing  that  DTC is  no  longer willing  or  able  to
discharge  properly  its  responsibilities  as depository  with  respect  to the
Book-Entry Certificates  and  the  Servicer  is unable  to  locate  a  qualified
successor,  (ii) the Servicer, at its option, elects to terminate the book-entry
system through DTC or (iii) after  the occurrence of a dismissal or  resignation
of  the Servicer  under the Pooling  and Servicing  Agreement, Beneficial Owners
representing not less than 51% of the Voting Interests of each outstanding class
of Book-Entry Certificates advise the Trustee through DTC, in writing, that  the
continuation  of a book-entry system through DTC  (or a successor thereto) is no
longer in the Beneficial Owners' best interest.

    Upon the  occurrence of  any event  described in  the immediately  preceding
paragraph,  the Trustee will be required to notify all Beneficial Owners through
Participants of the availability of  Definitive Certificates. Upon surrender  by
DTC  of the definitive certificates representing the Book-Entry Certificates and
receipt of  instructions  for  re-registration, the  Trustee  will  reissue  the
Book-Entry   Certificates  as  Definitive  Certificates  to  Beneficial  Owners.
Distributions of principal of, and interest on, the Book-Entry Certificates will
thereafter be made by the Servicer, or a paying agent on behalf of the Servicer,
directly to holders of Definitive Certificates in accordance with the procedures
set forth in the Pooling and Servicing Agreement.

                                      S-21
<PAGE>
    Definitive Certificates will be transferable and exchangeable at the offices
of the Trustee or the certificate  registrar. No service charge will be  imposed
for  any  registration of  transfer  or exchange,  but  the Trustee  may require
payment of  a sum  sufficient to  cover  any tax  or other  governmental  charge
imposed in connection therewith.

DISTRIBUTIONS

    Distributions  of interest and in reduction  of principal balance to holders
of Class A Certificates of each Subclass will be made monthly, to the extent  of
each  Subclass' entitlement thereto, on  the 25th day of  each month or, if such
day is not a business day, on the succeeding business day (each, a "Distribution
Date"), beginning in  June 1993, in  an aggregate  amount equal to  the Class  A
Distribution  Amount. Distributions  of interest  and in  reduction of principal
balance to holders of Class M Certificates  will be made monthly, to the  extent
of  the Class M Certificates' entitlement thereto, on each Distribution Date, in
an aggregate amount equal to the Class M Distribution Amount, after all  amounts
in  respect of interest and  principal due on the  Class A Certificates for such
Distribution Date  including all  previously unpaid  Class A  Subclass  Interest
Shortfall Amounts with respect to any Subclass of Class A Certificates have been
paid.  The "Determination Date"  with respect to each  Distribution Date will be
the 17th day of each month, or if such day is not a business day, the  preceding
business day. Distributions will be made on each Distribution Date to holders of
record  (which, in  the case  of the Book-Entry  Certificates, will  be Cede, as
nominee for DTC) at the close of business on the last day of the preceding month
(each, a "Record Date"), except that  the final distribution in respect of  each
Class  A Certificate of any  Subclass and each Class  M Certificate will only be
made upon presentation and surrender of such  Class A or Class M Certificate  at
the  office or agency  appointed by the  Trustee and specified  in the notice of
final distribution in respect of such Subclass of Class A Certificates or  Class
M Certificate.

    The  aggregate amount  available for  distribution to  Certificateholders on
each  Distribution  Date  will  be  the  Pool  Distribution  Amount.  The  "Pool
Distribution  Amount" for a Distribution Date will  be the sum of all previously
undistributed payments  or other  receipts on  account of  principal  (including
principal  prepayments and Liquidation Proceeds in respect of principal, if any)
and interest on or  in respect of  the Mortgage Loans  received by the  Servicer
after the Cut-Off Date (except for amounts due on or prior to the Cut-Off Date),
or  received by the Servicer on  or prior to the Cut-Off  Date but due after the
Cut-Off Date, in either case received on or prior to the business day  preceding
the Determination Date in the month in which such Distribution Date occurs, plus
(i)  all Periodic Advances made  by the Servicer, (ii)  all withdrawals from the
Reserve Fund, if established, as described under "--Periodic Advances" below and
(iii) all other amounts required to be placed in the Certificate Account by  the
Servicer  pursuant to  the Pooling  and Servicing  Agreement, but  excluding the
following:

        (a)  amounts  received  as  late  payments  of  principal  or   interest
    respecting  which the Servicer previously has  made one or more unreimbursed
    Periodic Advances or an unreimbursed advance has been made from the  Reserve
    Fund, if established;

        (b) any unreimbursed Periodic Advances or unreimbursed advances from the
    Reserve Fund, if established, with respect to Liquidated Loans;

        (c)  those portions of each payment of interest on a particular Mortgage
    Loan which represent the applicable Servicing Fee, as adjusted in respect of
    Prepayment Interest Shortfalls as described under "--Interest" below;

        (d)  all  amounts  representing  scheduled  payments  of  principal  and
    interest  due  after the  Due  Date occurring  in  the month  in  which such
    Distribution Date occurs;

        (e) all principal prepayments in full  and all proceeds of any  Mortgage
    Loans,  or  property acquired  in  respect thereof,  liquidated, foreclosed,
    purchased or repurchased  pursuant to the  Pooling and Servicing  Agreement,
    received  on or  after the  Due Date  occurring in  the month  in which such
    Distribution Date occurs, and all partial principal prepayments received  by
    the  Servicer on or after  the Determination Date occurring  in the month in
    which such Distribution Date occurs, and all related payments of interest on
    such amounts;

                                      S-22
<PAGE>
         (f) to the  extent permitted  by the Pooling  and Servicing  Agreement,
    that portion of Liquidation Proceeds or insurance proceeds with respect to a
    Mortgage  Loan  which  represents  any unpaid  Servicing  Fee  to  which the
    Servicer is entitled;

        (g) all  amounts  representing  certain  expenses  reimbursable  to  the
    Servicer  and  other amounts  permitted to  be retained  by the  Servicer or
    withdrawn by  the Servicer  from  the Certificate  Account pursuant  to  the
    Pooling and Servicing Agreement;

        (h)  all amounts in the nature of late fees, assumption fees, prepayment
    fees and similar fees which the Servicer is entitled to retain as additional
    servicing compensation;

         (i) reinvestment  earnings  on  payments received  in  respect  of  the
    Mortgage Loans;

         (j) Net Foreclosure Profits; and

        (k)  any  recovery  of  an  amount in  respect  of  principal  which had
    previously been allocated as  a Realized Loss to  any of the Series  1993-18
    Certificates.

    On  each Distribution Date,  the Pool Distribution  Amount will be allocated
among the Classes  of Certificates  and distributed  to the  holders thereof  of
record  as of the related Record Date  as follows (the "Pool Distribution Amount
Allocation"):

        FIRST, to the  Subclasses of  Class A  Certificates, pro  rata based  on
    their  respective Class A Subclass Interest Accrual Amounts, in an aggregate
    amount up to the sum of the  Class A Subclass Interest Accrual Amounts  with
    respect  to such Distribution  Date; provided, that  prior to the Cross-Over
    Date, the  amount  that  would  otherwise be  distributable  in  respect  of
    interest  to the Class A-9 Certificates by virtue of their Class A-9 Accrual
    Companion Component  will  instead  be  distributed  concurrently  with  the
    amounts  described  in THIRD  below  in reduction  of  the Class  A Subclass
    Principal Balances  of the  Class A  Certificates then  entitled to  receive
    distributions  in  reduction of  principal  balance in  accordance  with the
    priorities set forth below under "--Principal (Including
    Prepayments)--Allocation of Amounts  to be  Distributed to the  Class A  and
    Class M Certificates;"

        SECOND,  to the  Subclasses of Class  A Certificates, pro  rata based on
    their respective unpaid Class A  Subclass Interest Shortfall Amounts, in  an
    aggregate  amount up to  the sum of  the previously unpaid  Class A Subclass
    Interest Shortfall Amounts; provided, that prior to the Cross-Over Date, the
    amount that would otherwise be distributable  in respect of interest to  the
    Class  A-9  Certificates  by virtue  of  their Class  A-9  Accrual Companion
    Component  will  instead  be  distributed  concurrently  with  the   amounts
    described  in THIRD  below in  reduction of  the Class  A Subclass Principal
    Balances of the Class A Certificates then entitled to receive  distributions
    in  reduction of  principal balance  in accordance  with the  priorities set
    forth  below  under  "--Principal  (Including  Prepayments)--Allocation   of
    Amounts to be Distributed to the Class A and Class M Certificates;"

        THIRD, to the Subclasses of Class A Certificates, in an aggregate amount
    up  to  the  Class  A  Optimal Principal  Amount,  such  distribution  to be
    allocated among such Subclasses in accordance with the priorities set  forth
    below under "--Principal (Including Prepayments)--Allocation of Amount to be
    Distributed to the Class A and Class M Certificates;"

        FOURTH,  to the  Class M  Certificates in  an amount  up to  the Class M
    Interest Accrual Amount with respect to such Distribution Date;

        FIFTH, to the  Class M Certificates  in an amount  up to the  previously
    unpaid Class M Interest Shortfall Amount;

        SIXTH,  to  the Class  M Certificates  in an  amount up  to the  Class M
    Optimal Principal Amount; and

        SEVENTH, to the  Class B  Certificates first in  an amount  up to  their
    Class  B Interest  Accrual Amount  with respect  to such  Distribution Date,
    second in an amount up to their previously unpaid interest shortfall  amount
    and then in an amount up to their optimal principal amount.

                                      S-23
<PAGE>
    The "Class A Distribution Amount" for any Distribution Date will be equal to
the  sum of the amounts distributed  in accordance with priorities FIRST through
THIRD of the Pool Distribution Amount Allocation set forth above.

    The "Class M Distribution Amount" for any Distribution Date will be equal to
the sum of the amounts distributed in accordance with priorities FOURTH  through
SIXTH of the Pool Distribution Amount Allocation set forth above.

    The undivided percentage interest (the "Percentage Interest") represented by
any Class A Certificate of a Subclass or Class M Certificate in distributions to
such  Subclass or Class will be equal to the percentage obtained by dividing the
initial principal balance of such Certificate by the aggregate initial principal
balance of all Certificates of such Subclass or Class, as the case may be.

INTEREST

    The amount  of  interest  that will  accrue  on  each Subclass  of  Class  A
Certificates  during each month is  referred to herein as  the "Class A Subclass
Interest Accrual  Amount"  for such  Subclass.  The Class  A  Subclass  Interest
Accrual  Amount for each Subclass of  Offered Certificates, other than the Class
A-3, Class A-9, Class A-10 and  Class A-LR Certificates, will equal the  product
of  (i)  1/12th  of  the  Pass-Through  Rate  for  such  Subclass  and  (ii) the
outstanding  Class  A   Subclass  Principal  Balance   of  such  Subclass.   The
Pass-Through  Rate  for  each  such  Subclass  of  Offered  Certificates  is the
percentage set forth  on the cover  of this Prospectus  Supplement. The Class  A
Subclass  Interest Accrual Amount for the  Class A-3 Certificates will equal the
sum of (i) the  product of 1/12th  of 1.10% and the  Class A Subclass  Principal
Balance  of the Class A-2 Certificates, (ii)  the product of 1/12th of 7.00% and
the Class A Subclass Principal Balance  of the Class A-3 Certificates and  (iii)
the product of 1/12th of 0.30% and the Class A Subclass Principal Balance of the
Class  A-4 Certificates.  The Class A  Subclass Interest Accrual  Amount for the
Class A-10 Certificates will equal the sum of (i) the product of 1/12th of 1.25%
and the Class  A Subclass Principal  Balance of the  Class A-1 Certificates  and
(ii)  the product of 1/12th of 7.00%  and the Class A Subclass Principal Balance
of the Class A-10 Certificates. The Class A Subclass Interest Accrual Amount for
the Class A-9 Certificates will  be equal to the  sum of the Component  Interest
Accrual  Amounts of their Companion Components. The amount of interest that will
accrue on each of the  Class A-9 Companion Component  and the Class A-9  Accrual
Companion  Component  will  be referred  to  herein as  the  "Component Interest
Accrual Amount" for such Companion Component and will equal with respect to each
such Companion  Component  the product  of  (i) 1/12th  of  7.00% and  (ii)  the
outstanding Component Principal Balance of such Companion Component. The Class A
Subclass  Interest Accrual Amount for the  Class A-LR Certificate will equal the
product of (i)  1/12th of 7.00%  and (ii)  the Class A-LR  Notional Amount.  The
Class  A Subclass Interest  Accrual Amount for the  Class A-11 Certificates will
equal the  product of  (i) 1/12th  of the  difference between  (a) the  weighted
average  of the Net Mortgage  Interest Rates (as defined  below) of the Mortgage
Loans as of the first day  of such month and (b)  7.00% and (ii) the Class  A-11
Notional  Amount. Each Class A Subclass  Interest Accrual Amount will be reduced
by the portion  of (i) any  Non-Supported Interest Shortfall  allocable to  such
Subclass  and (ii) the interest portion  of Excess Special Hazard Losses, Excess
Fraud Losses  and  Excess  Bankruptcy  Losses  allocable  to  such  Subclass  as
described below.

    The  amount of interest that will accrue  on the Class M Certificates during
each month is referred to herein as  the "Class M Interest Accrual Amount."  The
Class  M Interest Accrual Amount  will equal the product  of (i) 1/12th of 7.00%
and (ii) the outstanding Class M Principal Balance. The Class M Interest Accrual
Amount will  be  reduced  by  (i) the  portion  of  any  Non-Supported  Interest
Shortfall allocable to the Class M Certificates and (ii) the interest portion of
Excess  Special Hazard Losses, Excess Fraud  Losses and Excess Bankruptcy Losses
allocable to the Class M Certificates as described below.

    The amount  of interest  that will  accrue on  the Class  B Certificates  is
referred  to  herein as  the  "Class B  Interest  Accrual Amount."  The  Class B
Interest Accrual Amount will equal the product  of (i) 1/12th of 7.00% and  (ii)
the  outstanding  Class  B  Principal  Balance.  The  Class  B  Interest Accrual

                                      S-24
<PAGE>
Amount will  be  reduced  by  (i) the  portion  of  any  Non-Supported  Interest
Shortfalls  allocable to the Class B  Certificates and (ii) the interest portion
of Excess  Special Hazard  Losses,  Excess Fraud  Losses and  Excess  Bankruptcy
Losses allocable to the Class B Certificates as described below.

    The  "Class  A  Subclass  Principal  Balance"  of  a  Subclass  of  Class  A
Certificates as of any Determination Date will be the principal balance of  such
Subclass  on the date of  initial issuance of the  Class A Certificates plus, in
the case  of the  Class A-9  Certificates, the  portion of  the related  Accrual
Distribution  Amount, as  described under  "--Principal (Including Prepayments)"
below, previously added  to the  Component Principal  Balance of  the Class  A-9
Accrual  Companion  Component, less  (i) all  amounts previously  distributed to
holders of Certificates of such Subclass  in reduction of the principal  balance
of such Subclass and (ii) such Subclass' pro rata share of the principal portion
of  Excess  Special Hazard  Losses, Excess  Fraud  Losses and  Excess Bankruptcy
Losses previously allocated to the holders of Class A Certificates in the manner
described   herein   under   "--Subordination   of   Class   M   and   Class   B
Certificates--Allocation  of  Losses." After  the Cross-Over  Date, the  Class A
Subclass Principal Balance of a Subclass may be subject to further reduction  in
an  amount equal  to such Subclass'  pro rata  share of the  difference, if any,
between (a) the Class A Principal Balance as of such Determination Date  without
regard  to this  provision and  (b) the Adjusted  Pool Amount  for the preceding
Distribution Date.  Any pro  rata allocation  among the  Subclasses of  Class  A
Certificates  described in this  paragraph will be made  among the Subclasses of
Class A Certificates  on the basis  of their then-outstanding  Class A  Subclass
Principal  Balances immediately prior  to the preceding  Distribution Date or in
the case  of  the  Class  A-9 Certificates,  the  sum  of  the  then-outstanding
Component  Principal Balance of the Class  A-9 Companion Component and the lower
of the then-outstanding  Component Principal Balance  and the initial  Component
Principal Balance of the Class A-9 Accrual Companion Component.

    The  Class A Subclass Principal Balance  of the Class A-7 Certificates will,
on any date,  be equal to  the sum of  the Component Principal  Balances of  the
Class  A-7 PAC Component and  the Class A-7 TAC  Component. The Class A Subclass
Principal Balance of the Class A-9 Certificates  will, on any date, be equal  to
the sum of the Component Principal Balances of the Class A-9 Companion Component
and the Class A-9 Accrual Companion Component.

    The  "Class A Principal Balance" as of  any Determination Date will be equal
to the sum of the Class A Subclass Principal Balances of the Subclasses of Class
A Certificates as of such date.

    The "Class M  Principal Balance" as  of any Determination  Date will be  the
lesser  of (a) the principal balance of the  Class M Certificates on the date of
initial issuance of  the Class M  Certificates less (i)  all amounts  previously
distributed  to holders  of Class M  Certificates in reduction  of the principal
balance thereof and (ii) the principal portion of Excess Special Hazard  Losses,
Excess  Fraud Losses  and Excess Bankruptcy  Losses previously  allocated to the
holders of  the  Class M  Certificates  in  the manner  described  herein  under
"--Subordination  of Class M and Class B Certificates--Allocation of Losses" and
(b) the Adjusted  Pool Amount  as of the  preceding Distribution  Date less  the
Class A Principal Balance as of such Determination Date.

    The  "Class B Principal  Balance" as of  any Determination Date  will be the
lesser of (a) the initial principal balance  on the date of initial issuance  of
the  Class B Certificates less (i) all amounts previously distributed to holders
of the Class B  Certificates in reduction of  the principal balance thereof  and
(ii)  the principal portion of Excess Special Hazard Losses, Excess Fraud Losses
and Excess Bankruptcy Losses previously allocated to the holders of the Class  B
Certificates in the manner described under
"--Subordination  of Class M and Class B Certificates--Allocation of Losses" and
(b) the Adjusted Pool Amount as of the preceding Distribution Date less the  sum
of the Class A Principal Balance and the Class M Principal Balance.

    With respect to any Distribution Date, the "Adjusted Pool Amount" will equal
the Cut-Off Date Aggregate Principal Balance of the Mortgage Loans minus the sum
of  (i) all amounts in respect of  principal received in respect of the Mortgage
Loans (including amounts  received as Periodic  Advances, principal  prepayments
and  Liquidation Proceeds in respect of principal) and distributed to holders of
the

                                      S-25
<PAGE>
Series 1993-18 Certificates on such Distribution Date and all prior Distribution
Dates and (ii)  the principal portion  of all Realized  Losses (other than  Debt
Service Reductions) incurred on the Mortgage Loans from the Cut-Off Date through
the end of the month preceding such Distribution Date.

    The  "Net Mortgage Interest Rate" on each Mortgage Loan will be equal to the
Mortgage Interest Rate on such Mortgage  Loan as stated in the related  mortgage
note minus the Servicing Fee rate of 0.20% per annum. See "Pooling and Servicing
Agreement--Servicing Compensation and Payment of Expenses" herein.

    The "Class A-11 Notional Amount" with respect to each Distribution Date will
be  equal to the Pool Scheduled Principal Balance, as defined under "--Principal
(Including Prepayments)" below,  as of  such Distribution Date.  The Class  A-11
Notional   Amount  with  respect   to  the  first   Distribution  Date  will  be
approximately $224,268,758 less  any partial principal  prepayments received  in
May 1993.

    The "Class A-LR Notional Amount" with respect to each Distribution Date will
be  equal to the sum of the Class A Subclass Principal Balance of the Class A-LR
Certificate and  the  Class A  Subclass  Principal  Balance of  the  Class  A-11
Certificates.  The  Class  A-LR  Notional  Amount  with  respect  to  the  first
Distribution Date will be $2,000.

    Interest shortfalls resulting from principal prepayments in full of Mortgage
Loans ("Prepayment Interest  Shortfalls") will be  offset to the  extent of  the
aggregate  Servicing  Fees relating  to mortgagor  payments or  other recoveries
distributed on the related Distribution Date.  To the extent that the  aggregate
Prepayment  Interest Shortfalls with  respect to a  Distribution Date exceed the
aggregate Servicing  Fees relating  to mortgagor  payments or  other  recoveries
distributed  on such  Distribution Date,  the resulting  interest shortfall (the
"Non-Supported Interest  Shortfall")  will  be  allocated to  (i)  the  Class  A
Certificates   according   to   the   percentage   obtained   by   dividing  the
then-outstanding Class A Principal  Balance by the  sum of the  then-outstanding
Class  A  Principal Balance,  Class M  Principal Balance  and Class  B Principal
Balance, (ii) the Class M Certificates  according to the percentage obtained  by
dividing  the  then-outstanding Class  M  Principal Balance  by  the sum  of the
then-outstanding Class A Principal Balance, Class M Principal Balance and  Class
B  Principal  Balance  and  (iii)  the Class  B  Certificates  according  to the
percentage obtained by dividing the  then-outstanding Class B Principal  Balance
by  the sum of the then-outstanding Class A Principal Balance, Class M Principal
Balance and Class B Principal Balance. Such allocation of Non-Supported Interest
Shortfalls will reduce the amount of  interest due to be distributed to  holders
of  the Class A Certificates (or, in the case of the Class A-9 Accrual Companion
Component, added to the  Component Principal Balance  thereof) then entitled  to
distributions  in respect of interest. Such allocation of Non-Supported Interest
Shortfalls will also reduce the amount of interest due to be distributed to  the
holders of the Class M Certificates and Class B Certificates. Any such reduction
in  respect  of interest  will  be allocated  among  the Subclasses  of  Class A
Certificates pro rata on the basis of their respective Class A Subclass Interest
Accrual Amounts for such Distribution Date. Any such reduction allocated to  the
Class  A-9 Certificates will be allocated between the Companion Components based
on their  Component Interest  Accrual Amounts  for such  Distribution Date.  See
"Servicing of the Mortgage Loans--Adjustment to Servicing Fee in Connection with
Prepaid Mortgage Loans" in the Prospectus.

    Interest  shortfalls resulting  from the  timing of  the receipt  of partial
principal prepayments will  not be offset  by Servicing Fees  and will, on  each
Distribution  Date occurring prior to the Cross-Over Date, be allocated first to
the Class B Certificates and then to the Class M Certificates before being borne
by the Class A  Certificates. See "--Subordination  of the Class  M and Class  B
Certificates"  below.  On  each  Distribution Date  occurring  on  or  after the
Cross-Over Date,  any  interest shortfalls  resulting  from the  timing  of  the
receipt  of  partial  principal  prepayments  will  be  considered Non-Supported
Interest Shortfalls  and  will be  allocated  to  the Class  A  Certificates  as
described above.

    The  interest  portion of  any Excess  Special  Hazard Losses,  Excess Fraud
Losses or Excess Bankruptcy Losses will be allocated among the Class A, Class  M
and  Class B Certificates  pro rata based  on the interest  accrued on each such
Class  and  among  the   Subclasses  of  Class  A   Certificates  pro  rata   on

                                      S-26
<PAGE>
the basis of their respective Class A Subclass Interest Accrual Amounts for such
Distribution  Date. Any amount  allocated to the Class  A-9 Certificates will be
allocated between the  Companion Components  based on  their Component  Interest
Accrual Amounts for such Distribution Date.

    Allocations  of the interest  portion of Realized  Losses (other than Excess
Special Hazard Losses, Excess Fraud Losses or Excess Bankruptcy Losses) first to
the Class B Certificates and then to  the Class M Certificates will result  from
the  priority of distributions first to  the Class A Certificateholders and then
to the Class M Certificateholders of  the Pool Distribution Amount as  described
above under
"--Distributions."

    On  each Distribution Date  on which the Pool  Distribution Amount equals or
exceeds the sum of the Class A Subclass Interest Accrual Amounts,  distributions
in  respect of interest to each Subclass of Class A Certificates will equal such
Subclass' Class A Subclass  Interest Accrual Amount.  On each such  Distribution
Date  prior to the Cross-Over Date, interest in an amount equal to its Component
Interest  Accrual  Amount  will  accrue  on  the  Class  A-9  Accrual  Companion
Component,  but such amount will not be distributed as interest to the Class A-9
Certificates. Prior to  the Cross-Over Date,  an amount equal  to the  Component
Interest  Accrual Amount for  the Class A-9 Accrual  Companion Component will be
distributed in  reduction of  the  Class A  Subclass  Principal Balance  of  the
Subclass  or  Subclasses  of  Class  A  Certificates  then  entitled  to receive
distributions in reduction of principal balance as described under  "--Principal
(Including Prepayments)" below, and the Component Principal Balance of the Class
A-9 Accrual Companion Component will be increased by a corresponding amount.

    If,  on any Distribution Date, the Pool Distribution Amount is less than the
sum of the  Class A Subclass  Interest Accrual Amounts,  the amount of  interest
currently  distributed or  accreted on the  Class A Certificates  will equal the
Pool Distribution Amount and will be  allocated among the Subclasses of Class  A
Certificates  pro rata in  accordance with each such  Subclass' Class A Subclass
Interest Accrual Amount. Amounts so allocated will be distributed in respect  of
interest  to each Subclass  of Class A  Certificates, with the  exception of the
Class A-9 Certificates in respect of  the Class A-9 Accrual Companion  Component
prior to the Cross-Over Date. Any amount allocated to the Class A-9 Certificates
will  be allocated  between the  Companion Components  based on  their Component
Interest Accrual  Amounts.  Any  difference  between the  portion  of  the  Pool
Distribution  Amount distributed in respect of current interest to each Subclass
of Class A  Certificates or,  in the  case of  the Class  A-9 Certificates  with
respect  to the  Class A-9 Accrual  Companion Component prior  to the Cross-Over
Date, added to the Component Principal Balance thereof, and the Class A Subclass
Interest  Accrual  Amount  for  such  Subclass  with  respect  to  the   related
Distribution Date (as to each Subclass, the "Class A Subclass Interest Shortfall
Amount")  will be added to the  amount to be distributed or,  in the case of the
Class A-9  Certificates  with  respect  to their  Class  A-9  Accrual  Companion
Component, accreted on subsequent Distribution Dates to the extent that the Pool
Distribution  Amount  is sufficient  therefor. No  interest  will accrue  on the
unpaid Class  A  Subclass  Interest  Shortfall Amounts.  The  Class  A  Subclass
Interest  Shortfall Amount  of the  Class A-9  Certificates with  respect to any
Distribution Date will be  allocated between the  Companion Components based  on
their  Component  Interest  Accrual  Amounts (such  shortfall  allocated  to any
Companion Component, its  "Component Interest Shortfall  Amount"). In the  event
that on any Distribution Date prior to the Cross-Over Date the Pool Distribution
Amount  is less than the  sum of the Class  A Subclass Interest Accrual Amounts,
resulting in Class A Subclass Interest Shortfall Amounts, as described above, an
amount equal to  the Accrual  Distribution Amount  would be  distributed to  the
Subclass  or  Subclasses  of  Class  A  Certificates  then  entitled  to receive
distributions in  reduction  of  principal  balance,  notwithstanding  that  the
holders of Certificates of the Subclasses then entitled to receive distributions
of  interest have received less than  their respective Class A Subclass Interest
Accrual Amounts with respect to such Distribution Date.

    On each Distribution Date on which the Pool Distribution Amount exceeds  the
sum  of the Class A  Subclass Interest Accrual Amounts,  any excess will then be
allocated first to pay (or accrete) previously unpaid Class A Subclass  Interest
Shortfall  Amounts. Such amounts will be allocated among the Subclasses of Class
A Certificates  pro  rata in  accordance  with  the respective  unpaid  Class  A
Subclass

                                      S-27
<PAGE>
Interest  Shortfall  Amounts immediately  prior to  such Distribution  Date. Any
amount allocated to  the Class A-9  Certificates will be  allocated between  the
Companion Components based on their unpaid Component Interest Shortfall Amounts.
Prior  to the Cross-Over Date, the amount  so allocated to the Class A-9 Accrual
Companion Component will not  be distributed as interest  to the holders of  the
Class  A-9 Certificates,  but will  instead be  distributed in  reduction of the
Class A Subclass  Principal Balance  of the Subclass  or Subclasses  of Class  A
Certificates  then entitled to  receive distributions in  reduction of principal
balance, and the Component Principal Balance of the Class A-9 Accrual  Companion
Component will be increased by a corresponding amount.

    On  each Distribution Date  on which the Pool  Distribution Amount equals or
exceeds the sum for such Distribution Date of (A) the sum of (i) the sum of  the
Class A Subclass Interest Accrual Amounts with respect to each Subclass of Class
A  Certificates, (ii) the sum of the  unpaid Class A Subclass Interest Shortfall
Amounts with respect  to each  Subclass of Class  A Certificates  and (iii)  the
Class  A Optimal  Principal Amount (collectively  with the  amounts described in
clauses (i) and (ii), "the Class A Optimal Amount") and (B) the Class M Interest
Accrual Amount, distributions  in respect  of current  interest to  the Class  M
Certificates will equal the Class M Interest Accrual Amount.

    If,  on any Distribution Date, the Pool Distribution Amount is less than the
sum of (i)  the Class A  Optimal Amount and  (ii) the Class  M Interest  Accrual
Amount,  the amount of current interest  distributed on the Class M Certificates
will equal the  Pool Distribution Amount  minus the amounts  distributed to  the
Class  A Certificates  with respect  to such  Distribution Date.  Any difference
between the portion of  the Pool Distribution Amount  distributed in respect  of
current  interest to the Class  M Certificates and the  Class M Interest Accrual
Amount with respect to such Distribution  Date (the "Class M Interest  Shortfall
Amount"),  will  be  added  to  the  amount  to  be  distributed  on  subsequent
Distribution Dates to the extent that the Pool Distribution Amount is sufficient
therefor. No  interest will  accrue on  the unpaid  Class M  Interest  Shortfall
Amount.

    On  each Distribution Date on which the Pool Distribution Amount exceeds the
sum of the Class A Optimal Amount  and the Class M Interest Accrual Amount,  any
excess  will  be  allocated first  to  pay  previously unpaid  Class  M Interest
Shortfall Amounts and then to make distributions in respect of principal on  the
Class  M Certificates and in respect of interest and then principal on the Class
B Certificates. With  respect to each  Distribution Date, the  "Class M  Optimal
Amount"  will equal the sum of (i) the Class M Interest Accrual Amount, (ii) the
unpaid Class M Interest Shortfall Amount and (iii) the Class M Optimal Principal
Amount.

    On any Distribution Date on which the Pool Distribution Amount is less  than
the  Class  A  Optimal  Amount,  the  Class  M  Certificates  and  the  Class  B
Certificates will not be entitled to any distributions of interest or principal.

PRINCIPAL (INCLUDING PREPAYMENTS)

    The principal balance of  a Class A  Certificate of any  Subclass or of  any
Class  M Certificate at any time is equal to the product of the Class A Subclass
Principal Balance of such Subclass or the Class M Principal Balance, as the case
may be, and such Certificate's  Percentage Interest, and represents the  maximum
specified  dollar amount (exclusive of (i) any  interest that may accrue on such
Class A Certificate (other than interest added to the Class A Subclass Principal
Balance of  the Class  A-9 Certificates  by virtue  of their  Class A-9  Accrual
Companion  Component) or Class M  Certificate and (ii) in  the case of the Class
A-R and Class A-LR Certificates, any  additional amounts to which the holder  of
the Class A-R or Class A-LR Certificate may be entitled as described below under
"--Additional  Rights of  the Class A-R  and Class  A-LR Certificateholders") to
which the holder thereof is entitled from the cash flow on the Mortgage Loans at
such time, and will decline to the  extent of distributions in reduction of  the
principal  balance  of,  and allocations  of  losses to,  such  Certificate. The
approximate initial Class A Subclass Principal Balance of each Subclass of Class
A Certificates  (other than  the Class  A-11 Certificates)  and the  approximate
initial  Class M Principal Balance are set forth on the cover of this Prospectus
Supplement. The initial  Class A Subclass  Principal Balance of  the Class  A-11
Certificates is $1,000.

                                      S-28
<PAGE>
  CALCULATION OF AMOUNT TO BE DISTRIBUTED TO THE CLASS A CERTIFICATES

    Distributions  in  reduction  of  the  principal  balance  of  the  Class  A
Certificates will be made on each Distribution Date in an aggregate amount equal
to  the  Class  A  Principal   Distribution  Amount.  The  "Class  A   Principal
Distribution  Amount" with respect to any Distribution Date will be equal to the
sum of  (i)  the Accrual  Distribution  Amount, if  any,  with respect  to  such
Distribution  Date and (ii)  the Class A  Principal Amount with  respect to such
Distribution Date.  The  "Accrual  Distribution  Amount"  with  respect  to  any
Distribution  Date will  be equal  to the  sum of  (i) the  portion, if  any, of
current interest allocated but not distributed to the Class A-9 Certificates  by
virtue of the Class A-9 Accrual Companion Component on such Distribution Date in
accordance  with priority FIRST  of the Pool  Distribution Amount Allocation and
(ii) the  portion, if  any, of  the  unpaid Class  A Interest  Shortfall  Amount
allocated  but not distributed to the Class  A-9 Certificates by virtue of their
Class A-9 Accrual Companion  Component on such  Distribution Date in  accordance
with  priority SECOND of  the Pool Distribution Amount  Allocation. The "Class A
Principal Amount" with  respect to any  Distribution Date will  be equal to  the
amount  distributed pursuant to  priority THIRD of  the Pool Distribution Amount
Allocation, in  an aggregate  amount of  up  to the  Class A  Optimal  Principal
Amount.

    The  "Class A  Optimal Principal Amount"  with respect  to each Distribution
Date will be an amount equal to the sum of (i) the Class A Percentage of (A) all
scheduled payments of principal due on each outstanding Mortgage Loan (including
each defaulted Mortgage  Loan, other  than a  Liquidated Loan,  with respect  to
which  the related Mortgaged Property has been  acquired by the Trust Estate) on
the first day of the  month in which the Distribution  Date occurs, less (B)  if
the  Bankruptcy Coverage Termination Date has occurred, the principal portion of
Debt Service Reductions, (ii) the Class A Prepayment Percentage of the Scheduled
Principal Balance of each  Mortgage Loan which, during  the month preceding  the
month  of such  Distribution Date  was repurchased  by the  Seller, as described
under the heading "The Trust  Estates--Mortgage Loans" in the Prospectus,  (iii)
the  Class A Prepayment Percentage of  the aggregate net Liquidation Proceeds on
all Mortgage  Loans that  became Liquidated  Loans during  such preceding  month
(excluding the portion thereof, if any, constituting Net Foreclosure Profits, as
defined   under  "--Additional   Rights  of  the   Class  A-R   and  Class  A-LR
Certificateholders" below),  less  the amounts  allocable  to principal  of  any
unreimbursed   Periodic  Advances  previously  made  by  the  Servicer  and  any
unreimbursed advances from  the Reserve  Fund (if established)  with respect  to
such  Liquidated Loans and the portion of the net Liquidation Proceeds allocable
to interest, (iv) the Class  A Prepayment Percentage of  an amount equal to  the
principal  portion of Realized Losses (other  than Bankruptcy Losses due to Debt
Service Reductions) incurred in such  preceding month other than Excess  Special
Hazard Losses, Excess Fraud Losses and Excess Bankruptcy Losses, (v) the Class A
Prepayment  Percentage of the Scheduled Principal  Balance of each Mortgage Loan
which was  the  subject of  a  principal prepayment  in  full during  the  month
preceding  the  month of  such Distribution  Date, (vi)  the Class  A Prepayment
Percentage of all partial principal prepayments  received by the Servicer on  or
after the Determination Date occurring in the month preceding the month in which
such  Distribution Date occurs and prior  to the Determination Date occurring in
the month  in  which  such  Distribution  Date occurs  and  (vii)  the  Class  A
Percentage  of  the  difference  between the  unpaid  principal  balance  of any
Mortgage Loan  substituted  for  a  defective Mortgage  Loan  during  the  month
preceding  the  month in  which  such Distribution  Date  occurs and  the unpaid
principal balance of such defective Mortgage Loan, less the amounts allocable to
principal of any  unreimbursed Periodic Advances  and any unreimbursed  advances
from  the Reserve Fund (if established)  with respect to such defective Mortgage
Loan. See "The  Trust Estates--Mortgage Loans--Assignment  of Mortgage Loans  to
the Trustee" in the Prospectus.

    In addition, in the event that there is any recovery of an amount in respect
of principal which had previously been allocated as a Realized Loss to the Class
A  Certificates, each Subclass of the Class A Certificates then outstanding will
be entitled to its pro rata share of such recovery in an amount up to the amount
by which the Class A Subclass Principal Balance of such Subclass was reduced  as
a result of such Realized Loss.

                                      S-29
<PAGE>
    The  "Scheduled Principal Balance" of a Mortgage Loan as of any Distribution
Date is the unpaid principal balance of  such Mortgage Loan as specified in  the
amortization  schedule at  the time relating  thereto (before  any adjustment to
such schedule  by  reason  of  bankruptcy  (other  than  Deficient  Valuations),
moratorium  or similar waiver or  grace period) as of  the Due Date occurring in
the month preceding  the month  in which  such Distribution  Date occurs,  after
giving  effect to any  principal prepayments or  other unscheduled recoveries of
principal previously received, to any  partial principal prepayments applied  as
of  such Due Date, Deficient Valuations occurring  prior to such Due Date and to
the payment  of  principal  due  on  such Due  Date,  and  irrespective  of  any
delinquency in payment by the mortgagor.

    A  "Liquidated Loan" is a  defaulted Mortgage Loan as  to which the Servicer
has determined that all recoverable liquidation and insurance proceeds have been
received. A "Liquidated Loan Loss" on a Liquidated Loan is equal to the  excess,
if  any,  of (i)  the unpaid  principal  balance of  such Liquidated  Loan, plus
interest thereon  in  accordance  with  the amortization  schedule  at  the  Net
Mortgage  Interest Rate through the last day of the month in which such Mortgage
Loan was  liquidated,  over  (ii)  net Liquidation  Proceeds.  For  purposes  of
calculating the amount of any Liquidated Loan Loss, all net Liquidation Proceeds
(after  reimbursement to the  Servicer for any  previously unreimbursed advance)
will be  applied first  to accrued  interest and  then to  the unpaid  principal
balance  of the Liquidated  Loan. A "Special  Hazard Loss" is  a Liquidated Loan
Loss occurring as  a result of  a hazard  not insured against  under a  standard
hazard insurance policy of the type described in the Prospectus under "The Trust
Estates--  Mortgage Loans--Insurance Policies."  A "Fraud Loss"  is a Liquidated
Loan Loss incurred  on a  Liquidated Loan  as to which  there was  fraud in  the
origination of such Mortgage Loan. A "Bankruptcy Loss" is a loss attributable to
certain  actions which may be  taken by a bankruptcy  court in connection with a
Mortgage Loan, including  a reduction  by a  bankruptcy court  of the  principal
balance  of or  the interest  rate on  a Mortgage  Loan or  an extension  of its
maturity. A "Debt Service Reduction" means a reduction in the amount of  monthly
payments  due  to  certain  bankruptcy proceedings,  but  does  not  include any
permanent forgiveness of principal.  A "Deficient Valuation"  with respect to  a
Mortgage  Loan means  a valuation  by a  court of  the Mortgaged  Property in an
amount less than  the outstanding indebtedness  under the Mortgage  Loan or  any
reduction  in  the  amount  of  monthly payments  that  results  in  a permanent
forgiveness of principal, which valuation or reduction results from a bankruptcy
proceeding. Liquidated Loan  Losses (including Special  Hazard Losses and  Fraud
Losses) and Bankruptcy Losses are referred to herein as "Realized Losses."

    The  "Class A Percentage"  for any Distribution Date  occurring prior to the
Cross-Over Date is the percentage (subject to rounding), which in no event  will
exceed  100%, obtained by dividing the Class A Principal Balance as of such date
(before taking into account distributions  in reduction of principal balance  on
such  date) by the aggregate Scheduled  Principal Balances of all Mortgage Loans
for such Distribution Date (the "Pool Scheduled Principal Balance"). The Class A
Percentage for the  first Distribution  Date will be  approximately 92.25%.  The
Class  A  Percentage will  decrease as  a  result of  the allocation  of certain
unscheduled payments in respect of principal according to the Class A Prepayment
Percentage for a specified period to the Class A Certificates and will  increase
as  a result of  the allocation of  Realized Losses to  the Class B  and Class M
Certificates. The Class A Percentage for each Distribution Date occurring on  or
after the Cross-Over Date will be 100%.

    The  "Class  A Prepayment  Percentage" for  any Distribution  Date occurring
during the five years beginning on  the first Distribution Date will, except  as
provided  below, equal 100%. Thereafter, the  Class A Prepayment Percentage will
be subject to gradual  reduction as described in  the following paragraph.  This
disproportionate  allocation  of  certain  unscheduled  payments  in  respect of
principal will have the effect of  accelerating the amortization of the Class  A
Certificates while, in the absence of Realized Losses, increasing the respective
interest in the principal balance of the Mortgage Loans evidenced by the Class M
and  Class B Certificates. Increasing the respective interest of the Class M and
Class B Certificates relative to that of the Class A Certificates is intended to
preserve the availability of the subordination provided by the Class M and Class
B Certificates. See "--Subordination of Class M and Class B Certificates" below.

                                      S-30
<PAGE>
    The Class A Prepayment Percentage for any Distribution Date occurring on  or
after  the fifth anniversary of the first  Distribution Date will be as follows:
for  any  Distribution  Date  subsequent  to  May  1998  to  and  including  the
Distribution Date in May 1999, the Class A Percentage for such Distribution Date
plus  70% of  the Subordinated  Percentage for  such Distribution  Date; for any
Distribution Date subsequent to May 1999 to and including the Distribution  Date
in  May 2000, the Class A Percentage for  such Distribution Date plus 60% of the
Subordinated Percentage for  such Distribution Date;  for any Distribution  Date
subsequent  to May 2000 to and including  the Distribution Date in May 2001, the
Class A  Percentage for  such Distribution  Date plus  40% of  the  Subordinated
Percentage  for such Distribution Date; for  any Distribution Date subsequent to
May 2001  to and  including  the Distribution  Date in  May  2002, the  Class  A
Percentage  for such Distribution  Date plus 20%  of the Subordinated Percentage
for such Distribution Date; and for any Distribution Date thereafter, the  Class
A  Percentage  for  such  Distribution  Date (unless  on  any  of  the foregoing
Distribution  Dates  the  Class  A  Percentage  exceeds  the  initial  Class   A
Percentage,   in  which  case  the  Class   A  Prepayment  Percentage  for  such
Distribution Date  will  once  again  equal 100%).  See  "Prepayment  and  Yield
Considerations"  herein and in the Prospectus. Notwithstanding the foregoing, no
reduction of the Class  A Prepayment Percentage will  occur on any  Distribution
Date if (i) as of such Distribution Date as to which any such reduction applies,
more  than an average of 2% of the  dollar amount of all monthly payments on the
Mortgage Loans due  in each of  the preceding twelve  months were delinquent  60
days  or more (including for this purpose  any Mortgage Loans in foreclosure and
Mortgage Loans with  respect to which  the related Mortgaged  Property has  been
acquired  by the Trust Estate), or  (ii) cumulative Realized Losses with respect
to  the  Mortgage  Loans  exceed  (a)  30%  of  the  principal  balance  of  the
Subordinated  Certificates as  of the  Cut-Off Date  (the "Original Subordinated
Principal Balance") if such Distribution Date occurs between and including  June
1998  and May 1999,  (b) 35% of  the Original Subordinated  Principal Balance if
such Distribution Date occurs between and including June 1999 and May 2000,  (c)
40%  of the  Original Subordinated Principal  Balance if  such Distribution Date
occurs between and including  June 2000 and  May 2001, (d)  45% of the  Original
Subordinated  Principal  Balance if  such Distribution  Date occurs  between and
including June  2001 and  May 2002,  and (e)  50% of  the Original  Subordinated
Principal  Balance if such  Distribution Date occurs during  or after June 2002.
The "Subordinated Percentage" for  any Distribution Date  will be calculated  as
the  difference  between 100%  and the  Class  A Percentage  for such  date. The
"Subordinated  Prepayment  Percentage"  for   any  Distribution  Date  will   be
calculated  as the difference between 100% and the Class A Prepayment Percentage
for such  date. If  on  any Distribution  Date the  allocation  to the  Class  A
Certificates  of full and partial principal prepayments and other amounts in the
percentage required above would reduce the outstanding Class A Principal Balance
below zero, the Class A Prepayment Percentage for such Distribution Date will be
limited to the percentage necessary to  reduce the Class A Principal Balance  to
zero.   See  "Description  of   the  Certificates--Distributions  to  Percentage
Certificateholders--Shifting Interest Certificates" in the Prospectus.

  CALCULATION OF AMOUNT TO BE DISTRIBUTED TO THE CLASS M CERTIFICATES

    Distributions  in  reduction  of  the  principal  balance  of  the  Class  M
Certificates  will be made on each Distribution Date, pursuant to priority SIXTH
of the Pool Distribution Amount Allocation, in an aggregate amount (the "Class M
Principal Distribution Amount"), up to the Class M Optimal Principal Amount.

    The "Class M  Optimal Principal  Amount" with respect  to each  Distribution
Date will be an amount equal to the sum of (i) the Class M Percentage of (A) all
scheduled payments of principal due on each outstanding Mortgage Loan (including
each  defaulted Mortgage  Loan, other  than a  Liquidated Loan,  with respect to
which the related Mortgaged Property has  been acquired by the Trust Estate)  on
the  first day of the  month in which the Distribution  Date occurs, less (B) if
the Bankruptcy Coverage Termination Date has occurred, the principal portion  of
Debt Service Reductions, (ii) the Class M Prepayment Percentage of the Scheduled
Principal  Balance of each  Mortgage Loan which, during  the month preceding the
month of such  Distribution Date  was repurchased  by the  Seller, as  described
under  the heading "The Trust Estates--Mortgage  Loans" in the Prospectus, (iii)
the Class M Prepayment Percentage of  the aggregate net Liquidation Proceeds  on
all  Mortgage Loans  that became  Liquidated Loans  during such  preceding month
(excluding the portion thereof, if  any, constituting Net Foreclosure  Profits),

                                      S-31
<PAGE>
less  the amounts allocable  to principal of  any unreimbursed Periodic Advances
previously made by the Servicer and  any unreimbursed advances from the  Reserve
Fund  (if established) with respect to such  Liquidated Loans and the portion of
the net Liquidation Proceeds  allocable to Interest,  (iv) on each  Distribution
Date  prior to the reduction of the Class B Principal Balance to zero, the Class
M Prepayment Percentage of an amount equal to the principal portion of  Realized
Losses (other than Bankruptcy Losses due to Debt Service Reductions) incurred in
such  preceding  month other  than Excess  Special  Hazard Losses,  Excess Fraud
Losses and Excess Bankruptcy  Losses, (v) the Class  M Prepayment Percentage  of
the Scheduled Principal Balance of each Mortgage Loan which was the subject of a
principal  prepayment  in full  during  the month  preceding  the month  of such
Distribution Date,  (vi)  the  Class  M Prepayment  Percentage  of  all  partial
principal  prepayments received  by the Servicer  on or  after the Determination
Date occurring in the month preceding the month in which such Distribution  Date
occurs  and prior to the Determination Date occurring in the month in which such
Distribution Date occurs  and (vii)  the Class  M Percentage  of the  difference
between  the unpaid  principal balance  of any  Mortgage Loan  substituted for a
defective Mortgage  Loan during  the month  preceding the  month in  which  such
Distribution  Date occurs  and the  unpaid principal  balance of  such defective
Mortgage Loan,  less the  amounts  allocable to  principal of  any  unreimbursed
Periodic  Advances  and  any unreimbursed  advances  from the  Reserve  Fund (if
established) with  respect  to such  defective  Mortgage Loan.  See  "The  Trust
Estates--Mortgage  Loans--Assignment of  Mortgage Loans  to the  Trustee" in the
Prospectus.

    In addition, in the event that there is any recovery of an amount in respect
of principal which had previously been allocated as a Realized Loss to the Class
M Certificates, the  Class M  Certificates will be  entitled to  their pro  rata
share  of such recovery up to the amount  by which the Class M Principal Balance
was reduced as a result of such Realized Loss.

    The "Class  M  Percentage"  and  "Class M  Prepayment  Percentage"  for  any
Distribution  Date will  equal that portion  of the  Subordinated Percentage and
Subordinated Prepayment  Percentage, as  the  case may  be, represented  by  the
fraction  the  numerator  of which  is  the then-outstanding  Class  M Principal
Balance and the denominator of which is the sum of the Class M Principal Balance
and, if the  Class B Certificates  are entitled to  principal distributions  for
such  Distribution Date  as described in  the succeeding paragraph,  the Class B
Principal Balance.

    In  the  event  that  on  any   Distribution  Date,  the  Current  Class   M
Subordination  Level is less than the Original Class M Subordination Level, then
the Class B  Certificates will not  be entitled to  distributions in respect  of
principal  and the Class B  Principal Balance will not  be used to determine the
Class M Percentage and Class M Prepayment Percentage for such Distribution Date.
For such  Distribution Date,  the  Class M  Percentage  and Class  M  Prepayment
Percentage   will  equal  the  Subordinated   Percentage  and  the  Subordinated
Prepayment Percentage, respectively.

    The "Original Class  M Subordination  Level" is the  percentage obtained  by
dividing  the initial  Class B  Subclass Principal  Balance by  the Cut-Off Date
Aggregate Principal  Balance  of  the  Mortgage  Loans.  The  Original  Class  M
Subordination  Level is expected to be approximately 6.50%. The "Current Class M
Subordination Level" for  any Distribution  Date is the  percentage obtained  by
dividing the sum of the then-outstanding Class B Principal Balance by the sum of
the  Class A Principal  Balance, the Class  M Principal Balance  and the Class B
Principal Balance.

  ALLOCATION OF AMOUNT TO BE DISTRIBUTED TO THE CLASS A AND CLASS M CERTIFICATES

    Solely  for  the  purpose  of  determining  distributions  in  reduction  of
principal  balance, the Class A-7 Certificates will  be deemed to consist of two
components (respectively, the "Class A-7 PAC  Component" and the "Class A-7  TAC
Component"). Solely for the purpose of determining distributions of interest and
in  reduction of principal balance, the Class A-9 Certificates will be deemed to
consist of two components (each, a "Companion Component" and, respectively,  the
"Class   A-9  Companion  Component"   and  the  "Class   A-9  Accrual  Companion
Component"). Each of the  Class A-7 PAC Component,  the Class A-7 TAC  Component
and the Companion Components (each, a "Component") has an identifiable principal
balance  (a "Component Principal Balance"). The  Beneficial Owner of a Class A-7
or Class A-9 Certificate

                                      S-32
<PAGE>
will not have a severable interest in any Component, but will have an  undivided
interest  in the entire Subclass. The Class  A Subclass Principal Balance of the
Class A-7 or Class A-9  Certificates will be, on any  date, equal to the sum  of
the  Component Principal  Balances of  their outstanding  Components as  of such
date. The Components  comprising the Class  A-7 and Class  A-9 Certificates  and
their initial Component Principal Balances are set forth in the table below.

<TABLE>
<CAPTION>
                                                               INITIAL COMPONENT PRINCIPAL
                   COMPONENT DESIGNATION                                BALANCE(1)
<S>                                                           <C>
Class A-7 PAC Component.....................................           $ 35,000,000
Class A-7 TAC Component.....................................           $ 35,000,000
Class A-9 Companion Component...............................           $    293,000
Class A-9 Accrual Companion Component.......................           $ 27,000,000
</TABLE>

(1)  Approximate.  The  initial  Component  Principal  Balances  are  subject to
     adjustment in the event that the initial Class A Subclass Principal Balance
     of the Class A-7 or Class A-9 Certificates is adjusted as described herein.

    On each Distribution Date occurring prior to the Cross-Over Date, the  Class
A  Principal  Distribution Amount  will be  allocated  among and  distributed in
reduction of the principal balances of the Subclasses of Class A Certificates as
follows:

        FIRST,  concurrently,  approximately  99.98962512%  to  the  Class   A-1
    Certificates  and approximately 0.01037488% to  the Class A-10 Certificates,
    up  to  their  respective  PAC  Principal  Amounts  with  respect  to   such
    Distribution Date;

        SECOND,  concurrently,  approximately  49.10757255%  to  the  Class  A-2
    Certificates, approximately 0.00375122%  to the Class  A-3 Certificates  and
    approximately  50.88867623%  to the  Class A-7  PAC  Component, up  to their
    respective PAC Principal Amounts with respect to such Distribution Date;

        THIRD,  concurrently,  approximately  0.00208174%   to  the  Class   A-3
    Certificates  and approximately 99.99791826% to  the Class A-4 Certificates,
    up  to  their  respective  PAC  Principal  Amounts  with  respect  to   such
    Distribution Date;

        FOURTH,  sequentially, to the  Class A-5 and  Class A-6 Certificates, in
    that order, up  to their respective  PAC Principal Amounts  with respect  to
    such Distribution Date;

        FIFTH,  concurrently, approximately  84.10833153% to  the Class  A-7 TAC
    Component and approximately 15.89166847% to  the Class A-8 Certificates,  up
    to  their respective TAC Principal Amounts with respect to such Distribution
    Date;

        SIXTH, to  the  Class  A-9  Companion  Component,  until  its  Component
    Principal Balance has been reduced to zero;

        SEVENTH,  to  the  Class  A-9  Accrual  Companion  Component,  until its
    Component Principal Balance has been reduced to zero;

        EIGHTH, to the Class A-7 TAC Component and the Class A-8 Certificates in
    the proportions set  forth in clause  FIFTH above, without  regard to  their
    respective  TAC Principal Amounts, until  the Component Principal Balance of
    the Class A-7 TAC  Component and the Class  A Subclass Principal Balance  of
    the Class A-8 Certificates have both been reduced to zero;

        NINTH,  to the Class A-1 and  Class A-10 Certificates in the proportions
    set forth in  clause FIRST  above, without  regard to  their respective  PAC
    Principal  Amounts, until  the Class  A Subclass  Principal Balances thereof
    have both been reduced to zero;

        TENTH, to the Class A-2 Certificates, the Class A-3 Certificates and the
    Class A-7 PAC Component in the proportions set forth in clause SECOND above,
    without regard to their respective PAC Principal Amounts, until the Class  A
    Subclass  Principal Balance of the Class  A-2 Certificates and the Component
    Principal Balance of the Class A-7  PAC Component have both been reduced  to
    zero;

                                      S-33
<PAGE>
        ELEVENTH, to the Class A-3 and Class A-4 Certificates in the proportions
    set  forth in  clause THIRD  above, without  regard to  their respective PAC
    Principal Amounts, until  the Class  A Subclass  Principal Balances  thereof
    have both been reduced to zero;

        TWELFTH,  sequentially, to the Class A-5  and Class A-6 Certificates, in
    that order, without regard to their respective PAC Principal Amounts,  until
    the  Class  A Subclass  Principal  Balance of  each  such Subclass  has been
    reduced to zero; and

        THIRTEENTH, concurrently, to the  Class A-11, Class  A-R and Class  A-LR
    Certificates,  pro  rata,  until  the Class  A  Subclass  Principal Balances
    thereof have all been reduced to zero.

    As used above, the "PAC Principal Amount" for any Distribution Date and  for
any  Subclass  of PAC  Certificates or  the  Class A-7  PAC Component  means the
amount, if any, that would reduce the Class A Subclass Principal Balance of such
Subclass or the Component Principal Balance of such Component to the  percentage
of its initial Class A Subclass Principal Balance or initial Component Principal
Balance  shown in the tables  set forth below with  respect to such Distribution
Date.

    As used above, the "TAC Principal Amount" for any Distribution Date and  for
the  TAC Certificates or the  Class A-7 TAC Component  means the amount, if any,
that would reduce the Class A Subclass Principal Balance of the TAC Certificates
or the Component Principal Balance of such Component to the percentage of  their
initial  Class  A  Subclass  Principal Balance  or  initial  Component Principal
Balance shown in the  tables set forth below  with respect to such  Distribution
Date.

    On  each Distribution  Date occurring on  or after the  Cross-Over Date, the
Class A Principal Distribution Amount  will be distributed among the  Subclasses
of Class A Certificates pro rata in accordance with their respective outstanding
Class  A Subclass Principal Balances without regard to either the priorities set
forth above or, in the case of  the PAC Certificates, the TAC Certificates,  the
Class  A-7 PAC Component and the Class  A-7 TAC Component, the amounts set forth
in the following tables.

    Amounts distributed on  each Distribution  Date to  the holders  of Class  A
Certificates  in  reduction of  principal balance  will  be allocated  among the
holders of Class  A Certificates of  each Subclass pro  rata in accordance  with
their respective Percentage Interests.

    Amounts  distributed  on any  Distribution Date  to the  holders of  Class M
Certificates in  reduction of  principal  balance will  be allocated  among  the
holders  of Class  M Certificates pro  rata in accordance  with their respective
Percentage Interests.

    The following tables set forth for each Distribution Date the planned  Class
A  Subclass Principal Balance for each Subclass of PAC Certificates, the planned
Component Principal Balance for the Class A-7 PAC Component, the targeted  Class
A Subclass Principal Balance for the TAC Certificates and the targeted Component
Principal  Balance for the Class A-7 TAC Component, expressed as a percentage of
the initial Class A Subclass Principal  Balance of such Subclass or the  initial
Component  Principal Balance of such Component.  Because the Class A-7 and Class
A-9 Certificates consist of  multiple Components, on  any Distribution Date  the
percentage  associated with any Component, as set forth in the following tables,
may be different from the percentage represented by the then outstanding Class A
Subclass Principal Balance  of the  related Subclass  over the  initial Class  A
Subclass Principal Balance of the related Subclass.

                                      S-34
<PAGE>
                  PLANNED CLASS A SUBCLASS PRINCIPAL BALANCES
                        AND COMPONENT PRINCIPAL BALANCES
         AS PERCENTAGES OF INITIAL CLASS A SUBCLASS PRINCIPAL BALANCES
                    AND INITIAL COMPONENT PRINCIPAL BALANCES

                     CLASS A-1 AND CLASS A-10 CERTIFICATES
<TABLE>
<CAPTION>
                        PERCENTAGE OF
                       INITIAL CLASS A
    DISTRIBUTION          SUBCLASS
        DATE          PRINCIPAL BALANCE
- --------------------  -----------------
<S>                   <C>
June 1993...........      98.17122911%
July 1993...........      96.10996718
August 1993.........      93.81674367
September 1993......      91.29229309
October 1993........      88.53755537
November 1993.......      85.55367545
December 1993.......      82.34200299
January 1994........      78.90409139
February 1994.......      75.24169692

<CAPTION>
                        PERCENTAGE OF
                       INITIAL CLASS A
    DISTRIBUTION          SUBCLASS
        DATE          PRINCIPAL BALANCE
- --------------------  -----------------
<S>                   <C>
March 1994..........      71.35677713%
April 1994..........      67.25148901
May 1994............      62.92818739
June 1994...........      58.38942219
July 1994...........      53.63823556
August 1994.........      48.67785886
September 1994......      43.51139423
October 1994........      38.14212663
<CAPTION>
                        PERCENTAGE OF
                       INITIAL CLASS A
    DISTRIBUTION          SUBCLASS
        DATE          PRINCIPAL BALANCE
- --------------------  -----------------
<S>                   <C>
November 1994.......      32.57351976%
December 1994.......      26.80949782
January 1995........      20.85413717
February 1995.......      14.71197632
March 1995..........       8.38736070
April 1995..........       1.88736446
May 1995
 and thereafter.....       0.00000000
</TABLE>

               CLASS A-2 CERTIFICATES AND CLASS A-7 PAC COMPONENT
<TABLE>
<CAPTION>
                        PERCENTAGE OF
                       INITIAL CLASS A
                          SUBCLASS
                      PRINCIPAL BALANCE
    DISTRIBUTION        OR COMPONENT
        DATE          PRINCIPAL BALANCE
- --------------------  -----------------
<S>                   <C>
Up to
and including
April 1995..........     100.00000000%
May 1995............      97.98981082
June 1995...........      95.11865375
July 1995...........      92.18488308
August 1995.........      89.19992942
September 1995......      86.18538903
October 1995........      83.16224676
November 1995.......      80.15630988
December 1995.......      77.17494428
January 1996........      74.21790052
February 1996.......      71.28493132
March 1996..........      68.37579154

<CAPTION>
                        PERCENTAGE OF
                       INITIAL CLASS A
                          SUBCLASS
                      PRINCIPAL BALANCE
    DISTRIBUTION        OR COMPONENT
        DATE          PRINCIPAL BALANCE
- --------------------  -----------------
<S>                   <C>
April 1996..........      65.49023817%
May 1996............      62.62803032
June 1996...........      59.78892924
July 1996...........      56.97269818
August 1996.........      54.17910251
September 1996......      51.40790961
October 1996........      48.65888886
November 1996.......      45.93181166
December 1996.......      43.22645136
January 1997........      40.54258332
February 1997.......      37.87998476
March 1997..........      35.23843489
April 1997..........      32.61771480
May 1997............      30.01760742
<CAPTION>
                        PERCENTAGE OF
                       INITIAL CLASS A
                          SUBCLASS
                      PRINCIPAL BALANCE
    DISTRIBUTION        OR COMPONENT
        DATE          PRINCIPAL BALANCE
- --------------------  -----------------
<S>                   <C>
June 1997...........      27.43789763%
July 1997...........      24.87837211
August 1997.........      22.33881937
September 1997......      19.81902972
October 1997........      17.31879529
November 1997.......      14.83791001
December 1997.......      12.37616949
January 1998........       9.93337115
February 1998.......       7.50931411
March 1998..........       5.10379923
April 1998..........       2.71662902
May 1998............       0.34760772
June 1998
 and thereafter.....       0.00000000
</TABLE>

                                      S-35
<PAGE>
                  PLANNED CLASS A SUBCLASS PRINCIPAL BALANCES
         AS PERCENTAGES OF INITIAL CLASS A SUBCLASS PRINCIPAL BALANCES

                             CLASS A-3 CERTIFICATES
<TABLE>
<CAPTION>
                        PERCENTAGE OF
                       INITIAL CLASS A
    DISTRIBUTION          SUBCLASS
        DATE          PRINCIPAL BALANCE
- --------------------  -----------------
<S>                   <C>
Up to
and including
April 1995..........     100.00000000%
May 1995............      98.27123730
June 1995...........      95.80204223
July 1995...........      93.27899945
August 1995.........      90.71193930
September 1995......      88.11943456
October 1995........      85.51953221
November 1995.......      82.93442650
December 1995.......      80.37045208
January 1996........      77.82739444
February 1996.......      75.30504094
March 1996..........      72.80318072
April 1996..........      70.32160482
May 1996............      67.86010608
June 1996...........      65.41847915
July 1996...........      62.99652043
August 1996.........      60.59402815
September 1996......      58.21080226

<CAPTION>
                        PERCENTAGE OF
                       INITIAL CLASS A
    DISTRIBUTION          SUBCLASS
        DATE          PRINCIPAL BALANCE
- --------------------  -----------------
<S>                   <C>
October 1996........      55.84664442%
November 1996.......      53.50135803
December 1996.......      51.17474817
January 1997........      48.86662165
February 1997.......      46.57678689
March 1997..........      44.30505400
April 1997..........      42.05123473
May 1997............      39.81514238
June 1997...........      37.59659196
July 1997...........      35.39540001
August 1997.........      33.21138466
September 1997......      31.04436556
October 1997........      28.89416395
November 1997.......      26.76060261
December 1997.......      24.64350576
January 1998........      22.54269919
February 1998.......      20.45801014
March 1998..........      18.38926734
April 1998..........      16.33630096
May 1998............      14.29894264
<CAPTION>
                        PERCENTAGE OF
                       INITIAL CLASS A
    DISTRIBUTION          SUBCLASS
        DATE          PRINCIPAL BALANCE
- --------------------  -----------------
<S>                   <C>
June 1998...........      13.13263043%
July 1998...........      12.13079668
August 1998.........      11.15949371
September 1998......      10.21784367
October 1998........       9.30499350
November 1998.......       8.42011415
December 1998.......       7.56240000
January 1999........       6.73106809
February 1999.......       5.92535761
March 1999..........       5.14452918
April 1999..........       4.38786432
May 1999............       3.65466483
June 1999...........       2.97237120
July 1999...........       2.31159484
August 1999.........       1.67170427
September 1999......       1.05208600
October 1999........       0.45214405
November 1999
 and thereafter.....       0.00000000
</TABLE>

                             CLASS A-4 CERTIFICATES
<TABLE>
<CAPTION>
                        PERCENTAGE OF
                       INITIAL CLASS A
    DISTRIBUTION          SUBCLASS
        DATE          PRINCIPAL BALANCE
- --------------------  -----------------
<S>                   <C>
Up to
and including
May 1998............     100.00000000%
June 1998...........      93.80450306
July 1998...........      86.64854774
August 1998.........      79.71066932
September 1998......      72.98459765
October 1998........      66.46423931

<CAPTION>
                        PERCENTAGE OF
                       INITIAL CLASS A
    DISTRIBUTION          SUBCLASS
        DATE          PRINCIPAL BALANCE
- --------------------  -----------------
<S>                   <C>
November 1998.......      60.14367250%
December 1998.......      54.01714284
January 1999........      48.07905779
February 1999.......      42.32398290
March 1999..........      36.74663700
April 1999..........      31.34188800
May 1999............      26.10474875
<CAPTION>
                        PERCENTAGE OF
                       INITIAL CLASS A
    DISTRIBUTION          SUBCLASS
        DATE          PRINCIPAL BALANCE
- --------------------  -----------------
<S>                   <C>
June 1999...........      21.23122285%
July 1999...........      16.51139174
August 1999.........      11.94074478
September 1999......       7.51490001
October 1999........       3.22960033
November 1999
 and thereafter.....       0.00000000
</TABLE>

                                      S-36
<PAGE>
                  PLANNED CLASS A SUBCLASS PRINCIPAL BALANCES
         AS PERCENTAGES OF INITIAL CLASS A SUBCLASS PRINCIPAL BALANCES

                             CLASS A-5 CERTIFICATES
<TABLE>
<CAPTION>
                        PERCENTAGE OF
                       INITIAL CLASS A
    DISTRIBUTION          SUBCLASS
        DATE          PRINCIPAL BALANCE
- --------------------  -----------------
<S>                   <C>
Up to
and including
October 1999........     100.00000000%
November 1999.......      98.67870165
December 1999.......      92.90577609
January 2000........      87.31752711
February 2000.......      81.90850467
March 2000..........      76.67341441
April 2000..........      71.60711342
May 2000............      66.70460555
June 2000...........      62.45882853
July 2000...........      58.35224407

<CAPTION>
                        PERCENTAGE OF
                       INITIAL CLASS A
    DISTRIBUTION          SUBCLASS
        DATE          PRINCIPAL BALANCE
- --------------------  -----------------
<S>                   <C>
August 2000.........      54.38060191%
September 2000......      50.53977624
October 2000........      46.82576277
November 2000.......      43.23467486
December 2000.......      39.76273990
January 2001........      36.40629672
February 2001.......      33.16179177
March 2001..........      30.02577631
April 2001..........      26.99490347
May 2001............      24.06592506
June 2001...........      21.63642217
July 2001...........      19.28598340
<CAPTION>
                        PERCENTAGE OF
                       INITIAL CLASS A
    DISTRIBUTION          SUBCLASS
        DATE          PRINCIPAL BALANCE
- --------------------  -----------------
<S>                   <C>
August 2001.........      17.01214676%
September 2001......      14.81252455
October 2001........      12.68480124
November 2001.......      10.62673121
December 2001.......       8.63613693
January 2002........       6.71090675
February 2002.......       4.84899288
March 2002..........       3.04840963
April 2002..........       1.30723175
May 2002
 and thereafter.....       0.00000000
</TABLE>

                                      S-37
<PAGE>
                  PLANNED CLASS A SUBCLASS PRINCIPAL BALANCES
         AS PERCENTAGES OF INITIAL CLASS A SUBCLASS PRINCIPAL BALANCES

                             CLASS A-6 CERTIFICATES
<TABLE>
<CAPTION>
                        PERCENTAGE OF
                       INITIAL CLASS A
    DISTRIBUTION          SUBCLASS
        DATE          PRINCIPAL BALANCE
- --------------------  -----------------
<S>                   <C>
Up to
and including
April 2002..........     100.00000000%
May 2002............      99.12983614
June 2002...........      96.06244599
July 2002...........      93.08310146
August 2002.........      90.18930123
September 2002......      87.37861447
October 2002........      84.64867919
November 2002.......      81.99719978
December 2002.......      79.42194549
January 2003........      76.92074852
February 2003.......      74.49150248
March 2003..........      72.13215976
April 2003..........      69.84073107
May 2003............      67.61528344
June 2003...........      65.45393792
July 2003...........      63.35486908
August 2003.........      61.31630271
September 2003......      59.33651499
October 2003........      57.41383103
November 2003.......      55.54662270
December 2003.......      53.73330831
January 2004........      51.97235047
February 2004.......      50.26225594
March 2004..........      48.60157296
April 2004..........      46.98889148
May 2004............      45.42284075
June 2004...........      43.90208960
July 2004...........      42.42534372
August 2004.........      40.99134586
September 2004......      39.59887435
October 2004........      38.24674210

<CAPTION>
                        PERCENTAGE OF
                       INITIAL CLASS A
    DISTRIBUTION          SUBCLASS
        DATE          PRINCIPAL BALANCE
- --------------------  -----------------
<S>                   <C>
November 2004.......      36.93379546%
December 2004.......      35.65891354
January 2005........      34.42100758
February 2005.......      33.21901895
March 2005..........      32.05191997
April 2005..........      30.91871114
May 2005............      29.81842194
June 2005...........      28.75010920
July 2005...........      27.71285640
August 2005.........      26.70577323
September 2005......      25.72799457
October 2005........      24.77867968
November 2005.......      23.85701186
December 2005.......      22.96219780
January 2006........      22.09346641
February 2006.......      21.25006852
March 2006..........      20.43127652
April 2006..........      19.63638308
May 2006............      18.86470142
June 2006...........      18.11556407
July 2006...........      17.38832247
August 2006.........      16.68234652
September 2006......      15.99702422
October 2006........      15.33176088
November 2006.......      14.68597876
December 2006.......      14.05911677
January 2007........      13.45062929
February 2007.......      12.85998667
March 2007..........      12.28667441
April 2007..........      11.73019237
May 2007............      11.19005468
June 2007...........      10.66578970
July 2007...........      10.15693891
<CAPTION>
                        PERCENTAGE OF
                       INITIAL CLASS A
    DISTRIBUTION          SUBCLASS
        DATE          PRINCIPAL BALANCE
- --------------------  -----------------
<S>                   <C>
August 2007.........       9.66305699%
September 2007......       9.18371130
October 2007........       8.71848140
November 2007.......       8.26695916
December 2007.......       7.82874803
January 2008........       7.40346262
February 2008.......       6.99072860
March 2008..........       6.59018265
April 2008..........       6.20147135
May 2008............       5.82425149
June 2008...........       5.45819022
July 2008...........       5.10296345
August 2008.........       4.75825692
September 2008......       4.42376499
October 2008........       4.09919121
November 2008.......       3.78424704
December 2008.......       3.47865267
January 2009........       3.18213637
February 2009.......       2.89443397
March 2009..........       2.61528871
April 2009..........       2.34445159
May 2009............       2.08168034
June 2009...........       1.82674013
July 2009...........       1.57940251
August 2009.........       1.33944566
September 2009......       1.10665416
October 2009........       0.88081868
November 2009.......       0.66173634
December 2009.......       0.44920949
January 2010........       0.24304678
February 2010.......       0.04306193
March 2010
 and thereafter.....       0.00000000
</TABLE>

                                      S-38
<PAGE>
                  TARGETED CLASS A SUBCLASS PRINCIPAL BALANCES
                        AND COMPONENT PRINCIPAL BALANCES
         AS PERCENTAGES OF INITIAL CLASS A SUBCLASS PRINCIPAL BALANCES
                        AND COMPONENT PRINCIPAL BALANCES

               CLASS A-7 TAC COMPONENT AND CLASS A-8 CERTIFICATES
<TABLE>
<CAPTION>
                        PERCENTAGE OF
                       INITIAL CLASS A
                          SUBCLASS
                      PRINCIPAL BALANCE
    DISTRIBUTION        OR COMPONENT
        DATE          PRINCIPAL BALANCE
- --------------------  -----------------
<S>                   <C>
June 1993...........      99.65533091%
July 1993...........      99.21083755
August 1993.........      98.66681537
September 1993......      98.02379350
October 1993........      97.28253587
November 1993.......      96.44404141
December 1993.......      95.50954377
January 1994........      94.48051035
February 1994.......      93.35864033
March 1994..........      92.14586237
April 1994..........      90.84433151
May 1994............      89.45642504
June 1994...........      87.98473823
July 1994...........      86.43221215
August 1994.........      84.80198722
September 1994......      83.09725901
October 1994........      81.32141559
November 1994.......      79.47802989
December 1994.......      77.57097321
January 1995........      75.60427013
February 1995.......      73.58222205
March 1995..........      71.50911655
April 1995..........      69.39045094
May 1995............      67.23157850
June 1995...........      65.03847134

<CAPTION>
                        PERCENTAGE OF
                       INITIAL CLASS A
                          SUBCLASS
                      PRINCIPAL BALANCE
    DISTRIBUTION        OR COMPONENT
        DATE          PRINCIPAL BALANCE
- --------------------  -----------------
<S>                   <C>
July 1995...........      62.81846221%
August 1995.........      60.58524963
September 1995......      58.36209660
October 1995........      56.17077913
November 1995.......      54.03691998
December 1995.......      51.96699020
January 1996........      49.95970134
February 1996.......      48.01378771
March 1996..........      46.12800601
April 1996..........      44.30113496
May 1996............      42.53197491
June 1996...........      40.81934742
July 1996...........      39.16209502
August 1996.........      37.55908079
September 1996......      36.00918802
October 1996........      34.51131988
November 1996.......      33.06439915
December 1996.......      31.66736779
January 1997........      30.31918665
February 1997.......      29.01883524
March 1997..........      27.76531132
April 1997..........      26.55763057
May 1997............      25.39482647
June 1997...........      24.27594973
July 1997...........      23.20006815
<CAPTION>
                        PERCENTAGE OF
                       INITIAL CLASS A
                          SUBCLASS
                      PRINCIPAL BALANCE
    DISTRIBUTION        OR COMPONENT
        DATE          PRINCIPAL BALANCE
- --------------------  -----------------
<S>                   <C>
August 1997.........      22.16626641%
September 1997......      21.17364574
October 1997........      20.22132348
November 1997.......      19.30843299
December 1997.......      18.43412337
January 1998........      17.59755913
February 1998.......      16.79791993
March 1998..........      16.03440033
April 1998..........      15.30620960
May 1998............      14.61257136
June 1998...........      13.82929126
July 1998...........      12.99828791
August 1998.........      12.12164244
September 1998......      11.20136379
October 1998........      10.23939105
November 1998.......       9.23759574
December 1998.......       8.19778356
January 1999........       7.12169678
February 1999.......       6.01101599
March 1999..........       4.86736202
April 1999..........       3.69229783
May 1999............       2.48733032
June 1999...........       1.21375276
July 1999
 and thereafter.....       0.00000000
</TABLE>

                                      S-39
<PAGE>
  PRINCIPAL PAYMENT CHARACTERISTICS OF THE PAC CERTIFICATES, THE TAC
   CERTIFICATES, THE CLASS A-7 PAC
   COMPONENT, THE CLASS A-7 TAC COMPONENT AND THE COMPANION COMPONENTS

    The  percentages of the  initial Class A Subclass  Principal Balances of the
PAC Certificates and  the TAC Certificates  and the percentages  of the  initial
Component Principal Balance of the Class A-7 PAC Component and the Class A-7 TAC
Component  set forth in  the tables above were  calculated using the assumptions
described in the  last paragraph beginning  on page S-63  herein. Based on  such
assumptions,  the Class  A Subclass  Principal Balance  of each  Subclass of PAC
Certificates and the Component Principal Balance of the Class A-7 PAC  Component
would  be reduced to  the percentage of  its initial Class  A Subclass Principal
Balance or initial Component Principal Balance indicated in the tables above for
each Distribution  Date  if prepayments  on  the  Mortgage Loans  occur  at  any
CONSTANT   rate  between  approximately  175%   SPA  (as  defined  herein  under
"Prepayment and Yield Considerations") and approximately 475% SPA. Based on such
assumptions, the Class A Subclass Principal Balance of the TAC Certificates  and
the  Component Principal Balance of the Class A-7 TAC Component would be reduced
to the percentage of their initial Class A Subclass Principal Balance or initial
Component Principal Balance indicated in the tables above for each  Distribution
Date  if prepayments on the Mortgage Loans occur at a CONSTANT rate of 285% SPA.
However, IT IS HIGHLY UNLIKELY THAT PRINCIPAL PREPAYMENTS ON THE MORTGAGE  LOANS
WILL  OCCUR AT ANY CONSTANT  RATE OR THAT THE MORTGAGE  LOANS WILL PREPAY AT THE
SAME RATE.  In  addition, even  if  principal prepayments  were  to occur  at  a
constant  rate,  there may  be differences  between  the characteristics  of the
mortgage loans ultimately included  in the Trust Estate  and the Mortgage  Loans
which  are expected to be included, as described herein. Therefore, there can be
no assurance that the Class A Subclass Principal Balance of any Subclass of  PAC
Certificates  or the TAC Certificates or  the Component Principal Balance of the
Class A-7 PAC Component or the Class A-7 TAC Component, after the application of
the distributions to  be made on  any Distribution  Date, will be  equal to  the
applicable  percentage  of the  initial Class  A  Subclass Principal  Balance or
initial Component Principal Balance for such Distribution Date specified in  the
tables above.

    As  discussed  under  "Prepayment  and  Yield  Considerations"  herein,  the
weighted average  life of  a Subclass  of  Class A  Certificates refers  to  the
average  amount  of time  that will  elapse from  the date  of issuance  of such
Subclass until  each  dollar in  reduction  of  the principal  balance  of  such
Subclass  is  distributed  to  investors. The  aggregate  amount  distributed in
reduction of the principal balance,  and accordingly, the weighted average  life
of  each Subclass of Class A Certificates  will be affected, to varying degrees,
by the rate of principal payments (including prepayments) of the Mortgage Loans,
the timing of  changes in  such rate  of payment  and the  priority sequence  of
distributions  in  reduction  of  principal of  the  Class  A  Certificates. The
interaction of these  factors may have  different effects on  the Subclasses  of
Class  A Certificates, including the PAC  Certificates, the TAC Certificates and
the Class  A-7  Certificates,  and the  effects  on  any Subclass  may  vary  at
different  times during the life  of such Subclass. Further,  to the extent that
the purchase prices paid  by investors for the  Class A Certificates,  including
the  PAC  Certificates, the  TAC Certificates  and  the Class  A-7 Certificates,
represent discounts or premiums to their respective initial principal  balances,
variability  in the weighted average lives  of such Certificates could result in
variability in  the  related  yields  to maturity.  See  "Prepayment  and  Yield
Considerations" herein.

    The  weighted average  lives of the  Subclasses of PAC  Certificates and the
Class A-7 Certificates to the extent of their Class A-7 PAC Component will  vary
under  different prepayment scenarios. To  the extent that principal prepayments
are made at  a CONSTANT rate  that is  slower than approximately  175% SPA,  the
Class  A  Principal  Distribution  Amount  on  each  Distribution  Date  may  be
insufficient to make  distributions in  reduction of the  principal balances  of
some  or all of the  PAC Certificates or the Class  A-7 PAC Component in amounts
that would reduce their principal balances to their respective planned principal
balances  for  such  Distribution  Date.  The  weighted  average  lives  of  the
Subclasses  of the PAC Certificates and the Class A-7 Certificates to the extent
of the Class A-7 PAC Component may therefore be extended, as illustrated by  the
tables beginning on page S-65. To the extent that such principal prepayments are
made at a CONSTANT rate that is higher than 475% SPA, the weighted average lives
of  the Subclasses  of PAC  Certificates and the  Class A-7  Certificates to the
extent of the  Class A-7 PAC  Component may  be reduced, as  illustrated by  the
tables beginning on page S-65.

                                      S-40
<PAGE>
    The  extent to which the planned principal balances will be achieved and the
sensitivity of the PAC Certificates or the Class A-7 PAC Component to  principal
prepayments  on the Mortgage Loans will depend, in part, upon the period of time
during which the TAC Certificates, the Class A-7 TAC Component and the Companion
Components remain  outstanding. On  each Distribution  Date, the  excess of  the
Class  A Principal Distribution  Amount over the  PAC Principal Amounts ("Excess
Principal Payments") for such Distribution Date will be distributed first to the
TAC Certificates,  the Class  A-7  TAC Component  and the  Companion  Components
before being distributed to the PAC Certificates and the Class A-7 PAC Component
in  accordance with the priorities set forth above under "--Allocation of Amount
to be Distributed to the Class A and Class M Certificates." This is intended  to
decrease  the  likelihood  that  the  PAC Certificates  and  the  Class  A-7 PAC
Component will be  reduced below  their planned  principal balances  on a  given
Distribution  Date. As  such, and  in accordance  with the  priorities described
above, the  TAC Certificates,  the Class  A-7 TAC  Component and  the  Companion
Components  support the PAC Certificates. However, under certain relatively fast
prepayment scenarios, one or  more Subclasses of PAC  Certificates or the  Class
A-7  PAC Component may continue to be outstanding when the Companion Components,
the Class A-7 TAC Component and the TAC Certificates are no longer  outstanding.
Under  such circumstances, the entire Class A Principal Distribution Amount will
be applied to the remaining PAC Certificates and the Class A-7 PAC Component  in
accordance  with  the  priorities  described herein.  Thus,  when  the principal
balances of the TAC Certificates, the Class A-7 TAC Component and the  Companion
Components  have been reduced to zero, any Subclasses of PAC Certificates or the
Class A-7 PAC Component then outstanding will, in accordance with the priorities
set forth above, become more sensitive to the rate of prepayment on the Mortgage
Loans as such Subclasses or Component will receive all Excess Principal Payments
until the  principal balances  of the  PAC Certificates  and the  Class A-7  PAC
Component  have been reduced to zero.  Conversely, under certain relatively slow
prepayment scenarios,  the Class  A  Principal Distribution  Amount may  not  be
sufficient  to  pay  the  PAC  Principal  Amounts  for  all  Subclasses  of  PAC
Certificates and the Class  A-7 PAC Component on  a given Distribution Date.  In
such  cases,  the  Class A  Principal  Distribution Amount  for  each subsequent
Distribution Date will be  applied in accordance  with the priorities  described
herein  such that  the TAC  Certificates, the  Class A-7  TAC Component  and the
Companion Components will not  receive any distributions  in reduction of  their
principal balances until the outstanding principal balance of each such Subclass
of  PAC Certificates  and the  Class A-7 PAC  Component has  reached its planned
principal balance for such Distribution Date. As a result, the weighted  average
life  of any Subclass of  PAC Certificates (or of  the Class A-7 Certificates to
the extent  of  the Class  A-7  PAC Component)  that  did not  receive  its  PAC
Principal Amount on a Distribution Date may be extended.

    The  weighted  average  life  of  the TAC  Certificates  and  the  Class A-7
Certificates to the extent of the Class  A-7 TAC Component will also vary  under
different  prepayment scenarios.  To the  extent that  principal prepayments are
made at a CONSTANT rate that is slower than approximately 285% SPA, the Class  A
Principal  Distribution Amount on each Distribution  Date may be insufficient to
make distributions in reduction of the principal balance of the TAC Certificates
and the Class  A-7 TAC Component  in amounts that  would reduce their  principal
balance  to their  targeted principal  balance for  such Distribution  Date. The
weighted average life of the TAC Certificates and the Class A-7 Certificates  to
the  extent  of  the Class  A-7  TAC  Component may  therefore  be  extended, as
illustrated by  the tables  beginning on  page  S-65. To  the extent  that  such
principal  prepayments are made at a CONSTANT rate that is higher than 285% SPA,
the weighted average life of the TAC Certificates and the Class A-7 Certificates
to the extent of the  Class A-7 TAC Component may  be reduced as illustrated  by
the tables beginning on page S-65.

    The  extent to which the targeted principal balance will be achieved and the
sensitivity of the TAC Certificates and the Class A-7 TAC Component to principal
prepayments on the Mortgage Loans will depend, in part, upon the period of  time
during  which the Companion Components  remain outstanding. On each Distribution
Date, the  excess of  the Class  A Principal  Distribution Amount  over the  PAC
Principal  Amounts and the TAC Principal Amounts for such Distribution Date will
be distributed first to the Companion Components before being distributed to the
TAC Certificates  and  the  Class  A-7 TAC  Component  in  accordance  with  the
priorities  set forth above  under "--Allocation of Amount  to be Distributed to
the Class A  and Class M  Certificates." As  such, and in  accordance with  such
priorities

                                      S-41
<PAGE>
described  above, the Companion Components support  the TAC Certificates and the
Class A-7 TAC Component.  This is intended to  decrease the likelihood that  the
principal  balance of the TAC Certificates and  the Class A-7 TAC Component will
be reduced below their targeted principal balance on a given Distribution  Date.
However,   under  certain   relatively  fast   prepayment  scenarios,   the  TAC
Certificates and the Class A-7 TAC Component may continue to be outstanding when
the Companion Components  are no longer  outstanding. Under such  circumstances,
all  Excess Principal Payments will be applied first to the TAC Certificates and
the Class A-7 TAC Component. Thus, when the principal balances of the  Companion
Components have been reduced to zero, the TAC Certificates and the Class A-7 TAC
Component,  if outstanding, will become more sensitive to the rate of prepayment
on the Mortgage Loans as  the TAC Certificates and  the Class A-7 TAC  Component
will  receive all Excess Principal Payments until the principal balances of such
TAC Certificates and  the Class  A-7 TAC Component  have been  reduced to  zero.
Conversely,  under  certain  relatively slow  prepayment  scenarios,  the Excess
Principal Payments,  if any,  may not  be sufficient  to pay  the TAC  Principal
Amounts  of the  TAC Certificates  and the  Class A-7  TAC Component  on a given
Distribution Date.  In  such  cases,  the Excess  Principal  Payments  for  each
subsequent  Distribution Date will be applied  in accordance with the priorities
described herein  such  that  the  Companion Components  will  not  receive  any
distributions  in reduction  of their  principal balances  until the outstanding
principal balances of the TAC Certificates and the Class A-7 TAC Component  have
reached  their  targeted  principal balance  for  such Distribution  Date.  As a
result, the weighted  average lives of  the TAC Certificates  and the Class  A-7
Certificates to the extent of the Class A-7 TAC Component may be extended.

    Because  any Excess  Principal Payments  for any  Distribution Date  will be
distributed to  Certificateholders on  such Distribution  Date, the  ability  to
distribute  the  PAC Principal  Amounts  and the  TAC  Principal Amounts  on any
Distribution Date  will  not  be enhanced  by  the  averaging of  high  and  low
principal  prepayment  rates on  the  Mortgage Loans  over  several Distribution
Dates, as might be the case if any such Excess Principal Payments were held  for
future  applications and not distributed monthly. There is no assurance that (i)
distributions in reduction  of the  Class A  Subclass Principal  Balance of  any
Subclass  of  PAC  Certificates  (other  than  the  Class  A-1  and  Class  A-10
Certificates) or the Component Principal Balance of the Class A-7 PAC  Component
will  not commence significantly earlier than  the first Distribution Date shown
in the above tables  relating to such Subclass  or Component, (ii) the  Subclass
Principal  Balance of any Subclass of PAC Certificates (other than the Class A-1
and Class A-10 Certificates) or the TAC Certificates or the Component  Principal
Balance  of the Class A-7 PAC Component or  the Class A-7 TAC Component will not
commence significantly later than the first Distribution Date shown in the above
tables relating to  such Subclass  or Component or  (iii) the  Class A  Subclass
Principal Balance of any Subclass of PAC Certificates or the TAC Certificates or
the  Component Principal Balance of the Class A-7 PAC Component or the Class A-7
TAC Component will not be reduced to zero significantly earlier or significantly
later than the last Distribution Date shown in the above tables.

ADDITIONAL RIGHTS OF THE CLASS A-R AND CLASS A-LR CERTIFICATEHOLDERS

    The Class A-R  and Class A-LR  Certificates will remain  outstanding for  as
long  as the Trust Estate shall exist, whether or not they are receiving current
distributions of principal or interest. The  holders of the Class A-R and  Class
A-LR  Certificates will  be entitled  to receive  the proceeds  of the remaining
assets of the  Trust Estate,  if any,  on the  final Distribution  Date for  the
Series  1993-18 Certificates, after distributions in  respect of any accrued but
unpaid interest on the  Series 1993-18 Certificates  and after distributions  in
reduction of principal balance have reduced the principal balances of the Series
1993-18  Certificates to  zero. It  is not  anticipated that  there will  be any
assets remaining in the  Trust Estate on the  final Distribution Date  following
the  distributions of interest and in reduction of principal balance made on the
Series 1993-18 Certificates on such date.

    In addition,  the Class  A-LR  Certificateholder will  be entitled  on  each
Distribution  Date to receive  any Pool Distribution  Amount remaining after all
distributions pursuant to the Pool Distribution Amount Allocation have been made
and any  Net Foreclosure  Profits after  the Servicer  has been  reimbursed  for

                                      S-42
<PAGE>
unpaid  Servicing  Fees. See  "Servicing of  the Mortgage  Loans--Fixed Retained
Yield, Servicing Compensation and Payment  of Expenses" in the Prospectus.  "Net
Foreclosure  Profits" means, with respect to  any Distribution Date, the excess,
if any, of (i) the aggregate profits  on Liquidated Loans in the related  period
with  respect  to which  net Liquidation  Proceeds  exceed the  unpaid principal
balance thereof plus accrued interest thereon at the Mortgage Interest Rate over
(ii) the aggregate  realized losses on  Liquidated Loans in  the related  period
with  respect  to  which  net  Liquidation Proceeds  are  less  than  the unpaid
principal balance thereof plus accrued interest thereon at the Mortgage Interest
Rate. It is not anticipated that there will be any such Net Foreclosure  Profits
or such undistributed Pool Distribution Amounts.

PERIODIC ADVANCES

    If, on any Determination Date, payments of principal and interest due on any
Mortgage Loan in the Trust Estate on the related Due Date have not been received
as  of the close  of business on  the business day  preceding such Determination
Date, the  Servicer  will be  obligated  to advance  on  or before  the  related
Distribution  Date for the benefit of holders of the Series 1993-18 Certificates
an amount in cash equal to all delinquent payments of principal and interest due
on each  Mortgage  Loan in  the  Trust Estate  (with  interest adjusted  to  the
applicable  Net Mortgage Interest Rate) not previously advanced, but only to the
extent that the Servicer  believes that such amounts  will be recoverable by  it
from liquidation proceeds or other recoveries in respect of the related Mortgage
Loan.

    The  Pooling and Servicing  Agreement provides that any  advance of the kind
described in the preceding  paragraph may be reimbursed  to the Servicer at  any
time from funds available in the Certificate Account to the extent that (i) such
funds  represent receipts on, or  liquidation, insurance, purchase or repurchase
proceeds in respect of, the Mortgage Loans to which the advance relates or  (ii)
the Servicer has determined in good faith that it will be unable to recover such
advance from funds of the type referred to in clause (i) above.

    In the event that, at some future date, Moody's should revise its assessment
of  the ability  of the Servicer  to make  Periodic Advances, and  so notify the
Trustee in  writing (the  date on  which such  notification is  received by  the
Servicer being referred to herein as the "Reserve Fund Trigger Date"), a reserve
fund (the "Reserve Fund") will be established by the Servicer in accordance with
the provisions of the Pooling and Servicing Agreement to provide limited support
for  the Servicer's obligation to make Periodic Advances, as described above. In
the event that, with respect to  any Distribution Date occurring after the  date
on  which the Reserve  Fund is funded,  the Servicer fails  to make any Periodic
Advance required  to  be  made by  it  pursuant  to the  Pooling  and  Servicing
Agreement,  the Trustee  will cause  to be  withdrawn from  the Reserve  Fund an
advance in an amount equal to the least of (i) the Periodic Advance required  to
be  made by the Servicer  which the Servicer failed to  make, (ii) the excess of
(A) the Class  A Optimal Amount  for such  Distribution Date over  (B) the  Pool
Distribution  Amount (determined without regard to  any advance from the Reserve
Fund on such Distribution Date) and (iii) an amount equal to the amount then  in
the  Reserve Fund, less any reinvestment income  or gain to be released from the
Reserve Fund  as  described  in  the  following  paragraph  (the  "Reserve  Fund
Available  Advance Amount").  The Pooling  and Servicing  Agreement will provide
that any such  advance made  from the  Reserve Fund  will be  reimbursed to  the
Reserve  Fund if and  to the extent  that such reimbursement  would be permitted
under the Pooling and  Servicing Agreement if such  advance had been a  Periodic
Advance  made by the Servicer.  The Reserve Fund, if  established, will not be a
part of the Trust Estate or the Upper-Tier REMIC or Lower-Tier REMIC.

    The Reserve  Fund, if  required,  will be  established  as a  trust  account
pursuant  to a depository agreement (the  "Depository Agreement") by and among a
depository institution (the  "Reserve Fund  Depository"), the  Servicer and  the
Trustee  and will be held by the  Reserve Fund Depository. Following the Reserve
Fund Trigger Date, should such  date occur, the Reserve  Fund will be funded  by
the  deposit by the  Servicer with the  Reserve Fund Depository  of an amount in
cash equal to  (i) 0.20% of  the outstanding principal  balance of the  Mortgage
Loans  as of the close of business on the Reserve Fund Trigger Date or (ii) such
lesser amount as Moody's may specify (the "Reserve Fund Required Amount"). After
the Reserve Fund  Required Amount  has been deposited  in the  Reserve Fund,  no
person will have

                                      S-43
<PAGE>
any further obligation to deposit amounts in the Reserve Fund or to maintain the
amounts in the Reserve Fund at that level even if at some future date amounts in
the  Reserve Fund  fall below the  Reserve Fund  Required Amount as  a result of
unreimbursed advances made  from the  Reserve Fund or  withdrawals permitted  by
Moody's.  The amounts in  the Reserve Fund  may be invested  in investments that
will not  cause the  then current  ratings of  the Class  A Certificates  to  be
lowered  by Moody's,  and reinvestment  income or gain  will be  released to the
Servicer (or  its designee)  on each  Distribution Date  free and  clear of  any
interest  of the Trustee, the Reserve Fund Depository or any other person. After
the Class A  Principal Balance  has been  reduced to  zero, any  amounts in  the
Reserve Fund will be released to the Servicer (or its designee).

    An  alternative method of  limited support for  the Servicer's obligation to
make Periodic Advances may be provided, if  such change does not cause the  then
current ratings of the Class A Certificates to be lowered by Moody's.

RESTRICTIONS ON TRANSFER OF THE CLASS A-R, CLASS A-LR AND CLASS M CERTIFICATES

    The  Class A-R and Class A-LR Certificates  will be subject to the following
restrictions on transfer, and each of the Class A-R and Class A-LR  Certificates
will contain a legend describing such restrictions.

    The  REMIC provisions of the Code impose certain taxes on (i) transferors of
residual interests to, or agents that  acquire residual interests on behalf  of,
Disqualified  Organizations  (as defined  in  the Prospectus)  and  (ii) certain
Pass-Through Entities  (as defined  in the  Prospectus) that  have  Disqualified
Organizations  as beneficial  owners. The  Pooling and  Servicing Agreement will
provide that no legal or beneficial interest in the Class A-R Certificate or the
Class A-LR Certificate may be  transferred to or registered  in the name of  any
person unless (i) the proposed purchaser provides to the Trustee an affidavit to
the  effect  that, among  other  items, such  transferee  is not  a Disqualified
Organization and is not purchasing the  Class A-R Certificate or the Class  A-LR
Certificate  as an  agent for  a Disqualified  Organization (I.E.,  as a broker,
nominee, or other middleman thereof) and  (ii) the transferor states in  writing
to  the Trustee that  it has no  actual knowledge that  such affidavit is false.
Further,  such  affidavit  requires  the  transferee  to  affirm  that  it   (i)
historically  has paid its debts as  they have come due and  intends to do so in
the future, (ii) understands that it  may incur tax liabilities with respect  to
the  Class A-R  Certificate or  Class A-LR Certificate  in excess  of cash flows
generated thereby, (iii) intends to pay taxes associated with holding the  Class
A-R Certificate or Class A-LR Certificate as such taxes become due and (iv) will
not  transfer the Class A-R Certificate or  Class A-LR Certificate to any person
or entity that does not provide a similar affidavit. The transferor must certify
in writing to  the Trustee  that, as  of the  date of  the transfer,  it had  no
knowledge  or  reason  to know  that  the  affirmations made  by  the transferee
pursuant to the preceding sentence were false.

    In addition, the Class A-R and Class A-LR Certificates may not be  purchased
by  or transferred to  any person that is  not a "U.S.  Person," unless (i) such
person holds such  Class A-R or  Class A-LR Certificate  in connection with  the
conduct  of  a trade  or business  within  the United  States and  furnishes the
transferor and the Trustee with an effective Internal Revenue Service Form  4224
or  (ii)  the transferee  delivers to  both  the transferor  and the  Trustee an
opinion of a nationally recognized tax counsel to the effect that such  transfer
is  in  accordance  with  the  requirements  of  the  Code  and  the regulations
promulgated thereunder and  that such transfer  of the Class  A-R or Class  A-LR
Certificate  will not be  disregarded for federal income  tax purposes. The term
"U.S. Person" means a citizen or  resident of the United States, a  corporation,
partnership  or other entity  created or organized  in or under  the laws of the
United States or any political subdivision  thereof, or an estate or trust  that
is subject to U.S. federal income tax regardless of the source of its income.

    The  Pooling  and Servicing  Agreement will  provide  that any  attempted or
purported transfer in violation of these transfer restrictions will be null  and
void  and will  vest no  rights in any  purported transferee.  Any transferor or
agent to whom the Trustee provides information as to any applicable tax  imposed
on  such transferor or  agent may be required  to bear the  cost of computing or
providing such information. See "Certain Federal Income Tax
Consequences--Federal Income Tax  Consequences for REMIC  Certificates--Taxation
of  Residual Certificates--Tax-Related Restrictions on  Transfer of the Residual
Certificates" in the Prospectus.

                                      S-44
<PAGE>
    Neither the Class  A-R Certificate  nor the  Class A-LR  Certificate may  be
purchased  by or  transferred to  a Plan. Because  the Class  M Certificates are
subordinated to the Class  A Certificates, the Class  M Certificates may not  be
purchased  by or transferred to a Plan except upon the delivery of an opinion of
counsel  as   described  herein   under  "ERISA   Considerations."  See   "ERISA
Considerations" herein and in the Prospectus.

REPORTS

    In  addition to the applicable information  specified in the Prospectus, the
Servicer will include in the statement delivered to holders of Class A and Class
M Certificates with respect to each Distribution Date the following information:
(i) the  amount  of such  distribution  allocable  to interest,  the  amount  of
interest  currently distributable on the Class  A Certificates allocated to each
Subclass and  to  the  Class  M Certificates,  any  Class  A  Subclass  Interest
Shortfall  Amount arising with respect to each  Subclass or any Class M Interest
Shortfall Amount  on  such  Distribution  Date, any  remaining  unpaid  Class  A
Subclass  Interest  Shortfall  Amount  with respect  to  each  Subclass,  or any
remaining unpaid Class M Interest Shortfall Amount, after giving effect to  such
distribution and any Non-Supported Interest Shortfall or the interest portion of
Realized  Losses  allocable  to such  Subclass  or  Class with  respect  to such
Distribution Date, (ii) the amount of such distribution allocable to  principal,
(iii)  the Class A Principal Balance, the Class M Principal Balance, the Class A
Subclass Principal Balance of each Subclass of Class A Certificates (and, in the
statement delivered to the holders of  the Class A-7 or Class A-9  Certificates,
the  Component Principal Balance with respect to each of their Components) after
giving effect to  the distribution  of principal  and the  allocation of  Excess
Special Hazard Losses, Excess Fraud Losses and Excess Bankruptcy Losses, if any,
(iv)  the Adjusted Pool Amount  and the Pool Scheduled  Principal Balance of the
Mortgage Loans for such  Distribution Date, (v) the  Class A Percentage and  the
Class  M Percentage for the following Distribution  Date, and (vi) the amount of
the remaining  Special  Hazard  Loss  Amount, the  Fraud  Loss  Amount  and  the
Bankruptcy  Loss Amount as of  the close of business  on such Distribution Date.
The statement delivered  to holders  of the  Class A-11  Certificates will  also
include  the Class  A-11 Notional Amount  and the weighted  average Net Mortgage
Interest Rate of the Mortgage Loans  applicable to such Distribution Date  minus
7.00%.  The statement delivered to the holder of the Class A-LR Certificate will
also include the  Class A-LR  Notional Amount.  See "Servicing  of the  Mortgage
Loans--Reports to Certificateholders" in the Prospectus.

    Copies  of the foregoing  reports are available upon  written request to the
Trustee  at  the  Corporate  Trust  Office.  See  "The  Pooling  and   Servicing
Agreement--Trustee" herein.

SUBORDINATION OF CLASS M AND CLASS B CERTIFICATES

    The   rights  of  the  holders  of  the  Class  M  Certificates  to  receive
distributions with respect  to the Mortgage  Loans in the  Trust Estate will  be
subordinated  to such rights of the holders  of the Class A Certificates and the
rights of the holders of the Class B Certificates to receive distributions  with
respect  to the Mortgage Loans in the  Trust Estate will be subordinated to such
rights of the holders of the Class A and Class M Certificates, all to the extent
described below. This  subordination is  intended to enhance  the likelihood  of
timely  receipt by the holders of the Class A Certificates (to the extent of the
subordination of the Class M  and Class B Certificates)  and the holders of  the
Class  M  Certificates  (to the  extent  of  the subordination  of  the  Class B
Certificates) of the full amount of their scheduled monthly payments of interest
and principal and  to afford the  holders of  the Class A  Certificates (to  the
extent  of the subordination  of the Class  M and Class  B Certificates) and the
holders of the Class M Certificates (to  the extent of the subordination of  the
Class  B  Certificates)  protection  against  Realized  Losses,  as  more  fully
described below. If Realized Losses  exceed the credit support provided  through
subordination  to the  Class A  and Class  M Certificates  or if  Excess Special
Hazard Losses, Excess Fraud Losses or  Excess Bankruptcy Losses occur, all or  a
portion of such losses will be borne by the Class A and Class M Certificates.

    The  protection afforded to the holders of  Class A Certificates by means of
the subordination feature will be accomplished by the preferential right of such
holders to receive, prior to any distribution being made on a Distribution  Date
in respect of the Class M and Class B Certificates, the amounts of principal and
interest due the Class A Certificateholders on each Distribution Date out of the
Pool Distribution

                                      S-45
<PAGE>
Amount with respect to such date and, if necessary, by the right of such holders
to  receive future distributions on the Mortgage Loans that would otherwise have
been payable to the holders of Class M and Class B Certificates. The application
of this subordination to cover Realized  Losses experienced in periods prior  to
the  periods  in  which  a  Subclass of  Class  A  Certificates  is  entitled to
distributions in reduction  of principal  balance will  decrease the  protection
provided by the subordination to any such Subclass.

    The  protection afforded to the holders of  Class M Certificates by means of
the subordination feature will be accomplished by the preferential right of such
holders to receive, prior to any distribution being made on a Distribution  Date
in  respect of the Class  B Certificates, the amounts  of principal and interest
due the  Class M  Certificateholders on  each Distribution  Date from  the  Pool
Distribution  Amount with respect  to such date (after  all required payments on
the Class A Certificates have been made) and, if necessary, by the right of such
holders to  receive  future  distributions  on the  Mortgage  Loans  that  would
otherwise have been payable to the holders of the Class B Certificates.

    The Class B Certificates will be entitled, on each Distribution Date, to the
remaining  portion, if  any, of the  applicable Pool  Distribution Amount, after
payment of the Class A  Optimal Amount and the Class  M Optimal Amount for  such
date. Amounts so distributed to Class B Certificateholders will not be available
to  cover delinquencies or Realized Losses in respect of subsequent Distribution
Dates.

  ALLOCATION OF LOSSES

    Realized Losses  (other  than Excess  Special  Hazard Losses,  Excess  Fraud
Losses  or Excess Bankruptcy Losses) will not be allocated to the holders of the
Class A Certificates until the date on which the amount of principal payments on
the Mortgage Loans  to which the  holders of the  Subordinated Certificates  are
entitled has been reduced to zero as a result of the allocation of losses to the
Subordinated  Certificates, I.E., the date  on which the Subordinated Percentage
has been  reduced to  zero (the  "Cross-Over Date").  Prior to  such time,  such
Realized  Losses will be allocated  first to the Class  B Certificates until the
Class B Principal  Balance has been  reduced to zero,  and then to  the Class  M
Certificates until the Class M Principal Balance has been reduced to zero.

    The  allocation of the  principal portion of  a Realized Loss  (other than a
Debt Service Reduction, Excess Special Hazard Loss, Excess Fraud Loss or  Excess
Bankruptcy  Loss)  will  be effected  through  the adjustment  of  the principal
balance of the  most subordinate  Class then-outstanding  in such  amount as  is
necessary to cause the sum of the Class A Subclass Principal Balances, the Class
M Principal Balance and the Class B Principal Balance to equal the Adjusted Pool
Amount.

    Allocations  to the Class M Certificates or  Class B Certificates of (i) the
principal portion  of Debt  Service  Reductions, (ii)  the interest  portion  of
Realized  Losses (other than  Excess Special Hazard  Losses, Excess Fraud Losses
and Excess  Bankruptcy Losses),  (iii) any  interest shortfalls  resulting  from
delinquencies  for which  the Servicer  does not  advance and  (iv) any interest
shortfalls resulting  from the  timing of  partial principal  prepayments,  will
result   from   the   priority   of  distributions   first   to   the   Class  A
Certificateholders and  then  to the  Class  M Certificateholders  of  the  Pool
Distribution Amount as described above under "--Distributions."

    The  principal  portion  of any  Realized  Loss  occurring on  or  after the
Cross-Over Date will be  allocated among the outstanding  Subclasses of Class  A
Certificates pro rata in accordance with their then-outstanding Class A Subclass
Principal Balances or, in the case of the Class A-9 Certificates, the sum of the
then-outstanding   Component  Principal  Balance  of  the  Class  A-9  Companion
Component and the lower of the then-outstanding Component Principal Balance  and
the  initial  Component Principal  Balance of  the  Class A-9  Accrual Companion
Component, and the interest portion of  any Realized Loss occurring on or  after
the  Cross-Over Date will be allocated among the outstanding Subclasses of Class
A Certificates  pro rata  in accordance  with their  Class A  Subclass  Interest
Accrual Amounts. Any such losses will be allocated among the outstanding Class A
Certificates  within each Subclass pro rata  in accordance with their respective
Percentage Interests.

    Any Excess Special Hazard Losses,  Excess Fraud Losses or Excess  Bankruptcy
Losses  will be allocated  on a pro  rata basis among  the Class A,  Class M and
Class B Certificates (any such losses so

                                      S-46
<PAGE>
allocated to the Class  A Certificates will be  allocated among the  outstanding
Subclasses   of  Class  A  Certificates  pro   rata  in  accordance  with  their
then-outstanding Class A  Subclass Principal  Balances or,  in the  case of  the
Class  A-9  Certificates, the  sum of  the then-outstanding  Component Principal
Balance  of  the   Class  A-9  Companion   Component  and  the   lower  of   the
then-outstanding Component Principal Balance and the initial Component Principal
Balance  of  the Class  A-9  Accrual Companion  Component,  with respect  to the
principal portion of  such losses and  their Class A  Subclass Interest  Accrual
Amounts  with respect  to the  interest portion  of such  losses, and  among the
outstanding Class A  Certificates within  each Subclass pro  rata in  accordance
with  their respective Percentage  Interests). Any such  losses allocated to the
Class A-7 or Class  A-9 Certificates will be  allocated between the  outstanding
Components  thereof pro rata in accordance with their then outstanding Component
Principal Balances or, in the case of the Class A-9 Accrual Companion Component,
the initial Component Principal Balance, if lower, with respect to the principal
portion of such losses and their Component Interest Accrual Amounts with respect
to the interest portion of such losses. An  allocation of a loss on a "pro  rata
basis"  among two or more  Classes of Certificates means  an allocation on a pro
rata  basis  to  each  such  Class  of  Certificates  on  the  basis  of   their
then-outstanding  principal balances in  the case of the  principal portion of a
loss or based on the accrued interest thereon in the case of an interest portion
of a loss.

    The interest portion of  Excess Special Hazard  Losses, Excess Fraud  Losses
and  Excess Bankruptcy Losses will be allocated by reducing the applicable Class
B Interest Accrual Amount, Class M  Interest Accrual Amount or Class A  Interest
Accrual Amount.

    As  described above, the Pool Distribution  Amount for any Distribution Date
will include  current  receipts  (other than  certain  unscheduled  payments  in
respect  of principal) from  the Mortgage Loans otherwise  payable to holders of
the Class M and  Class B Certificates.  If the Pool  Distribution Amount is  not
sufficient  to cover the amount of principal payable to the holders of the Class
A Certificates on a particular Distribution Date (other than any portion thereof
representing the  difference between  the Class  A Percentage  of the  Scheduled
Principal  Balances of Liquidated Loans and the Class A Prepayment Percentage of
such amounts), then the percentage of  principal payments on the Mortgage  Loans
to  which the holders  of the Class  A Certificates will  be entitled (I.E., the
Class  A  Percentage)  on  and  after   the  next  Distribution  Date  will   be
proportionately   increased,  thereby  reducing,  as   a  relative  matter,  the
respective interest of the Class M  and Class B Certificates in future  payments
of  principal on the Mortgage Loans in  the Trust Estate. Such a shortfall could
occur, for example, if  a considerable number of  Mortgage Loans were to  become
Liquidated Loans in a particular month.

    Special  Hazard Losses will be allocated solely to the Class B Certificates,
or following the reduction of the Class  B Principal Balance to zero, solely  to
the Class M Certificates, but only prior to the Special Hazard Termination Date.
The  "Special Hazard Termination Date" will be  the date on which Special Hazard
Losses exceed the  Special Hazard Loss  Amount (or, if  earlier, the  Cross-Over
Date).  Upon initial issuance  of the Series  1993-18 Certificates, the "Special
Hazard Loss Amount" with  respect thereto will be  equal to approximately  1.36%
(approximately  $3,052,293) of the  Cut-Off Date Aggregate  Principal Balance of
the Mortgage Loans. As of any Distribution Date, the Special Hazard Loss  Amount
will  equal  the initial  Special Hazard  Loss Amount  less the  sum of  (A) any
Special Hazard Losses allocated  solely to the Class  B or Class M  Certificates
and  (B) the Adjustment  Amount. The "Adjustment Amount"  on each anniversary of
the Cut-Off Date  will be  equal to  the amount, if  any, by  which the  Special
Hazard  Amount, without giving effect to  the deduction of the Adjustment Amount
for such anniversary,  exceeds the  greater of (i)  1.00% (or,  if greater  than
1.00%,  the highest  percentage of  Mortgage Loans  by principal  balance in any
California zip code) times the aggregate  principal balance of all the  Mortgage
Loans  on  such anniversary,  (ii)  twice the  principal  balance of  the single
Mortgage Loan  having the  largest principal  balance and  (iii) that  which  is
necessary  to  maintain  the  original  ratings  on  the  Class  A  and  Class M
Certificates, as evidenced by a  letter to that effect  delivered by S&P to  the
Servicer  and the Trustee. Special Hazard Losses in excess of the Special Hazard
Loss Amount are "Excess Special Hazard Losses."

    Fraud Losses  will be  allocated  solely to  the  Class B  Certificates,  or
following  the reduction of the Class B Principal Balance to zero, solely to the
Class   M   Certificates,    but   only    prior   to    the   Fraud    Coverage

                                      S-47
<PAGE>
Termination  Date. The  "Fraud Coverage  Termination Date"  will be  the date on
which Fraud Losses exceed the Fraud Loss Amount (or, if earlier, the  Cross-Over
Date). Upon initial issuance of the Series 1993-18 Certificates, the "Fraud Loss
Amount" with respect thereto will be equal to approximately 2.00% (approximately
$4,485,375)  of the  Cut-Off Date  Aggregate Principal  Balance of  the Mortgage
Loans. As of any Distribution Date prior to the first anniversary of the Cut-Off
Date, the Fraud Loss Amount will equal  the initial Fraud Loss Amount minus  the
aggregate  amount of  Fraud Losses allocated  solely to  the Class B  or Class M
Certificates up to the related Determination  Date. As of any Distribution  Date
from the first through the fifth anniversary of the Cut-Off Date, the Fraud Loss
Amount  will equal (1)  the lesser of (a)  the Fraud Loss Amount  as of the most
recent anniversary of the Cut-Off Date and (b) 1.00% of the aggregate  principal
balance  of all of the  Mortgage Loans as of the  most recent anniversary of the
Cut-Off Date minus (2) the aggregate amounts allocated solely to the Class B  or
Class  M  Certificates  with  respect  to Fraud  Losses  since  the  most recent
anniversary of the Cut-Off Date up to the related Determination Date. After  the
fifth  anniversary of the Cut-Off  Date, the Fraud Loss  Amount will be zero and
thereafter any Fraud Losses will be shared  pro rata among the Class A, Class  M
and  Class B Certificates. Fraud  Losses in excess of  the Fraud Loss Amount are
"Excess Fraud Losses."

    Bankruptcy Losses will be allocated solely  to the Class B Certificates,  or
following  the reduction of the Class B Principal Balance to zero, solely to the
Class M  Certificates, but  only prior  to the  Bankruptcy Coverage  Termination
Date.  The  "Bankruptcy Coverage  Termination Date"  will be  the date  on which
Bankruptcy Losses  exceed  the  Bankruptcy  Loss Amount  (or,  if  earlier,  the
Cross-Over  Date). Upon initial issuance of the Series 1993-18 Certificates, the
"Bankruptcy Loss Amount"  with respect  thereto will be  equal to  approximately
0.31%  (approximately $704,155) of the  Cut-Off Date Aggregate Principal Balance
of the  Mortgage  Loans.  As  of  any  Distribution  Date  prior  to  the  first
anniversary  of  the Cut-Off  Date, the  Bankruptcy Loss  Amount will  equal the
initial Bankruptcy Loss Amount minus  the aggregate amount of Bankruptcy  Losses
allocated  solely to  the Class  B and  Class M  Certificates up  to the related
Determination  Date.  As  of  any  Distribution  Date  on  or  after  the  first
anniversary  of  the Cut-Off  Date, the  Bankruptcy Loss  Amount will  equal the
excess, if any, of (1)  the lesser of (a) the  Bankruptcy Loss Amount as of  the
business  day next preceding the most recent anniversary of the Cut-Off Date and
(b) an amount  calculated pursuant  to the terms  of the  Pooling and  Servicing
Agreement,  which  amount as  calculated  will provide  for  a reduction  in the
Bankruptcy Loss  Amount, over  (2)  the aggregate  amount of  Bankruptcy  Losses
allocated  solely to the Class B or Class M Certificates since such anniversary.
The Bankruptcy Loss Amount and the  related coverage levels described above  may
be  reduced or modified upon written confirmation from Moody's and S&P that such
reduction or modification  will not  adversely affect  the then-current  ratings
assigned  to the  Class A and  Class M Certificates  by Moody's and  S&P. Such a
reduction  or  modification  may  adversely  affect  the  coverage  provided  by
subordination  with respect to Bankruptcy Losses. Bankruptcy Losses in excess of
the Bankruptcy Loss Amount are "Excess Bankruptcy Losses."

    Notwithstanding the foregoing, the provisions relating to subordination will
not be applicable in connection with a  Bankruptcy Loss so long as the  Servicer
has notified the Trustee in writing that the Servicer is diligently pursuing any
remedies  that may exist  in connection with  the representations and warranties
made regarding the related Mortgage Loan and when (A) the related Mortgage  Loan
is  not in default with regard to  the payments due thereunder or (B) delinquent
payments of  principal and  interest under  the related  Mortgage Loan  and  any
premiums  on any  applicable Standard  Hazard Insurance  Policy and  any related
escrow payments in respect of such Mortgage Loan are being advanced on a current
basis by the Servicer, in either case without giving effect to any Debt  Service
Reduction.

    Since  the  initial principal  balance of  the Class  B Certificates  in the
aggregate will  be approximately  $14,577,758, the  individual risk  of  Special
Hazard  Losses, Fraud Losses and Bankruptcy Losses  will be borne by the Class B
Certificates to  a lesser  extent (I.E.,  only  up to  the Special  Hazard  Loss
Amount,  Fraud Loss  Amount and Bankruptcy  Loss Amount,  respectively) than the
risk of other Realized Losses, which they will bear to the full extent of  their
initial principal balance. See "The Trust Estates--Mortgage
Loans--Representations  and  Warranties"  and  "--Insurance  Policies," "Certain
Legal  Aspects  of   the  Mortgage   Loans--Environmental  Considerations"   and
"Servicing   of   the  Mortgage   Loans--Enforcement  of   Due-on-Sale  Clauses;
Realization Upon Defaulted Mortgage Loans" in the Prospectus.

                                      S-48
<PAGE>
                      DESCRIPTION OF THE MORTGAGE LOANS(1)

    The Mortgage Loans to be included in the Trust Estate will be fixed interest
rate,  conventional,  monthly  pay,  fully  amortizing,  one-  to   four-family,
residential  first mortgage  loans originated  or acquired  by PHMC  for its own
account or  for the  account of  an affiliate  having original  terms to  stated
maturity  of approximately 30  years, which may include  loans secured by shares
("Co-op   Shares")   issued   by   private   non-profit   housing   corporations
("Cooperatives")  and  the related  proprietary  leases or  occupancy agreements
granting exclusive  rights  to  occupy specified  units  in  such  Cooperatives'
buildings.  As  of the  Cut-Off Date,  there are  not expected  to be  any loans
secured by Co-op Shares in the Trust Estate. The Mortgage Loans are expected  to
include  780 promissory notes, to have  an aggregate unpaid principal balance as
of the  Cut-Off  Date  (the  "Cut-Off  Date  Aggregate  Principal  Balance")  of
approximately  $224,268,758, to be  secured by first  liens (the "Mortgages") on
one- to  four-family  residential properties  or  Co-op Shares  (the  "Mortgaged
Properties")  and to have the additional  characteristics described below and in
the Prospectus.

    No Mortgage Loan is a Buy-Down Loan. See "The Trust Estates--Mortgage Loans"
in the Prospectus.

    Each of the Mortgage Loans is subject to a due-on-sale clause. See  "Certain
Legal  Aspects of the  Mortgage Loans--'Due-on-Sale' Clauses"  and "Servicing of
the  Mortgage  Loans--Enforcement  of  Due-on-Sale  Clauses;  Realization   Upon
Defaulted Mortgage Loans" in the Prospectus.

    All of the Mortgage Loans are Relocation Mortgage Loans. Relocation Mortgage
Loans  are  mortgage  loans  originated in  connection  with  the  relocation of
employees of  various corporate  employers  participating in  PHMC's  relocation
program   ("Sponsored  Relocation  Loans")  and  mortgage  loans  originated  in
connection with the  relocation of  employees whose employers  generally do  not
participate  in  PHMC's relocation  program ("Non-sponsored  Relocation Loans").
Non-sponsored Relocation Loans are generated as a result of the referral of loan
applicants to PHMC  by various  mortgage brokers  and similar  entities and  the
acquisition  of  mortgage  loans by  PHMC  from various  other  originators. See
"PHMC--Mortgage Loan Production  Sources" in the  Prospectus. The persons  being
relocated may be existing or newly hired employees. The Seller has not verified,
and  makes  no representation  as to,  whether any  individual mortgagor  of any
Relocation Mortgage Loan continues to be employed by the same employer as at the
time of origination. It  is expected that,  as of the Cut-Off  Date, 426 of  the
Mortgage  Loans, representing approximately 52.59% of the Cut-Off Date Aggregate
Principal Balance of the Mortgage Loans, will be Sponsored Relocation Loans, and
354 of the Mortgage Loans, representing approximately 47.41% of the Cut-Off Date
Aggregate Principal  Balance  of  the  Mortgage  Loans,  will  be  Non-sponsored
Relocation Loans. Sponsored Relocation Loans representing approximately 5.95% of

- ------------
(1) The  descriptions in this Prospectus Supplement  of the Trust Estate and the
    properties securing the Mortgage  Loans to be included  in the Trust  Estate
    are  based upon  the expected characteristics  of the Mortgage  Loans at the
    close of  business  on the  Cut-Off  Date,  as adjusted  for  the  scheduled
    principal   payments  due  on  or  before  such  date.  Notwithstanding  the
    foregoing, any of such Mortgage Loans may be excluded from the Trust  Estate
    (i)  as a result  of principal prepayment thereof  in full or  (ii) if, as a
    result of  delinquencies  or  otherwise, the  Seller  otherwise  deems  such
    exclusion  necessary or desirable. In either event, other Mortgage Loans may
    be included in the  Trust Estate. The Seller  believes that the  information
    set  forth  herein  with  respect to  the  expected  characteristics  of the
    Mortgage Loans on the Cut-Off Date is representative of the  characteristics
    as  of the Cut-Off  Date of the Mortgage  Loans to be  included in the Trust
    Estate as it will be constituted at the time the Series 1993-18 Certificates
    are issued, although the Cut-Off Date Aggregate Principal Balance, the range
    of Mortgage Interest Rates and maturities, and certain other characteristics
    of the Mortgage Loans in the Trust Estate may vary. In the event that any of
    the characteristics  as of  the  Cut-Off Date  of  the Mortgage  Loans  that
    constitute  the Trust Estate on  the date of initial  issuance of the Series
    1993-18 Certificates vary  materially from those  described herein,  revised
    information   regarding  the  Mortgage  Loans  will  be  made  available  to
    purchasers of the Class A Certificates, on or before such issuance date, and
    a Current Report on Form 8-K containing such information will be filed  with
    the Securities and Exchange Commission within 15 days following such date.

                                      S-49
<PAGE>
the  Cut-Off Date Aggregate Principal Balance of the Mortgage Loans are expected
to have  been originated  for the  employees of  one corporation;  none of  such
mortgage  loans are Subsidy  Loans. No other  individual corporation's relocated
employees are expected  to account for  Sponsored Relocation Loans  representing
more  than 5.00% of the Cut-Off Date Aggregate Principal Balance of the Mortgage
Loans. No individual corporation's relocated  employees are expected to  account
for  Non-sponsored Relocation Loans representing more  than 5.00% of the Cut-Off
Date Aggregate Principal Balance of the  Mortgage Loans. No mortgage broker  (or
similar   entity)  or  other  originator  is  expected  to  have  accounted  for
Non-sponsored Relocation Loans representing more than 5.00% of the Cut-Off  Date
Aggregate Principal Balance of the Mortgage Loans.

    It  is expected  that 86 of  the Mortgage  Loans, representing approximately
10.97% of the Cut-Off  Date Aggregate Principal Balance  of the Mortgage  Loans,
will  be  subject to  subsidy agreements,  which,  except under  certain limited
circumstances, require the employers of the mortgagors to make a portion of  the
payments  on the related Mortgage Loans ("Subsidy Loans") for specified periods.
All of the Subsidy Loans are Sponsored Relocation Loans. The subsidy  agreements
relating  to Subsidy Loans generally will  provide that monthly payments made by
the related mortgagors will be less than the scheduled monthly payments on  such
Mortgage  Loans, with the present value  of the resulting difference in payments
being provided by the  employers of the mortgagors  in advance, generally on  an
annual  basis.  The Subsidy  Loans are  offered  by employers  generally through
either a graduated or fixed subsidy loan program, or a combination thereof.  See
"The  Trust Estates--Mortgage Loans" in the Prospectus. The effective subsidized
rates under  the various  programs  offered generally  range  from one  to  five
percentage  points below  the interest  rate specified  in the  related mortgage
note. These subsidized rates are used to calculate the applicable debt-to-income
ratios that are used to evaluate the creditworthiness of prospective  borrowers.
This procedure may enable certain mortgagors who otherwise would not meet PHMC's
underwriting  guidelines  to obtain  mortgage loans.  See "Prepayment  and Yield
Considerations" herein and "PHMC--Mortgage Loan Underwriting" in the Prospectus.

    Subsidy amounts paid by the employers  will be deposited by the Servicer  in
an account (the "Subsidy Account") maintained by the Servicer, which will not be
part  of the Trust Estate or the  Upper-Tier REMIC or Lower-Tier REMIC. Funds in
the Subsidy Account with respect to each  Subsidy Loan will be withdrawn by  the
Servicer  and deposited in the Certificate Account on the business day following
the receipt by  the Servicer of  the mortgagor's monthly  payment to which  such
funds  relate. Funds in the Subsidy Account  with respect to a Subsidy Loan will
not be withdrawn by the Servicer, and are not permitted to be applied under  the
related  subsidy agreement, during any  period in which such  Subsidy Loan is in
default. Despite the existence of  the subsidy agreement, the mortgagor  remains
liable  for making all scheduled payments on  a Subsidy Loan. From time to time,
the amount of a subsidy payment or the term of a subsidy agreement may, upon the
request of a corporate employer,  be modified. See "The Trust  Estates--Mortgage
Loans" in the Prospectus.

    As  of the Cut-Off  Date, each Mortgage  Loan is expected  to have an unpaid
principal balance  of not  less than  $44,685  or more  than $997,084,  and  the
average  unpaid  principal  balance of  the  Mortgage  Loans is  expected  to be
approximately $287,524. The latest stated maturity  date of any of the  Mortgage
Loans  is expected  to be  May 1, 2023;  however, the  actual date  on which any
Mortgage Loan is paid in full may  be earlier than the stated maturity date  due
to  unscheduled  payments of  principal. Based  on  information supplied  by the
mortgagors in connection with their loan applications at origination, all of the
Mortgaged Properties are expected to  be owner occupied primary residences.  See
"PHMC--Mortgage Loan Underwriting" in the Prospectus.

                                      S-50
<PAGE>
    Set   forth  below   is  a   description  of   certain  additional  expected
characteristics of  the  Mortgage  Loans  as of  the  Cut-Off  Date  (except  as
otherwise indicated).

                            MORTGAGE INTEREST RATES

<TABLE>
<CAPTION>
                                                                                           PERCENTAGE OF
                                                                           AGGREGATE        CUT-OFF DATE
                                                          NUMBER OF         UNPAID           AGGREGATE
                                                          MORTGAGE         PRINCIPAL         PRINCIPAL
MORTGAGE INTEREST RATES                                     LOANS           BALANCE           BALANCE
- -------------------------------------------------------  -----------  -------------------  --------------
<S>                                                      <C>          <C>                  <C>
7.250%.................................................          40   $     11,348,189.19         5.06%
7.375%.................................................          74         21,828,491.51         9.73
7.500%.................................................          93         26,979,406.08        12.05
7.625%.................................................          90         26,186,614.55        11.68
7.750%.................................................          91         25,128,884.23        11.20
7.875%.................................................          83         24,456,192.63        10.90
8.000%.................................................          89         25,386,014.39        11.32
8.125%.................................................          73         20,346,341.35         9.07
8.250%.................................................          49         13,515,845.91         6.03
8.375%.................................................          39         12,184,740.43         5.43
8.500%.................................................          28          8,531,946.22         3.80
8.585%.................................................           1            307,555.17         0.14
8.625%.................................................          11          2,893,902.63         1.29
8.750%.................................................          10          2,716,377.17         1.21
8.875%.................................................           6          1,687,163.05         0.75
9.000%.................................................           2            547,387.78         0.24
9.250%.................................................           1            223,705.30         0.10
                                                              -----   -------------------      -------
        Total..........................................         780   $    224,268,757.59       100.00%
                                                              -----   -------------------      -------
                                                              -----   -------------------      -------
</TABLE>

As  of the  Cut-Off Date,  the weighted  average Mortgage  Interest Rate  of the
Mortgage Loans  is  expected to  be  approximately  7.850% per  annum.  The  Net
Mortgage  Interest Rate  of each  Mortgage Loan  will be  equal to  the Mortgage
Interest Rate of such Mortgage  Loan minus the Servicing  Fee rate of 0.20%  per
annum.  As of the Cut-Off Date, the  weighted average Net Mortgage Interest Rate
of the Mortgage Loans is expected to be approximately 7.650% per annum.

                                      S-51
<PAGE>
                      REMAINING MONTHS TO STATED MATURITY

<TABLE>
<CAPTION>
                                                                                           PERCENTAGE OF
                                                                           AGGREGATE        CUT-OFF DATE
                                                          NUMBER OF         UNPAID           AGGREGATE
                                                          MORTGAGE         PRINCIPAL         PRINCIPAL
REMAINING STATED TERM (MONTHS)                              LOANS           BALANCE           BALANCE
- -------------------------------------------------------  -----------  -------------------  --------------
<S>                                                      <C>          <C>                  <C>
306....................................................           1   $        307,555.17         0.14%
343....................................................           2            297,796.13         0.13
344....................................................           1            306,830.05         0.14
348....................................................           1            290,988.91         0.13
349....................................................           1            281,188.76         0.13
350....................................................           2            594,374.13         0.27
351....................................................           1            248,449.33         0.11
352....................................................          11          2,924,847.05         1.30
353....................................................           9          2,487,203.59         1.11
354....................................................          14          3,950,003.96         1.76
355....................................................          28          7,429,457.64         3.31
356....................................................          83         23,878,023.95        10.65
357....................................................         179         49,823,840.95        22.22
358....................................................         165         49,666,332.87        22.15
359....................................................         221         63,152,820.17        28.14
360....................................................          61         18,629,044.93         8.31
                                                              -----   -------------------      -------
        Total..........................................         780   $    224,268,757.59       100.00%
                                                              -----   -------------------      -------
                                                              -----   -------------------      -------
</TABLE>

As of the Cut-Off Date, the  weighted average remaining term to stated  maturity
of the Mortgage Loans is expected to be approximately 358 months.

                              YEARS OF ORIGINATION

<TABLE>
<CAPTION>
                                                                                           PERCENTAGE OF
                                                                           AGGREGATE        CUT-OFF DATE
                                                          NUMBER OF         UNPAID           AGGREGATE
                                                          MORTGAGE         PRINCIPAL         PRINCIPAL
YEAR OF ORIGINATION                                         LOANS           BALANCE           BALANCE
- -------------------------------------------------------  -----------  -------------------  --------------
<S>                                                      <C>          <C>                  <C>
1988...................................................           1   $        307,555.17         0.14%
1991...................................................           3            604,626.18         0.27
1992...................................................         152         42,806,364.30        19.09
1993...................................................         624        180,550,211.94        80.50
                                                              -----   -------------------      -------
        Total..........................................         780   $    224,268,757.59       100.00%
                                                              -----   -------------------      -------
                                                              -----   -------------------      -------
</TABLE>

The  earliest month and year of origination  of any Mortgage Loan is expected to
be October 1988 and the latest month  and year of origination is expected to  be
April 1993.

                                      S-52
<PAGE>
                         ORIGINAL LOAN-TO-VALUE RATIOS

<TABLE>
<CAPTION>
                                                                                           PERCENTAGE OF
                                                                           AGGREGATE        CUT-OFF DATE
                                                          NUMBER OF         UNPAID           AGGREGATE
                                                          MORTGAGE         PRINCIPAL         PRINCIPAL
LOAN-TO-VALUE RATIO                                         LOANS           BALANCE           BALANCE
- -------------------------------------------------------  -----------  -------------------  --------------
<S>                                                      <C>          <C>                  <C>
50.00% or less.........................................          13   $      2,882,265.87         1.29%
50.01-55.00%...........................................          11          3,161,040.31         1.41
55.01-60.00%...........................................          17          4,520,656.41         2.02
60.01-65.00%...........................................          25          7,908,745.37         3.53
65.01-70.00%...........................................          41         11,913,898.64         5.31
70.01-75.00%...........................................          66         20,000,352.83         8.92
75.01-80.00%...........................................         360        107,922,822.20        48.11
80.01-85.00%...........................................          31          7,467,178.98         3.33
85.01-90.00%...........................................         216         58,491,796.98        26.08
                                                              -----   -------------------      -------
        Total..........................................         780   $    224,268,757.59       100.00%
                                                              -----   -------------------      -------
                                                              -----   -------------------      -------
</TABLE>

As  of  the  Cut-Off  Date,  the minimum  and  maximum  Loan-to-Value  Ratios at
origination of  the  Mortgage  Loans  are expected  to  be  27.62%  and  90.00%,
respectively, and the weighted average Loan-to-Value Ratio at origination of the
Mortgage  Loans is expected to be  approximately 79.11%. The Loan-to-Value Ratio
of a Mortgage Loan is calculated using the lesser of (i) the appraised value  of
the  related Mortgaged Property, as established  by an appraisal obtained by the
originator from an appraiser in connection with the origination of such Mortgage
Loan and (ii) the sale price for  such property. For the purpose of  calculating
the  Loan-to-Value  Ratio  of  any  Mortgage Loan  that  is  the  result  of the
refinancing (including  a refinancing  for  "equity take  out" purposes)  of  an
existing mortgage loan, the appraised value of the related Mortgaged Property is
generally  determined by reference  to an appraisal  obtained in connection with
the origination of the replacement loan. See "The Trust Estates--Mortgage Loans"
in the  Prospectus.  It  is expected  that  183  of the  Mortgage  Loans  having
Loan-to-Value Ratios at origination in excess of 80%, representing approximately
21.90%  of the Cut-Off  Date Aggregate Principal Balance  of the Mortgage Loans,
were originated  without primary  mortgage insurance.  See "PHMC--Mortgage  Loan
Underwriting" in the Prospectus.

                       MORTGAGE LOAN DOCUMENTATION LEVELS

<TABLE>
<CAPTION>
                                                                                           PERCENTAGE OF
                                                                           AGGREGATE        CUT-OFF DATE
                                                          NUMBER OF         UNPAID           AGGREGATE
                                                          MORTGAGE         PRINCIPAL         PRINCIPAL
DOCUMENTATION LEVELS                                        LOANS           BALANCE           BALANCE
- -------------------------------------------------------  -----------  -------------------  --------------
<S>                                                      <C>          <C>                  <C>
Full Documentation.....................................         513   $    148,716,345.93        66.33%
Asset and Income Verification..........................           1            370,000.00         0.16
Asset and Mortgage Verification........................          89         24,044,821.82        10.72
Income and Mortgage Verification.......................           1            637,061.27         0.28
Asset Verification.....................................           0                  0.00         0.00
Income Verification....................................           1            182,503.91         0.08
Mortgage Verification..................................         169         48,721,026.65        21.72
Preferred Processing...................................           6          1,596,998.01         0.71
                                                              -----   -------------------      -------
        Total..........................................         780   $    224,268,757.59       100.00%
                                                              -----   -------------------      -------
                                                              -----   -------------------      -------
</TABLE>

Documentation levels vary depending upon several factors, including loan amount,
Loan-to-Value Ratio and the type and purpose of the Mortgage Loan. Asset, income
and mortgage verifications were

                                      S-53
<PAGE>
obtained  for Mortgage Loans processed with "full documentation." In the case of
"preferred processing," neither  asset, income nor  mortgage verifications  were
obtained. However, for all of the Mortgage Loans, verification of the borrower's
employment,  a  credit report  on  the borrower  and  a property  appraisal were
obtained. See "PHMC--Mortgage Loan Underwriting" in the Prospectus.

                   ORIGINAL MORTGAGE LOAN PRINCIPAL BALANCES

<TABLE>
<CAPTION>
                                                                                           PERCENTAGE OF
                                                                           AGGREGATE        CUT-OFF DATE
                       ORIGINAL                           NUMBER OF         UNPAID           AGGREGATE
                     MORTGAGE LOAN                        MORTGAGE         PRINCIPAL         PRINCIPAL
                   PRINCIPAL BALANCE                        LOANS           BALANCE           BALANCE
                 --------------------                    -----------  -------------------  --------------
<S>                                                      <C>          <C>                  <C>
Less than or equal to $200,000.........................          34   $      4,537,254.16         2.02%
$200,001-$250,000......................................         282         64,664,761.77        28.86
$250,001-$300,000......................................         215         58,721,223.26        26.18
$300,001-$350,000......................................         100         32,501,100.36        14.49
$350,001-$400,000......................................          87         32,746,006.79        14.60
$400,001-$450,000......................................          25         10,704,512.19         4.77
$450,001-$500,000......................................          14          6,781,589.07         3.02
$500,001-$550,000......................................          11          5,796,512.48         2.58
$550,001-$600,000......................................           8          4,726,134.40         2.11
$600,001-$650,000......................................           2          1,243,783.83         0.55
$800,001-$850,000......................................           1            848,796.27         0.38
$950,001-$1,000,000....................................           1            997,083.01         0.44
                                                              -----   -------------------      -------
        Total..........................................         780   $    224,268,757.59       100.00%
                                                              -----   -------------------      -------
                                                              -----   -------------------      -------
</TABLE>

As of the  Cut-Off Date, the  average unpaid principal  balance of the  Mortgage
Loans  is expected  to be  approximately $287,524. As  of the  Cut-Off Date, the
weighted  average   Loan-to-Value  Ratio   at   origination  and   the   maximum
Loan-to-Value  Ratio at  origination of  the Mortgage  Loans which  had original
principal balances in excess of $600,000 are expected to be approximately 74.50%
and  77.27%,  respectively.   See  "The  Trust   Estates--Mortgage  Loans"   and
"PHMC--Mortgage Loan Underwriting" in the Prospectus.

                              MORTGAGED PROPERTIES

<TABLE>
<CAPTION>
                                                                                           PERCENTAGE OF
                                                                           AGGREGATE        CUT-OFF DATE
                                                          NUMBER OF         UNPAID           AGGREGATE
                                                          MORTGAGE         PRINCIPAL         PRINCIPAL
PROPERTY                                                    LOANS           BALANCE           BALANCE
- -------------------------------------------------------  -----------  -------------------  --------------
<S>                                                      <C>          <C>                  <C>
Single-family detached.................................         760   $    219,116,807.27        97.71%
Two- to four-family units..............................           1            138,634.05         0.06
Condominiums
  High-rise ( four stories or more)....................           2            719,044.06         0.32
  Low-rise (less than four stores).....................          12          3,051,902.67         1.36
Planned unit development...............................           3            818,058.44         0.36
Townhouses.............................................           2            424,311.10         0.19
Cooperative units......................................           0                  0.00         0.00
                                                              -----   -------------------      -------
        Total..........................................         780   $    224,268,757.59       100.00%
                                                              -----   -------------------      -------
                                                              -----   -------------------      -------
</TABLE>

                                      S-54
<PAGE>
                GEOGRAPHIC DISTRIBUTION OF MORTGAGED PROPERTIES

<TABLE>
<CAPTION>
                                                                                                    PERCENTAGE OF
                                                                                    AGGREGATE        CUT-OFF DATE
                                                                   NUMBER OF         UNPAID           AGGREGATE
                                                                   MORTGAGE         PRINCIPAL         PRINCIPAL
STATE                                                                LOANS           BALANCE           BALANCE
- ----------------------------------------------------------------  -----------  -------------------  --------------
<S>                                                               <C>          <C>                  <C>
Arizona.........................................................           4   $      1,176,713.34         0.52%
California......................................................         209         65,696,748.76        29.30
Colorado........................................................          11          2,455,400.08         1.09
Connecticut.....................................................          77         24,576,709.50        10.96
Delaware........................................................           3            964,257.65         0.43
District of Columbia............................................           2            562,988.02         0.25
Florida.........................................................          25          6,214,362.67         2.77
Georgia.........................................................          34          8,994,872.98         4.01
Hawaii..........................................................           1            310,092.39         0.14
Illinois........................................................          33          9,098,743.24         4.06
Indiana.........................................................           4            937,491.59         0.42
Kentucky........................................................           1            224,600.71         0.10
Louisiana.......................................................           1            278,691.48         0.12
Maine...........................................................           1            223,590.01         0.10
Maryland........................................................          17          4,854,262.70         2.16
Massachusetts...................................................          44         13,689,073.58         6.10
Michigan........................................................          10          2,732,160.81         1.22
Minnesota.......................................................           8          1,900,914.59         0.85
Missouri........................................................           3            684,201.63         0.31
Montana.........................................................           1            223,993.55         0.10
Nevada..........................................................           2            542,791.18         0.24
New Hampshire...................................................           1            217,600.98         0.10
New Jersey......................................................          96         26,432,973.85        11.79
New York........................................................          25          6,889,672.22         3.07
North Carolina..................................................          17          4,284,992.53         1.91
Ohio............................................................          12          3,088,232.73         1.38
Oklahoma........................................................           1            209,585.07         0.09
Oregon..........................................................           2            539,132.67         0.24
Pennsylvania....................................................          37         10,314,198.11         4.60
South Carolina..................................................           1            228,359.29         0.10
Tennessee.......................................................           7          1,857,339.95         0.83
Texas...........................................................          46         12,292,650.69         5.48
Utah............................................................           4            955,909.38         0.43
Virginia........................................................          27          7,389,800.60         3.30
Washington......................................................          10          2,544,326.00         1.13
Wisconsin.......................................................           3            681,323.06         0.30
                                                                       -----   -------------------      -------
        Total...................................................         780   $    224,268,757.59       100.00%
                                                                       -----   -------------------      -------
                                                                       -----   -------------------      -------
</TABLE>

No more than approximately 1.72% of the Cut-Off Date Aggregate Principal Balance
of  the Mortgage Loans is expected to be secured by Mortgaged Properties located
in any one zip code.

                                      S-55
<PAGE>
                         ORIGINATORS OF MORTGAGE LOANS

<TABLE>
<CAPTION>
                                                                                                    PERCENTAGE OF
                                                                                    AGGREGATE        CUT-OFF DATE
                                                                   NUMBER OF         UNPAID           AGGREGATE
                                                                   MORTGAGE         PRINCIPAL         PRINCIPAL
ORIGINATOR                                                           LOANS           BALANCE           BALANCE
- ----------------------------------------------------------------  -----------  -------------------  --------------
<S>                                                               <C>          <C>                  <C>
PHMC or Affiliate...............................................         534   $    151,683,404.05        67.63%
Other Originators...............................................         246         72,585,353.54        32.37
                                                                       -----   -------------------      -------
        Total...................................................         780   $    224,268,757.59       100.00%
                                                                       -----   -------------------      -------
                                                                       -----   -------------------      -------
</TABLE>

No single "Other Originator" is expected  to have accounted for more than  5.00%
of  the  Cut-Off Date  Aggregate Principal  Balance of  the Mortgage  Loans. See
"PHMC--Mortgage Loan Production Sources" in the Prospectus.

                             SUBSIDY LOAN PROGRAMS

<TABLE>
<CAPTION>
                                                                                                    PERCENTAGE OF
                                                                                    AGGREGATE        CUT-OFF DATE
                                                                    NUMBER OF         UNPAID          AGGREGATE
                                                                    MORTGAGE        PRINCIPAL         PRINCIPAL
PROGRAM AND TERM                                                      LOANS          BALANCE           BALANCE
- -----------------------------------------------------------------  -----------  ------------------  --------------
<S>                                                                <C>          <C>                 <C>
Fixed (five years or longer).....................................           0   $             0.00         0.00%
    (less than five years).......................................           0                 0.00         0.00
Graduated (five years or longer).................................          42        11,816,251.64         5.27
         (less than five years)..................................          44        12,786,491.43         5.70
Combination (five years or longer)...............................           0                 0.00         0.00
           (less than five years)................................           0                 0.00         0.00
                                                                        -----   ------------------      -------
        Total....................................................          86   $    24,602,743.07        10.97%
                                                                        -----   ------------------      -------
                                                                        -----   ------------------      -------
</TABLE>

No Subsidy Loan is expected  to have a subsidy  agreement which had an  original
term of less than two years or more than eight years.

MANDATORY REPURCHASE OR SUBSTITUTION OF MORTGAGE LOANS

    The Seller is required, with respect to Mortgage Loans that are found by the
Trustee  to have defective documentation, or in  respect of which the Seller has
breached a representation or warranty, either to repurchase such Mortgage  Loans
or,  if within two years  of the date of initial  issuance of the Series 1993-18
Certificates, to substitute new  Mortgage Loans therefor.  Any Mortgage Loan  so
substituted  must, among other things, have an unpaid principal balance equal to
or less than the Scheduled Principal Balance  of the Mortgage Loan for which  it
is being substituted (after giving effect to the scheduled principal payment due
in  the month of substitution on the Mortgage Loan for which a new Mortgage Loan
is being  substituted), a  Loan-to-Value Ratio  less  than or  equal to,  and  a
Mortgage  Interest Rate  no less than,  and no  more than one  percent per annum
greater than, that of the Mortgage Loan  for which it is being substituted.  See
"Prepayment  and Yield  Considerations" herein and  "The Trust Estates--Mortgage
Loans--Assignment of Mortgage Loans to the Trustee" in the Prospectus.

OPTIONAL REPURCHASE OF DEFAULTED MORTGAGE LOANS

    The Seller may, in  its sole discretion,  repurchase any defaulted  Mortgage
Loan  from the Trust Estate at a price  equal to the unpaid principal balance of
such Mortgage  Loan, together  with accrued  interest  at a  rate equal  to  the
Mortgage  Interest  Rate  through  the  last day  of  the  month  in  which such
repurchase occurs. See "The Trust Estates--Mortgage Loans--Optional Repurchases"
in the  Prospectus.  The  Servicer  may,  in  its  sole  discretion,  allow  the
assumption   of  a  defaulted  Mortgage  Loan   by  a  borrower  meeting  PHMC's
underwriting guidelines or  encourage the  refinancing of  a defaulted  Mortgage
Loan.  See "Prepayment  and Yield Considerations"  herein and  "Servicing of the
Mortgage Loans--Enforcement of Due-on-Sale  Clauses; Realization Upon  Defaulted
Mortgage Loans" in the Prospectus.

                                      S-56
<PAGE>
              ORIGINATION, DELINQUENCY AND FORECLOSURE EXPERIENCE

LOAN ORIGINATION

    During  the years  ended December  31, 1991  and December  31, 1992  and the
quarter ended March 31, 1993, PHMC originated or purchased, for its own  account
or for the account of an affiliate, conventional mortgage loans having aggregate
principal   balances  of   approximately  $9,742,858,764,   $24,516,257,276  and
$5,000,825,279, respectively.

DELINQUENCY AND FORECLOSURE EXPERIENCE

    The  following  tables  set  forth  certain  information  concerning  recent
delinquency,  foreclosure and loan loss  experience on the conventional mortgage
loans included in PHMC's mortgage loan servicing portfolio which were originated
by PHMC for its own  account or for the account  of an affiliate or acquired  by
PHMC  for its own account or for the account of an affiliate and underwritten to
PHMC's underwriting standards (the "Program Loans"), on the Program Loans  which
are  Relocation Mortgage Loans  ("RELO Program Loans").  See "Description of the
Mortgage  Loans"   herein   and   "The  Trust   Estates--Mortgage   Loans"   and
"PHMC--General,"   "--Mortgage  Loan  Underwriting"  and  "--Servicing"  in  the
Prospectus. The delinquency,  foreclosure, and loan  loss experience  represents
the recent experience of PHMC and The Prudential Mortgage Capital Company, Inc.,
an  affiliate of PHMC which  serviced the Program Loans  prior to June 30, 1989,
but does not include  delinquency and foreclosure  experience of mortgage  loans
serviced  through  America's  Mortgage Group,  a  division of  PHMC,  located in
Springfield,  Illinois.  There  can  be  no  assurance  that  the   delinquency,
foreclosure  and loan  loss experience  set forth  with respect  to PHMC's total
servicing portfolio of Program Loans,  which includes both fixed and  adjustable
interest  rate  mortgage  loans, Relocation  Mortgage  Loans  and non-relocation
mortgage loans and loans  having a variety of  payment characteristics, such  as
Subsidy  Loans, Buy-Down Loans and Balloon Loans, and PHMC's servicing portfolio
of RELO Program Loans which include loans having a variety of original terms  to
stated  maturity, will be representative of  the results that may be experienced
with respect to the Mortgage Loans included in the Trust Estate.

    The following tables reflect  rapid growth during  recent periods in  PHMC's
mortgage loan servicing portfolio as a result of the substantially higher volume
of new loan originations and acquisitions of recently originated mortgage loans.
Delinquencies, foreclosures and loan losses generally are expected to occur more
frequently after the first full year of the life of mortgage loans. Accordingly,
because  a large number of mortgage loans  serviced by PHMC have been originated
recently, the current level of  delinquencies, foreclosures and loan losses  may
not  be representative of the levels which  may be experienced over the lives of
such mortgage  loans.  If  the  volume  of  PHMC's  new  loan  originations  and
acquisitions  does  not continue  to grow  at  the current  rate, the  levels of
delinquencies, foreclosures  and  loan losses  as  percentages of  PHMC's  total
servicing  portfolio could rise  significantly above the  rates indicated in the
following tables.

                                      S-57
<PAGE>
                              TOTAL PROGRAM LOANS

<TABLE>
<CAPTION>
                                          AS OF                      AS OF                      AS OF
                                    DECEMBER 31, 1991          DECEMBER 31, 1992           MARCH 31, 1993
                                -------------------------  -------------------------  -------------------------
                                             BY DOLLAR                  BY DOLLAR                  BY DOLLAR
                                 BY NO.        AMOUNT       BY NO.        AMOUNT       BY NO.        AMOUNT
                                OF LOANS      OF LOANS     OF LOANS      OF LOANS     OF LOANS      OF LOANS
                                ---------  --------------  ---------  --------------  ---------  --------------
<S>                             <C>        <C>             <C>        <C>             <C>        <C>
                                                         (DOLLAR AMOUNTS IN THOUSANDS)

Total Portfolio of Program
 Loans........................    136,972  $   21,489,014    217,719  $   37,908,754    232,314  $   41,086,186
                                ---------  --------------  ---------  --------------  ---------  --------------
                                ---------  --------------  ---------  --------------  ---------  --------------
Period of Delinquency(1)
  30 to 59 days...............      2,973  $      396,403      2,875  $      419,519      2,611  $      391,693
  60 to 89 days...............        706         103,710        572          84,335        540          85,958
  90 days or more.............      1,268         220,943      1,204         221,281      1,238         236,936
                                ---------  --------------  ---------  --------------  ---------  --------------
Total Delinquent Loans........      4,947  $      721,056      4,651  $      725,135      4,389  $      714,587
                                ---------  --------------  ---------  --------------  ---------  --------------
                                ---------  --------------  ---------  --------------  ---------  --------------
Percent of Portfolio..........       3.61%           3.36%      2.14%           1.91%      1.89%           1.74%
</TABLE>

<TABLE>
<CAPTION>
                                           AS OF                       AS OF                       AS OF
                                     DECEMBER 31, 1991           DECEMBER 31, 1992             MARCH 31, 1993
                                 --------------------------  --------------------------  --------------------------
<S>                              <C>                         <C>                         <C>
                                                           (DOLLAR AMOUNTS IN THOUSANDS)

Foreclosures(2)................         $    189,563                $    248,806                $    255,421
Foreclosure Ratio(3)...........                 0.88%                         0.66     %                  0.62     %
</TABLE>

<TABLE>
<CAPTION>
                                         YEAR ENDED                  YEAR ENDED                QUARTER ENDED
                                     DECEMBER 31, 1991           DECEMBER 31, 1992             MARCH 31, 1993
                                 --------------------------  --------------------------  --------------------------
<S>                              <C>                         <C>                         <C>
                                                           (DOLLAR AMOUNTS IN THOUSANDS)

Net Gain (Loss)(4).............         $    (11,103)               $    (36,404)               $    (24,847)
Net Gain (Loss) Ratio(5).......                (0.05)%                      (0.10      )%                (0.06      )%
</TABLE>

- -------------
(1) The indicated periods of  delinquency are based on  the number of days  past
    due,  based on a 30-day month. No mortgage loan is considered delinquent for
    these purposes until one month has passed since its contractual due date.  A
    mortgage   loan  is   no  longer  considered   delinquent  once  foreclosure
    proceedings have commenced.

(2) Includes loans in the applicable portfolio for which foreclosure proceedings
    had been instituted or with respect  to which the related property had  been
    acquired as of the dates indicated.

(3) Foreclosures  as a percentage of total  loans in the applicable portfolio at
    the end of each period.

(4) Does not  include gain  or loss  with  respect to  loans in  the  applicable
    portfolio  for  which foreclosure  proceedings had  been instituted  but not
    completed as of  the dates indicated,  or for which  the related  properties
    have been acquired in foreclosure proceedings but not yet sold.

(5) Net  gain (loss) as a percentage of  total loans in the applicable portfolio
    at the end of each period.

                                      S-58
<PAGE>
                               RELO PROGRAM LOANS

<TABLE>
<CAPTION>
                                            AS OF                       AS OF                      AS OF
                                      DECEMBER 31, 1991           DECEMBER 31, 1992           MARCH 31, 1993
                                 ---------------------------  -------------------------  -------------------------
                                                BY DOLLAR                  BY DOLLAR                  BY DOLLAR
                                   BY NO.         AMOUNT       BY NO.        AMOUNT       BY NO.        AMOUNT
                                  OF LOANS       OF LOANS     OF LOANS      OF LOANS     OF LOANS      OF LOANS
                                 -----------  --------------  ---------  --------------  ---------  --------------
<S>                              <C>          <C>             <C>        <C>             <C>        <C>
                                                           (DOLLAR AMOUNTS IN THOUSANDS)

Total Portfolio of RELO Program
 Loans.........................      38,875   $    5,744,524     45,121  $    6,847,625     46,121  $    7,018,998
                                 -----------  --------------  ---------  --------------  ---------  --------------
                                 -----------  --------------  ---------  --------------  ---------  --------------
Period of Delinquency(1)
  30 to 59 days................         342   $       44,822        287  $       37,312        216  $       29,291
  60 to 89 days................          43            5,499         38           4,038         31           3,732
  90 days or more..............          68            8,233         73          10,314         69           8,779
                                 -----------  --------------  ---------  --------------  ---------  --------------
Total Delinquent Loans.........         453   $       58,554        398  $       51,664        316  $       41,802
                                 -----------  --------------  ---------  --------------  ---------  --------------
                                 -----------  --------------  ---------  --------------  ---------  --------------
Percent of RELO Program Loan
 Portfolio.....................        1.17%            1.02%      0.88%           0.75%      0.69%           0.60%
</TABLE>
<TABLE>
<CAPTION>
                                           AS OF                       AS OF                       AS OF
                                     DECEMBER 31, 1991           DECEMBER 31, 1992             MARCH 31, 1993
                                 --------------------------  --------------------------  --------------------------
<S>                              <C>                         <C>                         <C>
                                                           (DOLLAR AMOUNTS IN THOUSANDS)

Foreclosures(2)................          $    2,729                  $    3,431                  $    4,500
Foreclosure Ratio(3)...........                0.05%                        0.05       %                0.06       %

<CAPTION>

                                         YEAR ENDED                  YEAR ENDED                QUARTER ENDED
                                     DECEMBER 31, 1991           DECEMBER 31, 1992             MARCH 31, 1993
                                 --------------------------  --------------------------  --------------------------
                                                           (DOLLAR AMOUNTS IN THOUSANDS)
<S>                              <C>                         <C>                         <C>

Net Gain (Loss)(4).............          $     (311)                 $     (462)                 $     (288)
Net Gain (Loss) Ratio(5).......               (0.01)%                      (0.01       )%               (0.00       )%
</TABLE>

- -------------
(1) The indicated periods of  delinquency are based on  the number of days  past
    due,  based on a 30-day month. No mortgage loan is considered delinquent for
    these purposes until one month has passed since its contractual due date.  A
    mortgage   loan  is   no  longer  considered   delinquent  once  foreclosure
    proceedings have commenced.

(2) Includes loans in the applicable portfolio for which foreclosure proceedings
    had been instituted or with respect  to which the related property had  been
    acquired as of the dates indicated.

(3) Foreclosures  as a percentage of total  loans in the applicable portfolio at
    the end of each period.

(4) Does not  include gain  or loss  with  respect to  loans in  the  applicable
    portfolio  for  which foreclosure  proceedings had  been instituted  but not
    completed as of  the dates indicated,  or for which  the related  properties
    have been acquired in foreclosure proceedings but not yet sold.

(5) Net  gain (loss) as a percentage of  total loans in the applicable portfolio
    at the end of each period.

                                      S-59
<PAGE>
    The likelihood that a mortgagor will become delinquent in the payment of his
or her mortgage loan, the rate of any subsequent foreclosures, and the  severity
of any loan loss experience, may be affected by a number of factors related to a
borrower's  personal circumstances, including, but  not limited to, unemployment
or change  in  employment  (or  in  the  case  of  self-employed  mortgagors  or
mortgagors  relying  on  commission  income,  fluctuations  in  income), marital
separation and  the mortgagor's  equity in  the related  mortgaged property.  In
addition,  delinquency, foreclosure and loan loss experience may be sensitive to
adverse economic  conditions,  either  nationally  or  regionally,  may  exhibit
seasonal  variations and may  be influenced by  the level of  interest rates and
servicing  decisions  on  the  applicable  mortgage  loans.  Regional   economic
conditions  (including  declining real  estate  values) may  particularly affect
delinquency, foreclosure  and loan  loss  experience on  mortgage loans  to  the
extent  that mortgaged properties are  concentrated in certain geographic areas.
Furthermore, the level  of foreclosures reported  is affected by  the length  of
time  legally required to complete the foreclosure process and take title to the
related property, which  varies from  jurisdiction to  jurisdiction. The  Seller
believes  that  the  changes  in  the  delinquency,  foreclosure  and  loan loss
experience of  PHMC's respective  servicing portfolios  during the  periods  set
forth  in the  preceding tables  may be  attributable to  factors such  as those
described above, although the  Seller is unable to  assess to what extent  these
changes are the result of any particular factor or a combination of factors. The
delinquency,  foreclosure  and  loan  loss  experience  on  the  Mortgage  Loans
contained in the Trust  Estate may be particularly  affected to the extent  that
the  Mortgaged  Properties are  concentrated in  areas which  experience adverse
economic conditions or  declining real  estate values. See  "Description of  the
Mortgage Loans."

                      PREPAYMENT AND YIELD CONSIDERATIONS

    The  rate  of distributions  in reduction  of the  principal balance  of any
Subclass of the Class A Certificates and the Class M Certificates, the aggregate
amount of distributions  on any  Subclass of the  Class A  Certificates and  the
Class  M Certificates and the  yield to maturity of any  Subclass of the Class A
Certificates and the  Class M Certificates  purchased at a  discount or  premium
will  be directly related to  the rate of payments  of principal on the Mortgage
Loans in  the Trust  Estate and  the  amount and  timing of  mortgagor  defaults
resulting  in Realized  Losses. The rate  of principal payments  on the Mortgage
Loans will in  turn be affected  by the amortization  schedules of the  Mortgage
Loans,  the  rate of  principal prepayments  (including partial  prepayments and
those  resulting  from  refinancing)  thereon  by  mortgagors,  liquidations  of
defaulted  Mortgage  Loans, repurchases  by the  Seller of  Mortgage Loans  as a
result of defective documentation or breaches of representations and warranties,
optional repurchase  by the  Seller  of defaulted  Mortgage Loans  and  optional
purchase  by the Servicer  of all of  the Mortgage Loans  in connection with the
termination  of   the   Trust  Estate.   See   "Description  of   the   Mortgage
Loans--Optional  Repurchase  of  Defaulted  Mortgage  Loans"  and  "Pooling  and
Servicing   Agreement--Optional    Termination"    herein   and    "The    Trust
Estates--Mortgage   Loans--Assignment  of   Mortgage  Loans   to  the  Trustee,"
"--Optional Repurchases" and "The Pooling and Servicing  Agreement--Termination;
Purchase  of  Mortgage Loans"  in the  Prospectus.  Mortgagors are  permitted to
prepay the Mortgage Loans, in whole or in part, at any time without penalty.  As
described   under   "Description  of   the   Certificates--Principal  (Including
Prepayments)"  herein,  all  or  a  disproportionate  percentage  of   principal
prepayments  on the  Mortgage Loans  (including liquidations  and repurchases of
Mortgage Loans) will be distributed to the holders of Class A Certificates  then
entitled  to  distributions  in  respect  of  principal  during  the  nine years
beginning on the first  Distribution Date. Prepayments  (which, as used  herein,
include  all unscheduled payments of principal, including payments as the result
of liquidations, purchases and repurchases) of  the Mortgage Loans in the  Trust
Estate  will  result in  distributions  to Certificateholders  then  entitled to
distributions in  respect  of principal  of  amounts which  would  otherwise  be
distributed  over the remaining terms of such  Mortgage Loans. Since the rate of
prepayment on the Mortgage Loans will depend  on future events and a variety  of
factors  (as described more fully below  and in the Prospectus under "Prepayment
and Yield Considerations"), no  assurance can be  given as to  such rate or  the
rate  of principal payments on  any Subclass of the  Class A Certificates or the
Class M Certificates or the aggregate amount of distributions on any Subclass of
Class A Certificates or the Class M Certificates.

                                      S-60
<PAGE>
    The rate of payments (including prepayments)  on pools of mortgage loans  is
influenced  by a variety  of economic, geographic, social  and other factors. If
prevailing rates  for  similar  mortgage  loans  fall  significantly  below  the
Mortgage  Interest Rates  on the  Mortgage Loans,  the rate  of prepayment would
generally be  expected to  increase. Conversely,  if interest  rates on  similar
mortgage  loans  rise significantly  above the  Mortgage  Interest Rates  on the
Mortgage Loans, the rate of prepayment would generally be expected to  decrease.
The  rate of prepayment on the Mortgage Loans may also be influenced by programs
offered by mortgage loan originators  (including PHMC) to encourage  refinancing
through  such originators,  including, but not  limited to,  general or targeted
solicitations, reduced origination  fees or  closing costs,  or other  financial
incentives.

    The  effect of subsidy agreements on the rate of prepayment of Subsidy Loans
is uncertain. The rate of  prepayment on Subsidy Loans  may be affected by  such
factors  as the relationship between prevailing mortgage rates and the effective
interest rates  on  such  Subsidy  Loans, the  remaining  term  of  the  subsidy
agreements, and requests by the related employers for refinance or modification.
The  subsidy agreement  relating to  a Subsidy  Loan generally  provides that if
prevailing market rates of  interest on mortgage loans  similar to such  Subsidy
Loan  decline relative to the Mortgage Interest Rate of such Subsidy Loan by the
percentage set forth in the subsidy agreement, the employer may request that the
mortgagor refinance such  Subsidy Loan.  In the event  the mortgagor  refinances
such  Subsidy Loan, the Subsidy Loan will be  prepaid, and the new loan will not
be included  in the  Trust Estate.  If  the mortgagor  fails to  refinance  such
Subsidy  Loan,  the employer  may terminate  the  related subsidy  agreement. In
addition, the termination of  the subsidy agreement relating  to a Subsidy  Loan
for  any  reason  (whether  due  to  the  mortgagor's  failure  to  refinance or
otherwise) may increase the financial burden of the mortgagor, who may not  have
otherwise  qualified  for a  mortgage  under PHMC's  mortgage  loan underwriting
guidelines, and may consequently  increase the risk of  default with respect  to
the   related  Mortgage  Loan.  See  "The  Trust  Estates--Mortgage  Loans"  and
"PHMC--Mortgage Loan Underwriting"  in the  Prospectus. From time  to time,  the
amount of the subsidy payment or the term of the subsidy agreement may, upon the
request of the corporate employer, be modified.

    Other  factors  affecting prepayment  of mortgage  loans include  changes in
mortgagors' housing  needs,  job transfers,  unemployment  or, in  the  case  of
self-employed mortgagors or mortgagors relying on commission income, substantial
fluctuations  in income, significant declines in  real estate values and adverse
economic  conditions  either  generally  or  in  particular  geographic   areas,
mortgagors'  equity in the Mortgaged Properties and servicing decisions. In this
regard, mortgagors of relocation mortgage loans  are thought by some within  the
mortgage  industry to be more  likely to be transferred  by their employers than
mortgagors generally. There can be no  assurance as to the likelihood of  future
transfers  of mortgagors of  either Sponsored Relocation  Loans or Non-Sponsored
Relocation Loans or as  to such mortgagors' continued  employment with the  same
employers by which they were employed when their mortgage loans were originated.
No  representation  is made  as  to the  rate  of prepayment  on  the Relocation
Mortgage Loans.  In addition,  all  of the  Mortgage Loans  contain  due-on-sale
clauses which will generally be exercised upon the sale of the related Mortgaged
Properties.  Consequently, acceleration of mortgage payments  as a result of any
such sale will affect the level of prepayments on the Mortgage Loans. The extent
to which defaulted  Mortgage Loans  are assumed  by transferees  of the  related
Mortgaged  Properties will also affect the  rate of principal payments. The rate
of prepayment and, therefore, the yield to  maturity of the Class A and Class  M
Certificates  will be affected by  the extent to which  (i) the Seller elects to
repurchase, rather than substitute  for, Mortgage Loans which  are found by  the
Trustee  to have defective documentation or with respect to which the Seller has
breached a representation or warranty or  (ii) the Servicer elects to  encourage
the  refinancing  of  any  defaulted  Mortgage Loan  rather  than  to  permit an
assumption  thereof  by   a  mortgagor  meeting   the  Servicer's   underwriting
guidelines.  See "Servicing  of the  Mortgage Loans--Enforcement  of Due-on-Sale
Clauses; Realization Upon Defaulted Mortgage Loans" in the Prospectus. There can
be no certainty as to the rate  of prepayments on the Mortgage Loans during  any
period  or over the life of the Series 1993-18 Certificates. See "Prepayment and
Yield Considerations" in the Prospectus.

                                      S-61
<PAGE>
    The timing of changes in  the rate of prepayment  on the Mortgage Loans  may
significantly affect the actual yield to maturity experienced by an investor who
purchases  a Class A or Class  M Certificate at a price  other than par, even if
the average rate of principal payments experienced over time is consistent  with
such  investor's expectation. In general, the  earlier a prepayment of principal
on the underlying  Mortgage Loans,  the greater  the effect  on such  investor's
yield to maturity. As a result, the effect on such 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 Class A and
Class M Certificates would  not be fully offset  by a subsequent like  reduction
(or increase) in the rate of principal payments. In addition, to the extent that
a mortgagor's Mortgage Loan is subject to a subsidy agreement, and the mortgagor
thereby  enjoys reduced  monthly mortgage payments,  such mortgagor  may be less
inclined to make prepayments on such Mortgage Loan.

    The yield to  maturity on the  Class M Certificates  will be more  sensitive
than  the Class A Certificates  to losses due to  defaults on the Mortgage Loans
(and the timing thereof), to the extent not covered by the Class B Certificates,
because the  entire amount  of such  losses will  be allocable  to the  Class  M
Certificates  prior to  the Class A  Certificates, except  as otherwise provided
herein. To  the  extent  not  covered by  Periodic  Advances,  delinquencies  on
Mortgage  Loans  may also  have  a relatively  greater  effect on  the  yield to
investors in  the  Class  M Certificates.  Amounts  otherwise  distributable  to
holders  of  the Class  M Certificates  will  be made  available to  protect the
holders of the Class A  Certificates against interruptions in distributions  due
to  certain  mortgagor  delinquencies.  Such delinquencies,  to  the  extent not
covered by the Class B Certificates, even if subsequently cured, may affect  the
timing  of the receipt of distributions by  the holders of Class M Certificates,
because the entire amount of those delinquencies  would be borne by the Class  M
Certificates prior to the Class A Certificates.

    No  representation  is made  as to  the  rate of  principal payments  on the
Mortgage Loans  or as  to the  yield  to maturity  of any  Subclass of  Class  A
Certificates  or  the Class  M Certificates.  An  investor is  urged to  make an
investment decision with respect to any Subclass of Class A Certificates or  the
Class M Certificates based on the anticipated yield to maturity of such Subclass
of  Class A Certificates or the Class M Certificates resulting from its purchase
price and  such investor's  own determination  as to  anticipated Mortgage  Loan
prepayment  rates under a variety of scenarios. The extent to which any Subclass
of Class A Certificates or the Class M Certificates are purchased at a  discount
or  a premium, the  degree to which the  timing of payments  on such Subclass or
Class is sensitive to prepayments will  determine the extent to which the  yield
to  maturity of such Subclass  or Class may vary  from the anticipated yield. An
investor should carefully consider the associated risks, including, in the  case
of  any Class A or Class M Certificates purchased at a discount, the risk that a
slower than anticipated rate of principal  payments on the Mortgage Loans  could
result  in an actual yield  to such investor that  is lower than the anticipated
yield and, in the  case of any Class  A or Class M  Certificates purchased at  a
premium,  the risk  that a  faster than  anticipated rate  of principal payments
could result  in  an actual  yield  to such  investor  that is  lower  than  the
anticipated yield.

    An  investor should consider the risk that rapid rates of prepayments on the
Mortgage Loans, and therefore of amounts distributable in reduction of principal
balance of the Class A or Class M Certificates, may coincide with periods of low
prevailing interest rates. During such periods, the effective interest rates  on
securities  in which an  investor may choose to  reinvest amounts distributed in
reduction of  the  principal balance  of  such investor's  Class  A or  Class  M
Certificate  may  be lower  than the  applicable Pass-Through  Rate. Conversely,
slower rates of  prepayments on  the Mortgage  Loans, and  therefore of  amounts
distributable  in  reduction of  principal balance  of  the Class  A or  Class M
Certificates, may  coincide  with periods  of  high prevailing  interest  rates.
During  such  periods, the  amount of  principal  distributions available  to an
investor for  reinvestment  at  such  high  prevailing  interest  rates  may  be
relatively small.

    As indicated under "Federal Income Tax Considerations" herein, the Class A-R
Certificateholder's REMIC taxable income and the tax liability thereon will, and
the  Class A-LR Certificateholder's  REMIC taxable income  and the tax liability
thereon may, exceed cash distributions  to such holders during certain  periods.
There  can be no assurance as to the amount by which such taxable income or such
tax liability

                                      S-62
<PAGE>
will exceed  cash distributions  in respect  of  the Class  A-R and  Class  A-LR
Certificates  during any such period and  no representation is made with respect
thereto under any principal prepayment scenario or otherwise. DUE TO THE SPECIAL
TAX TREATMENT OF RESIDUAL INTERESTS, THE  AFTER-TAX RETURN OF THE CLASS A-R  AND
CLASS A-LR CERTIFICATES MAY BE SIGNIFICANTLY LOWER THAN WOULD BE THE CASE IF THE
CLASS A-R AND CLASS A-LR CERTIFICATES WERE TAXED AS DEBT INSTRUMENTS.

    As  referred to herein, the weighted average life of a Subclass of the Class
A Certificates and the Class M Certificates refers to the average amount of time
that will elapse from the date of issuance of such Subclass or Class until  each
dollar  in  reduction of  the principal  balance  of such  Subclass or  Class is
distributed to the investor. The weighted  average life of each Subclass of  the
Class  A Certificates and the Class M  Certificates will be influenced by, among
other things, the rate and timing  of principal payments on the Mortgage  Loans,
which may be in the form of scheduled amortization or prepayments.

    THE  WEIGHTED AVERAGE  LIFE OF  THE CLASS A-9  CERTIFICATES, AS  WELL AS THE
YIELD TO MATURITY OF THE CLASS A-9 CERTIFICATES, TO THE EXTENT SUCH CERTIFICATES
ARE PURCHASED AT A  DISCOUNT OR PREMIUM, WILL  BE PARTICULARLY SENSITIVE TO  THE
RATE  OF  PRINCIPAL  PAYMENTS  (INCLUDING PREPAYMENTS)  ON  THE  MORTGAGE LOANS.
Specifically, if prepayments result in  a Class A Principal Distribution  Amount
equal to or less than the sum of the PAC Principal Amounts and the TAC Principal
Amounts  on any  Distribution Date, the  Class A-9 Certificates  will receive no
distributions in reduction of principal  on such Distribution Date. Further,  on
each  Distribution Date up to  and including the Distribution  Date on which the
Component Principal Balances of  the Companion Components  are reduced to  zero,
any Excess Principal Payments will be applied first to the Companion Components,
then  to the outstanding  TAC Certificates and  the Class A-7  TAC Component and
finally to the outstanding Subclasses of PAC Certificates and the Class A-7  PAC
Component  in the proportions and priorities  set forth above under "Description
of the Certificates--Principal (Including Prepayments)" without regard to  their
PAC  Principal  Amounts  or  TAC  Principal  Amounts.  See  "Description  of the
Certificates--Principal (Including Prepayments)--Principal Payment
Characteristics of the PAC Certificates, the TAC Certificates, the Class A-7 PAC
Component, the Class A-7 TAC Component and the Companion Components" herein.

    Prepayments on mortgage loans are commonly measured relative to a prepayment
standard or model. The  model used in this  Prospectus Supplement, the  Standard
Prepayment  Assumption ("SPA"),  represents an  assumed rate  of prepayment each
month relative  to the  then outstanding  principal  balance of  a pool  of  new
mortgage  loans. A prepayment assumption of 100% SPA assumes constant prepayment
rates of  0.2% per  annum of  the  then outstanding  principal balance  of  such
mortgage  loans in  the first  month of the  life of  the mortgage  loans and an
additional 0.2% per annum  in each month thereafter  until the thirtieth  month.
Beginning in the thirtieth month and in each month thereafter during the life of
the  mortgage loans, 100% SPA assumes a constant prepayment rate of 6% per annum
each month. As used in the table below, "0% SPA" assumes prepayment rates  equal
to  0%  of  SPA,  i.e.,  no  prepayments.  Correspondingly,  "100%  SPA" assumes
prepayment rates equal to 100% of SPA, and so forth. SPA DOES NOT PURPORT TO  BE
A  HISTORICAL  DESCRIPTION  OF  PREPAYMENT EXPERIENCE  OR  A  PREDICTION  OF THE
ANTICIPATED RATE OF  PREPAYMENT OF  ANY POOL  OF MORTGAGE  LOANS, INCLUDING  THE
MORTGAGE LOANS.

    The  tables  set  forth  below  have  been  prepared  on  the  basis  of the
characteristics of the Mortgage  Loans that are expected  to be included in  the
Trust  Estate, as described above under "Description of the Mortgage Loans." The
tables assume, among other things, that (i) the scheduled payment in each  month
for each Mortgage Loan has been based on its outstanding balance as of the first
day of the month preceding the month of such payment, its Mortgage Interest Rate
and its remaining term to stated maturity, so that such scheduled payments would
amortize  the  remaining balance  by its  stated  maturity date,  (ii) scheduled
monthly payments of principal and interest on the Mortgage Loans will be  timely
received  on the first day of each  month (with no defaults), commencing in June
1993, (iii) the Seller does not repurchase any Mortgage Loan, as described under
"The Trust Estates--Mortgage Loans" in the Prospectus, and the Servicer does not
exercise its  option  to  purchase  the  Mortgage  Loans  and  thereby  cause  a
termination  of the  Trust Estate,  (iv) principal  prepayments on  the Mortgage
Loans will be received on the last day  of each month commencing in May 1993  at
the respective constant percentages of SPA set forth in the tables and there are
no Prepayment Interest Shortfalls, (v) each Mortgage Loan

                                      S-63
<PAGE>
has  an  original term  to  maturity of  30 years  and  (vi) the  Series 1993-18
Certificates will be  issued on May  14, 1993.  IT IS HIGHLY  UNLIKELY THAT  THE
MORTGAGE  LOANS WILL  PREPAY AT ANY  CONSTANT RATE  OR THAT ALL  OF THE MORTGAGE
LOANS WILL  PREPAY AT  THE SAME  RATE.  In addition,  there may  be  differences
between  the characteristics  of the mortgage  loans ultimately  included in the
Trust Estate  and the  Mortgage Loans  which  are expected  to be  included,  as
described  herein. Any difference may have an effect upon the actual percentages
of initial  Class A  Subclass Principal  Balance of  the Subclasses  of Class  A
Certificates   and  initial  principal  balance  of  the  Class  M  Certificates
outstanding, the actual  weighted average  lives of  the Subclasses  of Class  A
Certificates  and the  Class M Certificates  and the  date on which  the Class A
Subclass Principal  Balance of  any Subclass  of Class  A Certificates  and  the
principal balance of the Class M Certificates are reduced to zero.

    Based  upon  the foregoing  assumptions, the  following tables  indicate the
weighted average life of each Subclass and Class of Offered Certificates and set
forth the percentages of the initial Class A Subclass Principal Balance of  each
such  Subclass, and,  in the case  of the  Class M Certificates,  of the initial
principal balance of the  Class M Certificates that  would be outstanding  after
each of the dates shown at various constant percentages of SPA.

                                      S-64
<PAGE>
 PERCENTAGE OF INITIAL CLASS A SUBCLASS PRINCIPAL BALANCE AND CLASS M PRINCIPAL
                            BALANCE OUTSTANDING FOR:
<TABLE>
<CAPTION>
                                          CLASS A-1 AND CLASS A-10                                      CLASS A-2
                                            CERTIFICATES AT THE                                    CERTIFICATES AT THE
                                           FOLLOWING PERCENTAGES                                  FOLLOWING PERCENTAGES
                                                   OF SPA                                                 OF SPA
<S>                   <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
                      ----------------------------------------------------------------  ------------------------------------------

<CAPTION>
    DISTRIBUTION
        DATE             0%        100%       175%       285%       475%       600%        0%        100%       175%       285%
- --------------------  ----------------------------------------------------------------  ------------------------------------------
<S>                   <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
Initial.............
                            100        100        100        100        100        100
                                                                                              100        100        100        100
May 1994............
                             87         73         63         63         63         63
                                                                                              100        100        100        100
May 1995............
                             73         28          0          0          0          0
                                                                                              100        100         98         98
May 1996............
                             58          0          0          0          0          0
                                                                                              100         88         63         63
May 1997............
                             42          0          0          0          0          0
                                                                                              100         65         30         30
May 1998............
                             24          0          0          0          0          0
                                                                                              100         43          0          0
May 1999............
                              5          0          0          0          0          0
                                                                                              100         22          0          0
May 2000............
                              0          0          0          0          0          0
                                                                                               94          2          0          0
May 2001............
                              0          0          0          0          0          0
                                                                                               84          0          0          0
May 2002............
                              0          0          0          0          0          0
                                                                                               75          0          0          0
May 2003............
                              0          0          0          0          0          0
                                                                                               64          0          0          0
May 2004............
                              0          0          0          0          0          0
                                                                                               52          0          0          0
May 2005............
                              0          0          0          0          0          0
                                                                                               40          0          0          0
May 2006............
                              0          0          0          0          0          0
                                                                                               27          0          0          0
May 2007............
                              0          0          0          0          0          0
                                                                                               13          0          0          0
May 2008............
                              0          0          0          0          0          0
                                                                                                0          0          0          0
May 2009............
                              0          0          0          0          0          0
                                                                                                0          0          0          0
May 2010............
                              0          0          0          0          0          0
                                                                                                0          0          0          0
May 2011............
                              0          0          0          0          0          0
                                                                                                0          0          0          0
May 2012............
                              0          0          0          0          0          0
                                                                                                0          0          0          0
May 2013............
                              0          0          0          0          0          0
                                                                                                0          0          0          0
May 2014............
                              0          0          0          0          0          0
                                                                                                0          0          0          0
May 2015............
                              0          0          0          0          0          0
                                                                                                0          0          0          0
May 2016............
                              0          0          0          0          0          0
                                                                                                0          0          0          0
May 2017............
                              0          0          0          0          0          0
                                                                                                0          0          0          0
May 2018............
                              0          0          0          0          0          0
                                                                                                0          0          0          0
May 2019............
                              0          0          0          0          0          0
                                                                                                0          0          0          0
May 2020............
                              0          0          0          0          0          0
                                                                                                0          0          0          0
May 2021............
                              0          0          0          0          0          0
                                                                                                0          0          0          0
May 2022............
                              0          0          0          0          0          0
                                                                                                0          0          0          0
May 2023............
                              0          0          0          0          0          0
                                                                                                0          0          0          0
Weighted Average
  Life (years)(1)...
                           3.44       1.55       1.23       1.23       1.23       1.23
                                                                                            11.06       4.79       3.48       3.48

<CAPTION>
                                                                                                                   CLASS A-4
                                                                  CERTIFICATES AT THE                              FOLLOWING
                                                                 FOLLOWING PERCENTAGES                            PERCENTAGES

                                                                         OF SPA                                      OF SPA
<S>                   <C>        <C>        <C>        <C>
                                            ----------------------------------------------------------------  --------------------
    DISTRIBUTION
        DATE            475%       600%        0%        100%       175%       285%       475%       600%        0%        100%
- --------------------                        ----------------------------------------------------------------  --------------------
<S>                   <C>        <C>        <C>        <C>
Initial.............

                            100        100
                                                  100        100        100        100        100        100
                                                                                                                    100        100
May 1994............

                            100        100
                                                  100        100        100        100        100        100
                                                                                                                    100        100
May 1995............

                             98         98
                                                  100        100         98         98         98         98
                                                                                                                    100        100
May 1996............

                             63         54
                                                  100         90         68         68         68         60
                                                                                                                    100        100
May 1997............

                             30          4
                                                  100         70         40         40         40         17
                                                                                                                    100        100
May 1998............

                              0          0
                                                  100         51         14         14         14          1
                                                                                                                    100        100
May 1999............

                              0          0
                                                  100         33          4          4          4          0
                                                                                                                    100        100
May 2000............

                              0          0
                                                   95         16          0          0          0          0
                                                                                                                    100        100
May 2001............

                              0          0
                                                   87          6          0          0          0          0
                                                                                                                    100         41
May 2002............

                              0          0
                                                   78          0          0          0          0          0
                                                                                                                    100          0
May 2003............

                              0          0
                                                   69          0          0          0          0          0
                                                                                                                    100          0
May 2004............

                              0          0
                                                   59          0          0          0          0          0
                                                                                                                    100          0
May 2005............

                              0          0
                                                   49          0          0          0          0          0
                                                                                                                    100          0
May 2006............

                              0          0
                                                   37          0          0          0          0          0
                                                                                                                    100          0
May 2007............

                              0          0
                                                   25          0          0          0          0          0
                                                                                                                    100          0
May 2008............

                              0          0
                                                   13          0          0          0          0          0
                                                                                                                     90          0
May 2009............

                              0          0
                                                    5          0          0          0          0          0
                                                                                                                     33          0
May 2010............

                              0          0
                                                    0          0          0          0          0          0
                                                                                                                      0          0
May 2011............

                              0          0
                                                    0          0          0          0          0          0
                                                                                                                      0          0
May 2012............

                              0          0
                                                    0          0          0          0          0          0
                                                                                                                      0          0
May 2013............

                              0          0
                                                    0          0          0          0          0          0
                                                                                                                      0          0
May 2014............

                              0          0
                                                    0          0          0          0          0          0
                                                                                                                      0          0
May 2015............

                              0          0
                                                    0          0          0          0          0          0
                                                                                                                      0          0
May 2016............

                              0          0
                                                    0          0          0          0          0          0
                                                                                                                      0          0
May 2017............

                              0          0
                                                    0          0          0          0          0          0
                                                                                                                      0          0
May 2018............

                              0          0
                                                    0          0          0          0          0          0
                                                                                                                      0          0
May 2019............

                              0          0
                                                    0          0          0          0          0          0
                                                                                                                      0          0
May 2020............

                              0          0
                                                    0          0          0          0          0          0
                                                                                                                      0          0
May 2021............

                              0          0
                                                    0          0          0          0          0          0
                                                                                                                      0          0
May 2022............

                              0          0
                                                    0          0          0          0          0          0
                                                                                                                      0          0
May 2023............

                              0          0
                                                    0          0          0          0          0          0
                                                                                                                      0          0
Weighted Average
  Life (years)(1)...

                           3.48       3.13
                                                11.72       5.23       3.80       3.80       3.80       3.34
                                                                                                                  15.78       7.94

<CAPTION>

    DISTRIBUTION
        DATE            175%       285%       475%       600%
- --------------------
Initial.............

                            100        100        100        100
May 1994............

                            100        100        100        100
May 1995............

                            100        100        100        100
May 1996............

                            100        100        100        100
May 1997............

                            100        100        100        100
May 1998............

                            100        100        100          5
May 1999............

                             26         26         26          0
May 2000............

                              0          0          0          0
May 2001............

                              0          0          0          0
May 2002............

                              0          0          0          0
May 2003............

                              0          0          0          0
May 2004............

                              0          0          0          0
May 2005............

                              0          0          0          0
May 2006............

                              0          0          0          0
May 2007............

                              0          0          0          0
May 2008............

                              0          0          0          0
May 2009............

                              0          0          0          0
May 2010............

                              0          0          0          0
May 2011............

                              0          0          0          0
May 2012............

                              0          0          0          0
May 2013............

                              0          0          0          0
May 2014............

                              0          0          0          0
May 2015............

                              0          0          0          0
May 2016............

                              0          0          0          0
May 2017............

                              0          0          0          0
May 2018............

                              0          0          0          0
May 2019............

                              0          0          0          0
May 2020............

                              0          0          0          0
May 2021............

                              0          0          0          0
May 2022............

                              0          0          0          0
May 2023............

                              0          0          0          0
Weighted Average
  Life (years)(1)...

                           5.75       5.75       5.75       4.61
</TABLE>

- ------------------
(1) The  weighted average  life of an  Offered Certificate is  determined by (i)
    multiplying the  amount  of  each distribution  in  reduction  of  principal
    balance  by  the number  of  years from  the date  of  the issuance  of such
    Certificate to the related  Distribution Date, (ii)  adding the results  and
    (iii)  dividing  the  sum by  the  aggregate distributions  in  reduction of
    principal balance referred to in clause (i).

                                      S-65
<PAGE>
 PERCENTAGE OF INITIAL CLASS A SUBCLASS PRINCIPAL BALANCE AND CLASS M PRINCIPAL
                            BALANCE OUTSTANDING FOR:
<TABLE>
<CAPTION>
                                                 CLASS A-5                                              CLASS A-6
                                            CERTIFICATES AT THE                                    CERTIFICATES AT THE
                                           FOLLOWING PERCENTAGES                                  FOLLOWING PERCENTAGES
                                                   OF SPA                                                 OF SPA
<S>                   <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
                      ----------------------------------------------------------------  ------------------------------------------

<CAPTION>
    DISTRIBUTION
        DATE             0%        100%       175%       285%       475%       600%        0%        100%       175%       285%
- --------------------  ----------------------------------------------------------------  ------------------------------------------
<S>                   <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
Initial.............
                            100        100        100        100        100        100
                                                                                              100        100        100        100
May 1994............
                            100        100        100        100        100        100
                                                                                              100        100        100        100
May 1995............
                            100        100        100        100        100        100
                                                                                              100        100        100        100
May 1996............
                            100        100        100        100        100        100
                                                                                              100        100        100        100
May 1997............
                            100        100        100        100        100        100
                                                                                              100        100        100        100
May 1998............
                            100        100        100        100        100        100
                                                                                              100        100        100        100
May 1999............
                            100        100        100        100        100         24
                                                                                              100        100        100        100
May 2000............
                            100        100         67         67         67          0
                                                                                              100        100        100        100
May 2001............
                            100        100         24         24         24          0
                                                                                              100        100        100        100
May 2002............
                            100         70          0          0          0          0
                                                                                              100        100         99         99
May 2003............
                            100          0          0          0          0          0
                                                                                              100         68         68         68
May 2004............
                            100          0          0          0          0          0
                                                                                              100         45         45         45
May 2005............
                            100          0          0          0          0          0
                                                                                              100         30         30         30
May 2006............
                            100          0          0          0          0          0
                                                                                              100         19         19         19
May 2007............
                            100          0          0          0          0          0
                                                                                              100         11         11         11
May 2008............
                            100          0          0          0          0          0
                                                                                              100          6          6          6
May 2009............
                            100          0          0          0          0          0
                                                                                              100          2          2          2
May 2010............
                             60          0          0          0          0          0
                                                                                              100          0          0          0
May 2011............
                              0          0          0          0          0          0
                                                                                               22          0          0          0
May 2012............
                              0          0          0          0          0          0
                                                                                                0          0          0          0
May 2013............
                              0          0          0          0          0          0
                                                                                                0          0          0          0
May 2014............
                              0          0          0          0          0          0
                                                                                                0          0          0          0
May 2015............
                              0          0          0          0          0          0
                                                                                                0          0          0          0
May 2016............
                              0          0          0          0          0          0
                                                                                                0          0          0          0
May 2017............
                              0          0          0          0          0          0
                                                                                                0          0          0          0
May 2018............
                              0          0          0          0          0          0
                                                                                                0          0          0          0
May 2019............
                              0          0          0          0          0          0
                                                                                                0          0          0          0
May 2020............
                              0          0          0          0          0          0
                                                                                                0          0          0          0
May 2021............
                              0          0          0          0          0          0
                                                                                                0          0          0          0
May 2022............
                              0          0          0          0          0          0
                                                                                                0          0          0          0
May 2023............
                              0          0          0          0          0          0
                                                                                                0          0          0          0
Weighted Average
  Life (years)(1)...
                          17.18       9.30       7.53       7.53       7.53       5.75
                                                                                            17.94      11.48      11.34      11.34

<CAPTION>

                                                                       CERTIFICATES AT THE                            FOLLOWING
                                                                      FOLLOWING PERCENTAGES                           PERCENTAGES
                                                                              OF SPA                                   OF SPA
<S>                   <C>        <C>        <C>        <C>        <C>
                                              ----------------------------------------------------------------------  ---------
    DISTRIBUTION
        DATE            475%        600%         0%        100%       175%        285%         475%         600%         0%
- --------------------                          ----------------------------------------------------------------------  ---------
<S>                   <C>        <C>        <C>        <C>        <C>
Initial.............

                            100         100
                                                    100        100        100         100          100          100
                                                                                                                            100
May 1994............

                            100         100
                                                    100        100        100          95           95           95
                                                                                                                            100
May 1995............

                            100         100
                                                    100        100         99          83           83           76
                                                                                                                            100
May 1996............

                            100         100
                                                    100         94         81          53           49           27
                                                                                                                            100
May 1997............

                            100         100
                                                    100         83         65          28           19            2
                                                                                                                            100
May 1998............

                            100         100
                                                    100         71         50           7            1            0
                                                                                                                            100
May 1999............

                            100         100
                                                    100         61         46           1            0            0
                                                                                                                            100
May 2000............

                            100          53
                                                     97         51         39           0            0            0
                                                                                                                            100
May 2001............

                            100           9
                                                     92         50         28           0            0            0
                                                                                                                            100
May 2002............

                             99           0
                                                     87         50         16           0            0            0
                                                                                                                            100
May 2003............

                             68           0
                                                     82         49          4           0            0            0
                                                                                                                            100
May 2004............

                             45           0
                                                     76         37          0           0            0            0
                                                                                                                            100
May 2005............

                             30           0
                                                     70         24          0           0            0            0
                                                                                                                            100
May 2006............

                             19           0
                                                     63         10          0           0            0            0
                                                                                                                            100
May 2007............

                             11           0
                                                     56          0          0           0            0            0
                                                                                                                            100
May 2008............

                              6           0
                                                     50          0          0           0            0            0
                                                                                                                            100
May 2009............

                              2           0
                                                     50          0          0           0            0            0
                                                                                                                            100
May 2010............

                              0           0
                                                     50          0          0           0            0            0
                                                                                                                            100
May 2011............

                              0           0
                                                     50          0          0           0            0            0
                                                                                                                            100
May 2012............

                              0           0
                                                     34          0          0           0            0            0
                                                                                                                             69
May 2013............

                              0           0
                                                     16          0          0           0            0            0
                                                                                                                             32
May 2014............

                              0           0
                                                      0          0          0           0            0            0
                                                                                                                              0
May 2015............

                              0           0
                                                      0          0          0           0            0            0
                                                                                                                              0
May 2016............

                              0           0
                                                      0          0          0           0            0            0
                                                                                                                              0
May 2017............

                              0           0
                                                      0          0          0           0            0            0
                                                                                                                              0
May 2018............

                              0           0
                                                      0          0          0           0            0            0
                                                                                                                              0
May 2019............

                              0           0
                                                      0          0          0           0            0            0
                                                                                                                              0
May 2020............

                              0           0
                                                      0          0          0           0            0            0
                                                                                                                              0
May 2021............

                              0           0
                                                      0          0          0           0            0            0
                                                                                                                              0
May 2022............

                              0           0
                                                      0          0          0           0            0            0
                                                                                                                              0
May 2023............

                              0           0
                                                      0          0          0           0            0            0
                                                                                                                              0
Weighted Average
  Life (years)(1)...

                          11.34        7.25
                                                  15.32       8.37       5.85        3.24         3.10         2.56
                                                                                                                          19.57

<CAPTION>

    DISTRIBUTION
        DATE            100%       175%       285%       475%       600%
- --------------------
Initial.............

                            100        100        100        100        100
May 1994............

                            100        100         89         89         89
May 1995............

                            100        100         67         67         54
May 1996............

                            100        100         43         35          0
May 1997............

                            100        100         25          9          0
May 1998............

                            100        100         15          1          0
May 1999............

                            100         93          2          1          0
May 2000............

                            100         77          0          1          0
May 2001............

                            100         56          0          1          0
May 2002............

                            100         32          0          1          0
May 2003............

                             99          7          0          1          0
May 2004............

                             73          0          0          1          0
May 2005............

                             47          0          0          1          0
May 2006............

                             21          0          0          1          0
May 2007............

                              0          0          0          1          0
May 2008............

                              0          0          0          1          0
May 2009............

                              0          0          0          1          0
May 2010............

                              0          0          0          1          0
May 2011............

                              0          0          0          1          0
May 2012............

                              0          0          0          0          0
May 2013............

                              0          0          0          0          0
May 2014............

                              0          0          0          0          0
May 2015............

                              0          0          0          0          0
May 2016............

                              0          0          0          0          0
May 2017............

                              0          0          0          0          0
May 2018............

                              0          0          0          0          0
May 2019............

                              0          0          0          0          0
May 2020............

                              0          0          0          0          0
May 2021............

                              0          0          0          0          0
May 2022............

                              0          0          0          0          0
May 2023............

                              0          0          0          0          0
Weighted Average
  Life (years)(1)...

                          11.96       8.22       2.99       2.72       1.99
</TABLE>

- ------------------
(1) The weighted average  life of an  Offered Certificate is  determined by  (i)
    multiplying  the  amount  of  each distribution  in  reduction  of principal
    balance by  the number  of  years from  the date  of  the issuance  of  such
    Certificate  to the related  Distribution Date, (ii)  adding the results and
    (iii) dividing  the  sum by  the  aggregate distributions  in  reduction  of
    principal balance referred to in clause (i).

                                      S-66
<PAGE>
 PERCENTAGE OF INITIAL CLASS A SUBCLASS PRINCIPAL BALANCE AND CLASS M PRINCIPAL
                            BALANCE OUTSTANDING FOR:
<TABLE>
<CAPTION>
                                                 CLASS A-9                                       CLASS A-R AND CLASS A-LR
                                            CERTIFICATES AT THE                                    CERTIFICATES AT THE
                                           FOLLOWING PERCENTAGES                                  FOLLOWING PERCENTAGES
                                                   OF SPA                                                 OF SPA
<S>                   <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
                      ----------------------------------------------------------------  ------------------------------------------

<CAPTION>
    DISTRIBUTION
        DATE             0%        100%       175%       285%       475%       600%        0%        100%       175%       285%
- --------------------  ----------------------------------------------------------------  ------------------------------------------
<S>                   <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
Initial.............
                            100        100        100        100        100        100
                                                                                              100        100        100        100
May 1994............
                            107        107        107        107         79         61
                                                                                              100        100        100        100
May 1995............
                            115        115        115        115         32          0
                                                                                              100        100        100        100
May 1996............
                            123        123        123        123          0          0
                                                                                              100        100        100        100
May 1997............
                            132        132        132        132          0          0
                                                                                              100        100        100        100
May 1998............
                            141        141        141        141          0          0
                                                                                              100        100        100        100
May 1999............
                            151        151        151        151          0          0
                                                                                              100        100        100        100
May 2000............
                            162        162        162        141          0          0
                                                                                              100        100        100        100
May 2001............
                            174        174        174        123          0          0
                                                                                              100        100        100        100
May 2002............
                            186        186        186        105          0          0
                                                                                              100        100        100        100
May 2003............
                            200        200        200         88          0          0
                                                                                              100        100        100        100
May 2004............
                            214        214        188         73          0          0
                                                                                              100        100        100        100
May 2005............
                            230        230        166         61          0          0
                                                                                              100        100        100        100
May 2006............
                            246        246        146         50          0          0
                                                                                              100        100        100        100
May 2007............
                            264        255        128         41          0          0
                                                                                              100        100        100        100
May 2008............
                            283        232        112         34          0          0
                                                                                              100        100        100        100
May 2009............
                            303        211         97         28          0          0
                                                                                              100        100        100        100
May 2010............
                            325        190         84         22          0          0
                                                                                              100        100        100        100
May 2011............
                            349        171         71         18          0          0
                                                                                              100        100        100        100
May 2012............
                            374        152         60         14          0          0
                                                                                              100        100        100        100
May 2013............
                            401        134         51         11          0          0
                                                                                              100        100        100        100
May 2014............
                            418        117         42          8          0          0
                                                                                              100        100        100        100
May 2015............
                            383        101         35          6          0          0
                                                                                              100        100        100        100
May 2016............
                            346         86         28          5          0          0
                                                                                              100        100        100        100
May 2017............
                            306         71         22          3          0          0
                                                                                              100        100        100        100
May 2018............
                            262         57         17          2          0          0
                                                                                              100        100        100        100
May 2019............
                            216         44         12          2          0          0
                                                                                              100        100        100        100
May 2020............
                            165         32          9          1          0          0
                                                                                              100        100        100        100
May 2021............
                            110         20          5          1          0          0
                                                                                              100        100        100        100
May 2022............
                             51          9          2          0          0          0
                                                                                              100        100        100        100
May 2023............
                              0          0          0          0          0          0
                                                                                                0          0          0          0
Weighted Average
  Life (years)(1)...
                          25.91      20.83      16.84      12.03       1.67       1.17
                                                                                            30.03      30.03      30.03      29.95

<CAPTION>
                                                                        CLASS M
                                                                  CERTIFICATES AT THE
                                                                 FOLLOWING PERCENTAGES
                                                                         OF SPA
<S>                   <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
                                            ----------------------------------------------------------------
    DISTRIBUTION
        DATE            475%       600%        0%        100%       175%       285%       475%       600%
- --------------------                        ----------------------------------------------------------------
<S>                   <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
Initial.............

                            100        100
                                                  100        100        100        100        100        100
May 1994............

                            100        100
                                                   99         99         99         99         99         99
May 1995............

                            100        100
                                                   98         98         98         98         98         98
May 1996............

                            100        100
                                                   97         97         97         97         97         97
May 1997............

                            100        100
                                                   96         96         96         96         96         96
May 1998............

                            100        100
                                                   95         95         95         95         95         95
May 1999............

                            100        100
                                                   94         92         90         88         85         82
May 2000............

                            100        100
                                                   92         88         85         81         73         68
May 2001............

                            100        100
                                                   91         84         78         71         59         51
May 2002............

                            100          0
                                                   89         78         71         60         44         34
May 2003............

                            100          0
                                                   87         72         62         49         31         21
May 2004............

                            100          0
                                                   85         66         54         40         22         13
May 2005............

                            100          0
                                                   83         61         47         32         15          8
May 2006............

                            100          0
                                                   81         56         41         26         11          5
May 2007............

                            100          0
                                                   79         51         36         21          7          3
May 2008............

                            100          0
                                                   76         46         31         17          5          2
May 2009............

                            100          0
                                                   73         42         27         13          3          1
May 2010............

                            100          0
                                                   70         37         23         11          2          1
May 2011............

                            100          0
                                                   67         34         19          8          2          0
May 2012............

                            100          0
                                                   63         30         17          7          1          0
May 2013............

                            100          0
                                                   59         26         14          5          1          0
May 2014............

                            100          0
                                                   55         23         12          4          0          0
May 2015............

                            100          0
                                                   51         20          9          3          0          0
May 2016............

                            100          0
                                                   46         17          8          2          0          0
May 2017............

                            100          0
                                                   40         14          6          2          0          0
May 2018............

                            100          0
                                                   35         11          5          1          0          0
May 2019............

                            100          0
                                                   28          9          3          1          0          0
May 2020............

                            100          0
                                                   22          6          2          1          0          0
May 2021............

                             59          0
                                                   15          4          1          0          0          0
May 2022............

                             20          0
                                                    7          2          1          0          0          0
May 2023............

                              0          0
                                                    0          0          0          0          0          0
Weighted Average
  Life (years)(1)...

                          28.38       8.74
                                                20.29      15.10      12.84      10.83       9.02       8.32
</TABLE>

- ------------------
(1) The  weighted average  life of an  Offered Certificate is  determined by (i)
    multiplying the  amount  of  each distribution  in  reduction  of  principal
    balance  by  the number  of  years from  the date  of  the issuance  of such
    Certificate to the related  Distribution Date, (ii)  adding the results  and
    (iii)  dividing  the  sum by  the  aggregate distributions  in  reduction of
    principal balance referred to in clause (i).

                                      S-67
<PAGE>
    Interest on Mortgage Loans prepaid  in full is accrued  only to the date  of
such  prepayment in full. Any interest  shortfall with respect to prepayments in
full will be offset only  to the extent of the  aggregate of the Servicing  Fees
relating  to mortgagor payments  or other recoveries  distributed on the related
Distribution Date. Any excess of such shortfall above the Servicing Fees in  any
month  will result  in a  pro rata  reduction of  interest distributable  to the
holders of each Subclass  of Class A  Certificates, the holders  of the Class  M
Certificates  and the holders  of the Class  B Certificates. Interest shortfalls
resulting from the timing of the receipt of partial principal prepayments on the
Mortgage Loans or from net liquidation  proceeds in respect of Liquidated  Loans
will  not be offset by Servicing Fees but will be allocated first to the Class B
Certificates until  the Class  B Principal  Balance has  been reduced  to  zero,
second  to the Class M Certificates until the Class M Principal Balance has been
reduced to  zero and  finally to  the Subclasses  of Class  A Certificates.  See
"Description  of the  Certificates--Interest" herein  and "Prepayment  and Yield
Considerations" in the Prospectus.

    Interest accrued on the Class A and Class M Certificates will be reduced  by
the  amount  of  any interest  portions  of  Realized Losses  allocated  to such
Certificates as  described  under "Description  of  the  Certificates--Interest"
herein.  The yield on the Class A Certificates and the Class M Certificates will
be less than the yield otherwise produced by their respective Pass-Through Rates
and the prices  at which  the Class  A and  Class M  Certificates are  purchased
because  the interest which accrues on the Mortgage Loans during each month will
not be passed  through to  Certificateholders until the  25th day  of the  month
following  the end of such month (or if such 25th day is not a business day, the
following business day).

SENSITIVITY OF THE CLASS A-3 AND CLASS A-10 CERTIFICATES

    THE YIELD TO AN INVESTOR ON THE  CLASS A-3 AND CLASS A-10 CERTIFICATES  WILL
BE  SENSITIVE TO BOTH THE TIMING OF  RECEIPT OF PREPAYMENTS AND THE OVERALL RATE
OF PRINCIPAL  PREPAYMENT  ON  THE  MORTGAGE  LOANS,  WHICH  RATE  MAY  FLUCTUATE
SIGNIFICANTLY  FROM  TIME  TO  TIME.  AN  INVESTOR  SHOULD  FULLY  CONSIDER  THE
ASSOCIATED RISKS, INCLUDING  THE RISK THAT  A RAPID RATE  OF PRINCIPAL  PAYMENTS
(INCLUDING  PREPAYMENTS) COULD RESULT IN THE FAILURE OF AN INVESTOR IN THE CLASS
A-3 OR CLASS A-10 CERTIFICATES TO FULLY RECOVER ITS INITIAL INVESTMENT.

    The following tables indicate the sensitivity to various rates of prepayment
on the Mortgage  Loans of the  pre-tax yields  to maturity on  a corporate  bond
equivalent  ("CBE") basis  of the  Class A-3  and Class  A-10 Certificates. Such
calculations are based on distributions made in accordance with "Description  of
the  Certificates" above,  on the assumptions  described in  clauses (i) through
(vi) of the last paragraph beginning on page S-63 and on the further assumptions
that (i) the Class A-3 and Class A-10 Certificates will be purchased on May  14,
1993  at a purchase price for the  Class A-3 Certificates equal to 42059.301% of
the aggregate initial  principal balance thereof  and a purchase  price for  the
Class  A-10 Certificates equal to 12813.345%  of the aggregate initial principal
balance thereof plus, in each case, accrued interest thereon from May 1, 1993 to
(but not including) May  14, 1993, (ii) the  initial Class A Subclass  Principal
Balance  of each  Subclass of  Class A Certificates,  other than  the Class A-11
Certificates, will be as set forth  on the cover hereof and (iii)  distributions
to  holders of Class A Certificates  will be made on the  25th day of each month
commencing in June 1993.

            SENSITIVITY OF THE CLASS A-3 CERTIFICATES TO PREPAYMENTS

<TABLE>
<CAPTION>
                                                                          PERCENTAGES OF SPA
                                       -----------------------------------------------------------------------------------------
                                           0%          100%         175%         285%         475%         600%         709%
                                       -----------  -----------  -----------  -----------  -----------  -----------  -----------
<S>                                    <C>          <C>          <C>          <C>          <C>          <C>          <C>
Pre-Tax Yield (CBE)..................      34.58%       23.30%       12.50%       12.50%       12.50%        6.57%       (0.01)%
</TABLE>

           SENSITIVITY OF THE CLASS A-10 CERTIFICATES TO PREPAYMENTS

<TABLE>
<CAPTION>
                                                                          PERCENTAGES OF SPA
                                       -----------------------------------------------------------------------------------------
                                           0%          100%         175%         285%         475%         600%         1317%
                                       -----------  -----------  -----------  -----------  -----------  -----------  -----------
<S>                                    <C>          <C>          <C>          <C>          <C>          <C>          <C>
Pre-Tax Yield (CBE)..................      83.95%       38.87%       12.50%       12.50%       12.50%       12.50%        0.00%
</TABLE>

                                      S-68
<PAGE>
    The pre-tax yields set forth in the preceding tables were calculated by  (i)
determining the monthly discount rates which, when applied to the assumed stream
of  cash flows to be paid  on the Class A-3 and  Class A-10 Certificates, as the
case may be, would cause the discounted present value of such assumed stream  of
cash  flows to equal  an assumed purchase  price for the  Class A-3 Certificates
equal to 42059.301% of  the aggregate initial principal  balance thereof and  an
assumed  purchase price for  the Class A-10 Certificates  equal to 12813.345% of
the aggregate  initial principal  balance thereof  plus, in  each case,  accrued
interest  thereon from May 1, 1993 to (but  not including) May 14, 1993 and (ii)
converting  such  monthly  rates  to  corporate  bond  equivalent  rates.   Such
calculation does not take into account the interest rates at which investors may
be  able to reinvest funds received by them as distributions on the Class A-3 or
Class A-10 Certificates and consequently does not purport to reflect the  return
on  any  investment  in the  Class  A-3  or Class  A-10  Certificates  when such
reinvestment rates are considered.

    NOTWITHSTANDING THE  ASSUMED PREPAYMENT  RATES  REFLECTED IN  THE  PRECEDING
TABLE,  IT IS HIGHLY UNLIKELY THAT THE  MORTGAGE LOANS WILL PREPAY AT A CONSTANT
RATE UNTIL MATURITY OR THAT  ALL OF THE MORTGAGE LOANS  WILL PREPAY AT THE  SAME
TIME.  The Mortgage Loans initially included in the Trust Estate may differ from
those currently expected to be included in the Trust Estate, and thereafter  may
be changed as a result of permitted substitutions. As a result of these factors,
the  pre-tax yields on the  Class A-3 and Class  A-10 Certificates are likely to
differ from those shown in such table, even if all of the Mortgage Loans  prepay
at the indicated percentages of SPA.

                        POOLING AND SERVICING AGREEMENT

GENERAL

    The  Series 1993-18  Certificates will be  issued pursuant to  a Pooling and
Servicing Agreement to be dated as of the date of initial issuance of the Series
1993-18 Certificates (the "Pooling and  Servicing Agreement") among the  Seller,
the  Servicer and the Trustee. Reference is made to the Prospectus for important
additional information regarding  the terms  and conditions of  the Pooling  and
Servicing Agreement and the Series 1993-18 Certificates. See "Description of the
Certificates,"  "Servicing of the Mortgage Loans" and "The Pooling and Servicing
Agreement" in the Prospectus. Distributions  (other than the final  distribution
in  retirement of the Class  A Certificates of each Subclass  and of the Class M
Certificates) will be made by check mailed to the address of the person entitled
thereto as it appears on the Certificate Register. However, with respect to  any
holder  of  an  Offered  Certificate  (other than  a  Class  A-3  or  Class A-10
Certificate) evidencing at  least a  $5,000,000 initial  principal balance,  any
holder  of a Class A-3 Certificate evidencing a $3,000 initial principal balance
or any holder of  a Class A-10  Certificate, distributions will  be made on  the
Distribution Date by wire transfer in immediately available funds, provided that
the  Servicer, or the paying agent acting  on behalf of the Servicer, shall have
been furnished with appropriate wiring instructions not less than seven business
days prior to the related Distribution  Date. The final distribution in  respect
of  each Class A and Class M Certificate will be made only upon presentation and
surrender of  such Class  A  or Class  M Certificate  at  the office  or  agency
appointed  by the  Trustee specified  in the  notice of  final distribution with
respect to the related Subclass or Class.

    Unless Definitive Certificates are issued  as described above, the  Servicer
and  the Trustee will treat DTC as the Holder of the Book-Entry Certificates for
all purposes, including  making distributions  thereon and  taking actions  with
respect  thereto. DTC will make book-entry transfers among its participants with
respect to the Book-Entry  Certificates; it will  also receive distributions  on
the  Book-Entry Certificates from the Trustee  and transmit them to participants
for distribution to Beneficial Owners or their nominees.

VOTING

    With respect  to  any provisions  of  the Pooling  and  Servicing  Agreement
providing  for the  action, consent  or approval  of the  holders of  all Series
1993-18 Certificates evidencing specified Voting Interests in the Trust  Estate,
the  holders of the  Class A Certificates  will collectively be  entitled to the
then applicable Class A Percentage, and the holders of the Class M  Certificates
will collectively be entitled to

                                      S-69
<PAGE>
the  then applicable percentage of the  aggregate Voting Interest represented by
all Series 1993-18 Certificates obtained by dividing the then-outstanding  Class
M  Principal  Balance  by the  sum  of  the then-outstanding  Class  A Principal
Balance, Class M Principal Balance and Class B Principal Balance and the holders
of the Class B Certificates will collectively be entitled to the balance of  the
aggregate  Voting Interest represented  by all Series  1993-18 Certificates. The
aggregate Voting Interests of the Class A Certificates other than the Class A-11
Certificates, on any date will  be 97% of the Class  A Percentage on such  date.
The aggregate Voting Interest of the Class A-11 Certificates on any date will be
3%  of the Class  A Percentage on  such date. The  aggregate Voting Interests of
each Subclass of Class A Certificates other than the Class A-11 Certificates  on
any  date will be equal to  the product of (a) 97%  of the Class A Percentage on
such date  and  (b) the  fraction  obtained by  dividing  the Class  A  Subclass
Principal  Balance  of such  Subclass  on such  date  by the  aggregate  Class A
Subclass Principal Balance of the Class A Certificates other than the Class A-11
Certificates on  such  date. The  aggregate  Voting  Interests of  the  Class  M
Certificates  on any date will be 100% of the percentage described above for the
Class M Certificates on such date. Each Certificateholder of a Class or Subclass
will have a Voting Interest equal to the product of the Voting Interest to which
such Class or Subclass is collectively  entitled and the Percentage Interest  in
such  Class or Subclass represented by  such holder's Certificates. With respect
to any provisions of the Pooling  and Servicing Agreement providing for  action,
consent  or  approval of  each Class  or Subclass  of Certificates  or specified
Classes or Subclasses of Certificates, each Certificateholder of a Subclass will
have a  Voting Interest  in  such Subclass  equal  to such  holder's  Percentage
Interest  in  such  Subclass.  Unless  Definitive  Certificates  are  issued  as
described above, Beneficial Owners of Book-Entry Certificates may exercise their
voting rights only through Participants.

TRUSTEE

    The Trustee for the Series 1993-18 Certificates will be First Trust National
Association, a national banking association.  The Corporate Trust Office of  the
Trustee is located at 180 East Fifth Street, St. Paul, Minnesota 55101. See "The
Pooling and Servicing Agreement--The Trustee" in the Prospectus.

SERVICING COMPENSATION AND PAYMENT OF EXPENSES

    The servicing fee paid to the Servicer with respect to the servicing of each
Mortgage  Loan  included  in  the Trust  Estate  underlying  the  Series 1993-18
Certificates and administrative services provided by it will be 0.20% per  annum
of  the outstanding principal balance of each such Mortgage Loan (the "Servicing
Fee"). No Fixed Retained Yield (as  defined in the Prospectus) will be  retained
with  respect  to any  of the  Mortgage  Loans. See  "Servicing of  the Mortgage
Loans--Fixed Retained Yield, Servicing Compensation and Payment of Expenses"  in
the  Prospectus  for information  regarding other  possible compensation  to the
Servicer. The Servicer will pay all routine expenses incurred in connection with
its responsibilities  under  the Pooling  and  Servicing Agreement,  subject  to
certain  rights of reimbursement  as described in  the Prospectus. The servicing
fees and other expenses of the Upper-Tier REMIC and the Lower-Tier REMIC will be
allocated  to  holders  of  the  Class  A-R  Certificate  and  the  Class   A-LR
Certificate,  respectively,  who are  individuals,  estates, or  trusts (whether
either such  Certificate  is  held  directly  or  through  certain  pass-through
entities)  as additional  gross income  without a  corresponding distribution of
cash, and  any such  investor (or  its owners,  in the  case of  a  pass-through
entity)  may be limited in  its ability to deduct  such expenses for regular tax
purposes and  may  not  be able  to  deduct  such expenses  to  any  extent  for
alternative minimum tax purposes. See "Certain Federal Income Tax Consequences--
Federal Income Tax Consequences for REMIC Certificates--Limitations on Deduction
of  Certain Expenses" in  the Prospectus. Unless  and until applicable authority
provides otherwise, the Seller intends to treat all such expenses as incurred by
the Lower-Tier REMIC  and, therefore, as  allocable to the  holder of the  Class
A-LR  Certificate. See "Certain Federal  Income Tax Consequences--Federal Income
Tax Consequences  for REMIC  Certificates--Limitations on  Deduction of  Certain
Expenses" in the Prospectus.

OPTIONAL TERMINATION

    At its option, the Servicer may purchase from the Trust Estate all remaining
Mortgage  Loans,  and  thereby effect  early  retirement of  the  Series 1993-18
Certificates, on any Distribution Date when the Pool Scheduled Principal Balance
is less  than 10%  of the  Cut-Off Date  Aggregate Principal  Balance. Any  such

                                      S-70
<PAGE>
purchase  will be made only in connection  with a "qualified liquidation" of the
Upper-Tier  REMIC  and   Lower-Tier  REMIC   within  the   meaning  of   Section
860F(a)(4)(A)  of the Code. The purchase price  will, generally, be equal to the
greater of (i) the unpaid principal balance of each Mortgage Loan plus the  fair
market  value of  other property in  the Trust  Estate and (ii)  the fair market
value of the  Trust Estate's assets  plus, in each  case, accrued interest.  See
"The  Pooling and Servicing Agreement--Termination;  Purchase of Mortgage Loans"
in the Prospectus.

                       FEDERAL INCOME TAX CONSIDERATIONS

    The Trust Estate  will consist of  two segregated asset  groupings, each  of
which  will qualify as a  REMIC for federal income  tax purposes. One REMIC (the
"Lower-Tier  REMIC")  will  issue  certain  uncertificated  interests  (each,  a
"Lower-Tier  REMIC Regular  Interest"), each  of which  will be  designated as a
regular interest in the Lower-Tier REMIC, and the Class A-LR Certificate,  which
will  be designated as the residual interest in the Lower-Tier REMIC. The assets
of the  Lower-Tier REMIC  will include  the Mortgage  Loans, together  with  the
amounts  held by the Servicer in a  separate account in which collections on the
Mortgage Loans  will  be  deposited  (the  "Certificate  Account"),  the  hazard
insurance  policies and primary mortgage insurance policies, if any, relating to
the Mortgage  Loans and  any property  which secured  a Mortgage  Loan which  is
acquired by foreclosure or deed in lieu of foreclosure.

    The  second REMIC (the "Upper-Tier REMIC")  will issue all Subclasses of the
Class A  Certificates  other  than  the Class  A-LR  Certificate,  the  Class  M
Certificates, and the Class B Certificates. The Class A-1, Class A-2, Class A-3,
Class  A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9 and Class A-10
Certificates  and  the   Class  M  Certificates   (collectively,  the   "Regular
Certificates"),  together  with  the Class  A-11  Certificates and  the  Class B
Certificates, will be designated as  regular interests in the Upper-Tier  REMIC,
and the Class A-R Certificate will be designated as the residual interest in the
Upper-Tier  REMIC.  The  regular  interests and  the  residual  interest  in the
Upper-Tier  REMIC  are  referred  to  herein  collectively  as  the  "Upper-Tier
Certificates."   The  Class  A-R  and  Class  A-LR  Certificates  are  "Residual
Certificates" for purposes of the Prospectus. The assets of the Upper-Tier REMIC
will include  the  uncertificated  Lower-Tier  REMIC  Regular  Interests  and  a
separate  account in which distributions  on the uncertificated Lower-Tier REMIC
Regular Interests will  be deposited.  The aggregate amount  distributed to  the
holders of the Upper-Tier Certificates, payable from such separate account, will
be  equal to the aggregate distributions in respect of the Mortgage Loans on the
uncertificated Lower-Tier REMIC Regular Interests.

    The Offered Certificates will be treated as "qualifying real property loans"
for mutual savings banks and  domestic building and loan associations,  "regular
or  residual interests in a REMIC"  for domestic building and loan associations,
and "real  estate assets"  for  real estate  investment  trusts, to  the  extent
described in the Prospectus.

REGULAR CERTIFICATES

    The  Regular Certificates generally will be treated as newly originated debt
instruments for federal income tax purposes.  Beneficial owners (or in the  case
of  Definitive  Certificates,  holders)  of  the  Regular  Certificates  will be
required to report income  on such Certificates in  accordance with the  accrual
method  of accounting. The  Class A-9 Certificates will  be issued with original
issue discount  in  an  amount equal  to  the  excess of  all  distributions  of
principal  and interest  thereon (whether current  or accrued)  over their issue
price  (including  accrued  interest).  It  is  anticipated  that  the  Class  M
Certificates  will be issued with original issue  discount in an amount equal to
the excess of the initial principal balance  of such Class over its issue  price
(including  accrued interest).  It is  further anticipated  that the  Class A-1,
Class A-2, Class A-4, Class  A-5, Class A-7 and  Class A-8 Certificates will  be
issued  at a premium and that the Class  A-6 Certificates will be issued with DE
MINIMIS original issue discount for federal income tax purposes.

    Under proposed Treasury regulations, because interest is distributed on  the
first  Distribution  Date  for  a  thirty-day  period  reflecting  the preceding
calendar month and not the number  of days reflecting the longer period  between
the issue date and the first Distribution Date, Regular Certificates expected to
be

                                      S-71
<PAGE>
issued  with  non-DE  MINIMIS  original  issue discount,  such  as  the  Class M
Certificates, may be considered to be issued with original issue discount in  an
amount  equal  to the  excess  of all  distributions  of principal  and interest
expected to  be received  thereon  over their  issue prices  (including  accrued
interest). These Treasury regulations are proposed to be effective only for debt
instruments  issued 60 or  more days after  the regulations are  issued in final
form, and the Seller does not intend  to report original issue discount in  this
manner.

    The  Class A-3 and Class  A-10 Certificates will be  considered to be issued
with  original  issue  discount  in  an  amount  equal  to  the  excess  of  all
distributions  of  principal  and  interest  thereon  over  their  issue  prices
(including accrued interest). Any "negative" amounts of original issue  discount
attributable  to  rapid prepayments  would not  be  deductible currently  by the
holder of a Class A-3 or Class A-10 Certificate, but most likely would be offset
against future positive accruals  of original issue  discount, if any.  Finally,
the  holder of a Class A-3  or Class A-10 Certificate may  be entitled to a loss
deduction to the extent it becomes certain  that such holder will not recover  a
portion  of its basis in such  Certificate, assuming no further prepayments. The
Class A-11 Certificates, which are not  offered hereby, also will be treated  as
issued with original issue discount for federal income tax purposes.

    The  Prepayment Assumption (as defined in the Prospectus) that is to be used
in determining the rate  of accrual of original  issue discount and whether  the
original  issue  discount is  considered DE  MINIMIS,  and that  may be  used to
amortize premium, will be calculated using  285% SPA. No representation is  made
as to the actual rate at which the Mortgage Loans will prepay.

RESIDUAL CERTIFICATES

    The  holders of the Class  A-R and Class A-LR  Certificates must include the
taxable income  or  loss of  the  Upper-Tier  REMIC and  the  Lower-Tier  REMIC,
respectively,  in determining  their federal taxable  income. The  Class A-R and
Class A-LR Certificates will remain outstanding for federal income tax  purposes
until  there are  no Certificates  of any  other Class  outstanding. PROSPECTIVE
INVESTORS ARE CAUTIONED  THAT THE  CLASS A-R  CERTIFICATEHOLDER'S REMIC  TAXABLE
INCOME   AND   THE   TAX   LIABILITY   THEREON   WILL,   AND   THE   CLASS  A-LR
CERTIFICATEHOLDER'S REMIC  TAXABLE INCOME  AND THE  TAX LIABILITY  THEREON  MAY,
EXCEED CASH DISTRIBUTIONS TO SUCH HOLDERS DURING CERTAIN PERIODS, IN WHICH EVENT
THE  HOLDERS THEREOF  MUST HAVE SUFFICIENT  ALTERNATIVE SOURCES OF  FUNDS TO PAY
SUCH TAX LIABILITY.  Furthermore, it is  anticipated that all  or a  substantial
portion  of  the taxable  income of  the Upper-Tier  REMIC and  Lower-Tier REMIC
includible by  the  holders  of  the Class  A-R  and  Class  A-LR  Certificates,
respectively, will be treated as "excess inclusion" income, resulting in (i) the
inability  of such holder to use net operating losses to offset such income from
the respective REMIC, (ii) the treatment  of such income as "unrelated  business
taxable  income" to certain holders who  are otherwise tax-exempt, and (iii) the
treatment of such income as subject  to 30% withholding tax to certain  non-U.S.
investors, with no exemption or treaty reduction.

    Under  the REMIC Regulations, because the fair market value of the Class A-R
and Class A-LR Certificates will not exceed  2% of the fair market value of  the
Upper-Tier  REMIC and  Lower-Tier REMIC, respectively,  the Class  A-R and Class
A-LR Certificates will  not have  "significant value,"  and thrift  institutions
will  not be permitted to offset their  net operating losses against such excess
inclusion income.  In  addition, under  the  REMIC Regulations,  the  Class  A-R
Certificate  will,  and the  Class  A-LR Certificate  may,  be considered  to be
"noneconomic residual interests," with the  result that transfers thereof  would
be disregarded for federal income tax purposes if any significant purpose of the
transferor  was to impede the assessment  or collection of tax. Accordingly, the
transferee affidavit  used  for  transfers  of the  Class  A-R  and  Class  A-LR
Certificates  will require the transferee to affirm that it (i) historically has
paid its debts as they have  come due and intends to  do so in the future,  (ii)
understands  that it may incur tax liabilities  with respect to the Class A-R or
Class A-LR Certificate in excess of cash flows generated thereby, (iii)  intends
to  pay taxes associated with holding the Class A-R or Class A-LR Certificate as
such taxes become due  and (iv) will  not transfer the Class  A-R or Class  A-LR
Certificate  to any person or entity that  does not provide a similar affidavit.
The transferor must certify in  writing to the Trustee that,  as of the date  of
transfer,  it had no knowledge  or reason to know  that the affirmations made by
the transferee

                                      S-72
<PAGE>
pursuant to the preceding sentence were false. Finally, the Class A-R and  Class
A-LR Certificates generally may not be transferred to a person who is not a U.S.
Person  (as defined herein). See  "Description of the Certificates--Restrictions
on Transfer of the Class  A-R, Class A-LR and  Class M Certificates" herein  and
"Certain  Federal Income  Tax Consequences--Federal Income  Tax Consequences for
REMIC Certificates--Taxation of the Residual Certificates--Limitations on Offset
or Exemption of  REMIC Income"  and "--Tax-Related Restrictions  on Transfer  of
Residual Certificates-- Noneconomic Residual Interests" in the Prospectus.

    Under proposed Treasury regulations relating to original issue discount, the
Lower-Tier  REMIC Regular Interests would be treated as a single debt instrument
for original issue  discount purposes because  they will be  issued in a  single
transaction  to a single holder (the Upper-Tier REMIC). Although there can be no
assurance that  final  regulations  will  apply this  aggregation  rule  to  the
Lower-Tier  REMIC  Regular  Interests,  the Servicer  intends  to  calculate the
taxable income (or net loss) of  the Upper-Tier REMIC and Lower-Tier REMIC  (and
to  report to the Class  A-R and Class A-LR  Certificateholders) by treating the
Lower-Tier REMIC Regular Interests as a single debt instrument. A failure of the
Lower-Tier REMIC Regular Interests  to qualify as a  single debt instrument  for
original  issue discount  purposes could have  a material adverse  impact on the
timing of taxable income to the Class A-LR Certificateholder.

    An individual,  trust or  estate that  holds  the Class  A-R or  Class  A-LR
Certificate  (whether such  Certificate is  held directly  or indirectly through
certain pass-through  entities)  also  may have  additional  gross  income  with
respect to, but may be subject to limitations on the deductibility of, Servicing
Fees  on the Mortgage Loans and other administrative expenses properly allocable
to such Certificate in  computing such holder's regular  tax liability, and  may
not  be able  to deduct such  fees or expenses  to any extent  in computing such
holder's alternative  minimum tax  liability.  In addition,  some portion  of  a
purchaser's basis, if any, in the Class A-R or Class A-LR Certificate may not be
recovered  until termination of  the respective REMIC.  Furthermore, the federal
income tax consequences of any consideration paid to a transferee on a  transfer
of  a Class A-R or Class A-LR Certificate are unclear. The preamble to the REMIC
Regulations indicates that  the Internal Revenue  Service anticipates  providing
guidance  with respect to  the federal tax treatment  of such consideration. Any
transferee  of  the  Class  A-R   or  Class  A-LR  Certificate  receiving   such
consideration should consult its tax advisors.

    DUE  TO  THE  SPECIAL TAX  TREATMENT  OF RESIDUAL  INTERESTS,  THE EFFECTIVE
AFTER-TAX  RETURN  OF  THE  CLASS  A-R  AND  CLASS  A-LR  CERTIFICATES  MAY   BE
SIGNIFICANTLY  LOWER THAN  WOULD BE  THE CASE  IF THE  CLASS A-R  AND CLASS A-LR
CERTIFICATES WERE TAXED AS DEBT INSTRUMENTS.

                              ERISA CONSIDERATIONS

    Neither the Class  A-R Certificate  nor the  Class A-LR  Certificate may  be
purchased  by or  transferred to  any person which  is an  employee benefit plan
within the meaning of  Section 3(3) of the  Employee Retirement Income  Security
Act  of  1974, as  amended  ("ERISA"), and  which  is subject  to  the fiduciary
responsibility rules  of Sections  401-414 of  ERISA or  Code Section  4975  (an
"ERISA  Plan") or which is  a governmental plan, as  defined in Section 3(32) of
ERISA, subject to any federal, state or local law ("Similar Law") which is, to a
material extent,  similar to  the  foregoing provisions  of  ERISA or  the  Code
(collectively, with an ERISA Plan, a "Plan"), or any person utilizing the assets
of  such Plan. Accordingly, the following discussion does not purport to discuss
the considerations under ERISA, Code Section 4975 or Similar Law with respect to
the purchase, acquisition or resale of the Class A-R or Class A-LR Certificate.

    In addition,  under current  law the  purchase and  holding of  the Class  M
Certificates  by or on behalf of a  Plan may result in "prohibited transactions"
within the meaning of ERISA  and Code Section 4975  or Similar Law. Transfer  of
the  Class M Certificates will not be  made unless the transferee (i) executes a
representation letter in form and substance satisfactory to the Trustee  stating
that  it is  not, and is  not acting on  behalf of,  any such Plan  or using the
assets of any such Plan to effect  such purchase or (ii) provides an opinion  of
counsel  in form and substance satisfactory to  the Trustee that the purchase or
holding of the Class M Certificates by or on behalf of such Plan will not result
in the assets of the Trust

                                      S-73
<PAGE>
Estate  being  deemed  to  be  "plan  assets"  and  subject  to  the  prohibited
transaction provisions of ERISA and the Code or Similar Law and will not subject
the  Servicer, the Seller or the Trustee  to any obligation in addition to those
undertaken in the Pooling and Servicing Agreement. The Class M Certificates will
contain a legend describing  such restrictions on transfer  and the Pooling  and
Servicing  Agreement will  provide that any  attempted or  purported transfer in
violation of these transfer restrictions will be null and void and will vest  no
rights  in any purported transferee.  Accordingly, the following discussion does
not purport to  discuss the  considerations under  ERISA, Code  Section 4975  or
Similar  Law with respect to the purchase,  acquisition or resale of the Class M
Certificates.

    As described in the Prospectus  under "ERISA Considerations," ERISA and  the
Code  impose certain duties and restrictions  on ERISA Plans and certain persons
who perform services  for ERISA  Plans. Comparable duties  and restrictions  may
exist  under Similar Law  on governmental plans and  certain persons who perform
services for governmental plans. For example, unless exempted, investment by  an
ERISA  Plan  in  the Offered  Certificates  may  constitute or  give  rise  to a
prohibited transaction under ERISA, the Code  or Similar Law. There are  certain
exemptions  issued by the United States Department of Labor (the "DOL") that may
be applicable to  an investment by  an ERISA Plan  in the Offered  Certificates,
including the individual administrative exemption described below and Prohibited
Transaction  Class Exemption 83-1 ("PTE 83-1").  For a further discussion of the
individual administrative  exemption  and  PTE  83-1,  including  the  necessary
conditions  to their applicability, and other important factors to be considered
by an ERISA Plan contemplating investing in the Offered Certificates, see "ERISA
Considerations" in the Prospectus.

    On  May  17,  1990,  the  DOL  issued  to  the  Underwriter  an   individual
administrative  exemption, Prohibited Transaction Exemption  90-24, 55 Fed. Reg.
20548 (the "Exemption"),  from certain  of the prohibited  transaction rules  of
ERISA  with  respect to  the initial  purchase, the  holding and  the subsequent
resale by an  ERISA Plan of  certificates in pass-through  trusts that meet  the
conditions  and requirements of the Exemption.  The Exemption might apply to the
acquisition, holding and resale  of the Offered Certificates  by an ERISA  Plan,
provided that specified conditions are met.

    Among  the conditions which would have to  be satisfied for the Exemption to
apply to the acquisition by  an ERISA Plan of  the Offered Certificates, is  the
condition  that  the ERISA  Plan  investing in  the  Offered Certificates  be an
"accredited investor"  as defined  in  Rule 501(a)(1)  of  Regulation D  of  the
Securities  and Exchange Commission under the Securities Act of 1933, as amended
(the "Securities Act").

    Before purchasing  an Offered  Certificate,  a fiduciary  of an  ERISA  Plan
should make its own determination as to the availability of the exemptive relief
provided   in  the  Exemption  or  the  availability  of  any  other  prohibited
transaction exemptions (including PTE 83-1),  and whether the conditions of  any
such exemption will be applicable to the Offered Certificates and a fiduciary of
a  governmental plan should  make its own  determination as to  the need for and
availability of any exemptive relief under Similar Law. Any fiduciary of a  Plan
considering  whether to  purchase an  Offered Certificate  should also carefully
review with its own legal advisors  the applicability of the fiduciary duty  and
prohibited  transaction provisions  of ERISA,  the Code  or Similar  Law to such
investment. See "ERISA Considerations" in the Prospectus.

                                LEGAL INVESTMENT

    The  Offered  Certificates  constitute  "mortgage  related  securities"  for
purposes  of  the  Secondary  Mortgage  Market  Enhancement  Act  of  1984  (the
"Enhancement Act") so long as  they are rated in one  of the two highest  rating
categories   by   at  least   one   nationally  recognized   statistical  rating
organization. As  such,  the  Offered Certificates  are  legal  investments  for
certain  entities  to  the  extent provided  in  the  Enhancement  Act. However,
institutions subject to the jurisdiction of the Office of the Comptroller of the
Currency, the Board  of Governors  of the  Federal Reserve  System, the  Federal
Deposit  Insurance Corporation, the  Office of Thrift  Supervision, the National
Credit Union Administration  or state  banking or  insurance authorities  should
review  applicable rules, supervisory policies  and guidelines of these agencies
before purchasing any of the Offered Certificates, as certain Subclasses of  the
Class A

                                      S-74
<PAGE>
Certificates  or  the  Class  M  Certificates may  be  deemed  to  be unsuitable
investments under  one or  more  of these  rules,  policies and  guidelines  and
whether certain restrictions may apply to investments in other Subclasses of the
Class  A Certificates or the Class M  Certificates. It should also be noted that
certain states recently  have enacted,  or have  proposed enacting,  legislation
limiting  to  varying extents  the ability  of  certain entities  (in particular
insurance companies) to invest in mortgage related securities. Investors  should
consult  with their own legal advisors in determining whether and to what extent
Offered Certificates constitute legal investments for such investors. See "Legal
Investment" in the Prospectus.

                                SECONDARY MARKET

    There will not  be any market  for the Offered  Certificates offered  hereby
prior  to the issuance thereof. The Underwriter intends to act as a market maker
in the Offered  Certificates, subject  to applicable provisions  of federal  and
state  securities  laws  and  other regulatory  requirements,  but  is  under no
obligation to do so. There  can be no assurance that  a secondary market in  the
Offered  Certificates will develop  or, if such  a market does  develop, that it
will provide holders of Offered Certificates with liquidity of investment at any
particular time or for the life of the Offered Certificates.

                                  UNDERWRITING

    Subject to the terms and conditions  of the underwriting agreement dated  as
of  April  1, 1993  (the "Underwriting  Agreement") among  the Seller,  PHMC and
Morgan Stanley  &  Co. Incorporated,  as  underwriter (the  "Underwriter"),  the
Offered  Certificates offered hereby are being  purchased from the Seller by the
Underwriter upon issuance. The Underwriter is  committed to purchase all of  the
Offered  Certificates if any Offered Certificates are purchased. The Underwriter
has advised the Seller that it proposes to offer the Offered Certificates,  from
time  to  time,  for sale  in  negotiated  transactions or  otherwise  at prices
determined at the  time of sale.  Proceeds to the  Seller from the  sale of  the
Offered  Certificates will be  approximately 100.5625% of  the aggregate initial
principal balance of the Offered Certificates, plus accrued interest thereon and
on the aggregate initial principal balance of the Class A-11 Certificates at the
rate of 7.00% per annum  from May 1, 1993 to  (but not including) May 14,  1993,
before  deducting expenses payable by the  Seller. The Underwriter, which is not
an affiliate of the Seller, has advised the Seller that the Underwriter has  not
allocated  the purchase price paid to the Seller among the Subclasses or Classes
of Offered Certificates. The Underwriter  and any dealers that participate  with
the Underwriter in the distribution of the Offered Certificates may be deemed to
be  underwriters,  and any  discounts or  commissions received  by them  and any
profit on  the resale  of  Offered Certificates  by them  may  be deemed  to  be
underwriting discounts or commissions, under the Securities Act.

    The  Underwriting Agreement provides that the Seller and PHMC will indemnify
the Underwriter against certain  civil liabilities under  the Securities Act  or
contribute  to payments which the Underwriter may be required to make in respect
thereof.

                                 LEGAL MATTERS

    Certain legal matters  in connection with  the Offered Certificates  offered
hereby  will be passed upon for the Seller by Cadwalader, Wickersham & Taft, New
York, New York, and for the Underwriter by Brown & Wood, New York, New York.

                                USE OF PROCEEDS

    The net proceeds to  be received from the  sale of the Offered  Certificates
offered  hereby will be applied  by the Seller to the  purchase from PHMC of the
Mortgage Loans represented by  the Series 1993-18  Certificates. It is  expected
that  PHMC will  use the  proceeds from the  sale of  the Mortgage  Loans to the
Seller for its  general business  purposes, including,  without limitation,  the
origination or acquisition of new mortgage loans and the repayment of borrowings
incurred  to  finance  the  origination or  acquisition  of  the  Mortgage Loans
underlying the Series 1993-18 Certificates.

                                      S-75
<PAGE>
                                    RATINGS

    It is a  condition to the  issuance of  the Class A  Certificates that  each
Subclass  will  have been  rated "Aaa"  by Moody's  and  "AAA" by  S&P. It  is a
condition to the issuance of the Class M Certificates that they shall have  been
rated   "Aa2"  by  Moody's  and  "AA"  by  S&P.  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 agency.  Each security  rating
should be evaluated independently of any other security rating.

    The  ratings of  Moody's on  mortgage pass-through  certificates address the
likelihood of the receipt  by certificateholders of  all distributions to  which
such  certificateholders  are  entitled.  Moody's  rating  opinions  address the
structural,  legal,  issuer   and  tax-related  aspects   associated  with   the
certificates,  including the  nature of  the underlying  mortgage loans  and the
credit quality  of the  credit  support provider,  if  any. Moody's  ratings  on
pass-through certificates do not represent any assessment of the likelihood that
principal prepayments may differ from those originally anticipated.

    The  ratings  of  S&P  on  mortgage  pass-through  certificates  address the
likelihood of the receipt  by certificateholders of  all distributions to  which
such   certificateholders  are  entitled.  S&P's  rating  opinions  address  the
structural and legal  aspects associated  with the  certificates, including  the
nature   of  the  underlying  mortgage  loans.  S&P's  ratings  on  pass-through
certificates do  not represent  any  assessment of  the  likelihood or  rate  of
principal prepayments.

    The  ratings of Moody's  and S&P do  not address the  possibility that, as a
result of principal  prepayments, Certificateholders  may receive  a lower  than
anticipated  yield  or  that  the  holders  of  the  Class  A-3  or  Class  A-10
Certificates may fail to fully recover their initial investment.

    The Seller has  not requested a  rating on the  Offered Certificates of  any
Subclass or Class by any rating agency other than Moody's and S&P, although data
with  respect  to the  Mortgage Loans  may  have been  provided to  other rating
agencies solely for their informational purposes. There can be no assurance that
if a rating is assigned to any Subclass or Class of Offered Certificates by  any
other rating agency such rating will be as high as those assigned by Moody's and
S&P.

                                      S-76
<PAGE>
                              INDEX OF SIGNIFICANT
                       PROSPECTUS SUPPLEMENT DEFINITIONS

<TABLE>
<CAPTION>
TERM                                                                                                         PAGE
- ---------------------------------------------------------------------------------------------------------  ---------
<S>                                                                                                        <C>
Accrual Distribution Amount..............................................................................    S-29
Adjusted Pool Amount.....................................................................................    S-25
Adjustment Amount........................................................................................    S-47
Bankruptcy Coverage Termination Date.....................................................................    S-48
Bankruptcy Loss..........................................................................................    S-30
Bankruptcy Loss Amount...................................................................................    S-48
Beneficial Owner.........................................................................................    S-20
Book-Entry Certificates..................................................................................     S-2
Cede.....................................................................................................    S-20
Class A Certificates.....................................................................................    Cover
Class A Distribution Amount..............................................................................    S-24
Class A Optimal Amount...................................................................................    S-28
Class A Optimal Principal Amount.........................................................................    S-29
Class A Percentage.......................................................................................    S-30
Class A Prepayment Percentage............................................................................    S-30
Class A Principal Amount.................................................................................    S-29
Class A Principal Balance................................................................................    S-25
Class A Principal Distribution Amount....................................................................    S-29
Class A Subclass Interest Accrual Amount.................................................................    S-24
Class A Subclass Interest Shortfall Amount...............................................................    S-27
Class A Subclass Principal Balance.......................................................................    S-25
Class A-7 PAC Component..................................................................................    S-32
Class A-7 TAC Component..................................................................................    S-32
Class A-9 Companion Component............................................................................    S-32
Class A-9 Accrual Companion Component....................................................................    S-32
Class A-11 Notional Amount...............................................................................    S-26
Class A-LR Notional Amount...............................................................................    S-26
Class B Certificates.....................................................................................    Cover
Class B Interest Accrual Amount..........................................................................    S-24
Class B Principal Balance................................................................................    S-25
Class M Certificates.....................................................................................    Cover
Class M Distribution Amount..............................................................................    S-24
Class M Interest Accrual Amount..........................................................................    S-24
Class M Interest Shortfall Amount........................................................................    S-28
Class M Optimal Amount...................................................................................    S-28
Class M Optimal Principal Amount.........................................................................    S-31
Class M Percentage.......................................................................................    S-32
Class M Prepayment Percentage............................................................................    S-32
Class M Principal Balance................................................................................    S-25
Class M Principal Distribution Amount....................................................................    S-31
Code.....................................................................................................    S-19
Companion Components.....................................................................................    Cover
Component................................................................................................    S-32
Component Interest Accrual Amount........................................................................    S-24
Component Interest Shortfall Amount......................................................................    S-27
Component Principal Balance..............................................................................    S-32
Cooperatives.............................................................................................    S-49
Co-op Shares.............................................................................................    S-49
Cross-Over Date..........................................................................................    S-46
</TABLE>

                                      S-77
<PAGE>
<TABLE>
<CAPTION>
TERM                                                                                                         PAGE
- ---------------------------------------------------------------------------------------------------------  ---------
Current Class M Subordination Level......................................................................    S-32
<S>                                                                                                        <C>
Cut-Off Date Aggregate Principal Balance.................................................................    S-49
Debt Service Reduction...................................................................................    S-30
Definitive Certificates..................................................................................    S-20
Depository Agreement.....................................................................................    S-43
Determination Date.......................................................................................    S-22
Distribution Date........................................................................................     S-9
DTC......................................................................................................     S-6
Enhancement Act..........................................................................................    S-74
ERISA....................................................................................................    S-19
ERISA Plan...............................................................................................    S-73
Excess Bankruptcy Losses.................................................................................    S-48
Excess Fraud Losses......................................................................................    S-48
Excess Principal Payments................................................................................    S-41
Excess Special Hazard Losses.............................................................................    S-48
Exemption................................................................................................    S-74
Fraud Coverage Termination Date..........................................................................    S-48
Fraud Loss...............................................................................................    S-30
Fraud Loss Amount........................................................................................    S-48
Indirect Participants....................................................................................    S-20
Liquidated Loan..........................................................................................    S-30
Liquidated Loan Loss.....................................................................................    S-30
Lower-Tier REMIC.........................................................................................     S-2
Lower-Tier REMIC Regular Interest........................................................................    S-71
Moody's..................................................................................................     S-4
Mortgage Loans...........................................................................................    Cover
Mortgaged Properties.....................................................................................    S-49
Mortgages................................................................................................    S-49
Net Foreclosure Profits..................................................................................    S-43
Net Mortgage Interest Rate...............................................................................    S-26
Non-Sponsored Relocation Loans...........................................................................    S-49
Non-Supported Interest Shortfall.........................................................................    S-26
Original Class M Subordination Level.....................................................................    S-32
Original Subordinated Principal Balance..................................................................    S-31
PAC Certificates.........................................................................................    Cover
PAC Principal Amount.....................................................................................    S-34
PAC Certificates.........................................................................................    Cover
Participants.............................................................................................    S-20
Percentage Interest......................................................................................    S-24
PHMC.....................................................................................................    Cover
Plan.....................................................................................................    S-73
Pool Distribution Amount.................................................................................    S-23
Pool Distribution Amount Allocation......................................................................    S-23
Pool Scheduled Principal Balance.........................................................................    S-30
Pooling and Servicing Agreement..........................................................................    S-69
Prepayment Interest Shortfalls...........................................................................    S-26
Program Loans............................................................................................    S-57
PTE 83-1.................................................................................................    S-74
Realized Losses..........................................................................................    S-30
Record Date..............................................................................................    S-22
Regular Certificates.....................................................................................    S-71
RELO Program Loans.......................................................................................    S-57
</TABLE>

                                      S-78
<PAGE>
<TABLE>
<CAPTION>
TERM                                                                                                         PAGE
- ---------------------------------------------------------------------------------------------------------  ---------
Relocation Mortgage Loans................................................................................    S-49
<S>                                                                                                        <C>
REMIC....................................................................................................     S-2
Reserve Fund.............................................................................................    S-43
Reserve Fund Available Advance Amount....................................................................    S-43
Reserve Fund Depository..................................................................................    S-43
Reserve Fund Required Amount.............................................................................    S-43
Reserve Fund Trigger Date................................................................................    S-43
Rules....................................................................................................    S-20
Scheduled Principal Balance..............................................................................    S-30
Securities Act...........................................................................................    S-74
Seller...................................................................................................    Cover
Series 1993-18 Certificates..............................................................................    Cover
Servicer.................................................................................................    Cover
Servicing Fee............................................................................................    S-70
Similar Law..............................................................................................    S-19
S&P......................................................................................................     S-4
SPA......................................................................................................    S-63
Special Hazard Loss......................................................................................    S-30
Special Hazard Loss Amount...............................................................................    S-47
Special Hazard Termination Date..........................................................................    S-47
Sponsored Relocation Loans...............................................................................    S-49
Subclass.................................................................................................    Cover
Subordinated Certificates................................................................................    Cover
Subordinated Percentage..................................................................................    S-31
Subordinated Prepayment Percentage.......................................................................    S-31
Subsidy Account..........................................................................................    S-50
Subsidy Loans............................................................................................    S-50
TAC Certificates.........................................................................................    Cover
TAC Principal Amount.....................................................................................    S-34
Trust Estate.............................................................................................    Cover
Upper-Tier REMIC.........................................................................................     S-2
Underwriter..............................................................................................    Cover
Underwriting Agreement...................................................................................    S-75
</TABLE>

                                      S-79
<PAGE>
THE PRUDENTIAL HOME MORTGAGE SECURITIES COMPANY, INC. r
                                     SELLER
                       MORTGAGE PASS-THROUGH CERTIFICATES
                              (ISSUABLE IN SERIES)
                             ---------------------

    The  Prudential  Home Mortgage  Securities  Company, Inc.  (the  "Seller" or
"PHMSC") may sell from time to time under this Prospectus and related Prospectus
Supplements Mortgage Pass-Through Certificates (the "Certificates"), issuable in
series (each, a "Series") consisting of one or more classes (each, a "Class") of
Certificates.

    The Certificates of a Series  will represent beneficial ownership  interests
in  a separate  trust formed  by the Seller.  Unless otherwise  specified in the
applicable Prospectus  Supplement, the  property of  each such  trust (for  each
Series,  the "Trust Estate") will be  comprised primarily of fixed or adjustable
interest rate, conventional, monthly pay, fully-amortizing first mortgage  loans
(the  "Mortgage Loans"), secured by  one- to four-family residential properties.
Unless otherwise specified in the applicable prospectus supplement, the Mortgage
Loans will have been acquired by  the Seller from its affiliate, The  Prudential
Home  Mortgage Company, Inc. ("PHMC"), and will have been underwritten to PHMC's
underwriting standards. Unless otherwise specified in the applicable  prospectus
supplement,  all of  the Mortgage Loans  will be  serviced by PHMC  (PHMC in its
capacity as servicer being referred to hereafter as the "Servicer").

    The Certificates of  a Series will  consist of  (i) one or  more Classes  of
Certificates  representing fractional  undivided interests in  all the principal
payments and the interest  payments, to the extent  of the related Net  Mortgage
Interest  Rate (as  defined herein),  on the  related Mortgage  Loans ("Standard
Certificates"), (ii) one or more Classes of Certificates representing fractional
undivided interests  in all  or  specified portions  of the  principal  payments
and/or  interest payments,  to the extent  of the related  Net Mortgage Interest
Rate, on the related Mortgage Loans  ("Stripped Certificates"), or (iii) two  or
more Classes of Certificates ("Multi-Class Certificates"), each of which will be
assigned  a principal balance  (a "Stated Amount"),  and each of  which may bear
interest on the Stated Amount at a fixed rate (which may be zero) specified  in,
or  a  variable  rate  determined as  specified  in,  the  applicable Prospectus
Supplement (the "Interest Rate"). Any Class of Certificates may be divided  into
two or more subclasses (each, a "Subclass").

    Each  Series of Certificates may include one or more Classes of Certificates
(the "Subordinated Certificates") that are subordinate in right of distributions
to such rights of one or more of  the other Classes of such Series (the  "Senior
Certificates").  If  specified  in  the  applicable  Prospectus  Supplement, the
relative interests of the Senior Certificates and the Subordinated  Certificates
of  a Series in the Trust Estate may  be subject to adjustment from time to time
on the basis of distributions received  in respect thereof. Any Class of  Senior
Certificates  or Subordinated Certificates  may, as described  above, be divided
into two or more Subclasses. If  specified in the Prospectus Supplement,  credit
support  may also be  provided for any Series  of Certificates in  the form of a
guarantee, letter of  credit, mortgage pool  insurance policy or  other form  of
credit enhancement as described herein or therein.

    Except  for  the  Seller's  limited obligation  in  connection  with certain
breaches of its  representations and warranties  and certain other  undertakings
and  PHMC's obligations as  Servicer, neither the Seller,  the Servicer, nor any
affiliate of the Seller or the Servicer, will have any obligations with  respect
to  the Certificates. In the event of  delinquencies in payments on the Mortgage
Loans, the Servicer will be obligated to make advances which it determines  will
be recoverable from future payments and collections on the Mortgage Loans.

    An election will be made to treat each Trust Estate (or a segregated pool of
assets  therein) underlying a Series of  Multi-Class Certificates or a Series of
Certificates in which the relative interests in the Trust Estate of the  Classes
of  Senior Certificates and Subordinated  Certificates are subject to adjustment
as a "real estate  mortgage investment conduit" (a  "REMIC") for federal  income
tax  purposes. Such an election may also be made with respect to any other Trust
Estate. See "Certain Federal Income Tax Consequences."

    There will have  been no public  market for the  Certificates of any  Series
prior to the offering thereof. No assurance can be given that such a market will
develop,   or   that  if   such  a   market  does   develop,  it   will  provide
Certificateholders with liquidity of investment or will continue for the life of
the Certificates.
                           --------------------------

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

    The Certificates may be sold from time to time by the Seller through dealers
or  agents,  through  underwriting  syndicates  led  by  one  or  more  managing
underwriters  or through  one or  more underwriters  acting alone.  See "Plan of
Distribution." Affiliates of the Seller may from  time to time act as agents  or
underwriters  in connection with  the sale of  the Certificates. The  terms of a
particular offering will be set forth  in the Prospectus Supplement relating  to
such offering.

    THIS  PROSPECTUS MAY NOT BE USED  TO CONSUMMATE SALES OF CERTIFICATES UNLESS
ACCOMPANIED BY  THE  PROSPECTUS SUPPLEMENT  RELATING  TO THE  OFFERING  OF  SUCH
CERTIFICATES.
                           --------------------------

                  The date of this Prospectus is April 8, 1993
<PAGE>
                                    REPORTS

    The  Servicer, or the  Paying Agent appointed by  the Servicer, will furnish
the Certificateholders of each Series, in connection with each distribution  and
annually,  statements  containing  information  with  respect  to  principal and
interest payments and the related Trust  Estate, as described herein and in  the
applicable  Prospectus Supplement for  such Series. No  information contained in
such reports will have been examined  or reported upon by an independent  public
accountant.    See    "Servicing    of    the    Mortgage    Loans--Reports   to
Certificateholders." The Servicer will also furnish periodic statements  setting
forth  certain specified information to the Trustee identified in the Prospectus
Supplement. See "Servicing of  the Mortgage Loans--Reports  to the Trustee."  In
addition,  annually  the Servicer  will furnish  the Trustee  for each  Series a
statement from a  firm of  independent public  accountants with  respect to  the
examination  of certain  documents and  records relating  to the  mortgage loans
serviced by the Servicer under the  related Pooling and Servicing Agreement  and
other   similar   servicing   agreements.  See   "Servicing   of   the  Mortgage
Loans--Evidence as to Compliance." Copies  of the monthly and annual  statements
provided  by the Servicer to the Trustee will be furnished to Certificateholders
of each Series upon  request addressed to the  Servicer c/o The Prudential  Home
Mortgage  Company,  Inc., 7470  New Technology  Way, Frederick,  Maryland 21701,
Attention: Legal Department.

                             ADDITIONAL INFORMATION

    This Prospectus contains, and the  Prospectus Supplement for each Series  of
Certificates  will contain,  a summary  of the  material terms  of the documents
referred to herein and therein, but neither contains nor will contain all of the
information set forth in the Registration Statement of which this Prospectus  is
a  part.  For  further  information,  reference  is  made  to  such Registration
Statement and  the  exhibits  thereto  which  the  Seller  has  filed  with  the
Securities  and Exchange Commission (the  "Commission"), Washington, D.C., under
the Securities  Act  of 1933,  as  amended (the  "Securities  Act").  Statements
contained in this Prospectus and any Prospectus Supplement as to the contents of
any  contract or other document referred to are summaries and, in each instance,
reference is made  to the copy  of the contract  or other document  filed as  an
exhibit  to the Registration  Statement, each such  statement being qualified in
all respects by  such reference.  Copies of  the Registration  Statement may  be
obtained  from the Public Reference Section  of the Commission, Washington, D.C.
20549 upon payment of the prescribed charges, or may be examined free of  charge
at the Commission's offices, 450 Fifth Street N.W., Washington, D.C. 20549 or at
the  regional offices of the Commission located at Room 1400, 75 Park Place, New
York, New York 10007 and 14th Floor, 500 West Madison Street, Chicago,  Illinois
60661. Copies of any documents incorporated herein by reference will be provided
to  each person to whom  a Prospectus is delivered  upon written or oral request
directed to  The Prudential  Home Mortgage  Securities Company,  Inc., 7470  New
Technology Way, Frederick, Maryland 21701, telephone number 301-846-8199.

                        ADDITIONAL DETAILED INFORMATION

    The   Seller  intends  to  offer  by  subscription  detailed  mortgage  loan
information in machine readable format updated on a monthly basis (the "Detailed
Information") with  respect  to each  outstanding  Series of  Certificates.  The
Detailed  Information  will reflect  payments  made on  the  individual mortgage
loans, including prepayments in full and in part made on such mortgage loans, as
well as the liquidation  of any such mortgage  loans, and will identify  various
characteristics  of the  mortgage loans.  Among the  initial subscribers  of the
Detailed Information will  be a number  of major investment  brokerage firms  as
well  as  financial information  service firms.  Some  of such  firms, including
certain investment brokerage firms  as well as Bloomberg  L.P. through the  "The
Bloomberg  (R)" service and Merrill Lynch Mortgage Capital Inc. through the "CMO
Passport-Registered  Trademark-"  service,   may,  in   accordance  with   their
individual  business practices and  fee schedules, if any,  make portions of, or
summaries of portions of, the Detailed Information available to their  customers
and  subscribers. The  Seller, the Servicer  and any affiliates  thereof take no
responsibility for  the  actions  of  such firms  in  processing,  analyzing  or
disseminating  such information. For further  information regarding the Detailed
Information and  subscriptions  thereto,  please  contact  The  Prudential  Home
Mortgage  Securities Company, Inc., 7470 New Technology Way, Frederick, Maryland
21701, telephone number (301) 846-8199.

                                       2
<PAGE>
                               TABLE OF CONTENTS

                                   PROSPECTUS

<TABLE>
<CAPTION>
                                                                                                                 PAGE
                                                                                                                 -----
<S>                                                                                                           <C>
Reports.....................................................................................................           2
Additional Information......................................................................................           2
Additional Detailed Information.............................................................................           2
Summary of Prospectus.......................................................................................           7
Title of Securities.........................................................................................           7
Seller......................................................................................................           7
Servicer....................................................................................................           7
The Trust Estates...........................................................................................           7
Description of the Certificates.............................................................................           7
    A. Standard Certificates................................................................................           8
    B. Stripped Certificates................................................................................           8
    C. Shifting Interest Certificates.......................................................................           8
    D. Multi-Class Certificates.............................................................................           8
Cut-Off Date................................................................................................           8
Distribution Dates..........................................................................................           8
Record Dates................................................................................................           9
Interest....................................................................................................           9
Principal (Including Prepayments)...........................................................................           9
Distributions in Reduction of Stated Amount.................................................................           9
Credit Enhancement..........................................................................................           9
Periodic Advances...........................................................................................          11
Optional Purchase of Mortgage Loans.........................................................................          11
ERISA Limitations...........................................................................................          11
Tax Status..................................................................................................          11
Rating......................................................................................................          11
The Trust Estates...........................................................................................          12
General.....................................................................................................          12
Mortgage Loans..............................................................................................          12
    INSURANCE POLICIES......................................................................................          15
    ACQUISITION OF THE MORTGAGE
      LOANS FROM PHMC.......................................................................................          16
    ASSIGNMENT OF MORTGAGE LOANS
      TO THE TRUSTEE........................................................................................          16
    REPRESENTATIONS AND WARRANTIES..........................................................................          18
    OPTIONAL REPURCHASES....................................................................................          21
Description of The Certificates.............................................................................          22
General.....................................................................................................          22
Percentage Certificates.....................................................................................          23
Multi-Class Certificates....................................................................................          24
Distributions to Percentage
 Certificateholders.........................................................................................          24
    CERTIFICATES OTHER THAN SHIFTING
      INTEREST CERTIFICATES.................................................................................          24
    CALCULATION OF DISTRIBUTABLE AMOUNTS....................................................................          24
    DETERMINATION OF AMOUNTS TO
      BE DISTRIBUTED........................................................................................          26
    SHIFTING INTEREST CERTIFICATES..........................................................................          28
</TABLE>

                                       3
<PAGE>
<TABLE>
<CAPTION>
                                                                                                                 PAGE
                                                                                                                 -----
Example of Distribution to
 Percentage Certificateholders..............................................................................          30
<S>                                                                                                           <C>
Distributions to Multi-Class Certificateholders.............................................................          31
    VALUATION OF MORTGAGE LOANS.............................................................................          32
    SPECIAL DISTRIBUTIONS...................................................................................          33
    LAST SCHEDULED DISTRIBUTION DATE........................................................................          33
Credit Support..............................................................................................          34
Subordination...............................................................................................          34
    CERTIFICATES OTHER THAN SHIFTING INTEREST CERTIFICATES..................................................          34
    SHIFTING INTEREST CERTIFICATES..........................................................................          36
Other Credit Enhancement....................................................................................          38
    LIMITED GUARANTEE.......................................................................................          38
    LETTER OF CREDIT........................................................................................          38
    POOL INSURANCE POLICIES.................................................................................          38
    SPECIAL HAZARD INSURANCE POLICIES.......................................................................          38
    MORTGAGOR BANKRUPTCY BOND...............................................................................          38
Prepayment and Yield Considerations.........................................................................          39
Pass-Through Rates and Interest Rates.......................................................................          39
Scheduled Delays in Distributions...........................................................................          39
Effect of Principal Prepayments.............................................................................          39
Weighted Average Life of Certificates.......................................................................          40
The Seller..................................................................................................          41
PHMC........................................................................................................          42
General.....................................................................................................          42
Mortgage Loan Production Sources............................................................................          43
Mortgage Loan Underwriting..................................................................................          45
Mortgage Origination Processing.............................................................................          48
Servicing...................................................................................................          48
Use of Proceeds.............................................................................................          48
Servicing of the Mortgage Loans.............................................................................          48
The Servicer................................................................................................          48
Payments on Mortgage Loans..................................................................................          49
Periodic Advances and Limitations Thereon...................................................................          51
Adjustment to Servicing Fee in Connection with Prepaid Mortgage Loans.......................................          51
Reports to Certificateholders...............................................................................          52
Reports to the Trustee......................................................................................          53
Collection and Other Servicing Procedures...................................................................          54
Enforcement of Due-on-Sale Clauses;
 Realization Upon Defaulted Mortgage Loans..................................................................          54
Fixed Retained Yield, Servicing Compensation and Payment of Expenses........................................          56
Evidence as to Compliance...................................................................................          57
Certain Matters Regarding the Servicer......................................................................          57
The Pooling and Servicing Agreement.........................................................................          58
Events of Default...........................................................................................          58
Rights Upon Event of Default................................................................................          58
Amendment...................................................................................................          59
Termination; Purchase of Mortgage Loans.....................................................................          60
The Trustee.................................................................................................          61
</TABLE>

                                       4
<PAGE>
<TABLE>
<CAPTION>
                                                                                                                 PAGE
                                                                                                                 -----
Certain Legal Aspects of the Mortgage Loans.................................................................          61
<S>                                                                                                           <C>
General.....................................................................................................          61
Foreclosure.................................................................................................          61
Foreclosure on Shares of Cooperatives.......................................................................          62
Rights of Redemption........................................................................................          63
Anti-Deficiency Legislation and Other Limitations on Lenders................................................          63
Soldiers' and Sailors' Civil Relief Act and Similar Laws....................................................          64
Environmental Considerations................................................................................          65
"Due-on-Sale" Clause........................................................................................          65
Applicability of Usury Laws.................................................................................          66
Enforceability of Certain Provisions........................................................................          67
Certain Federal Income Tax Consequences.....................................................................          67
Federal Income Tax Consequences for REMIC Certificates......................................................          67
  General...................................................................................................          67
  Status of REMIC Certificates..............................................................................          68
  Qualification as a REMIC..................................................................................          68
  Taxation of Regular Certificates..........................................................................          70
    GENERAL.................................................................................................          70
    ORIGINAL ISSUE DISCOUNT.................................................................................          70
    VARIABLE RATE REGULAR CERTIFICATES......................................................................          72
    MARKET DISCOUNT.........................................................................................          73
    PREMIUM.................................................................................................          74
    SALE OR EXCHANGE OF REGULAR CERTIFICATES................................................................          74
Taxation of Residual Certificates...........................................................................          75
    TAXATION OF REMIC INCOME................................................................................          75
    BASIS AND LOSSES........................................................................................          76
    TREATMENT OF CERTAIN ITEMS OF REMIC INCOME AND EXPENSE..................................................          77
      ORIGINAL ISSUE DISCOUNT...............................................................................          77
      MARKET DISCOUNT.......................................................................................          77
      PREMIUM...............................................................................................          77
    LIMITATIONS OF OFFSET OR EXEMPTION OF REMIC INCOME......................................................          77
    TAX-RELATED RESTRICTIONS ON TRANSFER OF RESIDUAL CERTIFICATES...........................................          78
      DISQUALIFIED ORGANIZATIONS............................................................................          78
      NONECONOMIC RESIDUAL INTERESTS........................................................................          79
      FOREIGN INVESTORS.....................................................................................          80
    SALE OR EXCHANGE OF A RESIDUAL CERTIFICATE..............................................................          80
    TAXES THAT MAY BE IMPOSED ON THE REMIC POOL.............................................................          81
      PROHIBITED TRANSACTIONS...............................................................................          81
      CONTRIBUTIONS TO THE REMIC POOL AFTER THE STARTUP DAY.................................................          81
      NET INCOME FROM FORECLOSURE PROPERTY..................................................................          81
    LIQUIDATION OF THE REMIC POOL...........................................................................          81
    ADMINISTRATIVE MATTERS..................................................................................          82
Limitations on Deduction of Certain Expenses................................................................          82
Taxation of Certain Foreign Investors.......................................................................          83
    REGULAR CERTIFICATES....................................................................................          83
    RESIDUAL CERTIFICATES...................................................................................          83
Backup Withholding..........................................................................................          83
Reporting Requirements......................................................................................          84
</TABLE>

                                       5
<PAGE>
<TABLE>
<CAPTION>
                                                                                                                 PAGE
                                                                                                                 -----
Federal Income Tax Consequences for Certificates as to Which No REMIC Election Is Made......................          84
<S>                                                                                                           <C>
Standard Certificates.......................................................................................          84
    GENERAL.................................................................................................          84
    TAX STATUS..............................................................................................          85
    PREMIUM AND DISCOUNT....................................................................................          86
      PREMIUM...............................................................................................          86
      ORIGINAL ISSUE DISCOUNT...............................................................................          86
      MARKET DISCOUNT.......................................................................................          86
    RECHARACTERIZATION OF SERVICING FEES....................................................................          86
    SALE OR EXCHANGE OF STANDARD CERTIFICATES...............................................................          87
Stripped Certificates.......................................................................................          88
    GENERAL.................................................................................................          88
    STATUS OF STRIPPED CERTIFICATES.........................................................................          89
    TAXATION OF STRIPPED CERTIFICATES.......................................................................          89
    ORIGINAL ISSUE DISCOUNT.................................................................................          89
      SALE OR EXCHANGE OF STRIPPED CERTIFICATES.............................................................          90
      PURCHASE OF MORE THAN ONE CLASS OF STRIPPED CERTIFICATES..............................................          90
      POSSIBLE ALTERNATIVE CHARATERIZATIONS.................................................................          90
Reporting Requirements and Backup Withholding...............................................................          91
Taxation of Certain Foreign Investors.......................................................................          91
ERISA Considerations........................................................................................          91
General.....................................................................................................          91
Certain Requirements Under ERISA............................................................................          92
    GENERAL.................................................................................................          92
    PARTIES IN INTEREST/DISQUALIFIED PERSONS................................................................          92
    DELEGATION OF FIDUCIARY DUTY............................................................................          92
Administrative Exemptions...................................................................................          93
    INDIVIDUAL ADMINISTRATIVE EXEMPTIONS....................................................................          93
Exempt Plans................................................................................................          95
Unrelated Business Taxable Income--Residual Certificates....................................................          95
Legal Investment............................................................................................          95
Plan of Distribution........................................................................................          96
Legal Matters...............................................................................................          98
Rating......................................................................................................          98
Index of Significant Definitions............................................................................          99
</TABLE>

                                       6
<PAGE>
                             SUMMARY OF PROSPECTUS

    THE  FOLLOWING IS  QUALIFIED IN  ITS ENTIRETY  BY REFERENCE  TO THE DETAILED
INFORMATION APPEARING  ELSEWHERE IN  THIS PROSPECTUS,  AND BY  REFERENCE TO  THE
INFORMATION  WITH  RESPECT  TO  EACH SERIES  OF  CERTIFICATES  CONTAINED  IN THE
APPLICABLE  PROSPECTUS  SUPPLEMENT.  CERTAIN  CAPITALIZED  TERMS  USED  AND  NOT
OTHERWISE  DEFINED  HEREIN  SHALL  HAVE THE  MEANINGS  GIVEN  ELSEWHERE  IN THIS
PROSPECTUS.

<TABLE>
<S>                                 <C>
Title of Securities...............  Mortgage Pass-Through Certificates (Issuable in Series).
Seller............................  The Prudential  Home Mortgage  Securities Company,  Inc.
                                    (the "Seller"), a direct, wholly-owned subsidiary of The
                                    Prudential  Home Mortgage Company,  Inc. ("PHMC"), which
                                    is a  direct,  wholly-owned  subsidiary  of  Residential
                                    Services  Corporation of America.  See "The Seller." The
                                    Seller  and   PHMC  are   each  indirect,   wholly-owned
                                    subsidiaries  of  The  Prudential  Insurance  Company of
                                    America ("Prudential Insurance").
Servicer..........................  PHMC (in such  capacity, the  "Servicer"). The  Servicer
                                    will  service the  Mortgage Loans  comprising each Trust
                                    Estate and administer  each Trust Estate  pursuant to  a
                                    Pooling  and Servicing  Agreement (each,  a "Pooling and
                                    Servicing Agreement").  See "Servicing  of the  Mortgage
                                    Loans."
The Trust Estates.................  Each  Trust Estate will consist  of the related Mortgage
                                    Loans (other than the  Fixed Retained Yield (as  defined
                                    herein),  if any) and certain other related property, as
                                    specified  in  the  applicable  Prospectus   Supplement.
                                    Unless  otherwise specified in the applicable Prospectus
                                    Supplement, the  Mortgage  Loans will  be  conventional,
                                    fixed  interest  rate,  monthly  pay,  fully-amortizing,
                                    level payment,  one-  to four-family  residential  first
                                    mortgage  loans.  If  so  specified  in  the  applicable
                                    Prospectus Supplement, a Trust Estate may include  fully
                                    amortizing,  adjustable  rate  Mortgage  Loans, Mortgage
                                    Loans secured  by condominium  units, townhouses,  units
                                    located  within  planned  unit  developments,  long-term
                                    leases with  respect to  any  of the  foregoing,  shares
                                    issued   by  cooperative  housing  corporations,  and/or
                                    Mortgage   Loans   which   are   subject   to   interest
                                    differential  subsidy agreements or buydown schedules or
                                    which provide for balloon payments of principal.
                                    The Mortgage Loans will have been acquired by the Seller
                                    from  its  affiliate  PHMC  or  another  affiliate.  The
                                    Mortgage Loans will have been originated by PHMC or will
                                    have  been  acquired by  PHMC  from other  mortgage loan
                                    originators, in each case for its own account or for the
                                    account of an affiliate. All of the Mortgage Loans  will
                                    have  been  underwritten to  PHMC's standards.  See "The
                                    Trust Estates."
                                    The particular characteristics or expected
                                    characteristics of each Trust  Estate will be set  forth
                                    in the applicable Prospectus Supplement.
Description of the Certificates...  Each  Series  will consist  of  one or  more  Classes of
                                    Certificates which  may  be (i)  Standard  Certificates,
                                    (ii) Stripped Certificates,
</TABLE>

                                       7
<PAGE>

<TABLE>
<S>                                 <C>
                                    or  (iii)  Multi-Class  Certificates.  Unless  otherwise
                                    specified in the  applicable Prospectus Supplement,  the
                                    Certificates  will be  offered only  in fully-registered
                                    form.
  A.  Standard Certificates.......  Standard Certificates of a  Series will each evidence  a
                                    fractional  undivided beneficial interest in the related
                                    Trust Estate and will entitle the holder thereof to  its
                                    proportionate share of a percentage of the principal and
                                    interest  payments (to the extent  of the applicable Net
                                    Mortgage Interest Rate) on the related Mortgage Loans.
  B.  Stripped Certificates.......  Stripped Certificates  will each  evidence a  fractional
                                    undivided  beneficial  interest  in  the  related  Trust
                                    Estate and  will  entitle  the  holder  thereof  to  its
                                    proportionate share of a specified portion (which may be
                                    zero)  of principal payments  and/or a specified portion
                                    (which may be zero) of interest payments (to the  extent
                                    of  the applicable  Net Mortgage  Interest Rate)  on the
                                    related Mortgage Loans.
  C.  Shifting Interest
  Certificates....................  Shifting Interest Certificates of a Series are  Standard
                                    or  Stripped Certificates, credit  enhancement for which
                                    is supplied by the adjustment  from time to time of  the
                                    relative  interests in  the Trust  Estate of  the Senior
                                    Certificates and the  Subordinated Certificates of  such
                                    Series.   See  "Description  of  the  Certificates--Dis-
                                    tributions  to  Percentage  Certificateholders--Shifting
                                    Interest Certificates" and "Credit
                                    Support--Subordination--Shifting Interest Certificates."
  D.  Multi-Class Certificates....  Each  Series of Multi-Class Certificates will consist of
                                    Certificates,  each  of  which  evidences  a  beneficial
                                    interest  in the  related Trust Estate  and entitles the
                                    holder thereof to interest  payments on the  outstanding
                                    Stated  Amount  thereof at  a fixed  rate (which  may be
                                    zero) specified  in, or  a variable  rate determined  as
                                    specified  in, the applicable Prospectus Supplement, and
                                    distributions  in  reduction   of  such  Stated   Amount
                                    determined in the manner and applied in the priority set
                                    forth  in  the  applicable  Prospectus  Supplement.  The
                                    aggregate Stated  Amount  of  a  Series  of  Multi-Class
                                    Certificates  may be  less than  the aggregate principal
                                    balance of the related Mortgage Loans.
Cut-Off Date......................  The  date   specified  in   the  applicable   Prospectus
                                    Supplement.
Distribution Dates................  Distributions  on  Standard  Certificates  and  Stripped
                                    Certificates will generally be made on the 25th day (or,
                                    if such  day is  not a  business day,  the business  day
                                    following  the 25th day) of  each month, commencing with
                                    the month following  the month in  which the  applicable
                                    Cut-Off  Date  occurs  (each,  a  "Distribution  Date").
                                    Distributions on Multi-Class  Certificates will be  made
                                    monthly,  quarterly,  or  semi-annually,  on  the  dates
                                    specified in the applicable Prospectus Supplement.
</TABLE>

                                       8
<PAGE>

<TABLE>
<S>                                 <C>
Record Dates......................  Distributions will be made on each Distribution Date  to
                                    Certificateholders of record at the close of business on
                                    (unless  a different date is specified in the applicable
                                    Prospectus Supplement)  the  last business  day  of  the
                                    month  preceding  the month  in which  such Distribution
                                    Date occurs (each, a "Record Date").
Interest..........................  With respect to a  Series of Certificates consisting  of
                                    Standard Certificates or Stripped Certificates, interest
                                    on   the  related  Mortgage   Loans  at  the  applicable
                                    pass-through rate  for  each  Class  and  Subclass  (the
                                    "Pass-Through  Rate"),  as set  forth in  the applicable
                                    Prospectus Supplement, will be passed through monthly to
                                    holders thereof, in accordance with the particular terms
                                    of  each  such   Certificate.  Holders  of   Multi-Class
                                    Certificates  will receive distributions  of interest on
                                    the Stated Amount of such Certificate, without regard to
                                    the  Net  Mortgage  Interest  Rate  on  the   underlying
                                    Mortgage  Loans. The Net Mortgage Interest Rate for each
                                    Mortgage Loan in a given period will equal the  mortgage
                                    interest  rate for such Mortgage Loan in such period, as
                                    specified in the  related mortgage  note (the  "Mortgage
                                    Interest  Rate"), less  the retained yield,  if any (the
                                    "Fixed Retained Yield"), and less an amount reserved for
                                    servicing the Mortgage  Loan and  administration of  the
                                    related  Trust  Estate and  related expenses  (the "Ser-
                                    vicing Fee").
Principal (Including
  Prepayments)....................  With respect  to a  Series of  Standard Certificates  or
                                    Stripped Certificates, unless otherwise specified in the
                                    applicable  Prospectus  Supplement,  principal  payments
                                    (including prepayments in full received on each  related
                                    Mortgage  Loan during  the month preceding  the month in
                                    which a Distribution Date occurs and partial prepayments
                                    received by the Servicer prior to the Determination Date
                                    preceding such Distribution Date) will be passed through
                                    to holders on such Distribution Date.
Distributions in Reduction of
  Stated Amount...................  With respect to  a Series  of Multi-Class  Certificates,
                                    distributions in reduction of Stated Amount will be made
                                    on  each Distribution Date to  the holders of each Class
                                    then entitled to  receive such  distributions until  the
                                    aggregate  amount of such distributions have reduced the
                                    Stated Amount  of each  such  Class of  Certificates  to
                                    zero.  Distributions in reduction  of Stated Amount will
                                    be allocated among the  Classes of such Certificates  in
                                    the   manner  specified  in  the  applicable  Prospectus
                                    Supplement. See "Description of the
                                    Certificates--Distributions to Multi-Class Cer-
                                    tificateholders."
Credit Enhancement................  A Series of Certificates may include one or more Classes
                                    of Senior  Certificates  and  one  or  more  Classes  of
                                    Subordinated  Certificates. The rights of the holders of
                                    Subordinated  Certificates  of   a  Series  to   receive
                                    distributions with respect to the related Mortgage Loans
                                    will  be subordinated to  such rights of  the holders of
                                    the Senior Certificates of the same Series to the extent
                                    (the "Subordinated Amount") specified in the  applicable
                                    Prospectus
</TABLE>

                                       9
<PAGE>

<TABLE>
<S>                                 <C>
                                    Supplement.  This subordination  is intended  to enhance
                                    the likelihood  of  the  timely receipt  by  the  Senior
                                    Certificateholders   of  their  proportionate  share  of
                                    scheduled monthly principal and interest payments on the
                                    related Mortgage  Loans  and  to  protect  them  against
                                    losses.   This  protection  will   be  effected  by  the
                                    preferential right of  the Senior Certificateholders  to
                                    receive  current distributions  on the  related Mortgage
                                    Loans and (if so specified in the applicable  Prospectus
                                    Supplement)  by the establishment of a reserve fund (the
                                    "Subordination  Reserve  Fund")  with  respect  to  each
                                    Series   of  Certificates  that   includes  a  Class  of
                                    Subordinated  Certificates.  Any  Subordination  Reserve
                                    Fund  may be  funded initially with  the Initial Deposit
                                    (as defined  herein)  in  an  amount  specified  in  the
                                    applicable Prospectus Supplement, and may be funded from
                                    time  to  time  from  payments  on  the  Mortgage  Loans
                                    otherwise distributable to the Subordinated
                                    Certificateholders in  the  manner  and  to  the  extent
                                    specified  in the applicable  Prospectus Supplement. The
                                    maintenance  of  any   Subordination  Reserve  Fund   is
                                    intended   to   provide   liquidity,   but   in  certain
                                    circumstances the  Subordination Reserve  Fund could  be
                                    depleted   and,   if   other   amounts   available   for
                                    distribution are insufficient, shortfalls in
                                    distributions to  the  Senior  Certificateholders  could
                                    result.  Until  the  Subordinated Amount  is  reduced to
                                    zero, Senior  Certificateholders  will  be  entitled  to
                                    receive  the amount of any such shortfall, together with
                                    interest at  the applicable  Pass-Through Rate,  on  the
                                    next   Distribution  Date   (as  defined   herein).  The
                                    Subordinated  Amount  is  intended  to  protect   Senior
                                    Certificateholders  against  losses; however,  if losses
                                    realized on the  Mortgage Loans  in a  Trust Estate  are
                                    exceptionally  high Senior  Certificateholders will bear
                                    their proportionate share of any losses realized on  the
                                    related  Mortgage  Loans  in  excess  of  the applicable
                                    Subordinated Amount.
                                    If so specified in the applicable Prospectus Supplement,
                                    the   protection   afforded   to   holders   of   Senior
                                    Certificates of a Series by the subordination of certain
                                    rights  of holders of  Subordinated Certificates of such
                                    Series to distributions  on the  related Mortgage  Loans
                                    may  be effected by  a method other  than that described
                                    above, such as, in the  event that the applicable  Trust
                                    Estate  (or a segregated pool  of assets therein) elects
                                    to be treated as a REMIC, the reallocation from time  to
                                    time, on the basis of distributions previously received,
                                    of  the  respective percentage  interests of  the Senior
                                    Certificates and  the Subordinated  Certificates in  the
                                    related   Trust   Estate.   See   "Description   of  the
                                    Certificates--Distributions to Percentage
                                    Certificateholders-- Shifting Interest Certificates."
                                    The Certificates  of  any Series,  or  any one  or  more
                                    Classes  thereof, may be  entitled to the  benefits of a
                                    guarantee, letter  of  credit, mortgage  pool  insurance
                                    policy  or other form of credit enhancement as specified
                                    in   the   applicable    Prospectus   Supplement.    See
                                    "Description of the Certificates" and "Credit Support."
</TABLE>

                                       10
<PAGE>

<TABLE>
<S>                                 <C>
Periodic Advances.................  In  the  event  of  delinquencies  in  payments  on  the
                                    Mortgage Loans, the Servicer will make advances of  cash
                                    ("Periodic  Advances")  to the  Certificate  Account (as
                                    defined  herein)  to  the   extent  that  the   Servicer
                                    determines  such Periodic Advances  would be recoverable
                                    from future  payments and  collections on  the  Mortgage
                                    Loans.  Any such Periodic  Advances will be reimbursable
                                    to the Servicer as described herein and in the  applica-
                                    ble   Prospectus  Supplement.  See   "Servicing  of  the
                                    Mortgage  Loans--Periodic   Advances   and   Limitations
                                    Thereon."
Optional Purchase of Mortgage
  Loans...........................  The  Seller may, at its option, repurchase any defaulted
                                    Mortgage  Loan.   See   "The   Trust   Estates--Mortgage
                                    Loans--Optional  Repurchases."  If so  specified  in the
                                    Prospectus Supplement with respect to a Series, all, but
                                    not less than all, of the Mortgage Loans in the  related
                                    Trust  Estate  and  any  property  acquired  in  respect
                                    thereof at the time, may  be purchased by the person  or
                                    persons  specified in such  Prospectus Supplement in the
                                    manner and  at the  price specified  in such  Prospectus
                                    Supplement.  In the  event that  an election  is made to
                                    treat the related Trust Estate (or a segregated pool  of
                                    assets  therein) as a  REMIC, any such  purchase will be
                                    effected only pursuant to a "qualified liquidation,"  as
                                    defined under Section 860F(a)(4)(A) of the Internal Rev-
                                    enue  Code of 1986, as amended (the "Code"). Exercise of
                                    the right of purchase  will effect the early  retirement
                                    of  the Certificates of that Series. See "Prepayment and
                                    Yield Considerations."
ERISA Limitations.................  A fiduciary of any employee benefit plan subject to  the
                                    fiduciary  responsibility  provisions  of  the  Employee
                                    Retirement Income  Security  Act  of  1974,  as  amended
                                    ("ERISA"),  including the "prohibited transaction" rules
                                    thereunder, and to the  corresponding provisions of  the
                                    Code,   should  carefully  review  with  its  own  legal
                                    advisors whether the purchase or holding of Certificates
                                    could give rise to a transaction prohibited or otherwise
                                    impermissible  under  ERISA  or  the  Code.  See  "ERISA
                                    Considerations."
Tax Status........................  The treatment of the Certificates for federal income tax
                                    purposes  will  be  determined (i)  by  whether  a REMIC
                                    election  is   made  with   respect  to   a  Series   of
                                    Certificates  and,  if  a  REMIC  election  is  made, by
                                    whether  the  Certificates  are  Regular  Interests   or
                                    Residual  Interests  and  (ii) by  whether,  if  a REMIC
                                    election is not  made, the Certificates  of such  Series
                                    are  Standard Certificates or Stripped Certificates. See
                                    "Certain Federal Income Tax Consequences."
Rating............................  It is  a  condition  to the  issuance  of  the  Stripped
                                    Certificates  and  the Multi-Class  Certificates  of any
                                    Series that they  be rated  in one of  the four  highest
                                    rating  categories by at least one nationally recognized
                                    statistical rating  organization  (a  "Rating  Agency").
                                    Standard  Certificates  may or  may  not be  rated  by a
                                    Rating Agency.
</TABLE>

                                       11
<PAGE>
                               THE TRUST ESTATES

GENERAL

    The  Trust Estate for  each Series of Certificates  will consist of Mortgage
Loans evidenced by promissory notes (the "Mortgage Notes") secured by mortgages,
deeds of trust or  other instruments creating first  liens (the "Mortgages")  on
some  or all of the  following types of property  (as so secured, the "Mortgaged
Properties"), to the extent set  forth in the applicable Prospectus  Supplement:
(i)  one- to four-family detached residences, (ii) townhouses, (iii) condominium
units, (iv) units within  planned unit developments,  (v) long-term leases  with
respect  to any of the  foregoing, and (vi) shares  issued by private non-profit
housing corporations  ("cooperatives") and  the  related proprietary  leases  or
occupancy agreements granting exclusive rights to occupy specified units in such
cooperatives'  buildings.  In addition,  a Trust  Estate  will also  include (i)
amounts held from  time to  time in the  related Certificate  Account, (ii)  the
Seller's  interest in  any primary  mortgage insurance,  hazard insurance, title
insurance or other  insurance policies relating  to a Mortgage  Loan, (iii)  any
property  which initially secured a Mortgage Loan and which has been acquired by
foreclosure or trustee's sale or deed in lieu of foreclosure or trustee's  sale,
(iv)  if applicable, and  to the extent  set forth in  the applicable Prospectus
Supplement, any Subordination Reserve Fund and/or any other reserve fund, (v) if
applicable, and to the extent set forth in the applicable Prospectus Supplement,
contractual obligations of any person to make payments in respect of any form of
credit enhancement or any interest subsidy agreement, and (vi) such other assets
as may be specified  in the applicable  Prospectus Supplement. Unless  otherwise
specified  in the  applicable Prospectus Supplement,  the Trust  Estate will not
include,  however,  the  portion  of  interest  on  the  Mortgage  Loans   which
constitutes  the Fixed  Retained Yield, if  any. See "Servicing  of the Mortgage
Loans--Fixed Retained Yield; Servicing Compensation and Payment of Expenses."

MORTGAGE LOANS

    The Mortgage Loans will have been acquired by the Seller from its  affiliate
PHMC  or another affiliate. The Mortgage Loans will have been originated by PHMC
for its  own account  or for  the  account of  an affiliate  or will  have  been
acquired  by PHMC for  its own account or  for the account  of an affiliate from
other mortgage loan originators. Each Mortgage Loan will have been  underwritten
to   PHMC's  standards.  See  "PHMC--  Mortgage  Loan  Production  Sources"  and
"--Mortgage Loan Underwriting." The Prospectus  Supplement for each Series  will
set  forth the  respective number  and principal  amounts of  Mortgage Loans (i)
originated by PHMC for its own account or for the account of its affiliates  and
(ii)  purchased by PHMC for its own account or for the account of its affiliates
from other  mortgage  loan originators  through  PHMC's mortgage  loan  purchase
programs.

    Each  of the  Mortgage Loans will  be secured  by a Mortgage  on a Mortgaged
Property located in any of the 50 states or the District of Columbia. Generally,
the land underlying a Mortgaged Property will consist of five acres or less  but
may  consist of greater acreage in PHMC's  discretion. The Mortgage Loans may be
secured by leases on real property  under circumstances that PHMC determines  in
its  discretion  are commonly  acceptable  to institutional  mortgage investors.
Generally, a  Mortgage Loan  will be  secured  by a  lease only  if the  use  of
leasehold  estates as security for mortgage loans  is customary in the area, the
lease is not subject to any prior  lien that could result in termination of  the
lease  and the term  of the lease ends  at least five  years beyond the maturity
date of the related Mortgage Loan. The Prospectus Supplement will set forth  the
geographic  distribution of  Mortgaged Properties  and the  number and aggregate
unpaid principal  balances  of  the  Mortgage Loans  by  category  of  Mortgaged
Property.

    The  Prospectus Supplement for each Series will  also set forth the range of
original terms  to maturity  of the  Mortgage  Loans in  the Trust  Estate,  the
weighted  average remaining term to stated maturity  at the Cut-Off Date of such
Mortgage Loans, the earliest and latest  months of origination of such  Mortgage
Loans,  the range  of Mortgage  Interest Rates  and Net  Mortgage Interest Rates
borne by such Mortgage Loans, if  such Mortgage Loans have varying Net  Mortgage
Interest Rates, the weighted average Net Mortgage Interest

                                       12
<PAGE>
Rate  at the  Cut-Off Date  of such Mortgage  Loans, the  range of Loan-to-Value
Ratios at  the  time of  origination  of such  Mortgage  Loans and  the  highest
outstanding principal balance at origination of any such Mortgage Loan.

    The  information with respect to the Mortgage Loans and Mortgaged Properties
described in the  preceding two paragraphs  may be presented  in the  Prospectus
Supplement  for a Series as  ranges in which the  actual characteristics of such
Mortgage Loans and Mortgaged Properties are expected to fall. In all such cases,
information as to the final characteristics of the Mortgage Loans and  Mortgaged
Properties will be available in a Current Report on Form 8-K which will be filed
with  the  Commission within  15 days  of  the initial  issuance of  the related
Series.

    Unless otherwise specified in the  applicable Prospectus Supplement, all  of
the Mortgage Loans in a Trust Estate will have monthly payments due on the first
of  each month (each, a "Due Date") and will be fully-amortizing Mortgage Loans,
each with a fixed rate of interest  and level monthly payments over the term  of
the  Mortgage Loan. If  so specified in the  applicable Prospectus Supplement, a
Trust Estate may include fully  amortizing, adjustable rate Mortgage Loans  with
Mortgage  Interest Rates adjusted  periodically, in the  manner specified in the
related Prospectus  Supplement. Unless  otherwise  specified in  the  applicable
Prospectus Supplement, no adjustable interest rate Mortgage Loan will be subject
to  a  possibility  of negative  amortization.  If specified  in  the applicable
Prospectus Supplement, fixed rates on certain Mortgage Loans may be converted to
adjustable rates and adjustable rates on certain Mortgage Loans may be converted
to fixed rates, in each case after  origination of such Mortgage Loans and  upon
the  satisfaction  of other  conditions specified  in the  applicable Prospectus
Supplement. Unless otherwise specified in the applicable Prospectus  Supplement,
in  either  such event,  the Pooling  and Servicing  Agreement will  require the
Servicer to repurchase each such converted Mortgage Loan at the price set  forth
in  the  applicable  Prospectus  Supplement.  If  specified  in  the  applicable
Prospectus Supplement, a  Trust Estate  may contain  convertible Mortgage  Loans
which  have converted prior to  the formation of the  Trust Estate and which are
subject to no further conversions.

    Unless otherwise  specified  in  the applicable  Prospectus  Supplement,  no
Mortgage  Loan will have had  at origination a Loan-to-Value  Ratio in excess of
90%. The Loan-to-Value  Ratio is the  ratio, expressed as  a percentage, of  the
principal  amount of the Mortgage  Loan at origination to  the lesser of (i) the
appraised value  of  the  related  Mortgaged  Property,  as  established  by  an
appraisal obtained by the originator generally no more than four months prior to
origination,  or  (ii) the  sale price  for  such property.  For the  purpose of
calculating the Loan-to-Value Ratio of any  Mortgage Loan that is the result  of
the  refinancing (including a refinancing for  "equity take out" purposes) of an
existing mortgage loan, the appraised value of the related Mortgaged Property is
generally determined by reference  to an appraisal  obtained in connection  with
the  origination  of the  replacement loan.  Unless  otherwise specified  in the
related Prospectus Supplement,  with respect  to a  Mortgage Loan  secured by  a
second  home,  an  owner-occupied  cooperative, a  high  rise  condominium  or a
non-owner occupied property, the  Loan-to-Value Ratio will  not exceed 80%,  and
with  respect to a Mortgage Loan which is made to refinance, for equity take out
purposes, an  existing  mortgage loan  on  a non-owner  occupied  property,  the
Loan-to-Value  Ratio  will generally  not exceed  75%.  Mortgage Loans  having a
Loan-to-Value Ratio in  excess of 80%  will not be  covered by primary  mortgage
insurance,   except  to  the  extent  specified  in  the  applicable  Prospectus
Supplement. See "PHMC--Mortgage Loan Underwriting."

    No assurance  can be  given that  values of  the Mortgaged  Properties  have
remained  or will remain at  the levels which existed  on the dates of appraisal
(or, where applicable, recertification of value) of the related Mortgage  Loans.
If  residential real estate  values generally or  in particular geographic areas
decline such  that  the outstanding  balances  of  the Mortgage  Loans  and  any
secondary  financing on  the Mortgaged Properties  in a  particular Trust Estate
become equal to or greater than the values of the related Mortgaged  Properties,
the  actual rates of delinquencies, foreclosures and losses could be higher than
those now generally experienced in the  mortgage lending industry and those  now
experienced  in  PHMC's  servicing  portfolio.  In  addition,  adverse  economic
conditions  generally,  in  particular   geographic  areas  or  industries,   or

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<PAGE>
affecting  particular segments  of the  borrowing community  (such as mortgagors
relying on commission  income and  self-employed mortgagors)  and other  factors
which  may or may  not affect real  property values, including  the purposes for
which the Mortgage Loans were made and the uses of the Mortgaged Properties, may
affect the timely payment by mortgagors  of scheduled payments of principal  and
interest   on  the  Mortgage  Loans  and,   accordingly,  the  actual  rates  of
delinquencies, foreclosures and  losses with  respect to any  Trust Estate.  See
"PHMC--Mortgage  Loan  Underwriting"  and  "Description  of  the  Certificates--
Weighted Average Life of  Certificates" herein. To the  extent that such  losses
are  not covered  by the  methods of  credit support  or the  insurance policies
described herein,  they will  be borne  by holders  of the  Certificates of  the
Series evidencing interests in such Trust Estate.

    Unless  otherwise  provided  in the  applicable  Prospectus  Supplement, all
Mortgage Loans will  be covered by  an appropriate standard  form American  Land
Title  Association ("ALTA") title  insurance policy, or  a substantially similar
policy or  form  of  insurance  acceptable  to  the  Federal  National  Mortgage
Association ("FNMA") or the Federal Home Loan Mortgage Corporation ("FHLMC").

    If  so specified in the applicable Prospectus Supplement, a Trust Estate may
contain  Mortgage  Loans  subject  to  temporary  interest  subsidy   agreements
("Subsidy  Loans") pursuant  to which the  monthly payments made  by the related
mortgagors will be  less than the  scheduled monthly payments  on such  Mortgage
Loans  with the present  value of the resulting  difference in payment ("Subsidy
Payments") being provided  by the  employer of  the mortgagor,  generally on  an
annual   basis.  Unless   otherwise  specified  in   the  applicable  Prospectus
Supplement, Subsidy Payments  will be  placed in a  custodial account  ("Subsidy
Account")  by  the  Servicer. Despite  the  existence  of a  subsidy  program, a
mortgagor remains  primarily  liable for  making  all scheduled  payments  on  a
Subsidy  Loan and for all other obligations provided for in the related Mortgage
Note and Mortgage Loan.

    Subsidy Loans are offered by employers generally through either a  graduated
or  fixed  subsidy loan  program, or  a  combination thereof.  The terms  of the
subsidy agreements relating  to Subsidy Loans  generally range from  one to  ten
years.  The subsidy agreements relating to  Subsidy Loans made under a graduated
program generally will  provide for  subsidy payments that  result in  effective
subsidized  interest rates between  three percentage points  and five percentage
points below  the Mortgage  Interest  Rates specified  in the  related  Mortgage
Notes.  Generally, under a graduated program, the subsidized rate for a Mortgage
Loan will increase approximately one percentage  point per year until it  equals
the full Mortgage Interest Rate. For example, if the initial subsidized interest
rate is five percentage points below the Mortgage Interest Rate in year one, the
subsidized  rate  will increase  to four  percentage  points below  the Mortgage
Interest Rate in year two, and likewise until year six, when the subsidized rate
will equal the Mortgage Interest Rate. Where the subsidy agreements relating  to
Subsidy  Loans are in effect for longer than five years, the subsidized interest
rates generally increase  at smaller  percentage increments for  each year.  The
subsidy  agreements  relating  to  Subsidy  Loans  made  under  a  fixed program
generally will  provide  for  subsidized interest  rates  at  fixed  percentages
(generally  one percentage  point to two  percentage points)  below the Mortgage
Interest Rates for  specified periods,  generally not  in excess  of ten  years.
Subsidy Loans are also offered pursuant to combination fixed/graduated programs.
The subsidy agreements relating to such Subsidy Loans generally will provide for
an  initial fixed  subsidy of  up to  five percentage  points below  the related
Mortgage Interest Rate for up  to five years, and  then a periodic reduction  in
the  subsidy for up to  five years, at an equal  fixed percentage per year until
the subsidized rate equals the Mortgage Interest Rate.

    Generally, employers may terminate subsidy programs in the event of (i)  the
mortgagor's  death, retirement,  resignation or termination  of employment, (ii)
the full prepayment  of the Subsidy  Loan by  the mortgagor, (iii)  the sale  or
transfer by the mortgagor of the related Mortgaged Property as a result of which
the  mortgagee  is  entitled to  accelerate  the  Subsidy Loan  pursuant  to the
"due-on-sale" clause  contained in  the Mortgage,  or (iv)  the commencement  of
foreclosure  proceedings or the acceptance of a  deed in lieu of foreclosure. In
addition, some  subsidy programs  provide  that if  prevailing market  rates  of
interest  on mortgage loans similar to a Subsidy Loan are less than the Mortgage
Interest Rate of such Subsidy Loan, the employer may request that the  mortgagor
refinance    such    Subsidy    Loan    and    may    terminate    the   related

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<PAGE>
subsidy agreement if the mortgagor fails to refinance such Subsidy Loan. In  the
event  the mortgagor  refinances such  Subsidy Loan,  the new  loan will  not be
included in the Trust Estate. See "Prepayment and Yield Considerations"  herein.
In  the event  a subsidy  agreement is terminated,  the amount  remaining in the
Subsidy Account will  be returned  to the employer,  and the  mortgagor will  be
obligated  to make the full amount of  all remaining scheduled payments, if any.
The mortgagor's reduced  monthly housing  expense as a  consequence of  payments
under  a  subsidy agreement  is  used by  PHMC  in determining  certain expense-
to-income ratios utilized  in underwriting a  Subsidy Loan. See  "PHMC--Mortgage
Loan Underwriting."

    If  so specified in the applicable Prospectus Supplement, a Trust Estate may
contain Mortgage Loans  subject to temporary  buy-down plans ("Buy-Down  Loans")
pursuant  to which the monthly  payments made by the  mortgagor during the early
years of the Mortgage Loan will be  less than the scheduled monthly payments  on
the  Mortgage Loan. The resulting difference  in payment will be compensated for
from an amount contributed  by the seller of  the related Mortgaged Property  or
another  source, including the  originator of the Mortgage  Loan (generally on a
present value basis) and, if so specified in the related Prospectus  Supplement,
placed  in a  custodial account  (the "Buy-Down Fund")  by the  Servicer. If the
mortgagor on a  Buy-Down Loan  prepays such Mortgage  Loan in  its entirety,  or
defaults on such Mortgage Loan and the Mortgaged Property is sold in liquidation
thereof,  during the period when  the mortgagor is not  obligated, on account of
the buy-down plan, to pay the full  monthly payment otherwise due on such  loan,
the  unpaid  principal balance  of such  Buy-Down  Loan will  be reduced  by the
amounts remaining in the Buy-Down Fund  with respect to such Buy-Down Loan,  and
such  amounts will be deposited in  the Certificate Account (as defined herein),
net of any  amounts paid  with respect  to such  Buy-Down Loan  by any  insurer,
guarantor or other person pursuant to a credit enhancement arrangement described
in the applicable Prospectus Supplement.

    If  so specified in the applicable Prospectus Supplement, a Trust Estate may
include Mortgage Loans which are amortized over 30 years but which have  shorter
terms  to maturity (each such  Mortgage Loan, a "Balloon  Loan") that causes the
outstanding principal balance of the related Mortgage Loan to be due and payable
at the  end  of  a  certain specified  period  (the  "Balloon  Period").  Unless
otherwise  specified in  the applicable  Prospectus Supplement,  the borrower of
such Balloon Loan  will be  obligated to  pay the  entire outstanding  principal
balance  of the Balloon  Loan at the end  of the related  Balloon Period. In the
event PHMC refinances a mortgagor's Balloon Loan at maturity, the new loan  will
not  be included in the Trust  Estate. See "Prepayment and Yield Considerations"
herein. A Trust Estate  may also include  other types of  Mortgage Loans to  the
extent set forth in the applicable Prospectus Supplement.

  INSURANCE POLICIES

    The Pooling and Servicing Agreement will require the Servicer to cause to be
maintained for each Mortgage Loan a standard hazard insurance policy issued by a
generally acceptable insurer insuring the improvements on the Mortgaged Property
underlying  such Mortgage Loan  against loss by fire,  with extended coverage (a
"Standard Hazard Insurance  Policy"). The Pooling  and Servicing Agreement  will
require  that such  Standard Hazard  Insurance Policy be  in an  amount at least
equal to the lesser of  100% of the insurable value  of the improvements on  the
Mortgaged  Property or  the principal balance  of such  Mortgage Loan; provided,
however, that such insurance may not be less than the minimum amount required to
fully compensate  for  any damage  or  loss on  a  replacement cost  basis.  The
Servicer  will also maintain  on property acquired upon  foreclosure, or deed in
lieu of foreclosure, of any Mortgage Loan, a Standard Hazard Insurance Policy in
an amount that is at least equal to the lesser of 100% of the insurable value of
the improvements which are a part of  such property or the principal balance  of
such  Mortgage Loan  plus accrued  interest and  liquidation expenses; provided,
however, that such insurance may not be less than the minimum amount required to
fully compensate for any damage or loss on a replacement cost basis. Any amounts
collected under  any such  policies (other  than amounts  to be  applied to  the
restoration  or repair of the Mortgaged Property  or released to the borrower in
accordance  with  normal  servicing  procedures)   will  be  deposited  in   the
Certificate Account.

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<PAGE>
    The Standard Hazard Insurance Policies covering the Mortgage Loans generally
will  cover  physical damage  to,  or destruction  of,  the improvements  on the
Mortgaged Property caused by fire, lightning, explosion, smoke, windstorm, hail,
riot, strike  and civil  commotion,  subject to  the conditions  and  exclusions
particularized  in each policy.  Because the Standard  Hazard Insurance Policies
relating to such Mortgage Loans will  be underwritten by different insurers  and
will  cover Mortgaged Properties  located in various  states, such policies will
not contain identical terms and conditions. The most significant terms  thereof,
however,  generally  will  be determined  by  state  law and  generally  will be
similar. Most  such  policies  typically  will not  cover  any  physical  damage
resulting  from the following: war, revolution, governmental actions, floods and
other water-related causes,  earth movement  (including earthquakes,  landslides
and  mudflows), nuclear  reaction, wet or  dry rot, vermin,  rodents, insects or
domestic animals,  hazardous  wastes  or hazardous  substances,  theft  and,  in
certain  cases, vandalism.  The foregoing list  is merely  indicative of certain
kinds of uninsured risks and is not all-inclusive.

    The Servicer may maintain a blanket policy insuring against hazard losses on
all of the  Mortgaged Properties in  lieu of maintaining  the required  Standard
Hazard  Insurance Policies. The  Servicer will be  liable for the  amount of any
deductible under a blanket policy  if such amount would  have been covered by  a
required Standard Hazard Insurance Policy, had it been maintained.

    In  general, if the improvements  on a Mortgaged Property  are located in an
area identified  in the  Federal Register  by the  Federal Emergency  Management
Agency  as having special flood hazards (and  such flood insurance has been made
available) the  Pooling and  Servicing Agreement  will require  the Servicer  to
cause  to be maintained a flood insurance policy meeting the requirements of the
current guidelines  of the  Federal Insurance  Administration with  a  generally
acceptable  insurance carrier.  Generally, the  Pooling and  Servicing Agreement
will require that such flood insurance be  in an amount not less than the  least
of  (i) the outstanding  principal balance of  the Mortgage Loan,  (ii) the full
insurable value of the  improvements, or (iii) the  maximum amount of  insurance
which  is available under the Flood Disaster Protection Act of 1973, as amended.
PHMC does not provide financing for flood zone properties located in communities
not participating  in  the National  Flood  Insurance Program  or  if  available
insurance coverage is, in its judgment, unrealistically low.

    Any  losses incurred with  respect to Mortgage Loans  due to uninsured risks
(including earthquakes,  mudflows,  floods  and hazardous  wastes  or  hazardous
substances) or insufficient hazard insurance proceeds could affect distributions
to the Certificateholders.

  ACQUISITION OF THE MORTGAGE LOANS FROM PHMC

    The  Seller will  have acquired  the Mortgage  Loans included  in each Trust
Estate from PHMC. In connection with the conveyance of the Mortgage Loans to the
Seller, PHMC will (i) agree to deliver to the Seller all of the documents  which
the   Seller  is  required  to  deliver   to  the  Trustee;  (ii)  make  certain
representations and warranties to the Seller which will be the basis of  certain
of  the Seller's representations and warranties  to the Trustee; and (iii) agree
to repurchase or substitute for any Mortgage Loan for which any document is  not
delivered  or is  found to  be defective  in any  material respect,  or which is
discovered at any  time not to  be in conformance  with the representations  and
warranties  PHMC has made to the Seller, if PHMC cannot deliver such document or
cure such defect or breach within  60 days after notice thereof. Such  agreement
will  inure to  the benefit of  the Trustee and  is intended to  help ensure the
Seller's performance of its limited  obligation to repurchase or substitute  for
Mortgage  Loans. See "The Trust  Estates--Mortgage Loans--Assignment of Mortgage
Loans to the Trustee," and "--Representations and Warranties."

  ASSIGNMENT OF MORTGAGE LOANS TO THE TRUSTEE

    At the time of issuance of  each Series of Certificates, the Mortgage  Loans
in  the  related  Trust Estate  will,  pursuant  to the  applicable  Pooling and
Servicing Agreement, be assigned to the Trustee, together with all principal and
interest received on or with respect to such Mortgage Loans after the applicable
Cut-Off Date other than principal and interest due and payable on or before such
Cut-Off Date  and interest  attributable to  the Fixed  Retained Yield  on  such
Mortgage   Loans,  if   any.  See   "Servicing  of   the  Mortgage  Loans--Fixed

                                       16
<PAGE>
Retained Yield, Servicing Compensation and Payment of Expenses." The Trustee  or
its  agent will, concurrently with such assignment, authenticate and deliver the
Certificates evidencing such Series to the  Seller in exchange for the  Mortgage
Loans.  Each Mortgage  Loan will  be identified  in a  schedule appearing  as an
exhibit to the applicable  Pooling and Servicing  Agreement. Each such  schedule
will  include, among other things, the unpaid  principal balance as of the close
of business on the applicable Cut-Off  Date, the maturity date and the  Mortgage
Interest Rate for each Mortgage Loan in the related Trust Estate.

    In  addition, with  respect to  each Mortgage  Loan in  a Trust  Estate, the
mortgage or other promissory note, any assumption, modification or conversion to
fixed interest rate agreement, a mortgage assignment in recordable form and  the
recorded  Mortgage (or other  documents as are required  under applicable law to
create a perfected security interest in  the Mortgaged Property in favor of  the
Trustee)  will  be delivered  to  the Trustee  (or  to a  designated custodian);
provided that, in instances where recorded documents cannot be delivered due  to
delays  in connection with recording, copies thereof, certified by the Seller to
be true  and  complete copies  of  such documents  sent  for recording,  may  be
delivered  and the original  recorded documents will  be delivered promptly upon
receipt. As to each Mortgage Loan for which there is primary mortgage insurance,
the certificate of primary mortgage insurance will be delivered to the  Trustee.
The  assignment of  each Mortgage  will be  recorded promptly  after the initial
issuance of Certificates for the related  Trust Estate, except in states  where,
in  the opinion  of counsel  acceptable to  the Trustee,  such recording  is not
required to protect  the Trustee's  interest in  the Mortgage  Loan against  the
claim  of  any subsequent  transferee or  any  successor to  or creditor  of the
Seller, PHMC or the originator of such Mortgage Loan.

    The  Trustee  will  hold  such  documents  in  trust  for  the  benefit   of
Certificateholders  of the related Series and  will review such documents within
45 days of the date  of the applicable Pooling  and Servicing Agreement. If  any
document  is not delivered or is found  to be defective in any material respect,
or if the  Seller is  in breach  of any  of its  representations and  warranties
contained  in such Pooling  and Servicing Agreement,  and such breach materially
and adversely  affects the  interests of  the Certificateholders  in a  Mortgage
Loan,  and the Seller cannot deliver such document or cure such defect or breach
within 60 days after written notice thereof, the Seller will, within 60 days  of
such  notice, either repurchase the related Mortgage  Loan from the Trustee at a
price equal  to the  then unpaid  principal balance  thereof, plus  accrued  and
unpaid  interest  at  the applicable  Mortgage  Interest Rate  (minus  any Fixed
Retained Yield) through the last day of the month in which such repurchase takes
place, or (in  the case of  a Series for  which a REMIC  election will be  made,
unless  the  maximum  period  as  may be  provided  by  the  Code  or applicable
regulations of the  Department of  the Treasury  ("Treasury Regulations")  shall
have  elapsed  since  the  execution of  the  applicable  Pooling  and Servicing
Agreement) substitute  for  such  Mortgage  Loan  a  new  mortgage  loan  having
characteristics  such that the representations and warranties of the Seller made
pursuant  to  the  applicable  Pooling  and  Servicing  Agreement  (except   for
representations  and warranties as to the correctness of the applicable schedule
of mortgage loans) would  not have been incorrect  had such substitute  Mortgage
Loan  originally been  a Mortgage  Loan. In the  case of  a repurchased Mortgage
Loan, the  purchase  price  will be  deposited  by  the Seller  in  the  related
Certificate  Account. In  the case of  a substitute Mortgage  Loan, the mortgage
file relating thereto will  be delivered to the  Trustee (or the custodian)  and
the Seller will deposit in the Certificate Account an amount equal to the excess
of  (i) the unpaid principal  balance of the Mortgage  Loan which is substituted
for, over (ii)  the unpaid principal  balance of the  substitute Mortgage  Loan,
together  with interest on such excess at  the Net Mortgage Interest Rate to the
next scheduled Due  Date of  the Mortgage Loan  which is  being substituted  for
(adjusted,  in the case of a Series for  which a REMIC election will be made, as
set forth in the applicable Pooling and Servicing Agreement, to ensure that  the
Trustee  will not recognize gain). In no event will any substitute Mortgage Loan
have an unpaid principal  balance greater than  the Scheduled Principal  Balance
(as  defined herein)  of the  Mortgage Loan for  which it  is substituted (after
giving  effect  to  the  scheduled  principal  payment  due  in  the  month   of
substitution  on the Mortgage Loan  substituted for), or a  term greater than, a
Mortgage Interest Rate less than, a Mortgage Interest Rate more than one percent
per annum greater than or a Loan-to-Value Ratio greater than, the Mortgage  Loan
for  which it is  substituted. If substitution  is to be  made for an adjustable
rate   Mortgage   Loan,   the   substitute   Mortgage   Loan   will   have    an

                                       17
<PAGE>
unpaid  principal balance no greater than the Scheduled Principal Balance of the
Mortgage Loan for which it is substituted (after giving effect to the  scheduled
principal  payment  due  in  the  month of  substitution  on  the  Mortgage Loan
substituted for), a Loan-to-Value  Ratio less than or  equal to, and a  Mortgage
Interest  Rate at  least equal  to, that of  the Mortgage  Loan for  which it is
substituted, and  will  bear  interest  based on  the  same  index,  margin  and
frequency  of  adjustment as  the  substituted Mortgage  Loan.  Unless otherwise
specified in the applicable Prospectus Supplement, the repurchase obligation and
the mortgage substitution referred  to above will  constitute the sole  remedies
available  to the Certificateholders  or the Trustee with  respect to missing or
defective documents or  breach of the  Seller's representations and  warranties.
Notwithstanding  the above, if an election is made to treat the Trust Estate (or
a segregated pool of assets therein) with respect to a Series of Certificates as
a REMIC (see "Certain Federal  Income Tax Consequences"), substitutions will  be
made only upon receipt by the Trustee of an opinion of counsel or other evidence
satisfactory  to the Trustee to the effect that such substitution will not cause
the Trust Estate  (or segregated pool  of assets) to  be subject to  the tax  on
"prohibited transactions" imposed by Code Section 860F(a), otherwise subject the
Trust  Estate  (or segregated  pool  of assets)  to  tax, cause  any replacement
mortgage not to constitute a "qualified replacement mortgage" within the meaning
of Code Section  860G(a)(4), or cause  the Trust Estate  (or segregated pool  of
assets)  to fail to qualify as a REMIC  while any Certificates of the Series are
outstanding. See "The  Trust Estates--Mortgage  Loans" with  respect to  certain
obligations  of PHMC in connection with  defective documentation and breaches of
representations and warranties as to the Mortgage Loans.

    The Trustee will be authorized to appoint a custodian to maintain possession
of the documents relating  to the Mortgage  Loans and to  conduct the review  of
such  documents  described  above.  The  custodian  will  keep  and  review such
documents as the Trustee's agent under a custodial agreement.

  REPRESENTATIONS AND WARRANTIES

    Unless otherwise provided in the applicable Pooling and Servicing  Agreement
for  a Series, the Seller will represent and warrant to the Trustee, among other
things, that as of the date of execution of the Pooling and Servicing Agreement,
with respect to the Mortgage Loans, or each Mortgage Loan, as the case may be:

        (i)   the  information set  forth  in  the schedule  of  Mortgage  Loans
    appearing  as an exhibit to such  Pooling and Servicing Agreement is correct
    in all  material  respects  at  the date  or  dates  respecting  which  such
    information is furnished as specified therein;

        (ii)  immediately prior to  the transfer and  assignment contemplated by
    the Pooling and Servicing Agreement, the Seller is the sole owner and holder
    of the Mortgage Loan, free and clear of any and all liens, pledges,  charges
    or security interests of any nature and has full right and authority to sell
    and assign the same;

        (iii)  the Mortgage is a valid, subsisting and enforceable first lien on
    the related Mortgaged Property, and the Mortgaged Property is free and clear
    of all encumbrances  and liens having  priority over the  first lien of  the
    Mortgage  except for liens for real estate taxes and special assessments not
    yet due and payable and liens or  interests arising under or as a result  of
    any  federal,  state  or  local law,  regulation  or  ordinance  relating to
    hazardous wastes or hazardous substances; and, if the Mortgaged Property  is
    a  condominium unit, any  lien for common charges  permitted by statute; and
    any security agreement, chattel mortgage or equivalent document related  to,
    and  delivered to the Trustee with, any Mortgage establishes in the Seller a
    valid first lien on the property  described therein and the Seller has  full
    right to sell and assign the same to the Trustee;

        (iv)  neither the  Seller nor  any prior holder  of the  Mortgage or the
    related Mortgage Note  has modified  the Mortgage in  any material  respect;
    satisfied,  cancelled or subordinated  the Mortgage or  the related Mortgage
    Note in whole or in part; or released the Mortgaged Property in whole or  in
    part

                                       18
<PAGE>
    from  the  lien of  the  Mortgage; or  executed  any instrument  of release,
    cancellation, modification or satisfaction, except in each case as reflected
    in a  document delivered  by the  Seller to  the Trustee  together with  the
    related Mortgage;

        (v)  all taxes, governmental assessments, insurance premiums, and water,
    sewer and municipal charges previously due  and owing have been paid, or  an
    escrow  of funds in  an amount sufficient  to pay for  every such item which
    remains unpaid has been established to the extent permitted by law; and  the
    Seller  has not advanced funds  or received any advance  of funds by a party
    other than the  mortgagor, directly  or indirectly (except  pursuant to  any
    Buy-Down  Loan or Subsidy  Loan arrangement), for the  payment of any amount
    required by the Mortgage, except for interest accruing from the date of  the
    related Mortgage Note or date of disbursement of the Mortgage Loan proceeds,
    whichever is later, to the date which precedes by 30 days the first Due Date
    under the related Mortgage Note;

        (vi)  to  the best  of the  Seller's knowledge,  there is  no proceeding
    pending or threatened for the total or partial condemnation of the Mortgaged
    Property and the Mortgaged Property is undamaged by water, fire,  earthquake
    or  earth movement, windstorm, flood, tornado or similar casualty (excluding
    casualty from the presence of  hazardous wastes or hazardous substances,  as
    to  which the Seller makes no representation), so as to affect adversely the
    value of the Mortgaged Property as security for the Mortgage Loan or the use
    for which the premises were intended;

        (vii) the Mortgaged  Property is free  and clear of  all mechanics'  and
    materialmen's  liens or liens in the nature thereof; provided, however, that
    this warranty shall  be deemed  not to  have been made  at the  time of  the
    initial  issuance  of  the  Certificates if  a  title  policy  affording, in
    substance, the same protection afforded by this warranty is furnished to the
    Trustee by the Seller;

        (viii) except for Mortgage Loans secured by shares in cooperatives,  the
    Mortgaged  Property consists  of a  fee simple  or leasehold  estate in real
    property, all of  the improvements  which are  included for  the purpose  of
    determining  the appraised value of the Mortgaged Property lie wholly within
    the boundaries  and  building restriction  lines  of such  property  and  no
    improvements  on adjoining  properties encroach upon  the Mortgaged Property
    (unless insured against under the applicable title insurance policy) and, to
    the  best  of  the  Seller's  knowledge,  the  Mortgaged  Property  and  all
    improvements  thereon comply with all  requirements of any applicable zoning
    and subdivision laws and ordinances;

        (ix) the Mortgage  Loan meets, or  is exempt from,  applicable state  or
    federal  laws, regulations and  other requirements pertaining  to usury, and
    the Mortgage Loan is not usurious;

        (x) to the best of the Seller's knowledge, all inspections, licenses and
    certificates required to  be made  or issued  with respect  to all  occupied
    portions  of  the  Mortgaged  Property  and, with  respect  to  the  use and
    occupancy of  the  same, including,  but  not limited  to,  certificates  of
    occupancy  and fire  underwriting certificates,  have been  made or obtained
    from the appropriate authorities;

        (xi) all payments  required to be  made up to  the Due Date  immediately
    preceding  the Cut-Off Date  for such Mortgage  Loan under the  terms of the
    related Mortgage Note have been made;

        (xii) the  Mortgage  Note, the  related  Mortgage and  other  agreements
    executed  in connection therewith are genuine,  and each is the legal, valid
    and binding obligation of the maker thereof, enforceable in accordance  with
    its  terms  except  as  such  enforcement  may  be  limited  by  bankruptcy,
    insolvency, reorganization or other  similar laws affecting the  enforcement
    of  creditors' rights generally and by general equity principles (regardless
    of whether such enforcement  is considered in a  proceeding in equity or  at
    law);  and,  to the  best  of the  Seller's  knowledge, all  parties  to the
    Mortgage Note and the  Mortgage had legal capacity  to execute the  Mortgage
    Note  and the Mortgage and each Mortgage Note and Mortgage has been duly and
    properly executed by the mortgagor;

                                       19
<PAGE>
        (xiii) any and all requirements of any federal, state or local law  with
    respect  to  the  origination  of  the  Mortgage  Loans  including,  without
    limitation, truth-in-lending,  real estate  settlement procedures,  consumer
    credit protection, equal credit opportunity or disclosure laws applicable to
    the Mortgage Loans have been complied with;

        (xiv)  the proceeds  of the  Mortgage Loans  have been  fully disbursed,
    there is  no requirement  for future  advances thereunder  and any  and  all
    requirements as to completion of any on-site or off-site improvements and as
    to  disbursements  of any  escrow funds  therefor  have been  complied with,
    except for escrow funds for exterior items which could not be completed  due
    to  weather; and all costs, fees and expenses incurred in making, closing or
    recording the  Mortgage Loan  have  been paid,  except recording  fees  with
    respect  to  Mortgages  not recorded  as  of  the date  of  the  Pooling and
    Servicing Agreement;

        (xv) the Mortgage Loan  (except any Mortgage  Loan secured by  Mortgaged
    Property  located in  Iowa, as to  which an  opinion of counsel  of the type
    customarily rendered in  such State in  lieu of title  insurance is  instead
    received)  is covered by  an ALTA mortgagee title  insurance policy or other
    generally acceptable  form of  policy  or insurance  acceptable to  FNMA  or
    FHLMC,  issued by a title  insurer acceptable to FNMA  or FHLMC insuring the
    originator, its successors and assigns, as to the first priority lien of the
    Mortgage in the original principal amount  of the Mortgage Loan and  subject
    only  to (A) the lien of current real property taxes and assessments not yet
    due and payable, (B) covenants, conditions and restrictions,  rights-of-way,
    easements  and other matters of public record as of the date of recording of
    such Mortgage acceptable  to mortgage  lending institutions in  the area  in
    which  the Mortgaged Property is located  or specifically referred to in the
    appraisal performed  in  connection  with the  origination  of  the  related
    Mortgage  Loan, (C)  liens created pursuant  to any federal,  state or local
    law, regulation or ordinance  affording liens for the  costs of clean-up  of
    hazardous   substances  or  hazardous  wastes  or  for  other  environmental
    protection purposes and (D) such other matters to which like properties  are
    commonly  subject which do not individually, or in the aggregate, materially
    interfere with the benefits of the  security intended to be provided by  the
    Mortgage;  the Seller is the sole  insured of such mortgagee title insurance
    policy, the  assignment to  the Trustee  of the  Seller's interest  in  such
    mortgagee  title  insurance  policy  does  not  require  any  consent  of or
    notification to  the insurer  which  has not  been  obtained or  made,  such
    mortgagee  title insurance policy is in full force and effect and will be in
    full force and effect and inure to the benefit of the Trustee and no  claims
    have  been made  under such mortgagee  title insurance policy,  and no prior
    holder of the related  Mortgage, including the Seller,  has done, by act  or
    omission,  anything which would impair the  coverage of such mortgagee title
    insurance policy;

        (xvi) the Mortgaged Property securing  each Mortgage Loan is insured  by
    an insurer acceptable to FNMA or FHLMC against loss by fire and such hazards
    as  are covered under a standard extended coverage endorsement, in an amount
    which is not  less than the  lesser of 100%  of the insurable  value of  the
    Mortgaged  Property and  the outstanding  principal balance  of the Mortgage
    Loan, but  in no  event less  than  the minimum  amount necessary  to  fully
    compensate  for  any damage  or loss  on  a replacement  cost basis;  if the
    Mortgaged Property is a condominium unit, it is included under the  coverage
    afforded  by a blanket  policy for the  project; if upon  origination of the
    Mortgage Loan, the improvements  on the Mortgaged Property  were in an  area
    identified  in  the Federal  Register  by the  Federal  Emergency Management
    Agency as having special flood hazards, a flood insurance policy meeting the
    requirements  of   the  current   guidelines   of  the   Federal   Insurance
    Administration  is in effect with  a generally acceptable insurance carrier,
    in an  amount representing  coverage not  less  than the  least of  (A)  the
    outstanding  principal balance of the Mortgage  Loan, (B) the full insurable
    value and (C) the maximum amount of insurance which was available under  the
    Flood  Disaster  Protection Act  of 1973;  and  each Mortgage  obligates the
    mortgagor thereunder to maintain all such insurance at the mortgagor's  cost
    and expense;

        (xvii)  to  the best  of the  Seller's knowledge,  there is  no default,
    breach, violation or event  of acceleration existing  under any Mortgage  or
    the    related   Mortgage    Note   and    no   event    which,   with   the

                                       20
<PAGE>
    passage of time  or with  notice and  the expiration  of any  grace or  cure
    period,   would  constitute  a  default,   breach,  violation  or  event  of
    acceleration; and the Seller has  not waived any default, breach,  violation
    or  event of acceleration;  no foreclosure action is  threatened or has been
    commenced with respect to the Mortgage Loan;

        (xviii) no  Mortgage  Note  or  Mortgage is  subject  to  any  right  of
    rescission,  set-off,  counterclaim  or defense,  including  the  defense of
    usury, nor will the operation  of any of the terms  of the Mortgage Note  or
    Mortgage,  or the  exercise of  any right  thereunder, render  such Mortgage
    unenforceable, in  whole  or  in  part,  or  subject  it  to  any  right  of
    rescission,  set-off,  counterclaim  or defense,  including  the  defense of
    usury, and no such right of rescission, set-off, counterclaim or defense has
    been asserted with respect thereto;

        (xix) each Mortgage Note  is payable in  monthly payments, resulting  in
    complete  amortization of the Mortgage Loan over a term of not more than 360
    months;

        (xx) each Mortgage contains customary and enforceable provisions such as
    to render the  rights and remedies  of the holder  thereof adequate for  the
    realization  against the Mortgaged Property of the benefits of the security,
    including realization  by judicial  foreclosure (subject  to any  limitation
    arising  from  any bankruptcy,  insolvency or  other law  for the  relief of
    debtors), and there  is no  homestead or  other exemption  available to  the
    mortgagor which would interfere with such right of foreclosure;

        (xxi) to the best of the Seller's knowledge, no mortgagor is a debtor in
    any state or federal bankruptcy or insolvency proceeding;

        (xxii)  each  Mortgaged Property  is located  in  the United  States and
    consists of a one- to four-unit single family residential property which may
    include a detached home, townhouse, condominium unit, unit in a planned unit
    development or a leasehold interest with respect to any of the foregoing or,
    in the case of Mortgage Loans  secured by shares of cooperatives, leases  or
    occupancy agreements;

        (xxiii) no payment required under any Mortgage Loan is more than 30 days
    past due and no Mortgage Loan had more than one delinquency in the preceding
    13 months; and

        (xxiv)  with respect to  each Buy-Down Loan, the  funds deposited in the
    Buy-Down Fund, if any, will be sufficient, together with interest thereon at
    the rate  customarily  received by  the  Seller on  such  funds,  compounded
    monthly,  and adding the  amounts required to  be paid by  the mortgagor, to
    make the scheduled payments stated in the Mortgage Note for the term of  the
    buy-down agreement.

    No representations or warranties are made by the Seller as to the absence or
effect  of  hazardous wastes  or hazardous  substances on  any of  the Mortgaged
Properties or on  the lien of  any Mortgage or  with respect to  the absence  or
effect  of  fraud in  the  origination of  any Mortgage  Loan,  and any  loss or
liability resulting  from  the presence  or  effect of  such  hazardous  wastes,
hazardous  substances or fraud  will be borne  solely by Certificateholders. See
"Certain Legal  Aspects  of the  Mortgage  Loans--Environmental  Considerations"
below.

    See  "The Trust  Estates--Mortgage Loans" for  a description  of the limited
remedies available in connection with breaches of the foregoing  representations
and warranties.

  OPTIONAL REPURCHASES

    The Seller may, at its option, repurchase any defaulted Mortgage Loan if, in
the  Seller's judgment,  the related default  is not  likely to be  cured by the
borrower, at a price equal to the unpaid principal balance thereof plus  accrued
interest thereon and under the conditions set forth in the applicable Prospectus
Supplement.

                                       21
<PAGE>
                        DESCRIPTION OF THE CERTIFICATES

GENERAL

    Each  Series  of  Certificates will  be  issued  pursuant to  a  Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement") between the  Seller,
the  Servicer, and  the Trustee named  in the  applicable Prospectus Supplement.
Each Pooling and Servicing Agreement  will contain substantially the same  terms
and  conditions, except  for revisions of  defined terms  and certain provisions
regarding distributions to Certificateholders, credit support and other  similar
matters.  Illustrative forms of Pooling and  Servicing Agreement have been filed
as exhibits to the  Registration Statement of which  this Prospectus is a  part.
The  following summaries describe certain  provisions common to the Certificates
and to each Pooling and Servicing Agreement. The summaries do not purport to  be
complete  and are subject to,  and are qualified in  their entirety by reference
to, all of the provisions of the Pooling and Servicing Agreement for each Series
of Certificates and  the applicable Prospectus  Supplement. Wherever  particular
sections  or defined terms  of the Pooling and  Servicing Agreement are referred
to, such sections or defined terms are thereby incorporated herein by  reference
from  the forms  of Pooling  and Servicing  Agreement filed  as exhibits  to the
Registration Statement.

    Each Series  of  Certificates  will represent  ownership  interests  in  the
related  Trust Estate. An election  may be made to treat  the Trust Estate (or a
segregated pool of assets therein) with respect to a Series of Certificates as a
REMIC. If such  an election is  made, such Series  will consist of  one or  more
Classes  of  Certificates that  will  represent "regular  interests"  within the
meaning of Code Section 860G(a)(1) (such Class or Classes collectively  referred
to as the "Regular Certificates") and one Class or Subclass of Certificates with
respect to each REMIC that will be designated as "residual interests" within the
meaning  of Code  Section 860G(a)(2) (the  "Residual Certificates") representing
the right to receive distributions as specified in the Prospectus Supplement for
such Series. See "Certain Federal Income Tax Consequences" herein.

    The Seller may sell certain Classes  or Subclasses of the Certificates of  a
Series, including one or more Classes of Subordinated Certificates, in privately
negotiated  transactions  exempt  from registration  under  the  Securities Act.
Alternatively, if  so specified  in  a Prospectus  Supplement relating  to  such
Subordinated  Certificates,  the Seller  may offer  one or  more Classes  of the
Subordinated Certificates  of a  Series by  means of  this Prospectus  and  such
Prospectus Supplement.

    Unless  otherwise  specified in  the  applicable Prospectus  Supplement with
respect to a Series of Certificates, each Certificate offered hereby and by  the
applicable  Prospectus Supplement will  be issued in  fully registered form. The
Certificates of  a  Series  offered  hereby  and  by  means  of  the  applicable
Prospectus  Supplements will be  transferable and exchangeable  at the office or
agency maintained by the Trustee or such other entity for such purpose set forth
in the related  Prospectus Supplement. No  service charge will  be made for  any
transfer  or exchange of Certificates, but the  Trustee or such other entity may
require payment  of a  sum sufficient  to cover  any tax  or other  governmental
charge  in  connection with  such transfer  or  exchange. In  the event  that an
election is made  to treat  the Trust  Estate (or  a segregated  pool of  assets
therein)  as a REMIC, no  legal or beneficial interest in  all or any portion of
the "residual interest" thereof  may be transferred without  the receipt by  the
transferor  and the  Trustee of an  affidavit signed by  the transferee stating,
among other things, that the transferee  (i) is not a disqualified  organization
within  the meaning  of Code  Section 860E(e) or  an agent  (including a broker,
nominee, or  middleman) thereof  and  (ii) understands  that  it may  incur  tax
liabilities  in excess  of any  cash flows  generated by  the residual interest.
Further, the transferee must state in the affidavit that it (x) historically has
paid its debts as they have come due, (y) intends to pay its debts as they  come
due  in the  future and  (z) intends  to pay  taxes associated  with holding the
residual interest as they become due. The transferor must certify to the Trustee
that, as of the time of the transfer, it has no actual knowledge that any of the
statements made in the transferee affidavit are false and no reason to know that
the statements made by the  transferee pursuant to clauses  (x), (y) and (z)  of
the   preceding   sentence  are   false.   See  "Certain   Federal   Income  Tax
Consequences--Federal Income Tax

                                       22
<PAGE>
Consequences for REMIC Certificates--Taxation of Residual
Certificates--Tax-Related Restrictions on Transfer of Residual Certificates." In
the event  that  an election  is  not  made to  treat  the Trust  Estate  (or  a
segregated  pool of assets therein) as  a REMIC, no Subordinated Certificate may
be transferred unless an appropriate ruling  of the Internal Revenue Service  or
opinion  of counsel is obtained to the  effect that the transfer will not result
in the arrangement contemplated under the Pooling and Servicing Agreement  being
treated as an association taxable as a corporation under the Code.

    Unless   otherwise  specified  in   the  applicable  Prospectus  Supplement,
distributions  to  Certificateholders  of  all  Series  (other  than  the  final
distribution  in retirement of the Certificates) will be made by check mailed to
the address of  the person  entitled thereto as  it appears  on the  certificate
register,  except that, with  respect to any holder  of a Certificate evidencing
not less  than  a certain  minimum  denomination  set forth  in  the  applicable
Prospectus   Supplement,  distributions  will  be   made  by  wire  transfer  in
immediately available funds,  provided that  the Servicer, or  the Paying  Agent
acting  on behalf  of the Servicer,  shall have been  furnished with appropriate
wiring instructions  not less  than three  business days  prior to  the  related
Distribution  Date. The final distribution in retirement of Certificates will be
made only upon presentation and surrender  of the Certificates at the office  or
agency  maintained by the Trustee or other entity for such purpose, as specified
in the final distribution notice to Certificateholders.

    A Series of  Certificates will consist  of one or  more Classes of  Standard
Certificates   or  Stripped  Certificates  (referred  to  hereinafter  sometimes
collectively as "Percentage Certificates") or two or more Classes of Multi-Class
Certificates (each as described below).

PERCENTAGE CERTIFICATES

    Each Series of Percentage  Certificates may include one  or more Classes  of
Standard  Certificates  or  Stripped Certificates,  any  Class of  which  may be
divided into two  or more Subclasses.  The Standard Certificates  of each  Class
will  evidence  fractional  undivided  interests in  all  of  the  principal and
interest (to  the extent  of the  Net Mortgage  Interest Rate)  payments on  the
Mortgage  Loans comprising the Trust Estate  related to such Series. Each holder
of  a  Standard  Certificate  of  a  Class  will  be  entitled  to  receive  its
Certificate's percentage interest of the portion of the Pool Distribution Amount
(as  defined below)  allocated to  such Class.  The percentage  interest of each
Standard Certificate will be  equal to the percentage  obtained by dividing  the
aggregate  unpaid principal  balance of the  Mortgage Loans  represented by such
Standard Certificate as of  the Cut-Off Date by  the aggregate unpaid  principal
balance  of the Mortgage  Loans represented by all  the Standard Certificates of
the same Class as of the Cut-Off Date.

    The Stripped Certificates of each  Class will evidence fractional  undivided
interests in specified portions of the principal and/or interest payments on the
Mortgage  Loans comprising the Trust Estate  related to such Series. The holders
of the Stripped Certificates of each Class will be entitled to receive a portion
(which may be zero) as specified in the applicable Prospectus Supplement of  the
principal  distributions comprising the Pool  Distribution Amount, and a portion
(which may be zero) as specified in the applicable Prospectus Supplement of  the
interest   distributions  comprising  the  Pool   Distribution  Amount  on  each
Distribution Date.

    In the case of  Classes of Stripped  Certificates representing interests  in
interest  distributions on the Mortgage Loans and not in principal distributions
on the  Mortgage  Loans,  such  Certificates will  be  denominated  in  notional
amounts. The aggregate original notional amount for a Class of such Certificates
will  be equal to the aggregate unpaid principal balance (or a specified portion
thereof) of  the  Mortgage  Loans  as  of the  Cut-Off  Date  specified  in  the
applicable  Prospectus  Supplement. The  notional amount  of each  such Stripped
Certificate will  be  used to  calculate  the holder's  pro  rata share  of  the
interest distributions on the Mortgage Loans allocated to that Class and for the
determination  of  certain other  rights of  holders of  such Class  of Stripped
Certificates and will not represent an  interest in, or entitle any such  holder
to any distribution with respect to, any principal distributions on the Mortgage
Loans.  Each such Certificate's  pro rata share of  the interest distribution on
the Mortgage Loans on each Distribution  Date will be calculated by  multiplying
the  interest distributions on  the Mortgage Loans  allocated to its  Class by a
fraction, the  numerator  of which  is  the  original notional  amount  of  such
Stripped  Certificate and  the denominator  of which  is the  aggregate original
notional amount of all the Stripped Certificates of its Class.

                                       23
<PAGE>
    The interest of a Class of Percentage Certificates representing an  interest
in a Trust Estate (or a segregated pool of assets therein) with respect to which
an  election to be  treated as a REMIC  has been made may  be fixed as described
above or may  vary over  time as  a result  of prepayments  received and  losses
realized  on the underlying Mortgage Loans.  A Series of Percentage Certificates
comprised of Classes whose percentage interests in the Trust Estate may vary  is
referred   to  herein   as  a   Series  of   "Shifting  Interest  Certificates."
Distributions on,  and  subordination  arrangements with  respect  to,  Shifting
Interest Certificates are discussed below under the headings "Description of the
Certificates--Distributions  to Percentage Certificateholders--Shifting Interest
Certificates" and "Credit Support--Subordination--Shifting Interest
Certificates."

MULTI-CLASS CERTIFICATES

    Each Series may  include two  or more Classes  of Multi-Class  Certificates.
Each Multi-Class Certificate will be assigned a Stated Amount. The Stated Amount
may  be based on an  amount of principal of the  underlying Mortgage Loans or on
the value of  an amount  of future  cash flows  from the  related Trust  Estate,
without distinction as to principal and interest received on the Mortgage Loans.
The  initial  Stated  Amount  of  each  Class  within  a  Series  of Multi-Class
Certificates will be specified in the applicable Prospectus Supplement. Interest
on the Classes of Multi-Class Certificates will be paid at rates specified in or
determined as specified in the applicable Prospectus Supplement, and will accrue
in the manner  specified therein.  Each Series of  Multi-Class Certificates  may
include one or more Classes of Certificates on which interest accrues but is not
payable  until such  time as specified  in the  applicable Prospectus Supplement
("Compound Interest Certificates"), and interest accrued on any such Class  will
be added to the Stated Amount thereof in the manner described therein.

DISTRIBUTIONS TO PERCENTAGE CERTIFICATEHOLDERS

  CERTIFICATES OTHER THAN SHIFTING INTEREST CERTIFICATES

    Except as otherwise specified in the applicable Prospectus Supplement, on or
about  the  17th day  of each  month in  which a  Distribution Date  occurs (the
"Determination Date"), the Servicer will  determine the amount of the  principal
and interest payments on the Mortgage Loans which will be distributed to holders
of  each  Class  and  Subclass  of  Percentage  Certificates  on  the succeeding
Distribution Date. Such amounts will be  distributed, pro rata, to holders of  a
Class  or  Subclass of  Percentage  Certificates (other  than  Shifting Interest
Certificates) except, in  the case of  Subordinated Certificateholders, for  any
amounts required to be paid to the holders of the related Senior Certificates or
deposited in the related Subordination Reserve Fund, if any. If the Certificates
of  a Class include two  or more Subclasses, the  allocation of distributions of
principal and interest among such Subclasses will be as specified in the related
Prospectus Supplement.

    CALCULATION OF  DISTRIBUTABLE  AMOUNTS.   On  each Determination  Date,  the
Servicer   will  calculate   the  "Distributable   Amount"  for   the  following
Distribution Date for each Class of Certificates. Unless otherwise specified  in
the  applicable Prospectus Supplement,  the Distributable Amount  for a Class of
Senior Certificates (a "Senior Class") of  a Series on a Distribution Date  (the
"Senior Class Distributable Amount") will be an amount equal to the sum of:

         (i)  the aggregate  undivided interest,  expressed as  a percentage and
    specified  in  the  applicable  Prospectus  Supplement,  evidenced  by   all
    Certificates of such Senior Class (the "Senior Class Principal Portion") of:

           (a)  all scheduled payments of principal on each outstanding Mortgage
       Loan  that  became  due  on  the  Due  Date  immediately  preceding  such
       Distribution  Date in accordance  with the amortization  schedules of the
       related Mortgage  Loans  (as adjusted  to  give effect  to  any  previous
       prepayments),  whether or not such payments were actually received by the
       Servicer (the aggregate of  such scheduled payments due  on any such  Due
       Date  being referred to herein as "Scheduled Principal"), and all partial
       principal  prepayments  received  by  the   Servicer  on  or  after   the
       Determination  Date  in  the  month  preceding  the  month  in  which the
       Distribution Date occurs (or after the  Cut-Off Date, in the case of  the
       first Distribution Date) and prior to the Determination Date occurring in
       the month in which the Distribution Date occurs ("Curtailments");

                                       24
<PAGE>
           (b) all principal prepayments in full received by the Servicer during
       the month preceding the month in which such Distribution Date occurs; and

           (c)  the  unpaid principal  balance,  less any  amounts  with respect
       thereto constituting Late  Payments (as herein  defined) attributable  to
       principal,  and  less  any unreimbursed  Periodic  Advances  with respect
       thereto, of each  Mortgage Loan which  was repurchased by  the Seller  or
       purchased by the Servicer, as the case may be (as described in "The Trust
       Estates--Mortgage  Loans--Assignment of  Mortgage Loans  to the Trustee",
       "--Optional   Repurchases,"    and    "The    Pooling    and    Servicing
       Agreement--Termination;  Purchase of Certificates"), and of each Mortgage
       Loan in respect of which property was acquired, liquidated or foreclosed,
       and with respect to which  Liquidation Proceeds (as defined herein)  were
       received, during the month preceding the month in which such Distribution
       Date  occurs,  determined as  of  the date  each  such Mortgage  Loan was
       repurchased or purchased, as the case may be, or as of the date each such
       related property was acquired, liquidated or foreclosed, as the case  may
       be; and

        (ii)  interest  at  the  applicable Pass-Through  Rate  from  the second
    preceding Due Date to the  Due Date immediately preceding such  Distribution
    Date  on  the  Senior Class  Principal  Portion of  the  aggregate principal
    balance of  the  Mortgage Loans  as  of  the Cut-Off  Date,  less  scheduled
    amortization of principal thereon and any principal prepayments with respect
    thereto  through  the second  preceding Due  Date (the  "Scheduled Principal
    Balance"), whether  or  not  such  interest was  actually  received  by  the
    Servicer;  provided that interest attributable to the accrual of interest on
    any prepaid  Mortgage  Loan at  the  Net  Mortgage Interest  Rate  for  such
    Mortgage  Loan from the date of its  prepayment in full through the last day
    of the month in which such prepayment in full occurred ("Prepayment Interest
    Shortfall") is included only to the extent that funds for such purposes  are
    available out of the aggregate Servicing Fees; and

        (iii)  the sum of (a) the portion  that was included in the Senior Class
    Distributable Amount on  a prior  Distribution Date  of the  amount of  each
    scheduled  payment of principal and interest on  a Mortgage Loan not paid by
    the mortgagor  when  due, net  of  any unreimbursed  Periodic  Advance  with
    respect  thereto that was included in the Distributable Amount of each Class
    on a prior Distribution Date but  was not included in the Pool  Distribution
    Amount  until  the  current  Distribution Date  (such  net  amount,  a "Late
    Payment"), less the  aggregate amount, if  any, received by  the holders  of
    such  Senior  Certificates  on any  prior  Distribution Date  or  Dates with
    respect to such  Late Payment  from amounts otherwise  distributable to  the
    holders  of  Subordinated  Certificates  and  from  any  credit  enhancement
    available for the benefit of the Senior Certificateholders, and (b) interest
    on the amount set forth  in clause (a) above  at the Pass-Through Rate  from
    the  Distribution Date on which such Late  Payment was first included in the
    Distributable  Amount   for  such   Senior  Certificates   to  the   current
    Distribution  Date (the "Late Payment  Period"); provided that the foregoing
    amount will  be included  in  the Senior  Class  Distributable Amount  on  a
    Distribution  Date only to  the extent such  amount is included  in the Pool
    Distribution Amount with respect to such Distribution Date.

    Unless otherwise  specified in  the  applicable Prospectus  Supplement,  the
Distributable  Amount for a Class of Subordinated  Certificates of a Series on a
Distribution Date (the  "Subordinated Class  Distributable Amount")  will be  an
amount equal to the sum of:

         (i)  the aggregate  undivided interest,  expressed as  a percentage and
    specified  in  the  applicable  Prospectus  Supplement,  evidenced  by   all
    Subordinated Certificates (the "Subordinated Class Principal Portion") of:

           (a) all Scheduled Principal and all Curtailments;

           (b) all principal prepayments in full received by the Servicer during
       the month preceding the month in which such Distribution Date occurs; and

           (c)  the  unpaid principal  balance,  less any  amounts  with respect
       thereto constituting Late  Payments attributable to  principal, and  less
       any unreimbursed Periodic Advances with respect

                                       25
<PAGE>
       thereto,  of each  Mortgage Loan which  was repurchased by  the Seller or
       purchased by the Servicer, and of each Mortgage Loan in respect of  which
       property  was  acquired, liquidated  or foreclosed,  and with  respect to
       which Liquidation Proceeds were received, during the month preceding  the
       month  in which such Distribution Date  occurs, determined as of the date
       each such Mortgage Loan was repurchased or purchased, as the case may be,
       or as of the date each such related property was acquired, liquidated  or
       foreclosed, as the case may be; and

        (ii)  interest  at  the  applicable Pass-Through  Rate  from  the second
    preceding Due Date to the  Due Date immediately preceding such  Distribution
    Date  on the Subordinated Class Principal Portion of the Scheduled Principal
    Balance of the Mortgage  Loans as of the  Determination Date preceding  such
    Distribution  Date, whether or not such  interest was actually received with
    respect to the Mortgage Loans;  provided that Prepayment Interest  Shortfall
    is  included only to the  extent that funds for  such purposes are available
    from the aggregate Servicing Fees; and

        (iii) the  sum  of  (a) each  Late  Payment  that was  included  in  the
    Subordinated  Class Distributable Amount  on a prior  Distribution Date plus
    the aggregate amount, if any,  received by the Senior Certificateholders  on
    any  prior Distribution Date or Dates with respect to such Late Payment from
    amounts  otherwise   available   for  distribution   to   the   Subordinated
    Certificateholders  on such  prior Distribution Date  or Dates,  or from the
    Subordination Reserve Fund and not attributable to the Initial Deposit,  and
    (b) interest on the amount set forth in clause (a) above at the Pass-Through
    Rate during the Late Payment Period; provided that the foregoing amount will
    be   included  in  the  Subordinated  Class  Distributable  Amount  on  such
    Distribution Date only  to the extent  such amount is  included in the  Pool
    Distribution Amount with respect to such Distribution Date.

    DETERMINATION  OF AMOUNTS TO BE DISTRIBUTED.   Unless otherwise specified in
the applicable  Prospectus  Supplement,  funds  available  for  distribution  to
Certificateholders  of a Series of Percentage  Certificates with respect to each
Distribution Date for such Series (the  "Pool Distribution Amount") will be  the
sum  of all  previously undistributed payments  or other receipts  on account of
principal (including principal prepayments and Liquidation Proceeds, if any) and
interest on or in respect of the related Mortgage Loans received by the Servicer
after the Cut-Off Date (except for amounts due on or prior to the Cut-Off Date),
or received by the Servicer  on or prior to the  Cut-Off Date but due after  the
Cut-Off  Date, in either case received on or prior to the business day preceding
the Determination Date in the month in which such Distribution Date occurs, plus
all Periodic Advances made by  the Servicer with respect  to payments due to  be
received on the Mortgage Loans on the Due Date preceding such Distribution Date,
but excluding the following:

        (a)   amounts  received  as  late  payments  of  principal  or  interest
    respecting which the Servicer previously  has made one or more  unreimbursed
    Periodic Advances;

        (b)  unreimbursed Periodic Advances with  respect to liquidated Mortgage
    Loans;

        (c) those portions of each payment of interest on a particular  Mortgage
    Loan  which represent  (i) the  Fixed Retained Yield,  if any,  and (ii) the
    applicable Servicing Fee, as adjusted in respect of principal prepayments in
    full as  described  in  "Servicing  of  the  Mortgage  Loans--Adjustment  to
    Servicing Fee in Connection with Prepaid Mortgage Loans" below;

        (d)  all  amounts  representing  scheduled  payments  of  principal  and
    interest due  after  the Due  Date  occurring in  the  month in  which  such
    Distribution Date occurs;

        (e)  all  principal  prepayments  in full  and  all  proceeds (including
    Liquidation Proceeds) of any Mortgage Loans, or property acquired in respect
    thereof, liquidated, foreclosed,  purchased or repurchased  pursuant to  the
    applicable  Pooling and  Servicing Agreement, received  on or  after the Due
    Date occurring in the month in  which such Distribution Date occurs and  all
    Curtailments  received by  the Servicer on  or after  the Determination Date
    occurring in  the month  in which  such Distribution  Date occurs,  and  all
    related payments of interest on such amounts;

                                       26
<PAGE>
        (f)   that portion  of Liquidation Proceeds  which represents any unpaid
    Servicing Fee  to  which the  Servicer  is  entitled and  any  unpaid  Fixed
    Retained Yield;

        (g) if an election has been made to treat the applicable Trust Estate as
    a REMIC, any Net Foreclosure Profits with respect to such Distribution Date.
    "Net  Foreclosure Profits" with  respect to a Distribution  Date will be the
    excess of  (i)  the portion  of  aggregate net  Liquidation  Proceeds  which
    represents  the amount by  which aggregate profits  on Liquidated Loans with
    respect to  which  net  Liquidation Proceeds  exceed  the  unpaid  principal
    balance  thereof plus accrued interest thereon at the Mortgage Interest Rate
    over (ii)  aggregate realized  losses on  Liquidated Loans  with respect  to
    which  net Liquidation Proceeds  are less than  the unpaid principal balance
    thereof plus accrued interest at the Mortgage Interest Rate.

        (h) all  amounts  representing  certain  expenses  reimbursable  to  the
    Servicer  and other amounts  permitted to be withdrawn  by the Servicer from
    the Certificate Account, in each case pursuant to the applicable Pooling and
    Servicing Agreement;

        (i)  all amounts in the nature of late fees, assumption fees, prepayment
    fees and similar fees which the  Servicer is entitled to retain pursuant  to
    the applicable Pooling and Servicing Agreement; and

        (j)    reinvestment  earnings on  payments  received in  respect  of the
    Mortgage Loans.

    The Servicer will calculate the portion of the Distributable Amount for each
Class of the Series that  is available to be paid  out of the Pool  Distribution
Amount  on such  date. The portion  so available  on a Distribution  Date to the
Senior   Certificateholders   and   to   the   Subordinated   Certificateholders
(respectively, the "Senior Class Pro Rata Share" and the "Subordinated Class Pro
Rata  Share")  will  be  the  amount  equal  to  the  product  of  (a)  the Pool
Distribution Amount for such date and (b)  a fraction the numerator of which  is
the  Distributable Amount  for such  Class on such  date and  the denominator of
which is the sum of the Distributable Amounts for such Series on such date.

    On each Distribution  Date for  a Series of  Percentage Certificates  (other
than  Shifting Interest Certificates), the holders of the Senior Certificates of
such Series will be entitled to receive the Senior Class Pro Rata Share of  such
Class  on such Distribution Date. In  addition, to the extent credit enhancement
is available on such  Distribution Date, the  Senior Certificateholders will  be
entitled  to receive the  amount by which the  Senior Class Distributable Amount
plus  any  Senior  Class  Carryover   Shortfall  (as  defined  below)  on   such
Distribution  Date exceeds the Senior Class  Pro Rata Share on such Distribution
Date (such excess  being referred to  herein as the  "Senior Class  Shortfall").
Such  credit  support  includes:  (a)  amounts  otherwise  distributable  to the
Subordinated Certificateholders on such Distribution Date and amounts  available
for  such  purpose in  the Subordination  Reserve Fund  as described  below; (b)
amounts  held  in   the  Certificate   Account  for   future  distributions   to
Certificateholders;   and  (c)  amounts  available  under  any  form  of  credit
enhancement (other  than subordination)  which is  specified in  the  applicable
Prospectus  Supplement.  See "Credit  Support" below.  The  manner in  which any
available credit support will  be allocated among Subclasses  of a Senior  Class
will  be set forth in the applicable  Prospectus Supplement. With respect to any
Distribution Date, the "Senior Class  Carryover Shortfall" means the excess,  if
any, of (a) the amount the Senior Certificateholders were entitled to receive on
the  prior  Distribution  Date  less the  amount  the  Senior Certificateholders
received on such prior Distribution Date, together with interest thereon at  the
Pass-Through Rate of such Senior Class from such prior Distribution Date through
the  current Distribution Date, over (b) the  portion of the amount specified in
clause (a) constituting Late Payments, together with interest on such portion at
the applicable Pass-Through Rate from  such prior Distribution Date through  the
current Distribution Date, to the extent such Late Payments and interest thereon
are  included  in  the Pool  Distribution  Amount  with respect  to  the current
Distribution Date.

    With respect to  a Series  of Percentage Certificates  (other than  Shifting
Interest  Certificates) including a Class of Subordinated Certificates, once the
Subordinated Amount is  reduced to  zero, any remaining  Senior Class  Shortfall
with  respect to a  Class of Senior  Certificates will cease  to be payable from
amounts otherwise

                                       27
<PAGE>
distributable to  the Subordinated  Certificateholders and  the amounts  in  the
related  Subordination Reserve  Fund, if  any, except  that the  portion of such
Senior Class Shortfall which is attributable  to the accrual of interest on  the
Senior  Class Carryover Shortfall (the  "Senior Class Shortfall Accruals") shall
continue to bear interest  at the applicable Pass-Through  Rate, and the  Senior
Certificateholders  shall continue to have a  preferential right to be paid such
amounts   from   distributions   otherwise   available   to   the   Subordinated
Certificateholders   until  such  amount  (including  interest  thereon  at  the
applicable   Pass-Through    Rate)    is    paid   in    full.    See    "Credit
Support--Subordination" below.

    The  Subordinated  Certificateholders will  be  entitled to  receive  on any
Distribution Date an amount equal to the Subordinated Class Pro Rata Share less:
(a) any  amounts required  to be  distributed to  the Senior  Certificateholders
pursuant   to   the   subordination   of   the   rights   of   the  Subordinated
Certificateholders as described below; and (b) any amounts necessary to fund the
Subordination Reserve Fund as described below. See "Credit
Support--Subordination" below.

  SHIFTING INTEREST CERTIFICATES

    On each Distribution Date  for a series  of Shifting Interest  Certificates,
the  Servicer will distribute on behalf of the Trustee or cause the Paying Agent
to distribute, as the case may be, to  the holders of record on the Record  Date
of a Class of Senior Certificates, to the extent of the Pool Distribution Amount
with  respect to such  Distribution Date (as  determined by the  Servicer on the
related Determination Date in the same manner as described above with respect to
Percentage Certificates other than Shifting Interest Certificates) and prior  to
any  distribution being made on the related Subordinated Certificates, an amount
equal to the  Senior Class  Distribution Amount. The  Senior Class  Distribution
Amount  will  (except  as  otherwise  set  forth  in  the  applicable Prospectus
Supplement) be calculated  for any Distribution  Date as the  lesser of (x)  the
Pool Distribution Amount for such Distribution Date and (y) the sum of:

         (i)  one month's interest  at the applicable  Pass-Through Rate on such
    Class's outstanding principal balance (less, if specified in the  applicable
    Prospectus  Supplement,  (a) the  amount by  which the  aggregate Prepayment
    Interest Shortfall with respect to the preceding month exceeds the aggregate
    Servicing Fees, in each case allocated to such Class on the basis set  forth
    in  the related Prospectus Supplement and/or (b) one month's interest at the
    applicable Net Mortgage Interest Rate on such Class's percentage,  specified
    in  the applicable Prospectus Supplement, of the Scheduled Principal Balance
    of each Special Hazard  Mortgage Loan (as defined  below) covered by  clause
    (iv) below);

        (ii)  if distribution of  the amount of  interest calculated pursuant to
    clause (i) above on any prior Distribution Date was not made in full on such
    prior Distribution Date, an amount equal  to (a) the difference between  (x)
    the  amount of interest which the holders  of such Class would have received
    on the prior Distribution Date if there had been sufficient funds  available
    in  the  Certificate  Account  and  (y)  the  amount  of  interest  actually
    distributed to such  holders on  such prior Distribution  Date (the  "Unpaid
    Interest   Shortfall")  less   (b)  the  aggregate   amount  distributed  on
    Distribution Dates subsequent to such  prior Distribution Date with  respect
    to the Unpaid Interest Shortfall;

        (iii)  such Class's percentage, calculated as provided in the applicable
    Prospectus Supplement, of  (a) all  scheduled payments of  principal due  on
    each  outstanding Mortgage Loan, on  the Due Date occurring  in the month in
    which the Distribution  Date occurs, (b)  all partial principal  prepayments
    received  by  the  Servicer in  reduction  of  the unpaid  principal  of any
    Mortgage Loan on or after the Determination Date in the month preceding  the
    month  in which the Distribution Date occurs  (or after the Cut-Off Date, in
    the case of the first Distribution Date) and prior to the Determination Date
    occurring in the month in which the Distribution Date occurs, and (c) except
    for Special  Hazard  Mortgage  Loans  covered  by  clause  (iv)  below,  the
    Scheduled  Principal  Balance  of  each  Mortgage  Loan  which,  during such
    preceding month, (i) was the subject of a principal prepayment in full, (ii)
    became a liquidated Mortgage Loan, or (iii) was repurchased by the Seller or
    purchased by the person  or persons specified  in the applicable  Prospectus
    Supplement pursuant to the Pooling and Servicing Agreement; and

                                       28
<PAGE>
        (iv)  such Class's specified percentage  of the net Liquidation Proceeds
    from any Mortgage  Loan that became  a Special Hazard  Mortgage Loan  during
    such  preceding month (but  only if the Special  Hazard Termination Date (as
    defined below) has occurred);

provided that, if such Distribution Date  falls on or after the Cross-Over  Date
(i.e.,  the date on which the amount of principal payments on the Mortgage Loans
to which the holders of the  related Subordinated Certificates are entitled  has
been reduced to zero as a result of the allocation of losses to the Subordinated
Certificates),  then the Senior Class Distribution Amount will instead equal the
lesser of (x) the Pool Distribution Amount and (y) the sum of the items referred
to above plus the amount by which such Class's outstanding principal balance  as
of  such Distribution  Date exceeds the  Pool Scheduled Principal  Balance as of
such  Distribution  Date.  The  Pool  Scheduled  Principal  Balance  as  of  any
Distribution  Date is the  aggregate of the Scheduled  Principal Balances of all
Mortgage Loans in a Trust Estate that  were outstanding on the first day of  the
month  prior  to the  month  in which  such  Distribution Date  falls.  The Pool
Scheduled  Principal  Balance  is  determined  after  taking  into  account  all
Curtailments applied by the Servicer on such first day of the month prior to the
month  in  which  such  Distribution Date  falls.  Under  its  current servicing
practices, Curtailments received  in any month  are applied by  the Servicer  in
reduction of the unpaid principal balance of the related Mortgage Loan as of the
first day of such month.

    If  so provided in the applicable Prospectus Supplement, one or more Classes
of Senior  Certificates  will also  be  entitled to  receive,  as its  or  their
specified  percentage(s) referred  to in clauses  (y)(iii)(b) and (y)(iii)(c)(i)
above, all partial principal prepayments  and all principal prepayments in  full
on the Mortgage Loans in the related Trust Estate under the circumstances or for
the period of time specified therein, which will have the effect of accelerating
the  amortization  of the  Senior Certificates  while increasing  the respective
interest evidenced by the Subordinated Certificates in the related Trust Estate.
Increasing the respective interest of the Subordinated Certificates relative  to
that  of the Senior Certificates is intended to preserve the availability of the
subordination provided by the Subordinated Certificates.

    If the Special Hazard Termination Date would occur on any Distribution  Date
under  the circumstances  referred to in  "Credit Support--Subordination" below,
the Senior Class Distribution  Amount for each Class  of Senior Certificates  of
such  Series calculated  as set  forth in the  two preceding  paragraphs will be
modified to the extent described in such section.

    Amounts distributed to a Class of Senior Certificates on a Distribution Date
will be deemed to be applied first  to the payment of current interest, if  any,
due  on such Class (i.e., the amount calculated pursuant to clause (y)(i) of the
third preceding  paragraph),  second  to  the payment  of  any  Unpaid  Interest
Shortfall  (i.e.,  the  amount calculated  pursuant  to clause  (y)(ii)  of such
paragraph) and third  to the payment  of principal,  if any, due  on such  Class
(i.e.,  the aggregate of the amounts calculated pursuant to clauses (y)(iii) and
(y)(iv) of such paragraph).

    As indicated above, in  the event that the  Pool Distribution Amount on  any
Distribution  Date is  not sufficient to  make the full  distribution of current
interest to the holders of a  Class of Senior Certificates entitled to  payments
of  interest, the  difference between the  amount of current  interest which the
holders of such Class would have received on such Distribution Date if there had
been sufficient  funds available  and the  amount actually  distributed will  be
added  to the amount of interest which the holders of such Class are entitled to
receive on  the  next  Distribution  Date. Unless  otherwise  specified  in  the
applicable  Prospectus Supplement, the amount of  any such interest shortfall so
carried forward will not bear interest.

    If the Pool Distribution Amount is insufficient on any Distribution Date  to
make  the full distribution of principal due  on a Class of Senior Certificates,
the percentage  of  principal  payments  to which  the  holders  of  the  Senior
Certificates  would be entitled on  the immediately succeeding Distribution Date
will be increased. This increase will have the effect of reducing, as a relative
matter, the respective interest of the holders of the Subordinated  Certificates
in  future payments  of principal  on the  related Mortgage  Loans. If  the Pool
Distribution Amount is not sufficient to make full distribution described  above
to  the holders of all  Classes of Senior Certificates  on any Distribution Date
(assuming   that    more    than   one    Class    or   Subclass    of    Senior

                                       29
<PAGE>
Certificates  of a  Series has been  issued), unless otherwise  specified in the
applicable Prospectus Supplement,  the holders  of each such  Class or  Subclass
will  share  in the  funds actually  available in  proportion to  the respective
amounts that  each such  Class or  Subclass  would have  received had  the  Pool
Distribution  Amount been sufficient  to make the  full distribution of interest
and principal due to each such Class or Subclass.

    Unless otherwise  provided in  the related  Prospectus Supplement,  on  each
Distribution  Date the holders of the  related Subordinated Certificates will be
entitled to receive (in the amounts specified therein if there is more than  one
Class  of Subordinated Certificates), out of funds available for distribution in
the related  Certificate  Account on  such  date, all  amounts  remaining  after
deduction  of  the amounts  required to  be  distributed to  the holders  of all
Classes of Senior Certificates of the same Series.

EXAMPLE OF DISTRIBUTION TO PERCENTAGE CERTIFICATEHOLDERS

    The following  chart  sets  forth  an example  of  the  application  of  the
foregoing  provisions  to the  first two  months of  the related  Trust Estate's
existence, assuming the Certificates are issued in the month of January, with  a
Distribution Date on the 25th of each month and a Determination Date on the 17th
of each month:

<TABLE>
<S>                               <C>
January 1(A)....................  Cut-Off Date.
January 2-January 31(B).........  The  Servicer receives  any principal  prepayments in full
                                  (including prepayments  due to  liquidation) and  interest
                                  thereon to date of prepayment.
January 31(C)...................  Record Date.
February 1-February 16(D).......  The  Servicer receives scheduled payments of principal and
                                  interest due on February 1.
February 17(E)..................  Determination Date.
February 25(F)..................  Distribution Date.
</TABLE>

- ------------------------
(A) The initial unpaid principal balance of the Mortgage Loans in a Trust Estate
    would be the aggregate unpaid principal balance of the Mortgage Loans at the
    close of business on January 1, after deducting principal payments due on or
    before such date. Those  principal payments due on  or before January 1  and
    the  related interest payments,  would not be  part of the  Trust Estate and
    would be remitted by the Servicer to the Seller when received.

(B) Principal prepayments in full received during this period would be  credited
    to  the Certificate  Account for  distribution to  Certificateholders on the
    February 25 Distribution Date.  When a Mortgage Loan  is prepaid in full  or
    liquidated or an insurance claim with respect to a Mortgage Loan is settled,
    interest  on the  amount prepaid,  liquidated or  received in  settlement is
    collected only from the last scheduled  Due Date to the date of  prepayment,
    liquidation  or settlement. In addition, when  a Mortgage Loan is prepaid in
    part and  such payment  is applied  as  of a  date other  than a  Due  Date,
    interest  is charged on such payment only to the date applied. To the extent
    funds are available from the aggregate Servicing Fees relating to  mortgagor
    payments  or  other  recoveries  distributed  to  Certificateholders  on the
    related Distribution Date, the Servicer would make an additional payment  to
    Certificateholders with respect to any Mortgage Loan that prepaid in full in
    January  equal to the  amount of interest  on such Mortgage  Loan at the Net
    Mortgage Interest  Rate  for  such  Mortgage Loan  from  the  date  of  such
    prepayment in full through January 31.

(C) Distributions in the month of February will be made to Certificateholders of
    record at the close of business on this date.

(D) Scheduled  monthly payments  on the  Mortgage Loans  due on  February 1, and
    partial principal prepayments received by  the Servicer in reduction of  the
    unpaid  principal balance of any Mortgage Loan prior to February 17, will be
    deposited in the Certificate Account as received by the Servicer and will be
    distributed to  Certificateholders on  the  February 25  Distribution  Date.
    Principal  prepayments  in  full,  liquidation  proceeds  and  proceeds with
    respect to the repurchase or purchase of any of the Mortgage Loans, in  each
    case received during this period, and partial principal prepayments received
    on or after

                                         (FOOTNOTES CONTINUED ON FOLLOWING PAGE)

                                       30
<PAGE>
    Succeeding  monthly periods  follow the pattern  of (B)  through (F), except
that the period in (B) begins on the first of the month.

DISTRIBUTIONS TO MULTI-CLASS CERTIFICATEHOLDERS

    The following description of distributions to Multi-Class Certificateholders
is one  example of  how such  distributions may  be determined.  The  Prospectus
Supplement   for  a  Series  may  provide   for  a  different  manner  in  which
distributions to  Multi-Class Certificateholders  will  be determined  for  such
Series  so long as such Multi-Class Certificates  are rated upon issuance in one
of the four highest rating categories by at least one Rating Agency.

    Except as  otherwise  set forth  in  the applicable  Prospectus  Supplement,
distributions of interest and distributions in reduction of the Stated Amount of
Multi-Class  Certificates will  be made  from the  Pool Distribution  Amount (as
determined by the Servicer on the related Determination Date in the same  manner
as  described above with  respect to Series of  Percentage Certificates) on each
Distribution Date for such Series to the holders of each Class then entitled  to
receive such distributions until the aggregate amount of such distributions have
reduced  the  Stated  Amount  of  each  such  Class  of  Certificates  to  zero.
Distributions in reduction of Stated Amount will be allocated among the  Classes
of  such  Certificates  in the  manner  specified in  the  applicable Prospectus
Supplement. If so specified  in the related  Prospectus Supplement, such  Series
may include Classes designed to receive principal payments using a predetermined
schedule   such  as   planned  amortization  class   certificates  and  targeted
amortization class certificates and Classes that receive principal payments only
if other designated Classes receive  their scheduled payments. Unless  otherwise
specified   in  the  applicable  Prospectus  Supplement,  all  distributions  in
reduction of the Stated  Amount of a Class  of Multi-Class Certificates will  be
made pro rata among the Certificates of such Class.

    Unless otherwise specified in the Prospectus Supplement relating to a Series
of  Certificates, the aggregate amount that  will be distributed in reduction of
Stated Amount to holders of Multi-Class  Certificates of a Series then  entitled
thereto on any Distribution Date for such Series will equal, to the extent funds
are

- --------------------------------------------------------------------------------
(FOOTNOTES CONTINUED FROM PRECEDING PAGE)
    February  17, will be deposited  in the Certificate Account  but will not be
    distributed to  Certificateholders on  the  February 25  Distribution  Date.
    Instead,  such  amounts  will be  credited  to the  Certificate  Account for
    distribution to Certificateholders on the March 25 Distribution Date.

(E) As of the close of business on February 17, the Servicer will determine  the
    amounts of Periodic Advances and the amounts of principal and interest which
    will  be distributed to the Certificateholders, including scheduled payments
    due on or before February 1 which have been received on or before the  close
    of  business on February  16, partial principal  prepayments received by the
    Servicer in reduction of the unpaid  principal balance of any Mortgage  Loan
    prior  to  February  17  and  principal  prepayments  in  full,  liquidation
    proceeds, and proceeds with respect to the repurchase or purchase of any  of
    the  Mortgage Loans,  received during  the period  commencing January  2 and
    ending  on  January  31.   With  respect  to   each  Series  of   Percentage
    Certificates,  other than Shifting Interest  Certificates, the Servicer will
    calculate the Distributable Amount  and the Pro Rata  Share for each  Class,
    and  the amount otherwise distributable  to the Subordinated Class, together
    with amounts, if any, in the Subordination Reserve Fund, will be  available,
    to   the  extent  of  the  Subordinated   Amount,  to  increase  the  amount
    distributable to  the  Senior  Class  or Classes  up  to  the  Senior  Class
    Shortfall  in  respect  of such  Classes.  With  respect to  each  Series of
    Shifting Interest Certificates, the Servicer will calculate the Senior Class
    Distribution Amount for each Senior Class and will determine the  percentage
    interests  of each  Senior Class to  be used in  connection with calculating
    Senior Class Distribution Amounts with respect to the March 25  Distribution
    Date.  If applicable,  the Servicer  will calculate  the amounts  payable in
    respect of any other form of credit enhancement.

(F) Unless otherwise  so specified  in the  related Prospectus  Supplement,  the
    Servicer  or the Paying Agent  will make distributions to Certificateholders
    on the 25th day of each month, or if such 25th day is not a business day, on
    the next business day.

                                       31
<PAGE>
available, the sum of  (i) the Multi-Class  Certificate Distribution Amount  (as
defined  herein)  and  (ii)  if  and to  the  extent  specified  in  the related
Prospectus Supplement, the applicable percentage of the Spread specified in such
Prospectus Supplement.

    Unless otherwise  specified in  the  applicable Prospectus  Supplement,  the
"Multi-Class  Certificate Distribution  Amount" with  respect to  a Distribution
Date for a Series of Multi-Class Certificates will equal the amount, if any,  by
which  the Stated Amount  of the Multi-Class Certificates  of such Series (after
taking into account the amount of interest  to be added to the Stated Amount  of
any Class of Compound Interest Certificates on such Distribution Date and before
giving  effect  to  any distributions  in  reduction  of Stated  Amount  on such
Distribution Date) exceeds the  Pool Value (as defined  herein) of the  Mortgage
Loans  included in the Trust Estate for such  Series as of the end of the period
(a "Due Period") specified in the related Prospectus Supplement. For purposes of
determining the Multi-Class  Certificate Distribution Amount  with respect to  a
Distribution  Date for a  Series of Certificates  having one or  more Classes of
Multi-Class Certificates, the Pool Value of  the Mortgage Loans included in  the
Trust  Estate for  such Certificates  will be reduced  to take  into account all
distributions thereon received by the Trustee during the applicable Due Period.

    Unless otherwise specified in the applicable Prospectus Supplement, "Spread"
with respect to  a Distribution Date  for a Series  of Multi-Class  Certificates
will  be the excess of (a) the sum of (i) all payments of principal and interest
received on the related Mortgage Loans (net of the Fixed Retained Yield, if any,
and the applicable Servicing Fee with respect to such Mortgage Loans) in the Due
Period applicable to such Distribution  Date and, in the  case of the first  Due
Period,  any amount deposited  by the Seller  in the Certificate  Account on the
Closing Date, (ii) income  from reinvestment thereof, if  any, and (iii) to  the
extent  specified in  the applicable Prospectus  Supplement, the  amount of cash
withdrawn from any  reserve fund  or available under  any other  form of  credit
enhancement for such Series, over (b) the sum of (i) all interest distributed on
the  Multi-Class Certificates of such Series on such Distribution Date, (ii) the
Multi-Class Certificate Distribution Amount for such Series with respect to such
Distribution Date, (iii) if applicable to such Series, any Special Distributions
(as described  below) in  reduction  of the  Stated  Amount of  the  Multi-Class
Certificates  of such Series made since the preceding Distribution Date for such
Series (or since the Closing Date in the case of the first Distribution Date for
such Series),  including  any accrued  interest  distributed with  such  Special
Distributions,  (iv) all administrative and other expenses relating to the Trust
Estate payable during  the Due  Period preceding such  Distribution Date,  other
than such expenses which are payable by the Servicer, and any amount required to
be  deposited  into any  reserve fund  from funds  allocable to  the Multi-Class
Certificates in the Certificate Account. Reinvestment income on any reserve fund
will not be included in Spread except to the extent that reinvestment income  is
taken into account in calculating the initial amount required to be deposited in
such reserve fund, if any.

  VALUATION OF MORTGAGE LOANS

    If   specified  in  the  Prospectus  Supplement  relating  to  a  series  of
Multi-Class Certificates, for purposes of  establishing the principal amount  of
Mortgage  Loans that will  be included in  a Trust Estate  for such Series, each
Mortgage Loan to be included  in such Trust Estate  will be assigned an  initial
"Pool   Value."  Unless   otherwise  specified  in   the  applicable  Prospectus
Supplement, the Pool  Value of  each Mortgage  Loan in  the Trust  Estate for  a
Series  is the Stated  Amount of Multi-Class Certificates  of such Series which,
based upon  certain  assumptions  and  regardless of  any  prepayments  on  such
Mortgage  Loans, can  be supported  by the  scheduled payments  of principal and
interest on  such  Mortgage Loans  (net  of the  Fixed  Retained Yield  on  such
Mortgage  Loans,  if  any,  and the  applicable  Servicing  Fee),  together with
reinvestment earnings thereon, if any, at the Assumed Reinvestment Rate for  the
period  specified in the related Prospectus  Supplement and amounts available to
be withdrawn  (if applicable)  from any  reserve fund  for such  Series, all  as
specified in the applicable Prospectus Supplement. In calculating the Pool Value
of  a Mortgage Loan included  in the Trust Estate,  future distributions on such
Mortgage Loan will be  determined based on scheduled  payments on such  Mortgage
Loan.  Any similar  Mortgage Loans  may be  aggregated into  one or  more groups
(each, a "Pool Value Group"), each of  which will be assigned an aggregate  Pool
Value

                                       32
<PAGE>
calculated  as if all such Mortgage Loans  in the Pool Value Group constituted a
single mortgage loan having the highest  mortgage rate and the longest  maturity
of  any such  mortgage loan  for such Pool  Value Group.  There are  a number of
alternative means of determining the Pool Value of a Mortgage Loan or Pool Value
Group, including determinations  based on  the discounted present  value of  the
remaining   scheduled   payments   of  principal   and   interest   thereon  and
determinations based on  the relationship  between the  Mortgage Interest  Rates
borne  thereby and  the Interest  Rates of  the Multi-Class  Certificates of the
related Series.  The Prospectus  Supplement for  each Series  will describe  the
method or methods (and related assumptions) used to determine the Pool Values of
the  Mortgage Loans or the  Pool Value Groups for such  Series. In any event, on
each Distribution Date, after  making the distributions  in reduction of  Stated
Amount  on  such Distribution  Date, the  aggregate  of the  Pool Values  of all
Mortgage Loans and all the Pool Value Groups included in the Trust Estate for  a
Series  of Certificates will be at least equal to the aggregate Stated Amount of
the Multi-Class Certificates of such Series.

    The "Assumed Reinvestment  Rate" for  a Series  of Multi-Class  Certificates
will  be the  highest rate  permitted by  the Rating  Agency or  Rating Agencies
rating such Series of Multi-Class Certificates or  a rate insured by means of  a
surety  bond, guaranteed investment contract or similar arrangement satisfactory
to such Rating Agency or Rating Agencies. If the Assumed Reinvestment Rate is so
insured, the related  Prospectus Supplement  will set  forth the  terms of  such
arrangement.

  SPECIAL DISTRIBUTIONS

    To the extent specified in the Prospectus Supplement relating to a Series of
Multi-Class  Certificates which have other  than monthly Distribution Dates, any
such  Classes  having  Stated  Amounts  may  receive  special  distributions  in
reduction of Stated Amount, together with accrued interest on the amount of such
reduction  ("Special Distributions") in any month, other than a month in which a
Distribution Date  occurs, if,  as  a result  of  principal prepayments  on  the
Mortgage  Loans  in the  related Trust  Estate  and/or reinvestment  yields then
available, the  Trustee  determines,  based  on  assumptions  specified  in  the
applicable  Pooling and Servicing Agreement, that the amount of cash anticipated
to be available on the next Distribution Date for such Series to be  distributed
to  the holders of such Multi-Class Certificates may be less than the sum of (i)
the interest scheduled to be distributed to such holders and (ii) the amount  to
be distributed in reduction of Stated Amount of such Multi-Class Certificates on
such  Distribution Date. Any such Special Distributions will be made in the same
priority and manner as distributions in reduction of Stated Amount would be made
on the next Distribution Date.

    To the extent specified  in the related Prospectus  Supplement, one or  more
Classes  of Certificates of a Series  of Multi-Class Certificates may be subject
to special distributions in reduction of the Stated Amount thereof at the option
of the  holders of  such  Certificates, or  to  mandatory distributions  by  the
Servicer.  Any such distributions with respect to  a Series will be described in
the applicable Prospectus Supplement and will be on such terms and conditions as
described therein and specified in the Pooling and Servicing Agreement for  such
Series.

  LAST SCHEDULED DISTRIBUTION DATE

    The  "Last  Scheduled  Distribution  Date"  for  each  Class  of Multi-Class
Certificates of a Series  having a Stated Amount,  to the extent Last  Scheduled
Distribution Dates are specified in the applicable Prospectus Supplement, is the
latest  date on which  (based upon the  assumptions set forth  in the applicable
Prospectus Supplement) the Stated Amount of such Class is expected to be reduced
to zero. Since the rate of distributions  in reduction of Stated Amount of  each
such Class of Multi-Class Certificates will depend upon, among other things, the
rate  of payment (including prepayments) of  the principal of the Mortgage Loans
in the Trust Estate for such Series,  the actual last Distribution Date for  any
such   Class  could  occur   significantly  earlier  than   its  Last  Scheduled
Distribution Date.  To the  extent of  any delays  in receipt  of any  payments,
insurance  proceeds or liquidation  proceeds with respect  to the Mortgage Loans
included in any  Trust Estate,  the last Distribution  Date for  any such  Class
could  occur  later  than its  Last  Scheduled  Distribution Date.  The  rate of
payments  on  the  Mortgage  Loans  in  the  Trust  Estate  for  any  Series  of
Certificates will

                                       33
<PAGE>
depend upon their particular characteristics, as well as on the prevailing level
of interest rates from time to time and other economic factors, and no assurance
can  be given as to the actual  prepayment experience of the Mortgage Loans. See
"Prepayment and Yield Considerations" below.

                                 CREDIT SUPPORT

SUBORDINATION

  CERTIFICATES OTHER THAN SHIFTING INTEREST CERTIFICATES

    If so  specified  in the  Prospectus  Supplement  relating to  a  Series  of
Certificates,  other than a Series of Shifting Interest Certificates, the rights
of the holders of a Class of Subordinated Certificates to receive  distributions
will  be  subordinated  to  the rights  of  the  holders of  a  Class  of Senior
Certificates, to  the  extent  of  the Subordinated  Amount  specified  in  such
Prospectus  Supplement. The  Subordinated Amount  will be  reduced by  an amount
equal to  Aggregate Losses  and will  be further  reduced in  accordance with  a
schedule  described in the applicable Prospectus Supplement. Aggregate Losses as
defined in the applicable Pooling and  Servicing Agreement for any given  period
will  equal the aggregate amount of delinquencies, losses and other deficiencies
("Payment Deficiencies") in  the amounts  due to  the Senior  Certificateholders
paid or borne by the Subordinated Certificateholders (but excluding any payments
of  Senior Class  Shortfall Accruals  or interest  thereon) during  such period,
whether  such  aggregate  amount  results   by  way  of  withdrawals  from   the
Subordination  Reserve Fund (including, prior to  the time that the Subordinated
Amount is reduced to  zero, any such withdrawal  of amounts attributable to  the
Initial  Deposit, if any), reductions in  amounts that would otherwise have been
distributable to the Subordinated  Certificateholders on any Distribution  Date,
or  otherwise;  less  the  aggregate  amount  of  previous  Payment Deficiencies
recovered by  the related  Trust Estate  during such  period in  respect of  the
Mortgage  Loans giving  rise to  such previous  Payment Deficiencies, including,
without limitation, such  recoveries resulting  from the  receipt of  delinquent
principal  or  interest payments,  Liquidation  Proceeds and  insurance proceeds
(net, in  each case,  of any  applicable  Fixed Retained  Yield and  any  unpaid
Servicing  Fee to  which the Servicer  is entitled, foreclosure  costs and other
servicing costs, expenses and advances relating to such Mortgage Loans).

    The  protection   afforded  to   the   Senior  Certificateholders   by   the
subordination  feature described above will be effected both by the preferential
right, to the extent specified in the applicable Prospectus Supplement, of  such
Senior  Certificateholders  to  receive  current  distributions  on  the related
Mortgage Loans that would otherwise have been distributable to the  Subordinated
Certificateholders  and (unless otherwise specified in the applicable Prospectus
Supplement) by the establishment and maintenance of a Subordination Reserve Fund
for such  Series.  Unless  otherwise  specified  in  the  applicable  Prospectus
Supplement,  the Subordination  Reserve Fund  will not  be a  part of  the Trust
Estate. The Subordination Reserve Fund may  be funded initially with an  initial
deposit  by the  Seller (the "Initial  Deposit") in  an amount set  forth in the
applicable  Prospectus  Supplement.  Following  the  initial  issuance  of   the
Certificates of a Series and until the balance of the Subordination Reserve Fund
(without  taking into account the amount of the Initial Deposit) first equals or
exceeds the  Specified  Subordination Reserve  Fund  Balance set  forth  in  the
applicable   Prospectus  Supplement,  and  unless  otherwise  specified  in  the
applicable Prospectus Supplement,  the Servicer will  withhold all amounts  that
would  otherwise have been distributable  to the Subordinated Certificateholders
and deposit such amounts (less any  portions thereof required to be  distributed
to  Senior Certificateholders as  described below) in  the Subordination Reserve
Fund. The time necessary for the Subordination Reserve Fund of a Series to reach
the applicable  Specified Subordination  Reserve Fund  Balance for  such  Series
after  the initial issuance of  the Certificates, and the  period for which such
balance is  maintained, will  be affected  by the  delinquency, foreclosure  and
prepayment  experience of  the Mortgage  Loans in  the related  Trust Estate and
cannot be accurately  predicted. Unless  otherwise specified  in the  applicable
Prospectus  Supplement,  after  the  amount in  the  Subordination  Reserve Fund
(without taking into  account the amount  of the Initial  Deposit) for a  Series
first  equals  or exceeds  the applicable  Specified Subordination  Reserve Fund
Balance, the Servicer will withhold from the Subordinated Certificateholders and
will deposit in  the Subordination Reserve  Fund such portion  of the  principal
payments  on  the Mortgage  Loans  otherwise distributable  to  the Subordinated
Certificateholders as may be necessary to maintain the

                                       34
<PAGE>
Subordination Reserve  Fund  (without taking  into  account the  amount  of  the
Initial  Deposit)  at  the  Specified Subordination  Reserve  Fund  Balance. The
Prospectus Supplement for each Series will set forth the amount of the Specified
Subordination Reserve Fund Balance applicable from time to time and the  extent,
if  any,  to  which the  Specified  Subordination  Reserve Fund  Balance  may be
reduced.

    In no event  will the  Specified Subordination  Reserve Fund  Balance for  a
Series  ever be  required to  exceed the Subordinated  Amount. In  the event the
Subordination Reserve Fund is depleted before the Subordinated Amount is reduced
to zero,  the Senior  Certificateholders will  continue to  have a  preferential
right,  to  the extent  specified in  the  applicable Prospectus  Supplement, to
receive  current  distributions  of  amounts  that  would  otherwise  have  been
distributable  to the Subordinated Certificateholders to  the extent of the then
Subordinated Amount.

    After  the   Subordinated   Amount   is  reduced   to   zero,   the   Senior
Certificateholders   of  a  Series  will,  unless  otherwise  specified  in  the
applicable Prospectus  Supplement,  nonetheless  have a  preferential  right  to
receive  payment  of  Senior Class  Shortfall  Accruals and  interest  which has
accrued thereon from amounts that would otherwise have been distributable to the
Subordinated Certificateholders.  The Senior  Certificateholders will  otherwise
bear  their proportionate share  of any losses  realized on the  Trust Estate in
excess of the Subordinated Amount.

    Amounts held  from time  to time  in the  Subordination Reserve  Fund for  a
Series  will be held  for the benefit  of the Senior  Certificateholders of such
Series until withdrawn from the Subordination Reserve Fund as described below.

    If on  any Distribution  Date while  the Subordinated  Amount exceeds  zero,
there  is a Senior Class Shortfall,  the Senior Class Certificateholders will be
entitled to  receive from  current payments  on the  Mortgage Loans  that  would
otherwise  have been distributable to Subordinated Certificateholders the amount
of such Senior Class  Shortfall. If such current  payments are insufficient,  an
amount  equal  to  the  lesser of:  (i)  the  entire amount  on  deposit  in the
Subordination Reserve  Fund  available for  such  purpose; or  (ii)  the  amount
necessary  to  cover  the Senior  Class  Shortfall  will be  withdrawn  from the
Subordination Reserve Fund. Amounts representing investment earnings on  amounts
held in the Subordination Reserve Fund will not be available to make payments to
the  Senior Certificateholders.  If current payments  on the  Mortgage Loans and
amounts available in the Subordination Reserve Fund are insufficient to pay  the
entire  Senior Class Shortfall, then amounts held in the Certificate Account for
future  distributions  will   be  distributed   as  necessary   to  the   Senior
Certificateholders.

    Amounts  withdrawn  from the  Subordination Reserve  Fund  for a  Series and
deposited in  the Certificate  Account for  such Series  will be  charged  first
against amounts in the Subordination Reserve Fund other than the Initial Deposit
for such Series, and thereafter against such Initial Deposit.

    Any amounts in the Subordination Reserve Fund for a Series on a Distribution
Date  in excess of the Specified Subordination Reserve Fund Balance on such date
prior to the time the  Subordinated Amount for such  Series is reduced to  zero,
and any amounts remaining in the Subordination Reserve Fund for such Series upon
termination  of  the  trust  created by  the  applicable  Pooling  and Servicing
Agreement, will be paid, unless otherwise specified in the applicable Prospectus
Supplement, to the Subordinated Certificateholders of such Series in  accordance
with  their pro rata ownership thereof, or, in the case of a Series with respect
to which an election has  been made to treat the  Trust Estate (or a  segregated
pool of assets therein) as a REMIC, first to the Residual Certificateholders (to
the  extent of  any portion  of the Initial  Deposit, if  any, and undistributed
reinvestment earnings  attributable thereto),  and  second to  the  Subordinated
Certificateholders  of such  Series, in each  case in accordance  with their pro
rata  ownership  thereof.   Amounts  permitted  to   be  distributed  from   the
Subordination  Reserve Fund for a Series will no longer be subject to any claims
or rights of the Senior Certificateholders of such Series.

    Funds in the  Subordination Reserve Fund  for a Series  will be invested  as
provided  in the applicable Pooling and  Servicing Agreement in certain types of
eligible investments ("Eligible Investments"). If an

                                       35
<PAGE>
election has been made to treat the Trust Estate (or a segregated pool of assets
therein) as a REMIC, no more than 30% of the income or gain of the Subordination
Reserve Fund  in  any  taxable year  may  be  derived from  the  sale  or  other
disposition  of investments held for less than three months in the Subordination
Reserve Fund. The earnings on such investments will be withdrawn and paid to the
Subordinated Certificateholders of such Series or to the holders of the Residual
Certificates, in the event  that an election  has been made  to treat the  Trust
Estate (or a segregated pool of assets therein) with respect to such Series as a
REMIC,  in accordance with their  respective interests. Investment income earned
on amounts held  in the  Subordination Reserve Fund  will not  be available  for
distribution to the Senior Certificateholders or otherwise subject to any claims
or rights of the Senior Certificateholders.

    Eligible  Investments for monies deposited in the Subordination Reserve Fund
will be specified in the applicable Pooling and Servicing Agreement and,  unless
otherwise provided in the applicable Prospectus Supplement, will mature no later
than the next Distribution Date.

    Holders  of Subordinated  Certificates of a  Series will not  be required to
refund any amounts which have been  properly distributed to them, regardless  of
whether  there are sufficient  funds to distribute  to Senior Certificateholders
the amounts to which they are later entitled.

    If  specified  in  the  Prospectus  Supplement  relating  to  a  Series   of
Certificates,  the Subordination Reserve Fund may  be funded in any other manner
acceptable to the  Rating Agency  and consistent with  an election,  if any,  to
treat  the Trust Estate (or a segregated pool of assets therein) for such Series
as a REMIC, as will be more fully described in such Prospectus Supplement.

  SHIFTING INTEREST CERTIFICATES

    If specified  in the  applicable Prospectus  Supplement, the  rights of  the
holders  of  the  Subordinated Certificates  of  a Series  of  Shifting Interest
Certificates to receive distributions with respect to the Mortgage Loans in  the
related  Trust Estate will be subordinated to  such rights of the holders of the
Senior Certificates of the same Series to the extent described below, except  as
otherwise  set  forth  in  such  Prospectus  Supplement.  This  subordination is
intended to  enhance the  likelihood of  regular receipt  by holders  of  Senior
Certificates  of the full amount of  scheduled monthly payments of principal and
interest due them and to provide limited protection to the holders of the Senior
Certificates against losses due to mortgagor defaults.

    The protection afforded to the holders of Senior Certificates of a Series of
Shifting Interest Certificates by the subordination feature described above will
be effected by the preferential right of  such holders to receive, prior to  any
distribution  being made in respect of  the related Subordinated Certificates on
each Distribution Date, current distributions  on the related Mortgage Loans  of
principal  and interest  due them  on each  Distribution Date  out of  the funds
available for distribution on such date in the related Certificate Account  and,
to  the extent described below,  by the right of  such holders to receive future
distributions on the Mortgage  Loans that would otherwise  have been payable  to
the holders of Subordinated Certificates.

    Losses  realized on liquidated Mortgage Loans (other than certain liquidated
Mortgage Loans that are Special Hazard  Mortgage Loans as described below)  will
be  allocated to the holders of Subordinated Certificates through a reduction of
the amount of principal payments on the Mortgage Loans to which such holders are
entitled. Prior to the Cross-Over Date,  holders of Senior Certificates of  each
Class  entitled to  a percentage of  principal payments on  the related Mortgage
Loans will be  entitled to  receive, as part  of their  respective Senior  Class
Distribution  Amounts  payable  on each  Distribution  Date in  respect  of each
Mortgage Loan that  became a  liquidated Mortgage  Loan in  the preceding  month
(subject  to the additional limitation  described below applicable to liquidated
Mortgage Loans that are Special Hazard Mortgage Loans), their respective  shares
of  the  Scheduled  Principal Balance  of  each such  liquidated  Mortgage Loan,
together with interest  accrued at  the applicable Net  Mortgage Interest  Rate,
irrespective of whether net Liquidation Proceeds realized thereon are sufficient
to  cover such amount. For  a description of the  full Senior Class Distribution
Amount  payable  to  holders  of   Senior  Certificates  of  each  Series,   see
"Description of the Certificates--Distributions to Percentage
Certificateholders--Shifting Interest Certificates."

                                       36
<PAGE>
    On each Distribution Date occurring on or after the Cross-Over Date, holders
of  Senior  Certificates of  each Class  entitled to  a percentage  of principal
payments will  generally  receive, as  part  of their  respective  Senior  Class
Distribution  Amounts,  only  their  respective shares  of  the  net Liquidation
Proceeds actually  realized in  respect of  the applicable  liquidated  Mortgage
Loans  after  reimbursement  to  the  Servicer  of  any  previously unreimbursed
Periodic Advances  made  in  respect  of such  liquidated  Mortgage  Loans.  See
"Description of the Certificates--Distributions to Percentage
Certificateholders--Shifting Interest Certificates."

    In  the event that a  Mortgage Loan becomes a  liquidated Mortgage Loan as a
result of a hazard not insured against under a standard hazard insurance  policy
of  the type described herein (a "Special Hazard Mortgage Loan"), the holders of
Senior Certificates of each Class entitled to a percentage of principal payments
on the related Mortgage  Loans will be  entitled to receive  in respect of  each
Mortgage  Loan  which became  a Special  Hazard Mortgage  Loan in  the preceding
month, as part of their respective Senior Class Distribution Amounts payable  on
each  Distribution  Date prior  to the  Special  Hazard Termination  Date, their
respective shares  of the  Scheduled Principal  Balance of  such Mortgage  Loan,
together  with interest  accrued at the  applicable Net  Mortgage Interest Rate,
rather than  their  respective  shares  of  net  Liquidation  Proceeds  actually
realized.  The Special Hazard Termination Date for a Series of Certificates will
be the  earlier to  occur of  (i) the  date on  which cumulative  net losses  in
respect  of Special Hazard Mortgage Loans  exceed the Special Hazard Loss Amount
specified in the applicable Prospectus  Supplement or (ii) the Cross-Over  Date.
Since  the amount of the Special Hazard Loss Amount for a Series of Certificates
is expected to be  less than the  amount of principal  payments on the  Mortgage
Loans  to which the holders of the  Subordinated Certificates of such Series are
initially entitled (such amount being subject to reduction, as described  above,
as  a result of allocation of losses  on other liquidated Mortgage Loans as well
as Special Hazard Mortgage Loans),  the holders of Subordinated Certificates  of
such  Series will bear the risk of losses in the case of Special Hazard Mortgage
Loans to a lesser extent than they will bear losses on other liquidated Mortgage
Loans. Once the Special Hazard Termination Date has occurred, holders of  Senior
Certificates of each Class entitled to payments of principal will be entitled to
receive,  as part  of their respective  Senior Class  Distribution Amounts, only
their respective shares of net  Liquidation Proceeds realized on Special  Hazard
Mortgage  Loans (less the total amount  of delinquent installments in respect of
each such  Special Hazard  Mortgage Loan  that were  previously the  subject  of
distributions  to  the  holders  of  Senior  Certificates  paid  out  of amounts
otherwise distributable to the holders of the Subordinated Certificates of  such
Series).  The outstanding principal balance of each such Class will, however, be
reduced by such Class's specified percentage of the Scheduled Principal  Balance
of   each  such   Special  Hazard  Mortgage   Loan.  See   "Description  of  the
Certificates--Distributions to Percentage Certificateholders--Shifting  Interest
Certificates."

    If  the cumulative net losses  on all Mortgage Loans  in a Trust Estate that
have become Special Hazard Mortgage  Loans in the months  prior to the month  in
which a Distribution Date occurs would exceed the Special Hazard Loss Amount for
a  Series of Certificates, that portion  of the Senior Class Distribution Amount
as of  such Distribution  Date for  each Class  of Senior  Certificates of  such
Series  entitled to a percentage of principal  payments on the Mortgage Loans in
the related Trust  Estate attributable  to Mortgage Loans  which became  Special
Hazard Mortgage Loans in the month preceding the month of such Distribution Date
will  be calculated not on the basis of the Scheduled Principal Balances of such
Special Hazard Mortgage Loans but rather will be computed as an amount equal  to
the  sum of (i) the excess of the Special Hazard Loss Amount over the cumulative
net losses on all  Mortgage Loans that became  Special Hazard Mortgage Loans  in
the  months prior to the month of such  Distribution Date and (ii) the excess of
(a) the product of the percentage of  principal payments to which such Class  is
entitled  multiplied by the  aggregate net Liquidation  Proceeds of the Mortgage
Loans which became  Special Hazard  Mortgage Loans  in the  month preceding  the
month  of  such  Distribution  Date  over (b)  the  total  amount  of delinquent
installments in  respect  of  such  Special  Hazard  Mortgage  Loans  that  were
previously  the  subject of  distributions  to such  Class  paid out  of amounts
otherwise distributable to the holders of the related Subordinated Certificates.

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<PAGE>
    Although  the subordination feature  described above is  intended to enhance
the likelihood of  timely payment of  principal and interest  to the holders  of
Senior  Certificates,  shortfalls  could result  in  certain  circumstances. For
example, a shortfall in  the payment of principal  otherwise due the holders  of
Senior  Certificates could occur if  losses realized on the  Mortgage Loans in a
Trust Estate  were exceptionally  high  and were  concentrated in  a  particular
month.   See  "Description  of  the  Certificates--Distributions  to  Percentage
Certificateholders--Shifting Interest  Certificates" for  a description  of  the
consequences of any shortfall of principal or interest.

    The  holders of Subordinated Certificates will not be required to refund any
amounts previously properly distributed to them, regardless of whether there are
sufficient funds on a subsequent Distribution  Date to make a full  distribution
to holders of each Class of Senior Certificates of the same Series.

OTHER CREDIT ENHANCEMENT

    In  addition to subordination as discussed  above, credit enhancement may be
provided with respect to  any Series of Certificates  in any other manner  which
may  be described  in the applicable  Prospectus Supplement,  including, but not
limited to,  credit enhancement  through an  alternative form  of  subordination
and/or one or more of the methods described below.

  LIMITED GUARANTEE

    If  so specified in  the Prospectus Supplement  with respect to  a Series of
Certificates, credit  enhancement may  be  provided in  the  form of  a  limited
guarantee issued by a guarantor named therein.

  LETTER OF CREDIT

    Alternative  credit support with respect to  a Series of Certificates may be
provided by  the  issuance of  a  letter of  credit  by the  bank  or  financial
institution  specified in  the applicable  Prospectus Supplement.  The coverage,
amount and frequency of any reduction in coverage provided by a letter of credit
issued with  respect to  a  Series of  Certificates will  be  set forth  in  the
Prospectus Supplement relating to such Series.

  POOL INSURANCE POLICIES

    If  so  specified  in the  Prospectus  Supplement  relating to  a  Series of
Certificates, the Seller will  obtain a pool insurance  policy for the  Mortgage
Loans in the related Trust Estate. The pool insurance policy will cover any loss
(subject  to the  limitations described in  a related  Prospectus Supplement) by
reason of default to the  extent a related Mortgage Loan  is not covered by  any
primary  mortgage insurance policy.  The amount and principal  terms of any such
coverage will be set forth in the Prospectus Supplement.

  SPECIAL HAZARD INSURANCE POLICIES

    If so specified in the applicable Prospectus Supplement, for each Series  of
Certificates  as to which a  pool insurance policy is  provided, the Seller will
also obtain a special  hazard insurance policy for  the related Trust Estate  in
the amount set forth in such Prospectus Supplement. The special hazard insurance
policy  will, subject to the limitations  described in the applicable Prospectus
Supplement, protect against  loss by  reason of damage  to Mortgaged  Properties
caused  by certain hazards not insured against under the standard form of hazard
insurance policy for the respective states in which the Mortgaged Properties are
located. The amount and principal terms of  any such coverage will be set  forth
in the Prospectus Supplement.

  MORTGAGOR BANKRUPTCY BOND

    If  so specified in  the applicable Prospectus  Supplement, losses resulting
from a  bankruptcy proceeding  relating to  a mortgagor  affecting the  Mortgage
Loans in a Trust Estate with respect to a Series of Certificates will be covered
under  a mortgagor bankruptcy bond (or any other instrument that will not result
in a downgrading of  the rating of  the Certificates of a  Series by the  Rating
Agency or Rating Agencies that rated such Series). Any mortgagor bankruptcy bond
or    such    other   instrument    will    provide   for    coverage    in   an

                                       38
<PAGE>
amount meeting the criteria of the  Rating Agency or Rating Agencies rating  the
Certificates  of  the related  Series, which  amount  will be  set forth  in the
related Prospectus  Supplement.  The amount  and  principal terms  of  any  such
coverage will be set forth in the Prospectus Supplement.

                      PREPAYMENT AND YIELD CONSIDERATIONS

PASS-THROUGH RATES AND INTEREST RATES

    Any  Class of Certificates of a Series may have a fixed Pass-Through Rate or
Interest Rate, or  a Pass-Through Rate  or Interest Rate  which varies based  on
changes  in an index or based on changes with respect to the underlying Mortgage
Loans (such as, for  example, varying on  the basis of  changes in the  weighted
average Net Mortgage Interest Rate of the underlying Mortgage Loans).

    The  Prospectus Supplement  for each Series  will specify the  range and the
weighted average of the Mortgage Interest Rates and, if applicable, Net Mortgage
Interest Rates for the Mortgage Loans  underlying such Series as of the  Cut-Off
Date.  If the Trust  Estate includes adjustable-rate  Mortgage Loans or includes
Mortgage Loans with different Net Mortgage Interest Rates, the weighted  average
Net  Mortgage Interest Rate may  vary from time to time  as set forth below. See
"The Trust Estates." The  Prospectus Supplement for a  Series will also  specify
the  initial weighted average Pass-Through Rate  or Interest Rate for each Class
of Certificates of such Series and  will specify whether each such  Pass-Through
Rate or Interest Rate is fixed or is variable.

    The  Net Mortgage Interest  Rate for any adjustable  rate Mortgage Loan will
change with  any  changes in  the  index  specified in  the  related  Prospectus
Supplement  on which such Mortgage Interest  Rate adjustments are based, subject
to any applicable periodic or aggregate  caps or floors on the related  Mortgage
Interest  Rate. The weighted average Net  Mortgage Interest Rate with respect to
any Series  may vary  due  to changes  in the  Net  Mortgage Interest  Rates  of
adjustable  rate Mortgage  Loans, to  the timing  of the  Mortgage Interest Rate
readjustments of  such Mortgage  Loans  and to  different  rates of  payment  of
principal  of fixed or adjustable rate Mortgage Loans bearing different Mortgage
Interest Rates. See "Prepayment and Yield Considerations."

SCHEDULED DELAYS IN DISTRIBUTIONS

    At the date of initial issuance  of the Certificates of each Series  offered
hereby,  the initial purchasers  of a Class of  Certificates (other than certain
Classes of Residual Certificates)  will be required to  pay accrued interest  at
the  applicable  Pass-Through Rate  or  Interest Rate  for  such Class  from the
Cut-Off Date for such Series to, but  not including, the date of issuance.  With
respect  to Standard Certificates or  Stripped Certificates, the effective yield
to Certificateholders  will  be  below  the  yield  otherwise  produced  by  the
applicable  Pass-Through Rate because the distribution of principal and interest
which is due on each Due  Date will not be made until  the 25th day (or if  such
25th day is not a business day, the business day immediately following such 25th
day)  of  the  month  in  which  such  Due  Date  occurs  (or  until  such other
Distribution Date specified  in the  applicable Prospectus  Supplement). To  the
extent  set forth in the related Prospectus Supplement, Multi-Class Certificates
may provide for distributions of interest accrued during periods ending prior to
the related Distribution Date. In any  such event, the nature of such  scheduled
delays  in  distribution  and  the  impact  on  the  yield  of  such Multi-Class
Certificates will be set forth in the related Prospectus Supplement.

EFFECT OF PRINCIPAL PREPAYMENTS

    When a Mortgage Loan is prepaid in full, the mortgagor pays interest on  the
amount  prepaid only to  the date of prepayment  and not thereafter. Liquidation
Proceeds (as defined  herein) and  amounts received in  settlement of  insurance
claims  are  also likely  to include  interest only  to the  time of  payment or
settlement. When a Mortgage Loan is  prepaid in part, an interest shortfall  may
result  depending on the timing of the receipt of the partial prepayment and the
timing of when those  prepayments are passed  through to Certificateholders.  To
partially  mitigate this reduction in yield, the Pooling and Servicing Agreement
relating to a Series will provide, unless otherwise specified in the  applicable
Prospectus Supplement, that with

                                       39
<PAGE>
respect  to any principal prepayment in full of any Mortgage Loan underlying the
Certificates of such Series, the Servicer will pay into the Certificate  Account
for  such Series  to the extent  funds are  available for such  purpose from the
aggregate Servicing  Fees  (or  portion  thereof as  specified  in  the  related
Prospectus  Supplement) which  the Servicer is  entitled to  receive relating to
mortgagor payments or other recoveries distributed to Certificateholders on  the
related  Distribution Date, the amount, if any,  of interest at the Net Mortgage
Interest Rate  for such  Mortgage Loan  for the  period from  the date  of  such
prepayment  in  full  to  and including  the  end  of the  month  in  which such
prepayment  in  full  occurs.  Unless  otherwise  specified  in  the  applicable
Prospectus  Supplement, no comparable  offset against the  Servicing Fee will be
provided with respect  to partial  prepayments or liquidations  of any  Mortgage
Loans  and  any  interest shortfall  arising  from partial  prepayments  or from
liquidations either will be covered by means of the subordination of the  rights
of Subordinated Certificateholders or any other credit support arrangements. See
"Servicing of the Mortgage Loans--Adjustment to Servicing Fee in Connection with
Prepaid Mortgage Loans."

    A  lower  rate of  principal prepayments  than anticipated  would negatively
affect the total return to  investors in any Certificates  of a Series that  are
offered  at a discount to their principal  amount and a higher rate of principal
prepayments than  anticipated  would  negatively  affect  the  total  return  to
investors in the Certificates of a Series that are offered at a premium to their
principal  amount.  The  yield  on  Stripped  Certificates  may  be particularly
sensitive to prepayment rates, and further information with respect to yield  on
such  Stripped  Certificates  will  be  included  in  the  applicable Prospectus
Supplement.

WEIGHTED AVERAGE LIFE OF CERTIFICATES

    The Mortgage Loans may  be prepaid in  full or in part  at any time.  Unless
otherwise  specified in the  applicable Prospectus Supplement,  no Mortgage Loan
will provide  for  a  prepayment  penalty. Unless  otherwise  specified  in  the
applicable  Prospectus Supplement,  all fixed  rate Mortgage  Loans will contain
due-on-sale clauses permitting the mortgagee to accelerate the maturities of the
Mortgage Loans  upon conveyance  of the  related Mortgaged  Properties, and  all
adjustable-rate  Mortgage Loans will permit creditworthy borrowers to assume the
then-outstanding indebtedness on the Mortgage Loans.

    Prepayments on Mortgage Loans are commonly measured relative to a prepayment
standard or  model.  The  Prospectus  Supplement for  each  Series  of  Stripped
Certificates  may, and the Prospectus Supplement  for each Series of Multi-Class
Certificates will, describe one or more such prepayment standards or models  and
contain  tables setting forth the projected yields  to maturity on each Class or
Subclass of Certificates of a Series  of Stripped Certificates or, with  respect
to a Series of Multi-Class Certificates, the weighted average life of each Class
and  the percentage of the  original aggregate Stated Amount  of each Class that
would be outstanding on  specified Distribution Dates for  such Series based  on
the assumptions stated in such Prospectus Supplement, including assumptions that
prepayments  on the  Mortgage Loans are  made at rates  corresponding to various
percentages of  the  prepayment  standard  or model  specified  in  the  related
Prospectus Supplement.

    There  is no  assurance that prepayment  of the Mortgage  Loans underlying a
Series of Certificates will conform to  any level of the prepayment standard  or
model  specified  in the  related Prospectus  Supplement.  A number  of factors,
including  homeowner  mobility,  economic  conditions,  changes  in  mortgagors'
housing  needs, job transfers, unemployment or, in the case of borrowers relying
on commission income  and self-employed borrowers,  significant fluctuations  in
income  or adverse economic conditions, mortgagors' net equity in the properties
securing the  mortgages,  servicing  decisions,  enforceability  of  due-on-sale
clauses,  mortgage  market interest  rates,  mortgage recording  taxes,  and the
availability of mortgage  funds, may affect  prepayment experience. In  general,
however,  if  prevailing interest  rates fall  significantly below  the Mortgage
Interest Rates on the  Mortgage Loans underlying a  Series of Certificates,  the
prepayment  rates  of  such Mortgage  Loans  are  likely to  be  higher  than if
prevailing rates remain at or above the  rates borne by such Mortgage Loans.  It
should  be noted  that Certificates of  a Series  may evidence an  interest in a
Trust Estate with different Mortgage Interest Rates. Accordingly, the prepayment
experience of such Certificates will to some extent be a function of the mix  of
interest   rates   of   the  Mortgage   Loans.   In  addition,   the   terms  of

                                       40
<PAGE>
the Pooling and  Servicing Agreement will  require the Servicer  to enforce  any
due-on-sale  clause to  the extent  it has  knowledge of  the conveyance  or the
proposed conveyance  of the  underlying Mortgaged  Property; provided,  however,
that  any enforcement action that  the Servicer in good  faith determines may be
restricted by law or that would impair or threaten to impair any recovery  under
any  related insurance policy  will not be required  and provided, further, that
the Servicer  may  permit  the  assumption  of  defaulted  Mortgage  Loans.  See
"Servicing   of   the  Mortgage   Loans--Enforcement  of   Due-on-Sale  Clauses;
Realization Upon Defaulted  Mortgage Loans"  and "Certain Legal  Aspects of  the
Mortgage  Loans--'Due-On-Sale' Clauses" for a  description of certain provisions
of each Pooling and Servicing Agreement and certain legal developments that  may
affect the prepayment experience on the Mortgage Loans.

    At the request of the mortgagor, the Servicer may allow the refinancing of a
Mortgage  Loan  in  any  Trust  Estate  by  accepting  prepayments  thereon  and
permitting a new  loan secured by  a Mortgage  on the same  property. Upon  such
refinancing,  the new loan will not be included in the Trust Estate. A mortgagor
may be legally entitled to require the Servicer to allow such a refinancing. Any
such refinancing  will have  the same  effect as  a prepayment  in full  of  the
related  Mortgage Loan. In  this regard PHMC  may, from time  to time, implement
programs designed  to  encourage refinancing  through  PHMC, including  but  not
limited  to general or  targeted solicitations, or  the offering of pre-approved
applications, reduced  origination fees  or closing  costs, or  other  financial
incentives.  The Servicer may  also encourage refinancing  of defaulted Mortgage
Loans, including  Mortgage Loans  that would  permit creditworthy  borrowers  to
assume the outstanding indebtedness.

    The  Seller will  be obligated,  under certain  circumstances, to repurchase
certain of  the Mortgage  Loans. In  addition, if  specified in  the  applicable
Prospectus  Supplement, the Pooling and Servicing Agreement will permit, but not
require, the Seller, and the terms of certain insurance policies relating to the
Mortgage Loans may  permit the  applicable insurer, to  purchase any  delinquent
Mortgage Loan. The proceeds of any such purchase or repurchase will be deposited
in the related Certificate Account and such purchase or repurchase will have the
same effect as a prepayment in full of the related Mortgage Loan. See "The Trust
Estates--Mortgage  Loans--Assignment  of  the  Mortgage  Loans  to  the Trustee"
and"--Optional Repurchases."  In addition,  if so  specified in  the  applicable
Prospectus  Supplement, the Servicer  will have the option  to purchase all, but
not less than all, of the Mortgage  Loans in any Trust Estate under the  limited
conditions   specified  in  such  Prospectus   Supplement.  For  any  Series  of
Certificates for which an election has been made to treat the Trust Estate (or a
segregated pool of assets therein) as  a REMIC, any such purchase or  repurchase
may  be effected only pursuant to a  "qualified liquidation," as defined in Code
Section 860F(a)(4)(A). See  "The Pooling  and Servicing  Agreement--Termination;
Purchase of Mortgage Loans."

                                   THE SELLER

    The  Prudential  Home Mortgage  Securities Company,  Inc. (the  "Seller"), a
direct, wholly-owned subsidiary  of The Prudential  Home Mortgage Company,  Inc.
("PHMC")  and  an  indirect,  wholly-owned  subsidiary  of  Residential Services
Corporation of America and The Prudential Insurance Company of America, a mutual
insurance  company  organized  under  the  laws  of  the  State  of  New  Jersey
("Prudential  Insurance"), is the  successor in interest  to The Prudential Home
Mortgage Securities  Company,  a  limited  purpose  general  partnership  formed
pursuant  to the Partnership Law  of the State of New  York on December 30, 1987
("PHMSCo."). The Seller was incorporated in the State of Delaware on August  21,
1985  under the name Dryden Guaranty Corporation, but did not actively engage in
business prior  to December  28, 1988.  On  July 18,  1988, the  Certificate  of
Incorporation  of the Seller was amended to, among other things, change the name
of Dryden  Guaranty  Corporation  to The  Prudential  Home  Mortgage  Securities
Company,  Inc. and  to limit the  purposes for  which the Seller  exists and, on
December 28, 1988, the Seller acquired all of the assets and assumed all of  the
liabilities of PHMSCo., including but not limited to all of PHMSCo.'s rights and
obligations  under the  Pooling and Servicing  Agreements relating  to series of
mortgage pass-through certificates previously sold by it.

                                       41
<PAGE>
    The limited purposes of the Seller are, in general, to acquire, own and sell
mortgage loans;  to issue,  acquire, own,  hold and  sell mortgage  pass-through
securities  which represent  ownership interests in  mortgage loans, collections
thereon and related properties; and to  engage in any acts which are  incidental
to, or necessary, suitable or convenient to accomplish, the foregoing.

    The  Seller  maintains  its principal  office  at 7470  New  Technology Way,
Frederick, Maryland 21701. Its telephone number is (301) 846-8199.

    At the time of  the formation of  any Trust Estate, the  Seller will be  the
sole  owner of all the related Mortgage Loans. The Seller will have acquired the
Mortgage Loans included in any Trust Estate from PHMC or another affiliate.  The
Seller's  only obligation with respect to the Certificates of any Series will be
to repurchase or substitute for Mortgage Loans in a Trust Estate in the event of
defective documentation  or  upon the  failure  of certain  representations  and
warranties  made by the Seller. See  "The Trust Estates-- Assignment of Mortgage
Loans to the Trustee."

                                      PHMC

GENERAL

    PHMC is the successor in interest to The Prudential Home Mortgage Company, a
joint venture  which was  formed under  the laws  of the  State of  New York  on
November 7, 1984 ("PHMCo."). Immediately prior to November 1987, the partners of
PHMCo.,  each  of which  owned a  50% interest  in the  joint venture,  were The
Prudential Mortgage  Capital Company,  Inc.,  a New  Jersey corporation  and  an
indirect,  wholly  owned  subsidiary  of Prudential  Insurance  ("PMCC")  and TR
Venture Corporation ("TRVC"), a Delaware corporation indirectly, wholly owned by
Salomon Inc and affiliated with Salomon Brothers Inc. During November 1987, PMCC
transferred a 0.1% interest in PHMCo. to its affiliate, PIC Realty  Corporation,
and,  immediately thereafter, the interest  of TRVC in PHMCo.  was retired. As a
consequence thereof,  PHMCo.  became  indirectly,  wholly  owned  by  Prudential
Insurance, which, in turn, also indirectly, wholly owns the Seller.

    PHMC was incorporated in the State of New Jersey on September 18, 1978 under
the  name Newark Rehabilitation,  Inc., but did not  actively engage in business
prior to October 31, 1988. On March 3, 1988, Newark Rehabilitation, Inc. changed
its name to  The Prudential  Home Mortgage Company,  Inc., and,  on October  31,
1988,  PHMC acquired  all of the  assets and  assumed all of  the liabilities of
PHMCo. As used herein and in each Prospectus Supplement, references to PHMC that
relate to activities  occurring prior  to October 31,  1988 are  to PHMCo.  From
October  31,  1988  to  December  19, 1989,  PHMC  was  a  direct,  wholly owned
subsidiary of PMCC. On December  19, 1989, all of the  common stock of PHMC  was
transferred   to,  and  PHMC  became  a  direct,  wholly  owned  subsidiary  of,
Residential Services Corporation of America,  a direct, wholly owned  subsidiary
of Prudential Insurance.

    PHMC  is engaged principally in the  business of originating and purchasing,
for its own account and for the account of its affiliates, residential  mortgage
loans  secured by one- to four-family homes located throughout the United States
and made in order to purchase those homes or to refinance prior loans secured by
such homes. PHMC  also processes  loans for other  originators. See  "--Mortgage
Origination Processing" below. The executive offices of PHMC are located at 8000
Maryland  Avenue, Suite 1400, Clayton, Missouri  63105, and its telephone number
is (314) 726-3900.

    PHMC is  an affiliate  of  Lender's Service,  Inc., a  Delaware  corporation
("LSI"),  formerly known as Lender's Service Acquisition Corporation, which is a
wholly owned subsidiary of  Residential Services Corporation  of America and  an
indirect  wholly  owned subsidiary  of Prudential  Insurance,  and which  is the
successor in interest to Lender's Service, Inc., a Pennsylvania corporation. LSI
maintains  a  relationship  with  a  nationwide  network  of  appraisers;  these
appraisers  perform work for LSI on an independent-contractor basis. Appraisals,
review appraisals  and recertifications  obtained  in connection  with  mortgage
loans  originated  or  acquired  by  PHMC  may  be  obtained  through  LSI.  See
"--Mortgage Loan Underwriting"  below. LSI  may also  act as  a title  insurance
agent  for  various  title  insurance  companies,  and  as  a  vendor  of credit

                                       42
<PAGE>
reports for UCB Services, a national mortgage reporting company, with respect to
mortgage loans,  including the  Mortgage Loans.  PHMC is  also an  affiliate  of
Prudential  Property and  Casualty Insurance  Company, a  wholly owned, indirect
subsidiary  of  Prudential  Insurance,  which  offers  casualty  insurance   for
residential  properties, which may include the  Mortgaged Properties. PHMC is an
affiliate of The Prudential  Bank and Trust Company,  a Georgia bank, for  which
PHMC  processes  applications  for  home  equity  loans  secured  by residential
properties, which  may  include  the  Mortgaged  Properties.  PHMC  is  also  an
affiliate of The Prudential Real Estate Affiliates, Inc., which may, directly or
through  real estate brokers, refer  loan originations to PHMC.  PHMC is also an
affiliate of The Prudential Savings Bank, a savings and loan association,  which
may  offer services  to the mortgagors  of the  Mortgage Loans. PHMC  is also an
affiliate  of  Prudential  Residential  Services  Limited  Partnership  and  The
Prudential  Real Estate  Affiliates, Inc.  (collectively, "PRR").  PRR primarily
offers relocation  services to  corporate  employees and  residential  brokerage
services  to the public. PRR may, directly or through real estate brokers, refer
loan originations  to PHMC.  PHMC is  also an  affiliate of  a number  of  other
insurance providers (including providers of life, health, disability, automobile
and  personal catastrophe insurance) and financial services providers (including
providers of annuities,  mutual funds, retirement  accounts, financial  planning
services,   credit  cards,  securities  and   commodities  brokerage  and  asset
management), all of which may offer  services to the mortgagors of the  Mortgage
Loans.

    PHMC  conducts its  mortgage loan processing  through centralized production
offices located in Costa Mesa, California, Frederick, Maryland and  Minneapolis,
Minnesota.  At  these locations,  PHMC receives  applications for  home mortgage
loans on toll-free  telephone numbers that  can be called  from anywhere in  the
United   States.  In  addition,  PHMC   maintains  marketing  offices  in  major
metropolitan centers in the United States. While the manner in which it conducts
its business does not generally entail face-to-face interactions with borrowers,
PHMC has varying  degrees of direct  contact with borrowers  under the  mortgage
origination  and acquisition programs  described below. Since  PHMC takes a more
active role in loan  processing in connection with  those programs that  involve
the referral of applicants, rather than the purchase of completed loan packages,
borrower  contact  tends  to  be  more  frequent  where  PHMC  functions  as the
originator of the mortgage loans.

    On May 31, 1991, PHMC acquired  certain assets and operations of A  Mortgage
Company,  formerly America's  Mortgage Company ("AMC"),  located in Springfield,
Illinois. AMC's business consisted primarily of the origination and  acquisition
of  mortgage loans insured  or guaranteed by  the Federal Housing Administration
and the  United States  Department  of Veterans  Affairs ("FHA/VA  loans"),  the
issuance  and sale of securities guaranteed  by the Government National Mortgage
Association ("GNMA"), which securities were backed by pools of FHA/VA loans, and
the servicing of such mortgage loans.  These activities are now being  conducted
by  PHMC  from the  Springfield, Illinois  location.  The description  of PHMC's
activities elsewhere in this  Prospectus relate to  conventional rather than  to
FHA/VA  loans, since the Mortgage  Loans to be included  in the Trust Estate for
any Series of Certificates will be comprised exclusively of conventional loans.

MORTGAGE LOAN PRODUCTION SOURCES

    Unless otherwise specified in  the applicable Prospectus Supplement,  PHMC's
primary  sources  of mortgage  loans are  (i)  selected corporate  clients, (ii)
mortgage brokers and similar  entities, and (iii)  other originators. The  first
two  categories involve  the origination of  mortgage loans by  PHMC through the
referral of applicants  to PHMC by  the respective sources;  the third  category
involves  the acquisition by PHMC of qualifying mortgage loans presented to PHMC
by such third  parties. The relative  contribution of each  of these sources  to
PHMC's  business, measured by the volume  of loans generated, tends to fluctuate
over time.

    Mortgage loans generated  through contacts  with corporate  clients or  with
mortgage  brokers and similar entities typically  involve the referral of a loan
applicant to PHMC; the gathering of credit-related and

                                       43
<PAGE>
property-specific information by PHMC;  and the decision by  PHMC, based on  its
analysis  of such information, as to the  suitability of its making the loan. It
is characteristic of PHMC's practice with respect to loans generated as a result
of referrals from these two sources  that PHMC, itself, orders appraisals  (most
frequently,  the original appraisals, but in  some cases, review appraisals) and
credit reports.  The  level of  involvement  by PHMC  in  other aspects  of  the
processing  of these loans varies  considerably; whereas, PHMC typically assists
the borrower referred by corporate  clients through the application stage,  PHMC
tends  to  have  limited contact  with  those borrowers  whose  applications are
processed on PHMC's behalf by certain  mortgage brokers or similar entities,  as
discussed below. Taken as a whole, however, PHMC's processing role in connection
with  loans generated either as a result  of referrals from corporate clients or
from mortgage brokers and  similar entities generally  exceeds the more  limited
processing  role  associated with  loans acquired  from PHMC's  third production
source, other  originators.  It is  PHMC's  practice  to review  the  loan  file
submitted  to  it by  the other  originator;  order a  new credit  report; under
certain limited circumstances, order  a review appraisal; and,  on the basis  of
its  analysis of both  the data that  it has received  and the data  that it has
gathered, determine  whether  to  accept  or reject  the  loan.  For  each  loan
purchased  by PHMC, the seller, or the other originator that previously sold the
loan to PHMC's seller, will have taken the borrower's loan application, obtained
the initial  credit reports,  ordered the  original appraisal  and provided  all
necessary  documentation  and disclosure  relating  to compliance  with federal,
state or local law applicable to mortgage loan origination and servicing.

    A majority of PHMC's corporate clients are companies that sponsor relocation
programs for their employees and in connection with which PHMC provides mortgage
financing. Eligibility  for  a relocation  loan  is  based, in  general,  on  an
employer's   providing  financial  assistance  to  the  relocating  employee  in
connection with a job-required  move. Although all  Subsidy Loans are  generated
through  such  corporate-sponsored  programs,  the  assistance  extended  by the
employer need  not  necessarily  take the  form  of  a loan  subsidy.  (Not  all
relocation  loans are  generated by  PHMC through  referrals from  its corporate
clients: some  relocation loans  are generated  as a  result of  referrals  from
mortgage  brokers  and similar  entities;  others are  generated  through PHMC's
acquisition of  mortgage  loans  from  other  originators.)  Also  among  PHMC's
corporate  clients are various professional associations. These associations, as
well as the other corporate clients,  promote the availability of a broad  range
of  PHMC mortgage  products to their  members or  employees, including refinance
loans, second-home loans and investment-property loans.

    Mortgage brokers, realtors (including  affiliates of Prudential  Insurance),
mortgage  bankers, commercial bankers, developers,  and builders also refer loan
applicants to PHMC.  Although the extent  to which mortgage  brokers or  similar
entities  will assist borrowers in  the application process varies considerably,
PHMC's role in the processing of  loans originated under this program  typically
involves the ordering of credit reports, as well as the ordering of the property
appraisal.  PHMC  may,  however,  permit certain  mortgage  brokers  and similar
entities to make  an initial determination  as to compliance  of mortgage  loans
with  PHMC's underwriting  guidelines. Under such  circumstances, the applicable
third parties take the loan  applications, obtain the borrowers' credit  reports
and  order  the property  appraisals from  qualified  appraisers. In  advance of
reaching a financing decision  with respect to such  loans, PHMC will  typically
order both review appraisals and additional credit reports.

    In  order  to qualify  for participation  in  PHMC's mortgage  loan purchase
programs, lending institutions must (i) meet and maintain certain net worth  and
other   financial   standards,  (ii)   demonstrate  experience   in  originating
residential  mortgage  loans,  (iii)  meet  and  maintain  certain   operational
standards,  (iv) evaluate each loan offered  to PHMC for consistency with PHMC's
underwriting guidelines and  (v) utilize the  services of qualified  appraisers.
The   contractual  arrangements  with  eligible   originators  may  involve  the
commitment by PHMC  to accept delivery  of a certain  dollar amount of  mortgage
loans over a period of time; this commitment may be satisfied either by delivery
of  mortgage loans  one at  a time or  in multiples  as aggregated  by the other
originator. In all instances, however, acceptance by PHMC is contingent upon the
loans being found  to satisfy PHMC's  program standards. PHMC  may also  acquire
portfolios of seasoned loans in negotiated transactions.

                                       44
<PAGE>
MORTGAGE LOAN UNDERWRITING

    In  determining  whether to  lend to  a particular  mortgage borrower  or to
purchase a mortgage loan, PHMC makes an assessment of the applicant's ability to
repay the loan, as well as an assessment  of the value of the property to  which
the  financing relates. The underwriting  standards that guide the determination
represent a balancing of several factors  that may affect the ultimate  recovery
of  the loan amount, including, among others,  the amount of the loan, the ratio
of the loan amount to the property value (i.e., the lower of the appraised value
of the  mortgaged property  and the  purchase price),  the borrower's  means  of
support  and the borrower's  credit history. PHMC's  guidelines for underwriting
may vary according  to the nature  of the borrower  or the type  of loan,  since
differing  characteristics may  be perceived  as presenting  different levels of
risk.

    PHMC's underwriting of  a mortgage  loan may be  based on  data obtained  by
parties  other than  PHMC that  are involved at  various stages  in the mortgage
origination or acquisition process. This typically occurs under circumstances in
which loans are subject to more  than one approval process, as when  third-party
lenders, certain mortgage brokers or similar entities that have been approved by
PHMC to process loans on its behalf, or independent contractors hired by PHMC to
perform  underwriting  services  on its  behalf  ("contract  underwriters") make
initial determinations as  to the  consistency of loans  with PHMC  underwriting
guidelines.   In  such  instances,   certain  information  may,   but  need  not
necessarily, be resolicited by PHMC in connection with its approval process. For
example, in connection with a mortgage loan that is presented to PHMC by another
originator for purchase, PHMC will typically  order a second credit report,  but
it  will only order  a review appraisal under  certain limited circumstances, in
advance of reaching a  purchase decision. However,  in connection with  mortgage
loans that are processed on PHMC's behalf by certain mortgage brokers or similar
entities,  PHMC will customarily order both a  second credit report and a review
appraisal. When contract underwriters  are used, PHMC  will generally not  order
any  supplemental  documentation but  will review  the information  collected by
these providers,  who  are trained  by  PHMC personnel  in  PHMC's  underwriting
practices  and  are  required to  review  all  loans in  accordance  with PHMC's
underwriting guidelines. In  all cases,  PHMC makes the  final determination  to
approve or deny the funding or purchase of a particular mortgage loan.

    The loan application elicits pertinent information about the applicant, with
particular  emphasis on  the applicant's financial  health (assets, liabilities,
income and expenses), the property being financed and the type of loan  desired.
A  self-employed applicant  may be  required to  submit his  or her  most recent
signed federal  income tax  returns.  With respect  to every  applicant,  credit
reports  are  obtained  from  commercial  reporting  services,  summarizing  the
applicant's credit history with  merchants and lenders. Significant  unfavorable
credit  information reported by the applicant  or a credit reporting agency must
be explained by the applicant. The type of credit report that PHMC obtains,  and
that   it  authorizes   parties  referring   loans  to   it  to   obtain,  is  a
computer-generated report that  electronically merges  the information  gathered
from   the  data  bases  of  two   major  consumer  credit  repositories  (these
repositories produce what are commonly referred to as "in-file" credit reports).
In connection  with  its underwriting  procedure,  PHMC will,  with  the  single
exception  of the use of contract underwriters,  itself order a credit report of
the type described,  whether or not  a report has  previously been ordered  with
respect  to an applicant for whom another party has processed or approved of the
loan. Certain of the credit reports that PHMC obtains may be purchased through a
credit reporting service with which LSI has a contractual relationship.

    Verifications of  employment, income,  assets or  mortgages may  be used  to
supplement   the  loan  application   and  the  credit   report  in  reaching  a
determination as  to  the  applicant's  ability  to  meet  his  or  her  monthly
obligations  on the proposed mortgage loan, as well as his or her other mortgage
payments (if  any),  living  expenses  and  financial  obligations.  A  mortgage
verification  involves  obtaining information  regarding the  borrower's payment
history with  respect to  any existing  mortgage the  applicant may  have.  This
verification  is accomplished  by either  having the  present lender  complete a
verification of mortgage form, evaluating  the information on the credit  report
concerning   the  applicant's   payment  history  for   the  existing  mortgage,
communicating, either  verbally  or in  writing,  with the  applicant's  present
lender or analyzing cancelled

                                       45
<PAGE>
checks  provided by the applicant. Verifications  of income, assets or mortgages
may be waived under certain programs offered by PHMC, but PHMC's practice is  to
obtain  verification of employment  for every loan  applicant. Waivers limit the
amount of  documentation required  for  an underwriting  decision and  have  the
effect  of  increasing the  relative  importance of  the  credit report  and the
appraisal. Such  waivers  or  reduced-documentation  options  are,  in  general,
available  for owner-occupied properties  where the ratio of  the loan amount to
the property value does  not exceed 80%.  The interest rate  may be higher  with
respect  to a loan which has been processed according to a reduced documentation
program than a loan which has been processed under a full documentation program.
Documentation requirements vary based  upon a number  of factors, including  the
purpose  of the loan, the amount of the loan and the ratio of the loan amount to
the property value. The  least restrictive reduced-documentation programs  apply
to  the applicant for  a relocation loan  and to the  borrower whose loan amount
does not exceed $600,000 and whose Loan-to-Value Ratio is not in excess of  75%.
PHMC  accepts  alternative methods  of  verification, in  those  instances where
verifications are  part  of the  underwriting  decision; for  example,  salaried
income may be substantiated either by means of a form independently prepared and
signed  by the applicant's employer  or by means of  the applicant's most recent
paystub and W-2. In cases where two  or more persons have jointly applied for  a
mortgage  loan,  the  gross  incomes  and expenses  of  all  of  the applicants,
including nonoccupant co-mortgagors, are combined and considered as a unit.

    All borrowers applying for relocation  loans with Loan-to-Value Ratios  less
than  or  equal  to  90%,  as well  as  borrowers  affiliated  with professional
associations applying for loans with Loan-to-Value Ratios less than or equal  to
80%,  and all  other borrowers applying  for non-relocation  mortgage loans with
respect to  which  the Loan-to-Value  Ratios  are less  than  or equal  to  75%,
generally must demonstrate that the ratio of their total monthly housing debt to
their  monthly gross  income does not  exceed 33%,  and that the  ratio of their
total monthly debt to their monthly gross income does not exceed 38%;  borrowers
affiliated  with professional associations  applying for non-relocation mortgage
loans with  Loan-to-Value Ratios  in  excess of  80%,  and all  other  borrowers
applying  for non-relocation mortgage loans  with Loan-to-Value Ratios in excess
of  75%,  generally  must  satisfy  28%  and  36%  ratios,  respectively.  These
calculations are based on the amortization schedule and the interest rate of the
related  loan,  with each  ratio being  computed  on the  basis of  the proposed
monthly mortgage payment.  In the  case of adjustable-rate  mortgage loans,  the
interest  rate used to  determine a mortgagor's monthly  payment for purposes of
the foregoing ratios is the initial  mortgage interest rate, which is  generally
lower  than the sum of the index  that would have been applicable at origination
plus the applicable  margin. In  evaluating applications for  Subsidy Loans  and
Buy-Down  Loans,  the  foregoing  ratios  are  determined  by  including  in the
applicant's total monthly housing  expense and total  monthly debt the  proposed
monthly  mortgage payment  reduced by  the amount  expected to  be applied  on a
monthly basis under the related subsidy  agreement or buy-down agreement or,  in
certain  cases, the  mortgage payment  that would  result from  an interest rate
approximately 2.50%  lower  than the  Mortgage  Interest Rate.  See  "The  Trust
Estates--Mortgage  Loans." These ratios may be  exceeded if, in PHMC's judgment,
certain compensating  factors are  identified and  proved to  its  satisfaction,
including  a  large downpayment,  a  large equity  position  on a  refinance, an
excellent credit history,  substantial liquid  net worth, the  potential of  the
borrower  for continued employment advancement or  income growth, or the ability
of the borrower to accumulate assets or to devote a greater portion of income to
basic needs  such  as  housing  expense. Secondary  financing  is  permitted  on
mortgage  loans  under  certain  circumstances.  In  those  cases,  the  payment
obligations under  both primary  and  secondary financing  are included  in  the
computation  of  the debt-to-income  ratios  described above,  and  the combined
amount  of  primary  and  secondary  loans   will  be  used  to  calculate   the
Loan-to-Value  Ratio. Any  secondary financing  permitted will  generally mature
prior to  the maturity  date of  the  related mortgage  loan. In  evaluating  an
application  with respect to a "non-owner-occupied" property, which PHMC defines
as a property leased to a third party  by its owner (as distinct from a  "second
home,"  which PHMC defines as an owner-occupied, non-rental property that is not
the owner's principal residence), PHMC will include projected rental income  net
of  certain mortgagor obligations  and other assumed expenses  or loss from such
property to be included in the applicant's monthly gross income or total monthly
debt in calculating the foregoing ratios. A  mortgage loan secured by a two-  to
four-family

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<PAGE>
Mortgaged  Property  is  considered  to be  an  owner-occupied  property  if the
borrower occupies  one  of  the units;  rental  income  on the  other  units  is
generally  taken into account in evaluating  the borrower's ability to repay the
mortgage loan.

    Property value  is established  in connection  with the  origination of  any
mortgage  loan  (whether  the loan  is  originated for  purchase  or refinancing
purposes) by means  of an  appraisal, which is  typically ordered  by the  party
originating  the  related  mortgage  loan. Consistent  with  this  practice, the
appraisals with respect  to the  loans generated through  corporate contacts  or
through  referrals from mortgage  brokers or other  similar entities (other than
those certain mortgage brokers or  similar entities that process mortgage  loans
on  PHMC's  behalf) are  generally ordered  by PHMC,  while the  appraisals with
respect to the loans sold  to PHMC by third-party  lenders are ordered by  those
other  originators.  PHMC  may,  however,  at  its  discretion,  order  a review
appraisal with  respect  to any  loan  generated  by a  third-party  lender;  in
addition,  PHMC typically  orders review appraisals  with respect  to loans that
certain mortgage brokers  or similar entities  process on its  behalf. A  review
appraisal, like the original appraisal, involves the making of a site visit, the
taking  of  photographs, and  the gathering  of  data on  comparable properties.
Unlike original  appraisals,  however,  review  appraisals  do  not  include  an
inspection of the interior of the house. A review appraisal is generally used to
validate  the decision made  based upon the original  appraisal. If the variance
between the original  and the  review appraisal is  significant, an  explanation
will  be sought  and the  underwriting decision  may be  reevaluated. In certain
instances, which most frequently  involve the postponement  of the closing  with
respect to a mortgage loan on a newly built home due to construction delays, the
recertification  of an appraisal  may be required.  A recertification includes a
physical inspection  of the  exterior of  the  property and  a statement  by  an
appraiser that the present value of the property is no lower than that reflected
on the original appraisal.

    There can be no assurance that the values determined by the appraisers as of
the  dates  of appraisal  represent the  prices at  which the  related Mortgaged
Properties can be sold, either as of  the dates of appraisal or at  foreclosure.
The  appraisal  of any  Mortgaged Property  reflects the  individual appraiser's
judgment as to value, based on the market values of comparable homes sold within
the recent past in comparable nearby locations and on the estimated  replacement
cost.  The appraisal relates both  to the land and to  the structure; in fact, a
significant portion  of the  appraised  value of  a  Mortgaged Property  may  be
attributable  to the value of the land  rather than to the residence. Because of
the unique  locations  and special  features  of certain  Mortgaged  Properties,
identifying  comparable  properties in  nearby locations  may be  difficult. The
appraised values of such Mortgaged Properties will be based to a greater  extent
on  adjustments made  by the  appraisers to  the appraised  values of reasonably
similar properties rather than  on objectively verifiable  sales data. See  "The
Trust Estates--Mortgage Loans" herein.

    In  connection with  all mortgage loans  that it  originates, PHMC currently
obtains appraisals through LSI. Review appraisals with respect to mortgage loans
that PHMC acquires, or with respect  to mortgage loans that PHMC originates  but
that  certain mortgage  brokers or similar  entities process on  its behalf, are
also likely  to be  obtained through  LSI.  LSI also  provides its  services  to
third-party lenders which sell mortgage loans to PHMC.

    Most  residential mortgage lenders  have not originated  mortgage loans with
Loan-to-Value Ratios  in excess  of 80%  unless primary  mortgage insurance  was
obtained. PHMC, however, does not require primary mortgage insurance on loans up
to  $400,000 that have Loan-to-Value Ratios exceeding 80% but less than or equal
to 90%.  Only owner-occupied,  primary  residences (excluding  cooperatives  and
certain  high-rise condominium  dwellings) are  eligible for  this program. Each
qualifying loan will be made  at an interest rate that  is higher than the  rate
would  be if  the Loan-to-Value  Ratio was  80% or  less or  if primary mortgage
insurance was  obtained. Loans  that do  not  qualify for  such program  may  be
approved  if primary  mortgage insurance  is obtained  from an  approved primary
mortgage insurance company. In such cases,  the excess over 75% will be  covered
by primary mortgage insurance until the unpaid principal balance of the Mortgage
Loan is reduced to an amount that will result in a Loan-to-Value Ratio less than
or equal to 80%.

                                       47
<PAGE>
    Where  permitted by law, PHMC generally  requires that a borrower include in
each monthly payment a  portion of the real  estate taxes, assessments,  primary
mortgage  insurance  (if applicable),  and hazard  insurance premiums  and other
similar items with respect to the related mortgage loan. PHMC may, however, on a
case-by-case basis,  in its  discretion not  require such  advance payments  for
certain  Mortgage Loans, based on an evaluation of the borrowers' ability to pay
such taxes and charges as they become due.

MORTGAGE ORIGINATION PROCESSING

    PHMC, or  an  affiliate  of  PHMC, may  provide  loan  processing  services,
including  document preparation, underwriting analysis and closing functions, to
other loan originators. It  is possible that PHMC  may purchase loans from  such
loan  originators,  or  from mortgage  sellers  that purchased  loans  from such
originators, that PHMC itself processed. Any  such loans purchased by PHMC  will
meet PHMC's underwriting guidelines.

SERVICING

    Prior  to  June  30,  1989, all  residential  mortgage  loans  originated or
purchased by PHMC for its own account or for the account of Prudential Insurance
were serviced by its affiliate, PMCC. On June 30, 1989, PHMC assumed all of  the
residential  mortgage servicing activities then being performed by PMCC. PHMC is
an approved servicer of FNMA, FHLMC and GNMA. As of December 31, 1992, PHMC  had
a  net  worth of  approximately  $275 million.  See  "Servicing of  the Mortgage
Loans--The Servicer" below.

                                USE OF PROCEEDS

    The net proceeds from the sale of  each Series of Certificates will be  used
by  the  Seller  for the  purchase  of  the Mortgage  Loans  represented  by the
Certificates of such Series  from PHMC. It  is expected that  PHMC will use  the
proceeds  from the  sale of  the Mortgage  Loans to  the Seller  for its general
business purposes, including, without limitation, the origination or acquisition
of new mortgage loans  and the repayment of  borrowings incurred to finance  the
origination  or  acquisition of  mortgage  loans, including  the  Mortgage Loans
underlying the Certificates of such Series.

                        SERVICING OF THE MORTGAGE LOANS

THE SERVICER

    The Servicer with  respect to  a Series of  Certificates will  be PHMC.  See
"PHMC--Servicing"  above. The Servicer may subcontract its servicing obligations
under any Pooling and  Servicing Agreement. The  Servicer will remain  primarily
liable  for any such subservicer's performance in accordance with the applicable
Pooling and Servicing Agreement. The  Servicer presently intends to  subcontract
certain  of  its  administrative  functions  under  the  Pooling  and  Servicing
Agreements to Securitized  Asset Services  Corporation ("SASCOR").  SASCOR is  a
direct,  wholly-owned subsidiary of Residential  Services Corporation of America
and an affiliate of the Seller and the Servicer. SASCOR was formed on  September
23,  1992 to master service residential mortgage loans and to provide securities
administration  services   in   connection   with   mortgage-backed   securities
transactions.  The  Servicer may  be released  from  its obligations  in certain
circumstances. See "Servicing of  the Mortgage Loans--Certain Matters  Regarding
the Servicer."

    Each Prospectus Supplement relating to a Series of Certificates will contain
information  concerning recent delinquency, foreclosure and loan loss experience
on the  mortgage  loans  included  in  PHMC's  servicing  portfolio  which  were
originated  or acquired by  PHMC for its own  account or for  the account of its
affiliates ("Program Loans"), and, if  available, on those Program Loans  having
payment  terms generally similar to  those of the Mortgage  Loans in the related
Trust Estate. PHMC's total servicing portfolio  of Program Loans as of any  date
may  include  loans  having  a  variety  of  payment  characteristics, including
adjustable rate mortgage loans and loans subject to subsidy agreements, and  the
overall  delinquency, foreclosure and loan loss  experience of the Program Loans
taken as a whole  may differ from  that of the Mortgage  Loans contained in  any
given Trust Estate and from that of mortgage servicers generally.

                                       48
<PAGE>
PAYMENTS ON MORTGAGE LOANS

    The Servicer will, as to each Series of Certificates, establish and maintain
a  separate  trust  account  or  accounts  in  the  name  of  the  Trustee  (the
"Certificate Account"), which must be  maintained with a depository  institution
(the  "Depository") either (i) whose long-term debt obligations (or, in the case
of a depository institution  which is part of  a holding company structure,  the
long  term debt obligations  of which) are,  at the time  of any deposit therein
rated  at  least  "AA"  (or  the  equivalent)  by  each  nationally   recognized
statistical  rating organization that rated  the related Series of Certificates,
or (ii) that  is otherwise acceptable  to the Rating  Agency or Rating  Agencies
rating  the Certificates of such Series and,  if a REMIC election has been made,
that would not cause the  related Trust Estate (or  a segregated pool of  assets
therein)  to fail to qualify as a REMIC. To the extent that the portion of funds
deposited in the Certificate Account at any time exceeds the limit of  insurance
coverage  established by the Federal Deposit Insurance Corporation (the "FDIC"),
such excess  will  be subject  to  loss  in the  event  of the  failure  of  the
Depository.  Such insurance coverage will  be based on the  number of holders of
Certificates, rather than the  number of underlying  mortgagors. Holders of  the
Subordinated  Certificates of  a Series  of Shifting  Interest Certificates will
bear any  such loss  up  to the  amount of  principal  payments on  the  related
Mortgage Loans to which such holders are entitled.

    The  Servicer will  deposit in  the Certificate  Account for  each Series of
Certificates any  amounts  representing  scheduled  payments  of  principal  and
interest  on  the  Mortgage Loans  due  after  the applicable  Cut-Off  Date but
received on or prior thereto, and, on a daily basis, except as specified in  the
applicable   Pooling  and  Servicing  Agreement,   the  following  payments  and
collections received or made by it with respect to the Mortgage Loans subsequent
to the applicable Cut-Off Date (other than payments due on or before the Cut-Off
Date):

         (i) all payments  on account of  principal, including prepayments,  and
    interest;

        (ii)  all  amounts  received  by the  Servicer  in  connection  with the
    liquidation of  defaulted Mortgage  Loans or  property acquired  in  respect
    thereof,  whether through foreclosure sale  or otherwise, including payments
    in connection  with defaulted  Mortgage Loans  received from  the  mortgagor
    other  than amounts  required to  be paid to  the mortgagor  pursuant to the
    terms  of  the  applicable  Mortgage  Loan  or  otherwise  pursuant  to  law
    ("Liquidation  Proceeds") less, to the extent permitted under the applicable
    Pooling and  Servicing Agreement,  the amount  of any  expenses incurred  in
    connection with the liquidation of such Mortgage Loans;

        (iii)  all proceeds received by the  Servicer under any title, hazard or
    other insurance policy covering any such Mortgage Loan, other than  proceeds
    to  be applied to the  restoration or repair of  the property subject to the
    related Mortgage  or  released  to  the mortgagor  in  accordance  with  the
    applicable Pooling and Servicing Agreement;

        (iv)  all  amounts required  to be  deposited  therein from  any related
    Reserve  Fund,  and  amounts  available  under  any  other  form  of  credit
    enhancement applicable to such Series;

        (v) all Periodic Advances made by the Servicer;

        (vi) all amounts withdrawn from Buy-Down Funds or Subsidy Funds, if any,
    with  respect to such  Mortgage Loans, in  accordance with the  terms of the
    respective agreements applicable thereto;

       (vii) all proceeds  of any such  Mortgage Loans or  property acquired  in
    respect  thereof  purchased  or  repurchased  pursuant  to  the  Pooling and
    Servicing Agreement; and

       (viii) all other amounts required to be deposited therein pursuant to the
    applicable Pooling and Servicing Agreement.

    Notwithstanding the  foregoing,  the  Servicer  will  be  entitled,  at  its
election,  either (a)  to withhold and  pay itself the  applicable Servicing Fee
and/or to withhold and  pay to the  owner thereof the  Fixed Retained Yield,  if
any,  from any payment or other recovery  on account of interest as received and
prior to deposit in the

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<PAGE>
Certificate Account or (b) to withdraw  the applicable Servicing Fee and/or  the
Fixed  Retained Yield,  if any,  from the  Certificate Account  after the entire
payment or recovery  has been  deposited therein; provided,  however, that  with
respect  to each  Trust Estate (or  a segregated  pool of assets  therein) as to
which a  REMIC election  has been  made, the  Servicer will,  in each  instance,
withhold  and pay to the owner thereof the Fixed Retained Yield prior to deposit
of the related payment or recovery in the Certificate Account.

    Periodic Advances,  amounts  withdrawn from  any  Buy-Down Fund  or  Subsidy
Account,  amounts withdrawn from  any reserve fund,  and amounts available under
any other  form of  credit enhancement,  will be  deposited in  the  Certificate
Account not later than the business day preceding the Distribution Date on which
such amounts are required to be distributed. All other amounts will be deposited
in  the Certificate Account not  later than the business  day next following the
day of receipt and posting by the Servicer.

    If the Servicer deposits in the Certificate Account for a Series any  amount
not  required to be deposited  therein, it may at  any time withdraw such amount
from such Certificate Account. Funds on  deposit in the Certificate Account  may
be  invested in certain Eligible Investments  maturing in general not later than
the business day  preceding the  next Distribution Date.  In the  event that  an
election has been made to treat the Trust Estate (or a segregated pool of assets
therein)  with respect to a Series as a REMIC, no such Eligible Investments will
be sold or  disposed of  at a  gain prior to  maturity unless  the Servicer  has
received  an opinion of counsel  or other evidence satisfactory  to it that such
sale or  disposition will  not cause  the Trust  Estate (or  segregated pool  of
assets)  to be subject to  the tax on "prohibited  transactions" imposed by Code
Section 860F(a)(1), otherwise subject  the Trust Estate  (or segregated pool  of
assets) to tax, or cause the Trust Estate (or segregated pool of assets) to fail
to  qualify as  a REMIC  while any Certificates  of the  Series are outstanding.
Except as  otherwise  specified in  the  applicable Prospectus  Supplement,  all
income and gain realized from any such investment will be for the account of the
Servicer  as  additional servicing  compensation and  all  losses from  any such
investment will  be  deposited by  the  Servicer into  the  Certificate  Account
immediately as realized.

    The  Servicer is permitted, from time to  time, to make withdrawals from the
Certificate Account for the following purposes,  to the extent permitted in  the
applicable Pooling and Servicing Agreement:

         (i) to reimburse itself for Periodic Advances;

        (ii)  to  reimburse  itself  for liquidation  expenses  and  for amounts
    expended by it in connection with the restoration of damaged property;

        (iii) to pay to itself the applicable Servicing Fee and/or pay the owner
    thereof any Fixed Retained Yield, in the event the Servicer is not required,
    and has elected not, to  withhold such amounts out  of any payment or  other
    recovery  with respect to a particular Mortgage Loan prior to the deposit of
    such payment or recovery in the Certificate Account;

        (iv) to reimburse itself for  certain expenses (including taxes paid  on
    behalf  of the Trust Estate) incurred  by and recoverable by or reimbursable
    to it;

        (v) to pay to the Seller with respect to each Mortgage Loan or  property
    acquired  in respect  thereof that has  been repurchased by  the Seller, all
    amounts received thereon and not distributed as of the date as of which  the
    purchase price of such Mortgage Loan was determined;

        (vi)  to pay itself  any interest earned on  or investment income earned
    with respect  to funds  in the  Certificate Account  (all such  interest  or
    income to be withdrawn not later than the next Distribution Date);

       (vii)  to pay itself from net Liquidation Proceeds allocable to interest,
    the amount of any unpaid Servicing Fees and any unpaid assumption fees, late
    payment charges or other mortgagor charges on the related Mortgage Loan;

                                       50
<PAGE>
       (viii) to withdraw from the  Certificate Account any amount deposited  in
    the Certificate Account that was not required to be deposited therein;

        (ix)  to make withdrawals from the  Certificate Account in order to make
    distributions to Certificateholders; and

        (x) to clear and terminate the Certificate Account.

    The Servicer  will be  authorized to  appoint a  paying agent  (the  "Paying
Agent")  to make distributions, as agent for the Servicer, to Certificateholders
of a Series. If  the Paying Agent for  a Series is the  Trustee of such  Series,
such  Paying Agent will  be authorized to make  withdrawals from the Certificate
Account in  order to  make distributions  to Certificateholders.  If the  Paying
Agent  for a Series is not the Trustee for such Series, the Servicer will, prior
to each Distribution Date, deposit in immediately available funds in an  account
designated  by the  Paying Agent  the amount required  to be  distributed to the
Certificateholders on such Distribution Date.

    The Servicer will cause any Paying Agent which is not the Trustee to execute
and deliver to the Trustee an instrument in which such Paying Agent agrees  with
the Trustee that such Paying Agent will:

        (1)  hold all amounts deposited with it by the Servicer for distribution
    to Certificateholders in trust for  the benefit of Certificateholders  until
    such  amounts are distributed to Certificateholders or otherwise disposed of
    as provided in the applicable Pooling and Servicing Agreement;

        (2) give the Trustee notice of any default by the Servicer in the making
    of such deposit; and

        (3) at any time during the continuance of any such default, upon written
    request of the  Trustee, forthwith pay  to the Trustee  all amounts held  in
    trust by such Paying Agent.

PERIODIC ADVANCES AND LIMITATIONS THEREON

    With  respect  to each  Series,  the Servicer  will  agree to  make Periodic
Advances in the amounts specified in the applicable Prospectus Supplement. Funds
of the  Servicer so  advanced are  recoverable by  the Servicer  out of  amounts
received  on Mortgage Loans with  respect to which such  funds were advanced and
which represent late  recoveries of principal  and/or interest respecting  which
any  such Periodic  Advance was  made, or, if  the Servicer  determines that any
Periodic Advance may not be so recoverable, out of any funds in the  Certificate
Account.  The Servicer  will make Periodic  Advances only if  it determines that
funds will  ultimately  be  available  to reimburse  it.  If  specified  in  the
applicable Prospectus Supplement, a reserve fund may be established with respect
to  any Series  of Certificates in  order to  provide a source  of liquidity for
Periodic Advances by the  Servicer. Any such  reserve fund will  be funded by  a
deposit  made by the Servicer in such an amount specified, and will otherwise be
as described, in the applicable Prospectus Supplement.

ADJUSTMENT TO SERVICING FEE IN CONNECTION WITH PREPAID MORTGAGE LOANS

    When a mortgagor prepays all of a Mortgage Loan, the mortgagor pays interest
on the amount prepaid only to the date on which the principal prepayment in full
is made. Unless otherwise specified in the applicable Prospectus Supplement,  in
order to mitigate the adverse effect to Certificateholders of a Series resulting
from  the prepayment  in full  of a  Mortgage Loan  the amount  of the aggregate
Servicing Fees will be offset by an  amount equal to the accrual of interest  on
any  fully prepaid  Mortgage Loan  at the  Net Mortgage  Interest Rate  for such
Mortgage Loan from the date of its prepayment to but not including the next  Due
Date  (the "Prepayment  Interest Shortfall").  Such reductions  in the aggregate
Servicing Fees will be made by the  Servicer with respect to the Mortgage  Loans
under  the applicable  Pooling and Servicing  Agreement, but only  to the extent
that the aggregate Prepayment Interest  Shortfall does not exceed the  aggregate
amount  of the Servicing Fee relating  to mortgagor payments or other recoveries
distributed on the related Distribution Date.  The amount of the offset  against
the   aggregate  Servicing  Fees  will  be  included  in  the  distributions  to
Certificateholders on  the  Distribution Date  on  which the  related  principal
prepayments  in full are passed  through to Certificateholders. Unless otherwise
specified in  the  applicable  Prospectus  Supplement,  any  interest  shortfall
arising  from partial  prepayments or  liquidations will  not be  so offset. See
"Prepayment and

                                       51
<PAGE>
Yield Considerations." Payments of the Prepayment Interest Shortfall will not be
obtained  by  means  of  any   subordination  of  the  rights  of   Subordinated
Certificateholders or any other credit enhancement arrangement.

REPORTS TO CERTIFICATEHOLDERS

    Unless  otherwise specified or modified in the related Pooling and Servicing
Agreement for each Series, the Servicer will include, or, in the event a  Paying
Agent  has been  appointed with  respect to such  Series, will  cause the Paying
Agent to include, with each distribution to Certificateholders of record of such
Series a statement setting forth the following information, if applicable:

         (i)  to  each  holder  of  a  Certificate  other  than  a   Multi-Class
    Certificate,  the amount of such distribution  allocable to principal of the
    related Mortgage Loans, separately identifying  the aggregate amount of  any
    principal  prepayments  included therein,  the  amount of  such distribution
    allocable to interest on the related Mortgage Loans and the aggregate unpaid
    principal balance of the Mortgage Loans evidenced by each Class after giving
    effect to the principal distributions on such Distribution Date;

        (ii) to each holder  of a Multi-Class Certificate  on which an  interest
    distribution and a distribution in reduction of Stated Amount are then being
    made, the amount of such interest distribution and distribution in reduction
    of Stated Amount, and the Stated Amount of each Class after giving effect to
    the  distribution in  reduction of Stated  Amount made  on such Distribution
    Date;

        (iii)  to  each  holder  of   a  Multi-Class  Certificate  on  which   a
    distribution  of  interest only  is then  being  made, the  aggregate Stated
    Amount of Certificates outstanding of each Class after giving effect to  the
    distribution  in reduction of  Stated Amount made  on such Distribution Date
    and on any Special Distribution Date  occurring subsequent to the last  such
    report  and after including in the aggregate Stated Amount the Stated Amount
    of the Compound Interest Certificates, if any, outstanding and the amount of
    any accrued interest added  to the Stated Amount  of such Compound  Interest
    Certificates on such Distribution Date;

        (iv)  to each  holder of a  Multi-Class Certificate which  is a Compound
    Interest Certificate (but  only if  such holder  shall not  have received  a
    distribution  of interest equal to the  entire amount of interest accrued on
    such Certificate with respect to such Distribution Date):

           (a) the information  contained in  the report  delivered pursuant  to
       clause (ii) above;

           (b)   the  interest  accrued  on  such  Class  of  Compound  Interest
       Certificates with  respect to  such Distribution  Date and  added to  the
       Stated Amount of such Compound Interest Certificate; and

           (c) the Stated Amount of such Class of Compound Interest Certificates
       after  giving  effect to  the addition  thereto  of all  interest accrued
       thereon;

        (v)  to  each  holder  of   a  Certificate,  the  amount  of   servicing
    compensation  with  respect  to  the related  Trust  Estate  and  such other
    customary information as the Servicer deems necessary or desirable to enable
    Certificateholders to prepare their tax returns;

        (vi) to each holder of a Certificate, the amount by which the  Servicing
    Fee  has been reduced by the aggregate Prepayment Interest Shortfall for the
    related Distribution Date;

       (vii) the  aggregate amount  of  any Periodic  Advances by  the  Servicer
    included in the amounts actually distributed to the Certificateholders;

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<PAGE>
       (viii)  to each holder of each  Senior Certificate (other than a Shifting
    Interest Certificate):

           (a)  the  amount  of  funds,  if  any,  otherwise  distributable   to
       Subordinated Certificateholders and the amount of any withdrawal from the
       Subordination  Reserve Fund  included in amounts  actually distributed to
       Senior Certificateholders;

           (b)  the  Subordinated  Amount  remaining  and  the  balance  in  the
       Subordination Reserve Fund following such distribution; and

           (c) the amount of any Senior Class Shortfall with respect to, and the
       amount of any Senior Class Carryover Shortfall outstanding prior to, such
       Distribution Date;

        (ix)  to  each  holder of  a  Certificate  entitled to  the  benefits of
    payments under any form of credit enhancement or from any reserve fund other
    than the Subordination Reserve Fund:

           (a) the  amounts  so  distributed  under  any  such  form  of  credit
       enhancement  or from any such reserve fund on the applicable Distribution
       Date; and

           (b) the amount of  coverage remaining under any  such form of  credit
       enhancement  and the balance in any such fund, after giving effect to any
       payments thereunder and other amounts charged thereto on the Distribution
       Date;

        (x) in the case of a Series of Certificates with a variable Pass-Through
    Rate, such Pass-Through Rate;

        (xi) the  book value  of any  collateral acquired  by the  Trust  Estate
    through foreclosure or
    otherwise;

        (xii)  the unpaid principal balance of any Mortgage Loan as to which the
    Servicer has determined  not to  foreclose because it  believes the  related
    Mortgaged  Property may be contaminated with or affected by hazardous wastes
    or hazardous substances; and

       (xiii) the number and  aggregate principal amount  of Mortgage Loans  one
    month, two months and three or more months delinquent.

    In  addition,  within a  reasonable period  of  time after  the end  of each
calendar year, the Servicer will furnish either directly, or through the  Paying
Agent,  if any, a report to each  Certificateholder of record at any time during
such calendar year (a) as to the  aggregate of amounts reported pursuant to  (i)
and  (ii) above,  as applicable, for  such calendar  year or, in  the event such
person was a Certificateholder of record during a portion of such calendar year,
for the  applicable portion  of such  year  and (b)  such other  information  as
required  by the Code and applicable  regulations thereunder and as the Servicer
deems necessary or desirable to  enable Certificateholders to prepare their  tax
returns.  (Section 4.02.) In the  event that an election  has been made to treat
the Trust  Estate (or  a segregated  pool of  assets therein)  as a  REMIC,  the
Trustee  will be required  to sign the  Federal income tax  returns of the REMIC
(which will  be prepared  by  the Servicer).  See  "Certain Federal  Income  Tax
Consequences--Federal  Income Tax Consequences for REMIC Certificates-- Taxation
of Residual Certificates--Administrative Matters."

REPORTS TO THE TRUSTEE

    No later  than  15 days  after  each Distribution  Date  for a  Series,  the
Servicer will provide the Trustee of such Series with a report setting forth the
status  of the related Certificate Account and the related Subordination Reserve
Fund and any other reserve fund as of the close of business on such Distribution
Date, stating that all distributions required  to be made by the Servicer  under
the  applicable  Pooling  and Servicing  Agreement  have  been made  (or  if any
required distribution has not been made  by the Servicer, specifying the  nature
and  status thereof) and showing, for the  period covered by such statement, the
aggregate of deposits to and withdrawals  from the Certificate Account for  each
category  of deposits  and withdrawals  specified in  the Pooling  and Servicing
Agreement.  Such  statement  shall  also  include  information  as  to  (i)  the

                                       53
<PAGE>
aggregate unpaid principal balances of all the Mortgage Loans as of the close of
business  on  the  last day  of  the month  preceding  the month  in  which such
Distribution Date occurs; and (ii) the amount of any Subordination Reserve  Fund
and any other reserve fund, as of such Distribution Date (after giving effect to
the  distributions on  such Distribution  Date). Copies  of such  reports may be
obtained  by  Certificateholders  upon  request  in  writing  addressed  to  the
Servicer,  c/o The Prudential  Home Mortgage Company,  Inc., 7470 New Technology
Way, Frederick, Maryland  21701. If  the Servicer  should fail  to provide  such
copies, they may be obtained from the Trustee. (Section 3.12).

COLLECTION AND OTHER SERVICING PROCEDURES

    The Servicer will make reasonable efforts to collect all payments called for
under  the Mortgage Loans  and will, consistent with  the applicable Pooling and
Servicing Agreement and any  applicable agreement governing  any form of  credit
enhancement,  follow such  collection procedures as  it follows  with respect to
mortgage loans  serviced  by it  that  are  comparable to  the  Mortgage  Loans.
Consistent  with the above, the  Servicer may, in its  discretion, (i) waive any
prepayment charge, assumption fee,  late payment charge or  any other charge  in
connection  with  the prepayment  of a  Mortgage  Loan and  (ii) arrange  with a
mortgagor a schedule for  the liquidation of deficiencies  running for not  more
than 180 days after the applicable Due Date.

    Under  the  Pooling and  Servicing Agreement,  the  Servicer, to  the extent
permitted by law, will establish and  maintain one or more escrow accounts  (the
"Servicing  Account")  in which  the Servicer  will be  required to  deposit any
payments made by mortgagors in advance for taxes, assessments, primary  mortgage
(if   applicable)  and  hazard  insurance  premiums  and  other  similar  items.
Withdrawals from the Servicing Account may  be made to effect timely payment  of
taxes,  assessments,  mortgage and  hazard  insurance, to  refund  to mortgagors
amounts determined to be overages, to pay interest to mortgagors on balances  in
the Servicing Account, if required, and to clear and terminate such account. The
Servicer  will be responsible for the  administration of each Servicing Account.
The Servicer will be obligated to  advance certain amounts which are not  timely
paid  by the mortgagors, to  the extent that it  determines, in good faith, that
they will be  recoverable out  of insurance proceeds,  liquidation proceeds,  or
otherwise.  Alternatively,  in lieu  of  establishing a  Servicing  Account, the
Servicer may procure a performance bond or other form of insurance coverage,  in
an  amount  acceptable  to  the  Rating  Agency  rating  the  related  Series of
Certificates, covering loss occasioned  by the failure  to escrow such  amounts.
(Section 3.06.)

ENFORCEMENT OF DUE-ON-SALE CLAUSES; REALIZATION UPON DEFAULTED MORTGAGE LOANS

    With  respect to  each Mortgage  Loan having  a fixed  interest rate, unless
otherwise specified in  the applicable Prospectus  Supplement, each Pooling  and
Servicing  Agreement will provide that, when  any Mortgaged Property is about to
be conveyed by the mortgagor, the Servicer will, to the extent it has  knowledge
of  such prospective conveyance, exercise its  rights to accelerate the maturity
of such Mortgage Loan under the "due-on-sale" clause applicable thereto, if any,
unless it is  not exercisable  under applicable law  or if  such exercise  would
result  in loss  of insurance  coverage with  respect to  such Mortgage  Loan or
would, in the Servicer's judgment, be reasonably likely to result in  litigation
by  the mortgagor. In either  case, the Servicer is  authorized to take or enter
into an assumption and  modification agreement from or  with the person to  whom
such  Mortgaged Property has been or is  about to be conveyed, pursuant to which
such person becomes  liable under the  Mortgage Note and,  unless prohibited  by
applicable  state law, the  mortgagor remains liable  thereon, provided that the
Mortgage Loan will continue to be covered  by any pool insurance policy and  any
related  primary mortgage insurance  policy and the  Mortgage Interest Rate with
respect to such Mortgage Loan and the payment terms shall remain unchanged.  The
Servicer  will also be authorized,  with the prior approval  of the pool insurer
and the  primary mortgage  insurer, if  any,  to enter  into a  substitution  of
liability  agreement with such person, pursuant  to which the original mortgagor
is released  from liability  and such  person is  substituted as  mortgagor  and
becomes liable under the Mortgage Note. (Section 3.08)

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<PAGE>
    The Servicer is obligated under the Pooling and Servicing Agreement for each
Series  to realize upon  defaulted Mortgage Loans in  accordance with its normal
servicing practices, which will conform  generally to those of prudent  mortgage
lending  institutions which service mortgage loans of  the same type in the same
jurisdictions. Notwithstanding the foregoing,  the Servicer is authorized  under
the  Pooling and  Servicing Agreement  to permit  the assumption  of a defaulted
Mortgage Loan rather than to foreclose  or accept a deed-in-lieu of  foreclosure
if,  in the  Servicer's judgment, the  default is  unlikely to be  cured and the
assuming borrower meets PHMC's underwriting  guidelines. In connection with  any
such assumption, the Mortgage Interest Rate and the payment terms of the related
Mortgage  Note  will  not  be changed.  See  also  "The  Trust Estates--Mortgage
Loans--Optional Repurchases,"  above,  with respect  to  the Seller's  right  to
repurchase  defaulted Mortgage  Loans. Further,  the Servicer  may encourage the
refinancing of  such defaulted  Mortgage Loans,  including Mortgage  Loans  that
would  permit creditworthy borrowers to  assume the outstanding indebtedness. In
the case of foreclosure or of damage  to a Mortgaged Property from an  uninsured
cause,  the Servicer  is not required  to expend  its own funds  to foreclose or
restore any  damaged property,  unless it  reasonably determines  (i) that  such
foreclosure  or restoration will increase  the proceeds to Certificateholders of
such Series  of liquidation  of the  Mortgage Loan  after reimbursement  of  the
Servicer  for its expenses and (ii) that such expenses will be recoverable to it
through Liquidation Proceeds. In  the event that the  Servicer has expended  its
own funds for foreclosure or to restore damaged property, it will be entitled to
charge  the Certificate Account for such Series an amount equal to all costs and
expenses incurred by it. (Sections 3.03 and 3.09).

    The Servicer is not obligated to  foreclose on any Mortgaged Property  which
it  believes  may  be  contaminated  with or  affected  by  hazardous  wastes or
hazardous   substances.   See   "Certain   Legal   Aspects   of   the   Mortgage
Loans--Environmental  Considerations." If the  Servicer does not  foreclose on a
Mortgaged Property, the Certificateholders of the related Series may  experience
a  loss on  the related Mortgage  Loan. The Servicer  will not be  liable to the
Certificateholders if it  fails to foreclose  on a Mortgaged  Property which  it
believes may be so contaminated or affected, even if such Mortgaged Property is,
in  fact, not so contaminated or affected.  Conversely, the Servicer will not be
liable  to  the  Certificateholders  if,  based  on  its  belief  that  no  such
contamination  or effect exists, the Servicer forecloses on a Mortgaged Property
and takes  title  to such  Mortgaged  Property, and  thereafter  such  Mortgaged
Property is determined to be so contaminated or affected.

    The  Servicer may foreclose  against property securing  a defaulted Mortgage
Loan either by foreclosure, by sale or by strict foreclosure and in the event  a
deficiency  judgment is  available against  the mortgagor  or other  person (see
"Certain Legal Aspects  of the Mortgage  Loans--Anti-Deficiency Legislation  and
Other Limitations on Lenders" for a discussion of the availability of deficiency
judgments), may proceed for the deficiency. It is anticipated that in most cases
the  Servicer  will  not seek  deficiency  judgments,  and the  Servicer  is not
required under the Pooling and Servicing Agreement to seek deficiency judgments.

    With respect to a Trust Estate (or  a segregated pool of assets therein)  as
to  which a REMIC election  has been made, if  the trustee acquires ownership of
any Mortgaged Property  as a  result of  a default  or imminent  default of  any
Mortgage  Loan secured by such Mortgaged  Property, the Trustee will be required
to dispose of such  property within two years  following its acquisition by  the
Trust Estate unless the Trustee (a) receives an opinion of counsel to the effect
that  the holding of the  Mortgaged Property by the  Trust Estate will not cause
the Trust Estate to be subject  to the tax on "prohibited transactions"  imposed
by  Code Section 860F(a)(1) or cause the Trust Estate (or any segregated pool of
assets therein as to which a REMIC election  has been made or would be made)  to
fail to qualify as a REMIC or (b) applies for and is granted an extension of the
two-year  period  in  the manner  contemplated  by Code  Section  856(e)(3). The
Servicer also will be required to administer the Mortgaged Property in a  manner
which  does not cause the Mortgaged Property  to fail to qualify as "foreclosure
property" within the meaning of Code Section 860G(a)(8) or result in the receipt
by the Trust  Estate of any  "net income from  foreclosure property" within  the
meaning of Code

                                       55
<PAGE>
Section 860G(c)(2), respectively. In general, this would preclude the holding of
the  Mortgaged Property by  a party acting as  a dealer in  such property or the
receipt of rental income based  on the profits of  the lessee of such  property.
See "Certain Federal Income Tax Consequences."

FIXED RETAINED YIELD, SERVICING COMPENSATION AND PAYMENT OF EXPENSES

    Fixed  Retained Yield with respect to any  Mortgage Loan is that portion, if
any, of interest  at the  Mortgage Interest  Rate that  is not  included in  the
related  Trust  Estate.  The Prospectus  Supplement  for a  Series  will specify
whether there is any Fixed Retained Yield with respect to the Mortgage Loans  of
such  Series.  If  so,  the  Fixed  Retained  Yield  will  be  established  on a
loan-by-loan basis  and will  be specified  in the  schedule of  Mortgage  Loans
attached  as an exhibit  to the applicable Pooling  and Servicing Agreement. The
Servicer may deduct the Fixed Retained Yield from mortgagor payments as received
and prior to deposit of such payments in the Certificate Account for such Series
or may  (unless an  election has  been  made to  treat the  Trust Estate  (or  a
segregated pool of assets therein) as a REMIC) withdraw the Fixed Retained Yield
from  the Certificate Account after the entire payment has been deposited in the
Certificate Account. Notwithstanding the foregoing, with respect to any  payment
of  interest received by the Servicer relating  to a Mortgage Loan (whether paid
by the  mortgagor or  received as  Liquidation Proceeds,  insurance proceeds  or
otherwise)  which is less than the full amount of interest then due with respect
to such Mortgage Loan,  the owner of  the Fixed Retained  Yield with respect  to
such  Mortgage Loan will receive  as its Fixed Retained  Yield only its pro rata
share of such interest payment.

    For each Series of  Certificates, the Servicer will  be entitled to be  paid
the  Servicing  Fee  on the  related  Mortgage  Loans until  termination  of the
applicable Pooling and Servicing Agreement, subject, unless otherwise  specified
in  the  applicable  Prospectus  Supplement, to  adjustment  as  described under
"Adjustment to Servicing Fee in Connection with Prepaid and Liquidated  Mortgage
Loans."  The Servicer, at its election, will  pay itself the Servicing Fee for a
Series with respect to each Mortgage  Loan by (a) withholding the Servicing  Fee
from  any scheduled payment of interest prior  to deposit of such payment in the
Certificate Account for such  Series or (b) withdrawing  the Servicing Fee  from
the  Certificate Account after the entire interest payment has been deposited in
the Certificate Account. The Servicer may also pay itself out of the Liquidation
Proceeds of  a  Mortgage Loan  or  other  recoveries with  respect  thereto,  or
withdraw  from the Certificate Account, or if such Liquidation Proceeds or other
recoveries are insufficient, from  Net Foreclosure Profits  with respect to  the
related  Distribution Date the Servicing Fee in respect of such Mortgage Loan to
the extent  provided in  the  applicable Pooling  and Servicing  Agreement.  The
Servicing  Fee with respect to the Mortgage Loans underlying the Certificates of
a Series will be specified  in the applicable Prospectus Supplement.  Additional
servicing  compensation in the form of prepayment charges, assumption fees, late
payment charges or otherwise will be retained by the Servicer.

    The Servicer will pay all expenses incurred in connection with the servicing
of the  Mortgage  Loans  underlying a  Series,  including,  without  limitation,
payment  of  the hazard  insurance  policy premiums  and  fees or  other amounts
payable pursuant  to  any  applicable  agreement for  the  provision  of  credit
enhancement  for  such Series,  payment  of the  fees  and disbursements  of the
Trustee and any custodian, fees due to the independent accountants and  expenses
incurred  in connection  with distributions  and reports  to Certificateholders.
Certain of these expenses  may be reimbursable to  the Servicer pursuant to  the
terms of the applicable Pooling and Servicing Agreement.

    As  set forth in the  preceding paragraph, the Servicer  will be entitled to
reimbursement for  certain  expenses  incurred  by it  in  connection  with  the
liquidation of defaulted Mortgage Loans. In the event that claims are either not
made  or are not fully paid from  any applicable form of credit enhancement, the
related Trust Estate will suffer a loss to the extent that Liquidation Proceeds,
after reimbursement of the Servicing Fee  and the expenses of the Servicer,  are
less  than the principal balance  of the related Mortgage  Loan. The Servicer is
also  entitled  to  reimbursement  from  the  Certificate  Account  of  Periodic
Advances, of advances

                                       56
<PAGE>
made  by it to pay  taxes, insurance premiums and  similar items with respect to
any Mortgaged Property, of  expenditures incurred by it  in connection with  the
restoration  of any Mortgaged Property and of certain losses against which it is
indemnified by the Trust Estate. (Section 3.03).

EVIDENCE AS TO COMPLIANCE

    The Servicer will  deliver to the  Trustee annually, on  or before the  date
specified  in  the Pooling  and  Servicing Agreement,  an  Officer's Certificate
stating that (i) a review of the activities of the Servicer during the preceding
calendar year and of performance under  the Pooling and Servicing Agreement  has
been  made under the supervision  of such officer, and (ii)  to the best of such
officer's knowledge, based on  such review, the Servicer  has fulfilled all  its
obligations  under the Pooling and Servicing Agreement throughout such year, or,
if there  has  been  a  default  in the  fulfillment  of  any  such  obligation,
specifying  each such default  known to such  officer and the  nature and status
thereof. Such Officer's  Certificate shall be  accompanied by a  statement of  a
firm  of independent public accountants  to the effect that,  on the basis of an
examination of  certain documents  and records  relating to  the mortgage  loans
being  serviced by the Servicer, conducted  substantially in compliance with the
Uniform Single  Audit  Program  for  Mortgage Bankers,  the  servicing  of  such
mortgage  loans was conducted  in compliance with the  provisions of the Pooling
and Servicing  Agreement  and other  similar  agreements, except  for  (i)  such
exceptions as such firm believes to be immaterial and (ii) such other exceptions
as are set forth in such statement. (Sections 3.13, 3.14).

CERTAIN MATTERS REGARDING THE SERVICER

    The  Servicer  may not  resign  from its  obligations  and duties  under the
Pooling and  Servicing Agreement  for  each Series  (other  than its  duties  as
Certificate Registrar for such Series, if it is acting as such), except upon its
determination  that  its  duties  thereunder  are  no  longer  permissible under
applicable law or are in material conflict by reason of applicable law with  any
other activities of a type and nature carried on by it. No such resignation will
become  effective until the Trustee for such  Series or a successor servicer has
assumed the Servicer's obligations  and duties under  the Pooling and  Servicing
Agreement.  (Section 6.04).  If the  Servicer resigns  for any  of the foregoing
reasons and the  Trustee is  unable or  unwilling to  assume responsibility  for
servicing  the Mortgage  Loans, it may  appoint another  institution as mortgage
loan servicer, as described under "Rights Upon Event of Default" below.

    The Pooling  and Servicing  Agreement  will also  provide that  neither  the
Servicer, any subservicer, nor any partner, director, officer, employee or agent
of  either  of them  (or of  any partner  of  the Servicer),  will be  under any
liability to the Trust Estate or  the Certificateholders, for the taking of  any
action or for refraining from the taking of any action in good faith pursuant to
the  Pooling  and  Servicing Agreement,  or  for errors  in  judgment; provided,
however, that neither the Servicer, any subservicer, nor any such person will be
protected against any  liability that would  otherwise be imposed  by reason  of
willful  misfeasance, bad faith or gross negligence in the performance of his or
its duties or  by reason of  reckless disregard  of his or  its obligations  and
duties thereunder. The Pooling and Servicing Agreement will further provide that
the  Servicer, any subservicer, and any  partner, director, officer, employee or
agent of either of them (or of any partner of the Servicer) shall be entitled to
indemnification by the Trust Estate and will be held harmless against any  loss,
liability  or expense incurred  in connection with any  legal action relating to
the Pooling and Servicing  Agreement or the Certificates,  other than any  loss,
liability  or expense  incurred by reason  of willful misfeasance,  bad faith or
gross negligence in the performance of his or its duties thereunder or by reason
of reckless  disregard of  his  or its  obligations  and duties  thereunder.  In
addition,  the Pooling  and Servicing Agreement  will provide  that the Servicer
will not be under  any obligation to  appear in, prosecute  or defend any  legal
action  that is  not incidental  to its duties  under the  Pooling and Servicing
Agreement and that in its  opinion may involve it  in any expense or  liability.
The  Servicer may, however, in its  discretion, undertake any such action deemed
by it necessary or desirable with respect to the Pooling and Servicing Agreement
and the  rights and  duties of  the parties  thereto and  the interests  of  the
Certificateholders  thereunder. In such  event, the legal  expenses and costs of
such action and any  liability resulting therefrom will  be expenses, costs  and
liabilities  of  the  Trust Estate  and  the  Servicer will  be  entitled  to be
reimbursed therefor out of the

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<PAGE>
Certificate Account, and any loss to the Trust Estate arising from such right of
reimbursement  will  be  allocated  pro  rata  among  the  various  Classes   of
Certificates  unless otherwise specified in the applicable Pooling and Servicing
Agreement. (Section 6.03).

    Any person into  which the Servicer  may be merged  or consolidated, or  any
person  resulting  from any  merger, conversion  or  consolidation to  which the
Servicer is  a party,  or any  person  succeeding to  the business  through  the
transfer  of substantially all of its assets, or otherwise, of the Servicer will
be the successor of the Servicer  under the Pooling and Servicing Agreement  for
each  Series provided  that such successor  or resulting entity  is qualified to
service mortgage loans for FNMA  or FHLMC and has a  net worth of not less  than
$15,000,000.

    The Servicer also has the right to assign its rights and delegate its duties
and  obligations  under the  Pooling and  Servicing  Agreement for  each Series;
provided that  (i) the  purchaser  or transferee  accepting such  assignment  or
delegation  is  qualified  to  service  mortgage loans  for  FNMA  or  FHLMC, is
satisfactory to the Trustee for such  Series, in the reasonable exercise of  its
judgment,  and executes and  delivers to the  Trustee an agreement,  in form and
substance reasonably satisfactory to the  Trustee, which contains an  assumption
by  such  purchaser  or  transferee  of the  due  and  punctual  performance and
observance of each  covenant and condition  to be performed  or observed by  the
Servicer  under the Pooling and  Servicing Agreement from and  after the date of
such  agreement;  and  (ii)  each  applicable  Rating  Agency's  rating  of  any
Certificates  for such  Series in effect  immediately prior  to such assignment,
sale or transfer would not be qualified, downgraded or withdrawn as a result  of
such  assignment, sale or transfer  and the Certificates would  not be placed on
credit review status by  any such Rating Agency.  The Servicer will be  released
from  its obligations  under the Pooling  and Servicing Agreement  upon any such
assignment and delegation, except that the  Servicer will remain liable for  all
liabilities and obligations incurred by it prior to the time that the conditions
contained in clauses (i) and (ii) above are met. (Section 6.02).

                      THE POOLING AND SERVICING AGREEMENT

EVENTS OF DEFAULT

    Events  of Default under the Pooling and Servicing Agreement for each Series
include (i) any failure by the Servicer to distribute to Certificateholders  any
required  payment which  continues unremedied  for 10  days after  the giving of
written notice of such failure to the  Servicer by the Trustee for such  Series,
or to the Servicer and the Trustee by the holders of Certificates of such Series
having  voting  rights  allocated  to  such  Certificates  ("Voting  Interests")
aggregating not  less  than  25%  of  the  Voting  Interests  allocated  to  all
Certificates  for such Series; (ii) any failure  by the Servicer duly to observe
or perform in any material respect any  other of its covenants or agreements  in
the  Pooling and Servicing Agreement which  continues unremedied for 60 days (or
30 days in the case of a failure to maintain any pool insurance policy  required
to  be maintained  pursuant to  the Pooling  and Servicing  Agreement) after the
giving of written notice of such failure  to the Servicer by the Trustee, or  to
the  Servicer and  Trustee by the  holders of Certificates  aggregating not less
than  25%  of  the  Voting  Interests;  (iii)  certain  events  in   insolvency,
readjustment   of  debt,  marshalling  of  assets  and  liabilities  or  similar
proceedings and  certain  action  by the  Servicer  indicating  its  insolvency,
reorganization  or inability to  pay its obligations and  (iv) both the Servicer
and any subservicer  appointed by it  to become ineligible  to service for  both
FNMA and FHLMC (unless remedied within 90 days). (Section 7.01).

RIGHTS UPON EVENT OF DEFAULT

    So  long as  an Event  of Default remains  unremedied under  the Pooling and
Servicing Agreement for  a Series,  the Trustee for  such Series  or holders  of
Certificates of such Series evidencing not less than 25% of the Voting Interests
in  the  Trust  Estate for  such  Series may  terminate  all of  the  rights and
obligations of the Servicer under the Pooling and Servicing Agreement and in and
to the  Mortgage Loans  (other than  the  Servicer's right  to recovery  of  any
Initial  Deposit for such Series, the aggregate  Servicing Fees due prior to the
date of termination,  and other expenses  and amounts advanced  pursuant to  the
terms  of the  Pooling and Servicing  Agreement, which rights  the Servicer will
retain under all circumstances), whereupon the

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<PAGE>
Trustee will succeed to all the responsibilities, duties and liabilities of  the
Servicer  under  the Pooling  and Servicing  Agreement and  will be  entitled to
monthly servicing  compensation  not  to exceed  the  aggregate  Servicing  Fees
together  with the other servicing compensation  in the form of assumption fees,
late payment  charges or  otherwise as  provided in  the Pooling  and  Servicing
Agreement.  In the event that  the Trustee is unwilling or  unable so to act, it
may select, pursuant  to the public  bid procedure described  in the  applicable
Pooling  and Servicing Agreement, or petition  a court of competent jurisdiction
to appoint, a housing and home  finance institution, bank or mortgage  servicing
institution  with a net worth of at least $10,000,000 to act as successor to the
Servicer under the provisions of the Pooling and Servicing Agreement relating to
the servicing  of  the Mortgage  Loans;  provided  however, that  until  such  a
successor Servicer is appointed and has assumed the responsibilities, duties and
liabilities  of  the Servicer  under the  Pooling  and Servicing  Agreement, the
Trustee shall continue as the successor  to the Servicer as described above.  In
the event such public bid procedure is utilized, the successor servicer would be
entitled to servicing compensation in an amount equal to the aggregate Servicing
Fees,  together with the other servicing  compensation in the form of assumption
fees, late  payment  charges  or  otherwise, as  provided  in  the  Pooling  and
Servicing  Agreement,  and the  Servicer would  be entitled  to receive  the net
profits, if any, realized from the sale of its servicing rights and  obligations
under the Pooling and Servicing Agreement. (Sections 7.01 and 7.05).

    During  the  continuance  of any  Event  of  Default under  the  Pooling and
Servicing Agreement for  a Series,  the Trustee for  such Series  will have  the
right  to take  action to  enforce its  rights and  remedies and  to protect and
enforce the rights and  remedies of the Certificateholders  of such Series,  and
holders of Certificates evidencing not less than 25% of the Voting Interests for
such  Series may direct the time, method  and place of conducting any proceeding
for any  remedy  available to  the  Trustee or  exercising  any trust  or  power
conferred  upon  the  Trustee.  However,  the  Trustee  will  not  be  under any
obligation to pursue any such remedy or to exercise any of such trusts or powers
unless such Certificateholders have offered  the Trustee reasonable security  or
indemnity  against the cost,  expenses and liabilities which  may be incurred by
the Trustee thereby. Also, the Trustee may decline to follow any such  direction
if  the Trustee  determines that  the action or  proceeding so  directed may not
lawfully be  taken or  would involve  it in  personal liability  or be  unjustly
prejudicial to the non-assenting Certificateholders. (Sections 7.02 and 7.03).

    No  Certificateholder of a Series, solely  by virtue of such holder's status
as a Certificateholder,  will have  any right  under the  Pooling and  Servicing
Agreement  for  such Series  to  institute any  proceeding  with respect  to the
Pooling and Servicing Agreement, unless such holder previously has given to  the
Trustee  for such  Series written  notice of default  and unless  the holders of
Certificates evidencing  not less  than 25%  of the  Voting Interests  for  such
Series  have made written request upon  the Trustee to institute such proceeding
in its own name as Trustee thereunder and have offered to the Trustee reasonable
indemnity and the Trustee for 60 days has neglected or refused to institute  any
such proceeding. (Section 10.03).

AMENDMENT

    Each  Pooling  and Servicing  Agreement may  be amended  by the  Seller, the
Servicer and the Trustee without the  consent of the Certificateholders, (i)  to
cure  any  ambiguity or  mistake, (ii)  to correct  or supplement  any provision
therein that may  be inconsistent  with any  other provision  therein, (iii)  to
modify,  eliminate or add  to any of its  provisions to such  extent as shall be
necessary to maintain  the qualification of  the Trust Estate  (or a  segregated
pool  of  assets therein)  as a  REMIC at  all times  that any  Certificates are
outstanding or to avoid or minimize the risk of the imposition of any tax on the
Trust Estate  pursuant to  the Code  that would  be a  claim against  the  Trust
Estate,  provided that  the Trustee  has received an  opinion of  counsel to the
effect that such action is necessary or desirable to maintain such qualification
or to avoid  or minimize the  risk of the  imposition of any  such tax and  such
action  will not, as evidenced  by such opinion of  counsel, adversely affect in
any material respect the interests of any Certificateholder, (iv) to change  the
timing  and/or nature  of deposits into  the Certificate  Account, provided that
such change will not, as evidenced by an opinion of counsel, adversely affect in
any material respect the interests of any Certificateholder and that such change
will not adversely affect the then current rating assigned to any  Certificates,
as  evidenced by a letter from each Rating Agency to such effect, (v) to add to,
modify or eliminate any provisions therein

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<PAGE>
restricting  transfers  of   residual  Certificates   to  certain   disqualified
organizations    described   below    under   "Certain    Federal   Income   Tax
Consequences--Federal Income Tax Consequences for REMIC Certificates--  Taxation
of  Residual  Certificates--Tax-Related  Restrictions  on  Transfer  of Residual
Certificates," (vi) to make certain provisions with respect to the denominations
of, and the manner of payments on, certain Classes or Subclasses of Certificates
initially retained by the  Seller or an  affiliate, or (vii)  to make any  other
provisions  with respect to matters or  questions arising under such Pooling and
Servicing Agreement  that  are not  inconsistent  with the  provisions  thereof,
provided  that such  action will  not, as  evidenced by  an opinion  of counsel,
adversely affect in any material respect the interests of the Certificateholders
of the related Series. The Pooling  and Servicing Agreement may also be  amended
by  the Seller, the Servicer and the Trustee  with the consent of the holders of
Certificates evidencing  interests aggregating  not  less than  66 2/3%  of  the
Voting  Interests  evidenced  by  the Certificates  of  each  Class  or Subclass
affected thereby, for the purpose of adding any provisions to or changing in any
manner or  eliminating any  of  the provisions  of  such Pooling  and  Servicing
Agreement  or of modifying  in any manner the  rights of the Certificateholders;
provided, however,  that no  such amendment  may (i)  reduce in  any manner  the
amount  of, or delay the timing of, any  payments received on or with respect to
Mortgage Loans that are required to be distributed on any Certificates,  without
the  consent of  the holder  of such Certificate,  (ii) adversely  affect in any
material respect  the  interests  of the  holders  of  a Class  or  Subclass  of
Certificates  of a  Series in a  manner other than  that set forth  in (i) above
without the consent  of the holders  of Certificates aggregating  not less  than
66  2/3% of the Voting  Interests evidenced by such  Class or Subclass, or (iii)
reduce the aforesaid percentage  of Certificates of any  Class or Subclass,  the
holders  of which are required to consent to such amendment, without the consent
of the  holders of  all Certificates  of such  Class or  Subclass affected  then
outstanding.  Notwithstanding the foregoing, the Trustee will not consent to any
such amendment if such amendment would subject the Trust Estate (or a segregated
pool of assets therein) to tax or  cause the Trust Estate (or a segregated  pool
of assets therein) to fail to qualify as a REMIC.

TERMINATION; PURCHASE OF MORTGAGE LOANS

    The  obligations created by the Pooling and Servicing Agreement for a Series
of Certificates  will terminate  on the  Distribution Date  following the  final
payment  or other liquidation of the last  Mortgage Loan subject thereto and the
disposition of all property acquired upon foreclosure of any such Mortgage Loan.
In no  event, however,  will the  trust  created by  the Pooling  and  Servicing
Agreement  continue beyond the expiration of 21 years from the death of the last
survivor of certain persons named in  such Pooling and Servicing Agreement.  For
each Series of Certificates, the Trustee will give written notice of termination
of  the Pooling and Servicing Agreement to each Certificateholder, and the final
distribution  will  be  made  only  upon  surrender  and  cancellation  of   the
Certificates at an office or agency appointed by the Seller and specified in the
notice of termination.

    If  so  provided  in  the related  Prospectus  Supplement,  the  Pooling and
Servicing Agreement  for  each  Series  of Certificates  will  permit,  but  not
require,  the  person  or persons  specified  in such  Prospectus  Supplement to
purchase from the Trust Estate for  such Series all remaining Mortgage Loans  at
the  time subject to the Pooling and Servicing Agreement at a price specified in
such Prospectus  Supplement. In  the  event that  the  Servicer has  caused  the
related Trust Estate (or a segregated pool of assets therein) to be treated as a
REMIC,  any  such  purchase  will  be effected  only  pursuant  to  a "qualified
liquidation" as defined  in Code Section  860F(a)(4)(A) and the  receipt by  the
Trustee  of an opinion of counsel that such  purchase will not (i) result in the
imposition of a tax on "prohibited transactions" under Code Section  860F(a)(1),
(ii)  otherwise subject the Trust Estate to tax, or (iii) cause the Trust Estate
(or a segregated pool of assets) to fail to qualify as a REMIC. The exercise  of
such  right will effect early retirement of the Certificates of that Series, but
the right so  to purchase may  be exercised only  after the aggregate  principal
balance  of the Mortgage Loans  for such Series at the  time of purchase is less
than a specified percentage  of the aggregate principal  balance at the  Cut-Off
Date  for the  Series, or  after the  date set  forth in  the related Prospectus
Supplement.

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<PAGE>
THE TRUSTEE

    The Trustee under each Pooling and Servicing Agreement (the "Trustee")  will
be  named in the applicable Prospectus  Supplement. The commercial bank or trust
company serving as Trustee may have normal banking relationships with the Seller
or any of its affiliates.

    The Trustee may  resign at any  time, in  which event the  Servicer will  be
obligated  to  appoint a  successor trustee.  The Servicer  may also  remove the
Trustee if the Trustee ceases to be eligible to act as Trustee under the Pooling
and Servicing Agreement, if the Trustee becomes insolvent or in order to  change
the situs of the Trust Estate for state tax reasons. Upon becoming aware of such
circumstances,  the  Servicer  will  become  obligated  to  appoint  a successor
trustee. The  Trustee  may  also be  removed  at  any time  by  the  holders  of
Certificates  evidencing not less than 51% of  the Voting Interests in the Trust
Estate, except that, any Certificate registered  in the name of the Seller,  the
Servicer  or any affiliate thereof will not be taken into account in determining
whether the requisite Voting  Interest in the Trust  Estate necessary to  effect
any  such removal has been obtained. Any resignation and removal of the Trustee,
and the appointment  of a  successor trustee,  will not  become effective  until
acceptance  of such appointment  by the successor trustee.  The Trustee, and any
successor trustee,  will  have  a  combined capital  and  surplus  of  at  least
$50,000,000,  or  will be  a  member of  a  bank holding  system,  the aggregate
combined capital and surplus of which is at least $50,000,000, provided that the
Trustee's and any such successor trustee's separate capital and surplus shall at
all times be at  least the amount  specified in Section  310(a)(2) of the  Trust
Indenture  Act of  1939, and  will be subject  to supervision  or examination by
federal or state authorities.

                  CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS

    The following  discussion contains  summaries of  certain legal  aspects  of
mortgage  loans  which are  general in  nature. Because  such legal  aspects are
governed by  applicable state  law (which  laws may  differ substantially),  the
summaries do not purport to be complete or to reflect the laws of any particular
state,  nor to encompass  the laws of all  states in which  the security for the
Mortgage Loans is  situated. The summaries  are qualified in  their entirety  by
reference to the applicable federal and state laws governing the Mortgage Loans.

GENERAL

    The Mortgage Loans will, in general, be secured by either first mortgages or
first  deeds of trust,  depending upon the  prevailing practice in  the state in
which the underlying  property is located.  A mortgage creates  a lien upon  the
real  property described in the  mortgage. There are two  parties to a mortgage:
the mortgagor, who is the borrower; and  the mortgagee, who is the lender. In  a
mortgage  state instrument,  the mortgagor delivers  to the mortgagee  a note or
bond evidencing the loan and the mortgage.  Although a deed of trust is  similar
to  a mortgage, a deed of trust has three parties: a borrower called the trustor
(similar to  a  mortgagor),  a  lender called  the  beneficiary  (similar  to  a
mortgagee), and a third-party grantee called the trustee. Under a deed of trust,
the  borrower grants the property, irrevocably until the debt is paid, in trust,
generally with a power of  sale, to the trustee to  secure payment of the  loan.
The  trustee's authority  under a  deed of  trust and  the mortgagee's authority
under a mortgage are governed by the express provisions of the deed of trust  or
mortgage, applicable law, and, in some cases, with respect to the deed of trust,
the directions of the beneficiary.

FORECLOSURE

    Foreclosure  of  a mortgage  is generally  accomplished by  judicial action.
Generally, the action is  initiated by the service  of legal pleadings upon  all
parties  having an interest of record in the real property. Delays in completion
of the  foreclosure  occasionally  may  result  from  difficulties  in  locating
necessary  parties  defendant.  When  the mortgagee's  right  of  foreclosure is
contested,  the  legal  proceedings  necessary  to  resolve  the  issue  can  be
time-consuming.  After the completion of  a judicial foreclosure proceeding, the
court may  issue a  judgment of  foreclosure  and appoint  a receiver  or  other
officer to conduct the sale of the property. In

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some  states, mortgages may  also be foreclosed by  advertisement, pursuant to a
power  of  sale  provided  in  the  mortgage.  Foreclosure  of  a  mortgage   by
advertisement  is  essentially similar  to  foreclosure of  a  deed of  trust by
non-judicial power of sale.

    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 that authorizes
the trustee  to sell  the property  to a  third party  upon any  default by  the
borrower  under the terms of the note or  deed of trust. In certain states, such
foreclosure also may be accomplished by  judicial action in the manner  provided
for  foreclosure of mortgages. In some states,  the trustee must record a notice
of default and send  a copy to  the borrower-trustor and to  any person who  has
recorded  a request for  a copy of  a notice of  default and notice  of sale. In
addition, the trustee must provide notice in some states to any other individual
having an  interest  of  record  in the  real  property,  including  any  junior
lienholders.  If the deed of trust is  not reinstated within any applicable cure
period, a notice of sale must be posted  in a public place and, in most  states,
published for a specified period of time in one or more newspapers. In addition,
some  state laws  require that a  copy of  the notice of  sale be  posted on the
property and sent to all parties having an interest of record in the property.

    In some states, the borrower-trustor has the right to reinstate the loan  at
any  time following default until shortly before the trustee's sale. In general,
the borrower,  or any  other person  having  a junior  encumbrance on  the  real
estate,  may,  during a  reinstatement period,  cure the  default by  paying the
entire amount in arrears plus the  costs and expenses incurred in enforcing  the
obligation.  Certain state laws  control the amount  of foreclosure expenses and
costs, including attorneys' fees, which may be recovered by a lender.

    In case of foreclosure under either a mortgage or a deed of trust, the  sale
by  the receiver  or other designated  officer, or  by the trustee,  is a public
sale. However, because  of the difficulty  a potential buyer  at the sale  would
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
receiver for an amount equal to the unpaid principal amount of the note, accrued
and  unpaid interest and the expenses of foreclosure. Thereafter, subject to the
right of  the  borrower  in some  states  to  remain in  possession  during  the
redemption  period, the lender  will assume the  burdens of ownership, including
obtaining hazard insurance  and making such  repairs at its  own expense as  are
necessary  to render  the property suitable  for sale. The  lender commonly will
obtain the services of a real estate  broker and pay the broker a commission  in
connection  with the sale of the property. Depending upon market conditions, the
ultimate proceeds  of  the sale  of  the property  may  not equal  the  lender's
investment  in the property. Any loss may  be reduced by the receipt of mortgage
insurance proceeds, if any, or by  judicial action against the borrower for  the
deficiency,   if  such  action  is  permitted  by  law.  See  "--Anti-Deficiency
Legislation and Other Limitations on Lenders" below.

FORECLOSURE ON SHARES OF COOPERATIVES

    The cooperative shares owned  by the tenant-stockholder  and pledged to  the
lender  are, in  almost all  cases, subject to  restrictions on  transfer as set
forth in the cooperative's Certificate of Incorporation and By-laws, as well  as
in  the proprietary lease  or occupancy agreement,  and may be  cancelled by the
cooperative  for  failure  by  the  tenant-stockholder  to  pay  rent  or  other
obligations  or charges  owed by  such tenant-stockholder,  including mechanics'
liens against  the  cooperative  apartment building  incurred  by  such  tenant-
stockholder.  The proprietary lease or occupancy agreement generally permits the
cooperative to terminate such lease or  agreement in the event an obligor  fails
to   make  payments  or  defaults  in  the  performance  of  covenants  required
thereunder. Typically, the lender and  the cooperative enter into a  recognition
agreement  which establishes the  rights and obligations of  both parties in the
event of  a default  by  the tenant-stockholder  on  its obligations  under  the
proprietary  lease or occupancy  agreement. A default  by the tenant-stockholder
under the proprietary  lease or  occupancy agreement will  usually constitute  a
default   under   the   security   agreement   between   the   lender   and  the
tenant-stockholder.

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    The recognition agreement  generally provides  that, in the  event that  the
tenant-stockholder  has  defaulted  under  the  proprietary  lease  or occupancy
agreement, the  cooperative will  take  no action  to  terminate such  lease  or
agreement until the lender has been provided an opportunity to cure the default.
The  recognition agreement typically  provides that if  the proprietary lease or
occupancy agreement is terminated, the  cooperative will recognize the  lender's
lien  against  proceeds  from  a sale  of  the  cooperative  apartment, subject,
however, to the cooperative's right to sums due under such proprietary lease  or
occupancy   agreement.  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  by the  agreement  in any  rights it  may  have to  dispossess the
tenant-stockholders.

    Foreclosure  on  the  cooperative  shares  is  accomplished  by  a  sale  in
accordance  with the provisions of Article 9 of the Uniform Commercial Code (the
"UCC") and the security agreement relating to those shares. Article 9 of the UCC
requires that a sale be conducted in a "commercially reasonable" manner. Whether
a foreclosure sale has been conducted in a "commercially reasonable" manner will
depend on the facts  in each case. In  determining commercial reasonableness,  a
court  will look to  the notice given  the debtor and  the method, manner, time,
place and terms of the foreclosure. Generally, a sale conducted according to the
usual practice of banks selling similar collateral will be considered reasonably
conducted.

    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-stockholder  is
generally  responsible for the deficiency.  See "Anti-Deficiency Legislation and
Other Limitations on Lenders" below.

RIGHTS OF REDEMPTION

    In some states, after sale pursuant to a deed of trust and/or foreclosure of
a mortgage,  the borrower  and certain  foreclosed junior  lienors are  given  a
statutory  period in which to redeem the  property from the foreclosure sale. In
most states where the right of redemption is available, statutory redemption may
occur upon  payment of  the  foreclosure purchase  price, accrued  interest  and
taxes.  In some states, the right to redeem is an equitable right. The effect of
a right  of redemption  is  to delay  the  ability of  the  lender to  sell  the
foreclosed  property. The  exercise of  a right  of redemption  would defeat the
title of any  purchaser at  a foreclosure  sale, or  of any  purchaser from  the
lender  subsequent  to  judicial foreclosure  or  sale  under a  deed  of trust.
Consequently, the  practical effect  of the  redemption right  is to  force  the
lender  to maintain  the property  and pay the  expenses of  ownership until the
redemption period has run.

ANTI-DEFICIENCY LEGISLATION AND OTHER LIMITATIONS ON LENDERS

    Certain states have imposed statutory  restrictions that limit the  remedies
of  a beneficiary under a deed of trust or a mortgagee under a mortgage. In some
states, statutes limit  the right 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  amount due to the
lender and the net amount realized upon the foreclosure sale.

    Some state statutes may require the beneficiary or mortgagee to exhaust  the
security afforded under a deed of trust or mortgage by foreclosure in an attempt
to satisfy the full debt before bringing a personal action against the borrower.
In certain other states, the lender has the option of bringing a personal action
against  the  borrower  on  the debt  without  first  exhausting  such security;
however, in some of these states, the

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lender, following  judgment on  such  personal action,  may  be deemed  to  have
elected  a remedy and may be precluded  from exercising remedies with respect to
the security. Consequently,  the practical effect  of the election  requirement,
when applicable, is that lenders will usually proceed first against the security
rather than bringing a personal action against the borrower.

    Other  statutory provisions  may limit  any deficiency  judgment against the
former borrower following a  foreclosure sale to the  excess of the  outstanding
debt  over the fair market value  of the property at the  time of such sale. The
purpose of  these statutes  is to  prevent  a beneficiary  or a  mortgagee  from
obtaining a large deficiency judgment against the former borrower as a result of
low or no bids at the foreclosure sale.

    In  some states, exceptions to the anti-deficiency statutes are provided for
in certain instances where the value of the lender's security has been  impaired
by  acts or omissions of the borrower, for example, in the event of waste of the
property.

    Generally, Article 9 of  the UCC governs  foreclosure on cooperative  shares
and  the related proprietary lease or occupancy agreement and foreclosure on the
beneficial interest in a land trust. Some courts have interpreted Section  9-504
of  the UCC to prohibit a deficiency  award unless the creditor establishes that
the sale of the  collateral (which, in  the case of a  Mortgage Loan secured  by
shares  of a cooperative, would be such shares and the related proprietary lease
or occupancy agreement) was conducted in a commercially reasonable manner.

    The Servicer is not  required under the Pooling  and Servicing Agreement  to
pursue deficiency judgments on the Mortgage Loans even if permitted by law.

    In  addition  to  anti-deficiency and  related  legislation,  numerous other
federal and state  statutory provisions, including  the federal bankruptcy  laws
and  state laws affording  relief to debtors,  may interfere with  or affect the
ability of a secured mortgage lender to realize upon its security. For  example,
in  a Chapter  13 proceeding  under the  federal Bankruptcy  Code, when  a court
determines that the value of  a home is less than  the principal balance of  the
loan,  the court may prevent a lender from foreclosing on the home, and, as part
of the rehabilitation plan, reduce the amount of the secured indebtedness to the
value of the home as it exists at the time of the proceeding, leaving the lender
as a general unsecured  creditor for the difference  between that value and  the
amount  of outstanding indebtedness.  A bankruptcy court may  grant the debtor a
reasonable time to cure a  payment default, and in the  case of a mortgage  loan
not  secured by  the debtor's principal  residence, also may  reduce the monthly
payments due under such mortgage loan,  change the rate of interest, reduce  the
principal balance of the loan to the then-current appraised value of the related
Mortgaged Property and alter the mortgage loan repayment schedule. Certain court
decisions  have applied such relief to  claims secured by the debtor's principal
residence. If  a  court  relieves  a  borrower's  obligation  to  repay  amounts
otherwise  due on a Mortgage Loan, the  Servicer will not be required to advance
such  amounts,  and  any  loss  in   respect  thereof  will  be  borne  by   the
Certificateholders.

    The  Internal Revenue Code of 1986, as amended, provides priority to certain
tax liens over  the lien  of the mortgage  or deed  of trust. The  laws of  some
states  provide priority to certain  tax liens over the  lien of the mortgage or
deed of trust. Numerous federal and  some state consumer protection laws  impose
substantive   requirements  upon   mortgage  lenders  in   connection  with  the
origination, servicing and enforcement of mortgage loans. These laws include the
federal Truth  in Lending  Act,  Real Estate  Settlement Procedures  Act,  Equal
Credit  Opportunity Act, Fair Credit Billing Act, Fair Credit Reporting Act, and
related statutes  and regulations.  These  federal laws  and state  laws  impose
specific  statutory liabilities upon  lenders who originate  or service mortgage
loans and who fail to comply with the provisions of the law. In some cases, this
liability may affect assignees of the mortgage loans.

SOLDIERS' AND SAILORS' CIVIL RELIEF ACT AND SIMILAR LAWS

    Generally, under the terms of the Soldiers' and Sailors' Civil Relief Act of
1940, as amended  (the "Relief  Act"), a  borrower who  enters military  service
after the origination of such borrower's Mortgage Loan (including a borrower who
is  a member of the  National Guard or is  in reserve status at  the time of the

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origination of the Mortgage Loan and is later called to active duty) may not  be
charged interest above an annual rate of 6% during the period of such borrower's
active  duty status,  unless a  court orders  otherwise upon  application of the
lender.  It  is  possible  that  such  action  could  have  an  effect,  for  an
indeterminate  period of time,  on the ability  of the Servicer  to collect full
amounts of interest  on certain of  the Mortgage  Loans in a  Trust Estate.  Any
shortfall  in interest collections resulting from  the application of the Relief
Act could result in  losses to the  holders of the  Certificates of the  related
Series.  Further,  the Relief  Act imposes  limitations  which would  impair the
ability of the  Servicer to foreclose  on an affected  Mortgage Loan during  the
borrower's period of active duty status. Thus, in the event that such a Mortgage
Loan  goes  into default,  there  may be  delays  and losses  occasioned  by the
inability to realize upon  the Mortgaged Property in  a timely fashion.  Certain
states  have enacted comparable  legislation which may  interfere with or affect
the ability of the Servicer to timely collect payments of principal and interest
on, or to  foreclose on,  Mortgage Loans  of borrowers  in such  states who  are
active or reserve members of the armed services.

ENVIRONMENTAL CONSIDERATIONS

    Under  the  federal  Comprehensive Environmental  Response  Compensation and
Liability Act, as  amended, and  under state law  in certain  states, a  secured
party  which takes a deed in lieu of foreclosure, purchases a mortgaged property
at a foreclosure  sale or  operates a mortgaged  property may  become liable  in
certain  circumstances for  the costs  of remedial  action ("Cleanup  Costs") if
hazardous wastes or hazardous  substances have been released  or disposed of  on
the  property. Such Cleanup Costs  may be substantial. It  is possible that such
Cleanup Costs  could become  a liability  of  the Trust  Estate and  reduce  the
amounts  otherwise  distributable  to  the  Certificateholders  if  a  Mortgaged
Property securing a  Mortgage Loan became  the property of  the Trust Estate  in
certain circumstances and if such Cleanup Costs were incurred. Moreover, certain
states  by statute impose a lien for any Cleanup Costs incurred by such state on
the property that  is the  subject of such  Cleanup Costs  (a "Superlien").  All
subsequent  liens on  such property are  subordinated to such  Superlien and, in
some states, even prior recorded liens  are subordinated to such Superliens.  In
the  latter states, the security  interest of the Trustee  in a property that is
subject to such a Superlien could be adversely affected.

    Traditionally, residential mortgage lenders have not taken steps to evaluate
whether hazardous wastes or hazardous substances 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, neither the
Seller  nor  PHMC has  made such  evaluations  prior to  the origination  of the
Mortgage Loans,  nor  does either  require  that  such evaluations  be  made  by
originators  who have sold  the Mortgage Loans  to PHMC. Neither  the Seller nor
PHMC is  required to  undertake any  such evaluations  prior to  foreclosure  or
accepting  a deed-in-lieu of  foreclosure. Neither the  Seller, the Servicer nor
PHMC makes  any representations  or  warranties or  assumes any  liability  with
respect  to the absence or effect of hazardous wastes or hazardous substances on
any Mortgaged Property or any casualty resulting from the presence or effect  of
hazardous  wastes  or  hazardous substances.  See  "The  Trust Estates--Mortgage
Loans--Representations  and   Warranties"  and   "Servicing  of   the   Mortgage
Loans--Enforcement  of Due-on-Sale Clauses;  Realization Upon Defaulted Mortgage
Loans" above.

"DUE-ON-SALE" CLAUSES

    The forms  of note,  mortgage and  deed of  trust relating  to  conventional
Mortgage Loans may contain a "due-on-sale" clause permitting acceleration of the
maturity  of a loan if  the borrower transfers its  interest in the property. In
recent  years,  court  decisions  and  legislative  actions  placed  substantial
restrictions  on the right  of lenders to  enforce such clauses  in many states.
However, effective  October  15,  1982, Congress  enacted  the  Garn-St  Germain
Depository  Institutions Act of 1982 (the  "Garn Act") which purports to preempt
state laws which prohibit the enforcement of "due-on-sale" clauses by  providing
among  other matters, that  "due-on-sale" clauses in  certain loans (which loans
may include the Mortgage Loans)  made after the effective  date of the Garn  Act
are enforceable, within certain limitations as set forth in the Garn Act and the
regulations  promulgated thereunder. "Due-on-sale" clauses contained in mortgage
loans originated by  federal savings  and loan associations  or federal  savings
banks are fully enforceable pursuant to regulations

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of  the Office of Thrift  Supervision ("OTS"), as successor  to the Federal Home
Loan  Bank  Board  ("FHLBB"),  which  preempt  state  law  restrictions  on  the
enforcement  of such clauses. Similarly, "due-on-sale" clauses in mortgage loans
made by  national banks  and federal  credit unions  are now  fully  enforceable
pursuant  to preemptive regulations  of the Comptroller of  the Currency and the
National Credit Union Administration, respectively.

    The  Garn  Act  created  a  limited  exemption  from  its  general  rule  of
enforceability  for  "due-on-sale" clauses  in  certain mortgage  loans ("Window
Period Loans") which were originated by non-federal lenders and made or  assumed
in  certain states ("Window Period States")  during the period, prior to October
15, 1982,  in  which that  state  prohibited the  enforcement  of  "due-on-sale"
clauses  by constitutional provision,  statute or statewide  court decision (the
"Window Period"). Though neither the Garn  Act nor the OTS regulations  actually
names  the Window Period States, the  Federal Home Loan Mortgage Corporation has
taken the  position,  in  prescribing mortgage  loan  servicing  standards  with
respect  to mortgage loans which it has purchased, that the Window Period States
were:  Arizona,  Arkansas,  California,   Colorado,  Georgia,  Iowa,   Michigan,
Minnesota,  New Mexico, Utah and Washington. Under the Garn Act, unless a Window
Period State took action by October 15,  1985, the end of the Window Period,  to
further  regulate enforcement of  "due-on-sale" clauses in  Window Period Loans,
"due-on-sale" clauses would become enforceable even in Window Period Loans. Five
of the Window Period States (Arizona, Minnesota, Michigan, New Mexico and  Utah)
have taken actions which restrict the enforceability of "due-on-sale" clauses in
Window  Period Loans beyond October 15, 1985.  The actions taken vary among such
states.

    By virtue  of the  Garn Act,  the  Servicer may  generally be  permitted  to
accelerate  any conventional Mortgage Loan which contains a "due-on-sale" clause
upon transfer of an interest in the property subject to the mortgage or deed  of
trust.  With respect to any Mortgage Loan  secured by a residence occupied or to
be occupied  by the  borrower, this  ability  to accelerate  will not  apply  to
certain  types of transfers, including (i)  the granting of a leasehold interest
which has a term of three years or less and which does not contain an option  to
purchase,  (ii) a transfer to a relative resulting from the death of a borrower,
or a transfer where the  spouse or children become an  owner of the property  in
each  case where  the transferee(s) will  occupy the property,  (iii) a transfer
resulting from a decree of  dissolution of marriage, legal separation  agreement
or  from an incidental property settlement agreement by which the spouse becomes
an owner of  the property,  (iv) the  creation of  a lien  or other  encumbrance
subordinate  to  the lender's  security instrument  which does  not relate  to a
transfer of rights  of occupancy  in the property  (provided that  such lien  or
encumbrance  is not created pursuant to a  contract for deed), (v) a transfer by
devise, descent or operation of law on the death of a joint tenant or tenant  by
the  entirety, and  (vi) other transfers  as set forth  in the Garn  Act and the
regulations thereunder. The extent of the effect of the Garn Act on the  average
lives  and  delinquency rates  of the  Mortgage Loans  cannot be  predicted. See
"Prepayment and Yield Considerations."

APPLICABILITY OF USURY LAWS

    Title V of the Depository Institutions Deregulation and Monetary Control Act
of  1980,  enacted  in  March  1980  ("Title  V"),  provides  that  state  usury
limitations shall not apply to certain types of residential first mortgage loans
originated  by certain lenders after March 31, 1980. The OTS as successor to the
FHLBB  is   authorized  to   issue  rules   and  regulations   and  to   publish
interpretations  governing implementation of Title V. The statute authorized any
state to reimpose interest rate limits by  adopting before April 1, 1983, a  law
or  constitutional provision which expressly  rejects application of the federal
law. Fifteen  states have  adopted laws  reimposing or  reserving the  right  to
reimpose  interest  rate limits.  In  addition, even  where  Title V  is  not so
rejected, any state is  authorized to adopt a  provision limiting certain  other
loan charges.

    The Seller will represent and warrant in the Pooling and Servicing Agreement
to the Trustee for the benefit of Certificateholders that all Mortgage Loans are
originated  in full compliance with applicable state laws, including usury laws.
See "The Pooling and  Servicing Agreement--Assignment of  Mortgage Loans to  the
Trustee."

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ENFORCEABILITY OF CERTAIN PROVISIONS

    Standard  forms  of  note,  mortgage and  deed  of  trust  generally contain
provisions obligating the  borrower to  pay a late  charge if  payments are  not
timely  made  and  in some  circumstances  may  provide for  prepayment  fees or
penalties if the obligation is paid prior to maturity. In certain states,  there
are  or may be specific limitations upon late charges which a lender may collect
from a borrower for delinquent payments.  Certain states also limit the  amounts
that a lender may collect from a borrower as an additional charge if the loan is
prepaid.  Under the Pooling and Servicing Agreement, late charges and prepayment
fees (to the extent  permitted by law  and not waived by  the Servicer) will  be
retained by the Servicer as additional servicing compensation.

    Courts  have imposed  general equitable  principles upon  foreclosure. These
equitable principles are  generally designed  to relieve the  borrower from  the
legal effect of defaults under the loan documents. Examples of judicial remedies
that  may be fashioned  include judicial requirements  that the lender undertake
affirmative and expensive  actions to  determine the causes  for the  borrower's
default and the likelihood that the borrower will be able to reinstate the loan.
In  some cases, courts have substituted their judgment for the lender's judgment
and have required  lenders to  reinstate loans  or recast  payment schedules  to
accommodate  borrowers who are suffering from temporary financial disability. In
some cases, courts have limited the right of lenders to foreclose if the default
under the mortgage instrument is not  monetary, such as the borrower failing  to
adequately  maintain the property or the borrower executing a second mortgage or
deed of trust  affecting the  property. In other  cases, some  courts have  been
faced  with  the issue  of whether  federal  or state  constitutional provisions
reflecting due process concerns for adequate notice require that borrowers under
the deeds of  trust receive  notices in addition  to the  statutorily-prescribed
minimum  requirements. 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 protections to the borrower.

                    CERTAIN FEDERAL INCOME TAX CONSEQUENCES

    The following is a  general discussion of  the anticipated material  federal
income   tax  consequences  of  the  purchase,  ownership,  and  disposition  of
Certificates, which may consist of REMIC Certificates, Standard Certificates  or
Stripped Certificates, as described below. The discussion below does not purport
to  address  all  federal income  tax  consequences  that may  be  applicable to
particular categories of  investors, some  of which  may be  subject to  special
rules.  The authorities on which this discussion  is based are subject to change
or differing interpretations, and any such change or interpretation could  apply
retroactively.  This discussion reflects the enactment  of the Tax Reform Act of
1986 (the "1986 Act")  and the Technical and  Miscellaneous Revenue Act of  1988
("TAMRA"),  as well as regulations (the  "REMIC Regulations") promulgated by the
U.S. Department of the  Treasury on December 23,  1992, and generally  effective
for  REMICs with startup  days on or  after November 12,  1991. Investors should
consult their own tax advisors in determining the federal, state, local, and any
other tax consequences to  them of the purchase,  ownership, and disposition  of
Certificates,  particularly with respect to  federal income tax changes effected
by the 1986 Act, TAMRA and the REMIC Regulations.

    For purposes of this discussion, where the applicable Prospectus  Supplement
provides  for a  Fixed Retained Yield  with respect  to the Mortgage  Loans of a
Series of Certificates, references to the Mortgage Loans will be deemed to refer
to that portion of the  Mortgage Loans held by the  Trust Estate which does  not
include the Fixed Retained Yield.

             FEDERAL INCOME TAX CONSEQUENCES FOR REMIC CERTIFICATES

GENERAL

    With respect to a particular Series of Certificates, an election may be made
to  treat the Trust Estate or one or  more segregated pools of assets therein as
one or more REMICs within the meaning of Code

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Section 860D. A Trust Estate or a portion or portions thereof as to which one or
more REMIC elections will  be made will  be referred to as  a "REMIC Pool."  For
purposes  of this discussion, Certificates  of a Series as  to which one or more
REMIC elections are made,  which will include  all Multi-Class Certificates  and
may include Standard Certificates or Stripped Certificates or both, are referred
to  as "REMIC Certificates" and will consist  of one or more Classes of "Regular
Certificates" and one Class of "Residual Certificates" in the case of each REMIC
Pool.  Qualification  as  a  REMIC  requires  ongoing  compliance  with  certain
conditions.  With  respect to  each  Series of  REMIC  Certificates, Cadwalader,
Wickersham & Taft, counsel  to the Seller,  has advised the  Seller that in  the
firm's  opinion,  assuming  (i)  the making  of  an  appropriate  election, (ii)
compliance with the Pooling and  Servicing Agreement, and (iii) compliance  with
any  changes in  the law,  including any  amendments to  the Code  or applicable
Treasury regulations thereunder,  each REMIC Pool  will qualify as  a REMIC.  In
such case, the Regular Certificates will be considered to be "regular interests"
in  the REMIC Pool and generally will be treated for federal income tax purposes
as if they were newly originated debt instruments, and the Residual Certificates
will be considered to be "residual interests" in the REMIC Pool. The  Prospectus
Supplement  for each  Series of Certificates  will indicate whether  one or more
REMIC elections with respect to the related Trust Estate will be made, in  which
event  references to "REMIC" or "REMIC Pool"  herein shall be deemed to refer to
each such REMIC Pool.

STATUS OF REMIC CERTIFICATES

    REMIC Certificates held by a mutual savings bank or a domestic building  and
loan  association will  constitute "qualifying  real property  loans" within the
meaning of Code Section 593(d)(1) in the same proportion that the assets of  the
REMIC  Pool would be so treated. REMIC  Certificates held by a domestic building
and loan association will constitute "a regular or residual interest in a REMIC"
within the meaning  of Code  Section 7701(a)(19)(C)(xi) in  the same  proportion
that  the assets of  the REMIC Pool  would be treated  as "loans...secured by an
interest in real property" within the meaning of Code Section  7701(a)(19)(C)(v)
or  as other assets described in Code Section 7701(a)(19)(C). REMIC Certificates
held by a  real estate  investment trust  will constitute  "real estate  assets"
within  the  meaning of  Code Section  856(c)(5)(A), and  interest on  the REMIC
Certificates will be considered "interest on obligations secured by mortgages on
real property  or on  interests in  real property"  within the  meaning of  Code
Section  856(c)(3)(B) in the same proportion that, for both purposes, the assets
of the REMIC Pool would be so treated. If at all times 95% or more of the assets
of the  REMIC Pool  qualify for  each  of the  foregoing treatments,  the  REMIC
Certificates  will qualify for  the corresponding status  in their entirety. For
purposes of Code Sections 593(d)(1) and 856(c)(5)(A), payments of principal  and
interest  on  the Mortgage  Loans that  are  reinvested pending  distribution to
holders of REMIC Certificates qualify for such treatment. Where two REMIC  Pools
are  a part of a tiered structure they will be treated as one REMIC for purposes
of the tests  described above respecting  asset ownership of  more or less  than
95%.  In addition,  if the  assets of  the REMIC  include Buy-Down  Loans, it is
possible that  the  percentage  of such  assets  constituting  "qualifying  real
property  loans"  or  "loans...secured  by an  interest  in  real  property" for
purposes of Code Sections 593(d)(1) and 7701(a)(19)(C)(v), respectively, may  be
required  to  be reduced  by the  amount  of the  related Buy-Down  Funds. REMIC
Certificates  held  by  a  regulated  investment  company  will  not  constitute
"Government  securities"  within the  meaning  of Code  Section 851(b)(4)(A)(i).
REMIC Certificates held  by certain  financial institutions  will constitute  an
"evidence of indebtedness" within the meaning of Code Section 582(c)(1).

QUALIFICATION AS A REMIC

    In  order for the  REMIC Pool to qualify  as a REMIC,  there must be ongoing
compliance on the part of the REMIC Pool with the requirements set forth in  the
Code.  The REMIC Pool  must fulfill an  asset test, which  requires that no more
than a DE MINIMIS portion of  the assets of the REMIC  Pool, as of the close  of
the  third calendar month beginning after  the "Startup Day" (which for purposes
of this discussion is the date of issuance of the REMIC Certificates) and at all
times thereafter, may  consist of  assets other than  "qualified mortgages"  and
"permitted investments." The REMIC Regulations provide a safe harbor pursuant to
which  the DE  MINIMIS requirement  will be  met if  at all  times the aggregate
adjusted basis  of the  nonqualified assets  is less  than 1%  of the  aggregate
adjusted  basis of all the REMIC Pool's assets. An entity that fails to meet the

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safe harbor may nevertheless demonstrate that it holds no more than a DE MINIMIS
amount of  nonqualified  assets. A  REMIC  Pool also  must  provide  "reasonable
arrangements" to prevent its residual interests from being held by "disqualified
organizations"  or agents thereof and must furnish applicable tax information to
transferors or agents that violate  this requirement. See "Taxation of  Residual
Certificates--Tax-Related Restrictions on Transfer of Residual
Certificates--Disqualified Organizations."

    A  qualified mortgage  is any obligation  that is principally  secured by an
interest in real property and  that is either transferred  to the REMIC Pool  on
the  Startup Day or is  purchased by the REMIC  Pool within a three-month period
thereafter pursuant to  a fixed  price contract in  effect on  the Startup  Day.
Qualified  mortgages include whole  mortgage loans, such  as the Mortgage Loans,
and, generally,  certificates of  beneficial interest  in a  grantor trust  that
holds  mortgage  loans  and  regular  interests  in  another  REMIC.  The  REMIC
Regulations specify that loans secured by timeshare interests and shares held by
a tenant  stockholder in  a  cooperative housing  corporation can  be  qualified
mortgages. A qualified mortgage includes a qualified replacement mortgage, which
is  any property that would have been treated as a qualified mortgage if it were
transferred to the REMIC Pool on the Startup Day and that is received either (i)
in exchange for any qualified mortgage within a three-month period thereafter or
(ii)  in  exchange  for  a  "defective  obligation"  within  a  two-year  period
thereafter. A "defective obligation" includes (i) a mortgage in default or as to
which default is reasonably foreseeable, (ii) a mortgage as to which a customary
representation  or warranty made at  the time of transfer  to the REMIC Pool has
been breached, (iii) a mortgage that was fraudulently procured by the mortgagor,
and (iv) a mortgage that  was not in fact  principally secured by real  property
(but  only  if such  mortgage is  disposed of  within 90  days of  discovery). A
Mortgage Loan that is "defective" as described  in clause (iv) that is not  sold
or,  if  within two  years  of the  Startup Day,  exchanged,  within 90  days of
discovery, ceases to be a qualified mortgage after such 90-day period.

    Permitted investments  include  cash  flow  investments,  qualified  reserve
assets,  and  foreclosure property.  A cash  flow  investment is  an investment,
earning a return  in the  nature of  interest, of  amounts received  on or  with
respect  to qualified mortgages for a temporary period, not exceeding 13 months,
until the next scheduled distribution to holders of interests in the REMIC Pool.
A qualified reserve asset is any intangible property held for investment that is
part of any reasonably required reserve maintained by the REMIC Pool to  provide
for  payments of  expenses of the  REMIC Pool or  amounts due on  the regular or
residual interests in  the event  of defaults (including  delinquencies) on  the
qualified  mortgages,  lower  than  expected  reinvestment  returns,  prepayment
interest shortfalls and certain  other contingencies. The  reserve fund will  be
disqualified  if more than 30% of the gross  income from the assets in such fund
for the year is derived from the sale or other disposition of property held  for
less  than three  months, unless  required to prevent  a default  on the regular
interests caused by a default on one or more qualified mortgages. A reserve fund
must be reduced "promptly and appropriately"  as payments on the Mortgage  Loans
are  received. Foreclosure property is real  property acquired by the REMIC Pool
in connection with the default or  imminent default of a qualified mortgage  and
generally  held for  not more  than two  years, with  extensions granted  by the
Internal Revenue Service.

    In addition to the foregoing requirements, the various interests in a  REMIC
Pool  also must meet certain requirements. All  of the interests in a REMIC Pool
must be either of the following: (i) one or more classes of regular interests or
(ii) a single class  of residual interests on  which distributions, if any,  are
made  pro rata. A regular interest is an interest in a REMIC Pool that is issued
on the Startup Day with  fixed terms, is designated  as a regular interest,  and
unconditionally  entitles the holder to receive a specified principal amount (or
other similar amount),  and provides  that interest payments  (or other  similar
amounts), if any, at or before maturity either are payable based on a fixed rate
or  a qualified variable rate, or consist  of a specified, nonvarying portion of
the interest  payments on  qualified  mortgages. Such  a specified  portion  may
consist  of a  fixed number  of basis  points, a  fixed percentage  of the total
interest, or a qualified variable or inverse variable rate on some or all of the
qualified mortgages. The specified principal  amount of a regular interest  that
provides  for interest payments consisting of a specified, nonvarying portion of
interest payments on qualified mortgages may be zero. A residual interest is  an
interest in a REMIC Pool other than a regular

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<PAGE>
interest  that is issued on the Startup Day and that is designated as a residual
interest. An interest in a REMIC Pool may be treated as a regular interest  even
if  payments  of principal  with respect  to such  interest are  subordinated to
payments on other regular interests or the residual interest in the REMIC  Pool,
and  are  dependent on  the absence  of defaults  or delinquencies  on qualified
mortgages or permitted  investments, lower than  reasonably expected returns  on
permitted  investments,  expenses  incurred  by  the  REMIC  Pool  or prepayment
interest shortfalls.  Accordingly, the  Regular Certificates  of a  Series  will
constitute   one  or  more  classes  of  regular  interests,  and  the  Residual
Certificates with  respect to  that Series  will constitute  a single  class  of
residual interests on which distributions are made pro rata.

    If  an entity, such as the  REMIC Pool, fails to comply  with one or more of
the ongoing requirements of the Code  for REMIC status during any taxable  year,
the  Code provides that the entity will not  be treated as a REMIC for such year
and thereafter. In  this event,  an entity  with multiple  classes of  ownership
interests  may be  treated as  a separate  association taxable  as a corporation
under Treasury  regulations, and  the  Regular Certificates  may be  treated  as
equity  interests therein. The Code, however, authorizes the Treasury Department
to issue regulations that address situations  where failure to meet one or  more
of the requirements for REMIC status occurs inadvertently and in good faith, and
disqualification  of  the  REMIC  Pool  would  occur  absent  regulatory relief.
Investors should be aware, however, that the Conference Committee Report to  the
1986  Act indicates that the relief may be accompanied by sanctions, such as the
imposition of a corporate tax on all or a portion of the REMIC Pool's income for
the period of time in which the requirements for REMIC status are not satisfied.

TAXATION OF REGULAR CERTIFICATES

  GENERAL
    In general,  interest, original  issue discount,  and market  discount on  a
Regular  Certificate  will be  treated as  ordinary  income to  a holder  of the
Regular Certificate (the "Regular Certificateholder"), and principal payments on
a Regular Certificate will be  treated as a return of  capital to the extent  of
the  Regular  Certificateholder's  basis in  the  Regular  Certificate allocable
thereto. Regular Certificateholders  must use the  accrual method of  accounting
with  regard to  Regular Certificates,  regardless of  the method  of accounting
otherwise used by such Regular Certificateholders.

  ORIGINAL ISSUE DISCOUNT
    Compound Interest  Certificates  will  be,  and  other  classes  of  Regular
Certificates may be, issued with "original issue discount" within the meaning of
Code  Section 1273(a). Holders of any  Class or Subclass of Regular Certificates
having original issue discount generally must include original issue discount in
ordinary income for  federal income tax  purposes as it  accrues, in  accordance
with  a  constant interest  method that  takes into  account the  compounding of
interest, in advance  of receipt of  the cash attributable  to such income.  The
following discussion is based in part on proposed Treasury regulations issued on
December  21, 1992 under Code Sections 1271 through 1273 and 1275 (the "Proposed
OID Regulations")  and  in part  on  the provisions  of  the 1986  Act.  Regular
Certificateholders  should be aware, however,  that the Proposed OID Regulations
do not adequately address certain issues relevant to prepayable securities, such
as the  Regular Certificates,  and are  subject to  change and  are not  binding
authority  before being adopted as final  or temporary regulations. The Proposed
OID Regulations are proposed to be  effective for debt instruments issued 60  or
more  days after the date the Proposed  OID Regulations are finalized, and prior
proposed regulations have been withdrawn.

    Under the Proposed OID Regulations, each Regular Certificate (except to  the
extent  described below with respect to a Regular Certificate on which principal
is distributed in a single installment or by lots of specified principal amounts
upon the  request of  a Certificateholder  or  by random  lot (a  "Retail  Class
Certificate"))  will be treated as a  single installment obligation for purposes
of  determining   the  original   issue  discount   includible  in   a   Regular
Certificateholder's  income. The  total amount of  original issue  discount on a
Regular Certificate is the excess of  the "stated redemption price at  maturity"
of  the Regular Certificate over its "issue price." The issue price of a Regular
Certificate offered  pursuant  to  this  Prospectus is  the  price  at  which  a
substantial amount of such Class is first sold to the public. The issue price of
a Regular Certificate

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also  includes  the  amount paid  by  an initial  Regular  Certificateholder for
accrued interest that relates to a period prior to the issue date of the Regular
Certificate. The stated redemption  price at maturity  of a Regular  Certificate
always  includes  the original  principal  amount (in  the  case of  Standard or
Stripped Certificates)  or initial  Stated Amount  (in the  case of  Multi-Class
Certificates)  of  the  Regular  Certificate,  but  generally  will  not include
distributions of  interest if  such distributions  constitute "qualified  stated
interest."  Under  the  Proposed  OID  Regulations,  qualified  stated  interest
generally means interest payable at a single fixed rate or a qualified  variable
rate   (as   described  below)   provided  that   such  interest   payments  are
unconditionally payable at intervals of one year or less during the entire  term
of  the Regular  Certificate. Distributions of  interest on  a Compound Interest
Certificate, or on  other Regular  Certificates with respect  to which  deferred
interest will accrue, will not constitute qualified stated interest payments, in
which  case the stated redemption price at maturity of such Regular Certificates
includes all distributions of interest as  well as principal thereon. Where  the
interval  between the issue  date and the  first Distribution Date  on a Regular
Certificate is either  longer or  shorter than the  interval between  subsequent
Distribution  Dates, all or  part of the  interest foregone, in  the case of the
longer interval, and all of the additional interest, in the case of the  shorter
interval, will be included in the stated redemption price at maturity and tested
under  the DE MINIMIS rule described below. The Proposed OID Regulations suggest
that all interest on a long first period Regular Certificate that is issued with
non-DE MINIMIS OID will  be treated as  OID, but the Seller  does not intend  to
follow  this  approach  unless  and  until  required  to  do  so  by  final  OID
regulations. Regular Certificateholders should consult their own tax advisors to
determine the issue price and stated  redemption price at maturity of a  Regular
Certificate.

    Under  a DE MINIMIS  rule, original issue discount  on a Regular Certificate
will be considered to be zero if such original issue discount is less than 0.25%
of the stated redemption price at maturity of the Regular Certificate multiplied
by the weighted average maturity of  the Regular Certificate. For this  purpose,
the  weighted average maturity of the Regular Certificate is computed as the sum
of the  amounts  determined by  multiplying  the  number of  full  years  (I.E.,
rounding  down partial  years) from  the issue  date until  each distribution in
reduction of stated redemption price  at maturity is scheduled  to be made by  a
fraction,  the numerator of which is the amount of each distribution included in
the stated  redemption price  at maturity  of the  Regular Certificate  and  the
denominator  of which is the stated redemption  price at maturity of the Regular
Certificate. Although currently unclear,  it appears that  the schedule of  such
distributions  should  be  determined in  accordance  with the  assumed  rate of
prepayment of the Mortgage Loans and the anticipated reinvestment rate, if  any,
relating   to  the  Regular  Certificates  (the  "Prepayment  Assumption").  The
Prepayment Assumption with respect to a  Series of Regular Certificates will  be
set forth in the related Prospectus Supplement. Holders generally must report DE
MINIMIS OID pro rata as principal payments are received, and such income will be
capital  gain if the Regular  Certificate is held as  a capital asset. Under the
Proposed OID Regulations, however,  accrual method holders  may elect to  accrue
all  DE  MINIMIS OID  as  well as  market discount  and  market premium  under a
constant  interest  method.  Holders  should  consult  their  own  tax  advisors
regarding  the method of  making such an  election and the  effect on other debt
instruments acquired by such holder at a market discount or market premium.

    A Regular Certificateholder generally must  include in gross income for  any
taxable  year the sum of the "daily portions," as defined below, of the original
issue discount on the Regular Certificate  accrued during an accrual period  for
each  day  on which  it holds  the  Regular Certificate,  including the  date of
purchase but  excluding the  date  of disposition.  The  Seller will  treat  the
monthly  period ending  on each  Distribution Date  as the  accrual period. With
respect to each Regular Certificate, a calculation will be made of the  original
issue  discount  that accrues  during each  successive  full accrual  period (or
shorter period  from  the date  of  original issue)  that  ends on  the  related
Distribution Date on the Regular Certificate. The Conference Committee Report to
the  1986 Act  states that  the rate  of accrual  of original  issue discount is
intended to be based on the Prepayment Assumption. Other than as discussed below
with respect to a Retail Class Certificate, the original issue discount accruing
in a full accrual period would be the excess, if any, of (i) the sum of (a)  the
present  value of all of  the remaining distributions to  be made on the Regular
Certificate as of the end of that accrual period, and (b) the distributions made
on   the   Regular   Certificate   during   the   accrual   period   that    are

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included  in the Regular Certificate's stated redemption price at maturity, over
(ii) the adjusted issue price of the Regular Certificate at the beginning of the
accrual period. The present value of the remaining distributions referred to  in
the  preceding sentence is calculated based on  (i) the yield to maturity of the
Regular  Certificate  at   the  issue  date,   (ii)  events  (including   actual
prepayments)  that have  occurred prior  to the end  of the  accrual period, and
(iii) the Prepayment Assumption. For these purposes, the adjusted issue price of
a Regular Certificate at  the beginning of any  accrual period equals the  issue
price  of the Regular Certificate, increased by the aggregate amount of original
issue discount with respect to the Regular Certificate that accrued in all prior
accrual periods  and reduced  by the  amount of  distributions included  in  the
Regular  Certificate's stated redemption price at maturity that were made on the
Regular Certificate in such prior periods. The original issue discount  accruing
during any accrual period (as determined in this paragraph) will then be divided
by  the number of days in the period  to determine the daily portion of original
issue discount for each day  in the period. With  respect to an initial  accrual
period  shorter than a full accrual period, the daily portions of original issue
discount must be  determined according  to an appropriate  allocation under  any
reasonable method.

    Under  the  method described  above, the  daily  portions of  original issue
discount required  to  be included  in  income by  a  Regular  Certificateholder
generally  will  increase  to  take  into  account  prepayments  on  the Regular
Certificates as a result  of prepayments on the  Mortgage Loans that exceed  the
Prepayment  Assumption, and generally will decrease  (but not below zero for any
period) if the  prepayments are slower  than the Prepayment  Assumption. To  the
extent  specified  in  the  applicable  Prospectus  Supplement,  an  increase in
prepayments  on  the  Mortgage  Loans  with  respect  to  a  Series  of  Regular
Certificates  can result in both a change  in the priority of principal payments
with respect to certain Classes of  Regular Certificates and either an  increase
or  decrease in the  daily portions of  original issue discount  with respect to
such Regular Certificates.

    In the case of a Retail Class Certificate, although not entirely clear,  the
yield  to  maturity of  such  Certificate should  be  determined based  upon the
anticipated payment characteristics of the Class as a whole under the Prepayment
Assumption. In  general, the  original issue  discount accruing  on each  Retail
Class  Certificate in a full accrual period  would be its allocable share of the
original issue  discount with  respect to  the entire  Class, as  determined  in
accordance  with the preceding paragraph. However, in the case of a distribution
in retirement  of  the entire  unpaid  principal  balance of  any  Retail  Class
Certificate  (or portion  of such unpaid  principal balance),  (a) the remaining
unaccrued original  issue discount  allocable to  such Certificate  (or to  such
portion)  will accrue at the  time of such distribution,  and (b) the accrual of
original issue discount allocable  to each remaining  Certificate of such  Class
(or  the remaining unpaid principal balance of a partially redeemed Retail Class
Certificate after  a  distribution  of  principal has  been  received)  will  be
adjusted  by reducing the present value of  the remaining payments on such Class
and the adjusted issue  price of such  Class to the  extent attributable to  the
portion of the unpaid principal balance thereof that was distributed.

    A  purchaser of a Regular  Certificate at a price  greater than its adjusted
issue price will be required  to include in gross  income the daily portions  of
the  original issue discount  on the Regular  Certificate reduced pro  rata by a
fraction, the numerator of which is the  excess of its purchase price over  such
adjusted issue price and the denominator of which is the excess of the remaining
stated redemption price at maturity over the adjusted issue price.

  VARIABLE RATE REGULAR CERTIFICATES

    Regular  Certificates may  provide for  interest based  on a  variable rate.
Under the Proposed OID Regulations, interest is treated as payable at a variable
rate and not as contingent interest if, generally, (i) the issue price does  not
exceed  the original  principal balance, and  (ii) the interest  compounds or is
payable at least annually at current values of certain objective rates  measured
by  or  based on  lending rates  for newly  borrowed  funds or  on the  price of
actively traded  property  or an  index  of the  prices  of such  property.  The
variable  interest generally will be qualified  stated interest to the extent it
is unconditionally  payable at  least  annually and,  to the  extent  successive
qualified  floating  rates or  a  fixed rate  followed  by a  qualified floating

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rate are used, interest is not significantly accelerated or deferred. Because of
effective date rules, qualified variable rates for REMIC purposes do not  appear
to  be  as broad  as for  OID  purposes without  further clarification  from the
Internal Revenue Service. The Internal Revenue Service has provided guidance  in
Notice  93-11  that  a  rate  that meets  the  definition  in  the  Proposed OID
Regulations of a "qualified floating rate" (I.E., a floating rate, variations in
which can reasonably be  expected to measure  contemporaneous variations in  the
cost  of newly borrowed funds) is a  qualified variable rate for REMIC purposes.
Accordingly, under the REMIC  Regulations, a Regular  Certificate (i) bearing  a
variable  rate  tied to  current values  of  a qualified  floating rate  (or the
highest, lowest or average of two or more qualified floating rates, including  a
rate  based on the average cost of  funds of one or more financial institutions)
or that represents a weighted  average of rates on some  or all of the  Mortgage
Loans that bear either a fixed rate or a qualified floating rate, including such
a  rate that is subject  to one or more  caps or floors, or  (ii) bearing one or
more such variable rates for one or more periods, or one or more fixed rates for
one or more periods, qualifies as a regular interest in a REMIC.

    The Proposed  OID Regulations  indicate that  the amount  of original  issue
discount  with  respect to  a  Regular Certificate  bearing  a variable  rate of
interest will  accrue  in  the  manner described  above  under  "Original  Issue
Discount,"  with  the yield  to  maturity and  future  payments on  such Regular
Certificate to be determined by assuming  that interest will be payable for  the
life  of the Regular  Certificate at a  reasonable fixed rate  that, taking into
account any  actual  discount  from  par, provides  a  yield  to  maturity  that
approximates the applicable Federal rate under Code Section 1274(d). The Seller,
however,   unless  and  until  required  to   do  otherwise  by  final  Treasury
regulations, intends  to  determine  original issue  discount  with  respect  to
variable  rate Regular Certificates based on the assumption that future interest
payments will be  based on  the initial rate  for the  relevant Class.  Ordinary
income reportable for any period will be adjusted based on subsequent changes in
the applicable interest rate index.

    Although   unclear  at  present,   the  Seller  intends   to  treat  Regular
Certificates bearing an  interest rate  that is a  weighted average  of the  net
interest  rates on  Mortgage Loans having  adjustable rates  as having qualified
stated interest. In such case, the applicable index used to compute interest  on
the  Mortgage Loans in effect  on the issue date  (or possibly the pricing date)
will be deemed  to be in  effect beginning with  the period in  which the  first
weighted  average adjustment date occurring after  the issue date occurs. If the
Pass-Through Rate for one or  more periods is less than  it would be based  upon
the  fully indexed rate,  the excess of  the interest payments  projected at the
assumed index over interest projected at such initial rate will be tested  under
the  DE  MINIMIS rules  as described  above.  Adjustments will  be made  in each
accrual period either  increasing or  decreasing the amount  of ordinary  income
reportable to reflect the actual Pass-Through Rate on the Regular Certificate.

  MARKET DISCOUNT

    A  purchaser of  a Regular  Certificate also  may be  subject to  the market
discount rules of Code Sections 1276 through 1278. Under these sections and  the
principles  applied by the  Proposed OID Regulations in  the context of original
issue discount,  "market  discount"  is  the amount  by  which  the  purchaser's
original  basis in the  Regular Certificate (i) is  exceeded by the then-current
principal amount of the Regular  Certificate, or (ii) in  the case of a  Regular
Certificate  having original issue  discount, is exceeded  by the adjusted issue
price of  such Regular  Certificate  at the  time  of purchase.  Such  purchaser
generally will be required to recognize ordinary income to the extent of accrued
market  discount on such Regular Certificate  as distributions includible in the
stated redemption  price at  maturity thereof  are received,  in an  amount  not
exceeding  any such distribution. Such market  discount would accrue in a manner
to be  provided  in  Treasury  regulations and  should  take  into  account  the
Prepayment  Assumption. The Conference Committee Report to the 1986 Act provides
that until such regulations are issued, such market discount would accrue either
(i) on the basis  of a constant interest  rate, or (ii) in  the ratio of  stated
interest  allocable to the relevant  period to the sum  of the interest for such
period plus the remaining interest as of the end of such period, or in the  case
of  a Regular Certificate issued  with original issue discount,  in the ratio of
original issue  discount accrued  for the  relevant  period to  the sum  of  the
original issue discount accrued for such period

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plus  the remaining original issue  discount as of the  end of such period. Such
purchaser also generally will be  required to treat a portion  of any gain on  a
sale  or exchange of the Regular Certificate as ordinary income to the extent of
the market  discount  accrued  to the  date  of  disposition under  one  of  the
foregoing  methods,  less any  accrued  market discount  previously  reported as
ordinary income as partial distributions  in reduction of the stated  redemption
price  at  maturity were  received.  Such purchaser  will  be required  to defer
deduction of  a  portion of  the  excess of  the  interest paid  or  accrued  on
indebtedness  incurred  to  purchase or  carry  a Regular  Certificate  over the
interest distributable thereon. The deferred portion of such interest expense in
any taxable year generally  will not exceed the  accrued market discount on  the
Regular  Certificate for  such year. Any  such deferred interest  expense is, in
general, allowed as a  deduction not later  than the year  in which the  related
market  discount income is recognized or the Regular Certificate is disposed of.
As an alternative to the inclusion of market discount in income on the foregoing
basis, the Regular  Certificateholder may  elect to include  market discount  in
income  currently as it  accrues on all market  discount instruments acquired by
such Regular Certificateholder in that taxable year or thereafter, in which case
the interest deferral rule will not apply.

    By analogy to the Proposed OID Regulations, market discount with respect  to
a  Regular Certificate will be considered to  be zero if such market discount is
less than 0.25%  of the remaining  stated redemption price  at maturity of  such
Regular  Certificate multiplied by the weighted  average maturity of the Regular
Certificate  (determined  as  described  above  in  the  third  paragraph  under
"Original  Issue  Discount")  remaining  after the  date  of  purchase. Treasury
regulations implementing the market discount rules have not yet been issued, and
therefore  investors  should  consult  their  own  tax  advisors  regarding  the
application  of  these rules.  Investors should  also consult  Revenue Procedure
92-67 concerning the elections  to include market  discount in income  currently
and to accrue market discount on the basis of a constant interest rate.

  PREMIUM

    A  Regular Certificate purchased at a cost greater than its remaining stated
redemption price  at maturity  generally  is considered  to  be purchased  at  a
premium.  If the Regular  Certificateholder holds such  Regular Certificate as a
"capital  asset"  within  the  meaning   of  Code  Section  1221,  the   Regular
Certificateholder  may elect  under Code  Section 171  to amortize  such premium
under the constant interest method. The Conference Committee Report to the  1986
Act  indicates a Congressional intent that the same rules that will apply to the
accrual of  market  discount  on  installment obligations  will  also  apply  to
amortizing  bond premium under Code Section  171 on installment obligations such
as the Regular Certificates, although it is unclear whether the alternatives  to
the  constant  interest  method  described  above  under  "Market  Discount" are
available. Amortizable bond  premium will be  treated as an  offset to  interest
income on a Regular Certificate, rather than as a separate deduction item.

  SALE OR EXCHANGE OF REGULAR CERTIFICATES
    If a Regular Certificateholder sells or exchanges a Regular Certificate, the
Regular  Certificateholder will recognize gain or  loss equal to the difference,
if any,  between the  amount received  and  its adjusted  basis in  the  Regular
Certificate.  The adjusted basis  of a Regular  Certificate generally will equal
the cost of  the Regular Certificate  to the seller,  increased by any  original
issue  discount or  market discount  previously included  in the  seller's gross
income with respect to the Regular  Certificate and reduced by amounts  included
in  the stated redemption price at maturity of the Regular Certificate that were
previously received by the seller and by any amortized premium.

    Except as described  above with respect  to market discount,  and except  as
provided  in this  paragraph, any  gain or  loss on  the sale  or exchange  of a
Regular Certificate realized by an investor who holds the Regular Certificate as
a capital asset will be capital gain or loss and will be long-term or short-term
depending on whether  the Regular Certificate  has been held  for the  long-term
capital  gain holding period (currently, more than  one year). Such gain will be
treated as  ordinary income  if there  was an  "intention to  call" the  Regular
Certificate  prior  to maturity.  The Proposed  OID  Regulations state  that the
presence of  a sinking  fund or  optional call  does not  give rise  to such  an
intention,  and the Seller does not believe  such an intention will otherwise be
present with respect to  a Series of Certificates,  although the application  of
these

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<PAGE>
rules  to Retail Class Certificates  is unclear. In addition,  such gain will be
treated as ordinary  income to the  extent that  such gain does  not exceed  the
excess,  if any, of (i) the amount that  would have been includible in the gross
income of the holder if his yield  on such Regular Certificate were 110% of  the
applicable  Federal rate under Code Section 1274(d)  as of the date of purchase,
over (ii) the amount of income actually  includible in the gross income of  such
holder  with  respect to  the  Regular Certificate.  In  addition, gain  or loss
recognized from the  sale of a  Regular Certificate by  certain banks or  thrift
institutions will be treated as ordinary income or loss pursuant to Code Section
582(c).  The  preferential  rates  applicable to  long-term  capital  gains were
eliminated by the  1986 Act.  However, the  Revenue Reconciliation  Act of  1990
restored  a preferential rate applicable to long-term capital gains with respect
to certain individuals.

TAXATION OF RESIDUAL CERTIFICATES

  TAXATION OF REMIC INCOME

    Generally, the "daily portions" of REMIC taxable income or net loss will  be
includible  as ordinary income or loss in determining the federal taxable income
of holders of Residual Certificates ("Residual Holders"), and will not be  taxed
separately  to the REMIC Pool. The daily portions of REMIC taxable income or net
loss of a Residual Holder are determined by allocating the REMIC Pool's  taxable
income or net loss for each calendar quarter ratably to each day in such quarter
and by allocating such daily portion among the Residual Holders in proportion to
their  respective holdings  of Residual Certificates  in the REMIC  Pool on such
day. REMIC taxable  income is  generally determined in  the same  manner as  the
taxable  income of an individual using  the accrual method of accounting, except
that (i)  the limitation  on deductibility  of investment  interest expense  and
expenses  for the production of income do not  apply, (ii) all bad loans will be
deductible as business bad debts, and (iii) the limitation on the  deductibility
of  interest and expenses related to tax-exempt income will apply. REMIC taxable
income generally  means  the  REMIC Pool's  gross  income,  including  interest,
original  issue  discount income,  and market  discount income,  if any,  on the
Mortgage Loans, plus income  on reinvestment of cash  flows and reserve  assets,
minus  deductions, including interest and original issue discount expense on the
Regular  Certificates,  servicing   fees  on  the   Mortgage  Loans  and   other
administrative  expenses of the REMIC Pool, and amortization of premium, if any,
with respect to the Mortgage Loans. The requirement that Residual Holders report
their pro  rata share  of taxable  income or  net loss  of the  REMIC Pool  will
continue  until there  are no  Certificates of any  class of  the related Series
outstanding.

    The taxable income recognized by a Residual Holder in any taxable year  will
be  affected by,  among other  factors, the  relationship between  the timing of
recognition of interest and original issue discount or market discount income or
amortization of premium with respect to the Mortgage Loans, on the one hand, and
the timing of deductions for interest (including original issue discount) on the
Regular Certificates, on the other  hand. In the event  that an interest in  the
Mortgage  Loans is acquired by the REMIC Pool  at a discount, and one or more of
such Mortgage Loans is prepaid, the Residual Holder may recognize taxable income
without being entitled to receive a corresponding amount of cash because (i) the
prepayment may be used in whole or in part to make distributions in reduction of
principal or Stated Amount on the Regular Certificates, and (ii) the discount on
the Mortgage  Loans which  is  includible in  income  may exceed  the  deduction
allowed  upon such distributions on those Regular Certificates on account of any
unaccrued original issue discount relating  to those Regular Certificates.  When
there  is more than one Class  of Regular Certificates that distribute principal
or payments  in reduction  of Stated  Amount sequentially,  this mismatching  of
income  and  deductions  is particularly  likely  to  occur in  the  early years
following issuance of the Regular  Certificates when distributions in  reduction
of  principal or Stated Amount  are being made in  respect of earlier Classes of
Regular Certificates  to  the extent  that  such  Classes are  not  issued  with
substantial  discount. If taxable  income attributable to  such a mismatching is
realized, in general, losses would be allowed in later years as distributions on
the later Classes of Regular Certificates  are made. Taxable income may also  be
greater  in earlier  years than  in later  years as  a result  of the  fact that
interest expense  deductions,  expressed  as a  percentage  of  the  outstanding
principal  amount of  such a Series  of Regular Certificates,  may increase over
time as distributions in reduction of principal or Stated Amount are made on the
lower

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<PAGE>
yielding Classes of Regular Certificates, whereas, to the extent the REMIC  Pool
consists of fixed rate Mortgage Loans, interest income with respect to any given
Mortgage  Loan will remain constant over time as a percentage of the outstanding
principal  amount  of  that  loan.  Consequently,  Residual  Holders  must  have
sufficient  other sources  of cash  to pay any  federal, state,  or local income
taxes due as a result of such mismatching or unrelated deductions against  which
to  offset such income,  subject to the discussion  of "excess inclusions" below
under "Limitations on Offset or Exemption  of REMIC Income." The timing of  such
mismatching  of income  and deductions described  in this  paragraph, if present
with respect to a Series of Certificates, may have a significant adverse  effect
upon  a  Residual Holder's  after-tax rate  of return.  In addition,  a Residual
Holder's taxable income during certain  periods may exceed the income  reflected
by  such Residual Holder for such  periods in accordance with generally accepted
accounting principles. Investors should consult their own accountants concerning
the accounting treatment of their investment in Residual Certificates.

  BASIS AND LOSSES

    The amount of any net loss of the REMIC Pool that may be taken into  account
by  the  Residual  Holder is  limited  to  the adjusted  basis  of  the Residual
Certificate as  of the  close of  the quarter  (or time  of disposition  of  the
Residual Certificate if earlier), determined without taking into account the net
loss  for the quarter. The  initial adjusted basis of  a purchaser of a Residual
Certificate is  the amount  paid for  such Residual  Certificate. Such  adjusted
basis  will  be increased  by the  amount of  taxable income  of the  REMIC Pool
reportable by the Residual  Holder and will be  decreased (but not below  zero),
first,  by a cash distribution from the REMIC Pool and, second, by the amount of
loss of the  REMIC Pool  reportable by  the Residual  Holder. Any  loss that  is
disallowed  on account of this limitation  may be carried over indefinitely with
respect to the Residual Holder  as to whom such loss  was disallowed and may  be
used  by such Residual  Holder only to  offset any income  generated by the same
REMIC Pool.

    A Residual Holder will not be permitted to amortize directly the cost of its
Residual Certificate as  an offset to  its share  of the taxable  income of  the
related  REMIC Pool. However, that taxable income will not include cash received
by the REMIC Pool that  represents a recovery of the  REMIC Pool's basis in  its
assets.  Such  recovery of  basis  by the  REMIC Pool  will  have the  effect of
amortization of the issue  price of the Residual  Certificates over their  life.
However,  in view of the possible acceleration of the income of Residual Holders
described above under "Taxation of REMIC Income," the period of time over  which
such  issue price is effectively amortized may  be longer than the economic life
of the Residual Certificates.

    A Residual Certificate may have a negative value if the net present value of
anticipated tax liabilities exceeds the present value of anticipated cash flows.
The REMIC  Regulations  appear to  treat  the issue  price  of such  a  residual
interest  as zero rather  than such negative amount  for purposes of determining
the REMIC Pool's  basis in  its assets. The  preamble to  the REMIC  Regulations
states  that the  Internal Revenue  Service may  provide future  guidance on the
proper tax  treatment  of payments  made  by a  transferor  of such  a  residual
interest  to induce the transferee to acquire the interest, and Residual Holders
should consult their own tax advisors in this regard.

    Further, to the extent that the initial adjusted basis of a Residual  Holder
(other  than an original holder) in the Residual Certificate is greater than the
corresponding portion  of the  REMIC Pool's  basis in  the Mortgage  Loans,  the
Residual  Holder will not recover  a portion of such  basis until termination of
the  REMIC  Pool  unless  future  Treasury  regulations  provide  for   periodic
adjustments  to the REMIC income otherwise  reportable by such holder. The REMIC
Regulations currently in  effect do not  so provide. See  "Treatment of  Certain
Items of REMIC Income and Expense--Market Discount" below regarding the basis of
Mortgage  Loans  to  the  REMIC  Pool  and  "Sale  or  Exchange  of  a  Residual
Certificate" below regarding possible  treatment of a  loss upon termination  of
the REMIC Pool as a capital loss.

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<PAGE>
  TREATMENT OF CERTAIN ITEMS OF REMIC INCOME AND EXPENSE

    ORIGINAL  ISSUE  DISCOUNT.    Generally,  the  REMIC  Pool's  deductions for
original issue discount will be determined in the same manner as original  issue
discount  income on Regular  Certificates as described  above under "Taxation of
Regular Certificates--Original  Issue  Discount" and  "--Variable  Rate  Regular
Certificates," without regard to the DE MINIMIS rule described therein.

    MARKET DISCOUNT.  The REMIC Pool will have market discount income in respect
of  Mortgage Loans if, in general, the basis  of the REMIC Pool in such Mortgage
Loans is exceeded by their unpaid principal balances. The REMIC Pool's basis  in
such  Mortgage Loans is  generally the fair  market value of  the Mortgage Loans
immediately after the transfer thereof to the REMIC Pool. The REMIC  Regulations
provide  that such basis  is equal in the  aggregate to the  issue prices of all
regular and residual interests in the  REMIC Pool. In respect of Mortgage  Loans
that  have  market discount  to  which Code  Section  1276 applies,  the accrued
portion of such  market discount  would be recognized  currently as  an item  of
ordinary  income. Market discount  income generally should  accrue in the manner
described above  under  "Taxation  of  Regular  Certificates--Market  Discount."
However,  the rules of Code Section  1276 concerning market discount income will
not apply in the case of Mortgage Loans originated on or prior to July 18, 1984,
if any.  With respect  to  such Mortgage  Loans,  market discount  is  generally
includible  in  REMIC  taxable  income  or ordinary  gross  income  pro  rata as
principal payments are  received. The  deduction of  a portion  of the  interest
expense  on the Regular Certificates allocable  to such discount may be deferred
until such discount is included in income, and any gain on the sale or  exchange
thereof  will  be treated  as  ordinary income  to  the extent  of  the deferred
interest deductible at that time.

    PREMIUM.  Generally, if the  basis of the REMIC  Pool in the Mortgage  Loans
exceeds the unpaid principal balances thereof, the REMIC Pool will be considered
to  have acquired such Mortgage  Loans at a premium equal  to the amount of such
excess. As stated above, the  REMIC Pool's basis in  Mortgage Loans is the  fair
market  value of the Mortgage Loans, based  on the aggregate of the issue prices
of the regular and  residual interests in the  REMIC Pool immediately after  the
transfer  thereof to  the REMIC  Pool. In a  manner analogous  to the discussion
above under "Taxation of Regular  Certificates--Premium," a person that holds  a
Mortgage  Loan as a capital  asset under Code Section  1221 may elect under Code
Section 171 to amortize premium on Mortgage Loans originated after September 27,
1985 under a constant interest method. Amortizable bond premium will be  treated
as an offset to interest income on the Mortgage Loans, rather than as a separate
deduction  item. Because  substantially all  of the  mortgagors on  the Mortgage
Loans are expected to be individuals, Code Section 171 will not be available for
premium on Mortgage Loans originated on or prior to September 27, 1985.  Premium
with  respect to  such Mortgage  Loans may  be deductible  in accordance  with a
reasonable method regularly employed  by the holder  thereof. The allocation  of
such premium pro rata among principal payments should be considered a reasonable
method; however, the Internal Revenue Service may argue that such premium should
be  allocated in a different manner, such as allocating such premium entirely to
the final payment of principal.

  LIMITATIONS ON OFFSET OR EXEMPTION OF REMIC INCOME

    The Code  provides that,  to  the extent  provided  in regulations,  if  the
aggregate  value of the Residual Certificates relative to the aggregate value of
the  Regular  Certificates  and  Residual  Certificates  is  considered  to   be
"significant,"  as described below,  then a portion  (but not all)  of the REMIC
taxable income includible in determining the  federal income tax liability of  a
Residual  Holder will be subject to special treatment. That portion, referred to
as the "excess inclusion," is  equal to the excess  of REMIC taxable income  for
the calendar quarter allocable to a Residual Certificate over the daily accruals
for  such quarterly period of (i) 120%  of the long-term applicable Federal rate
that would  have  applied  to  the  Residual Certificate  (if  it  were  a  debt
instrument)  on the Startup  Day under Code Section  1274(d), multiplied by (ii)
the adjusted issue price of such  Residual Certificate at the beginning of  such
quarterly  period.  For this  purpose, the  adjusted issue  price of  a Residual
Certificate at the beginning  of a quarter  is the issue  price of the  Residual
Certificate, plus the amount of such daily accruals of REMIC income described in
this  paragraph for all prior quarters, decreased by any distributions made with
respect to such Residual Certificate prior to

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<PAGE>
the beginning of such quarterly period. Although the Conference Committee Report
to the 1986 Act indicates that the  value of all Residual Certificates would  be
considered significant in cases where such value is at least 2% of the aggregate
value   of  the  Regular  Certificates  and  Residual  Certificates,  the  REMIC
Regulations have not adopted  such a general rule.  Accordingly, the portion  of
the  REMIC Pool's taxable income that will  be treated as excess inclusions will
be determined  by  the preceding  formula,  with  the effect  that  such  excess
inclusions  will be a larger portion of such income as the relative value of the
Residual Certificates diminishes.

    The portion of a  Residual Holder's REMIC taxable  income consisting of  the
excess inclusions generally may not be offset by other deductions, including net
operating  loss carryforwards, on such Residual Holder's return. Further, if the
Residual Holder is  an organization  subject to  the tax  on unrelated  business
income imposed by Code Section 511, the Residual Holder's excess inclusions will
be  treated as  unrelated business  taxable income  of such  Residual Holder for
purposes of Code Section  511. In addition, REMIC  taxable income is subject  to
30% withholding tax with respect to certain persons who are not U.S. Persons (as
defined   below  under   "Tax-Related  Restrictions  on   Transfer  of  Residual
Certificates--Foreign Investors"),  and  the  portion  thereof  attributable  to
excess  inclusions is not eligible for any  reduction in the rate of withholding
tax   (by   treaty   or   otherwise).   See   "Taxation   of   Certain   Foreign
Investors--Residual  Certificates" below.  Finally, if a  real estate investment
trust or a regulated investment company  owns a Residual Certificate, a  portion
(allocated under Treasury regulations yet to be issued) of dividends paid by the
real estate investment trust or regulated investment company could not be offset
by net operating losses of its shareholders, would constitute unrelated business
taxable  income  for  tax-exempt  shareholders,  and  would  be  ineligible  for
reduction of withholding to certain persons who are not U.S. Persons.

    An exception  to  the  inability  of a  Residual  Holder  to  offset  excess
inclusions  with unrelated deductions  and net operating  losses applies to Code
Section 593 institutions ("thrift institutions"). For purposes of applying  this
rule,  all  members of  an  affiliated group  filing  a consolidated  return are
treated as one taxpayer, except that  thrift institutions to which Code  Section
593  applies,  together  with their  subsidiaries  formed to  issue  REMICs, are
treated  as  separate   corporations.  Furthermore,  the   Code  provides   that
regulations  may disallow the ability of  a thrift institution to use deductions
to offset excess inclusions if necessary or appropriate to prevent the avoidance
of tax. A thrift institution may not so offset its excess inclusions unless  the
Residual  Certificates  have "significant  value," which  requires that  (i) the
Residual Certificates have an issue  price that is at least  equal to 2% of  the
aggregate  of  the  issue  prices  of  all  Residual  Certificates  and  Regular
Certificates with respect to the REMIC  Pool, and (ii) the anticipated  weighted
average  life of the  Residual Certificates is  at least 20%  of the anticipated
weighted average life of the REMIC  Pool. The anticipated weighted average  life
of  the Residual  Certificates is based  on all distributions  anticipated to be
received with respect thereto (using the Prepayment Assumption). The anticipated
weighted average life of the REMIC  Pool is the aggregate weighted average  life
of   all  classes   of  interests   therein  (computed   using  all  anticipated
distributions on a regular interest with  nominal or no principal). Finally,  an
ordering rule under the REMIC Regulations provides that a thrift institution may
only  offset  its excess  inclusion income  with deductions  after it  has first
applied its deductions against  income that is not  excess inclusion income.  If
applicable,  the Prospectus Supplement  with respect to a  Series will set forth
whether the  Residual  Certificates are  expected  to have  "significant  value"
within the meaning of the REMIC Regulations.

  TAX-RELATED RESTRICTIONS ON TRANSFER OF RESIDUAL CERTIFICATES

    DISQUALIFIED  ORGANIZATIONS.    If any  legal  or beneficial  interest  in a
Residual Certificate is transferred to  a Disqualified Organization (as  defined
below),  a tax would  be imposed in  an amount equal  to the product  of (i) the
present value of the  total anticipated excess inclusions  with respect to  such
Residual  Certificate  for  periods  after the  transfer  and  (ii)  the highest
marginal  federal  income  tax  rate  applicable  to  corporations.  The   REMIC
Regulations  provide that the anticipated excess  inclusions are based on actual
prepayment experience to the date of  the transfer and projected payments  based
on  the  Prepayment Assumption.  The present  value  rate equals  the applicable
federal rate under Code  Section 1274(d) as  of the date of  the transfer for  a
term  ending  with the  last  calendar quarter  in  which excess  inclusions are
expected to accrue. Such rate is

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<PAGE>
applied  to  the anticipated  excess inclusions  from the  end of  the remaining
calendar quarters in which they  arise to the date of  the transfer. Such a  tax
generally would be imposed on the transferor of the Residual Certificate, except
that  where such transfer is  through an agent (including  a broker, nominee, or
other middleman)  for a  Disqualified  Organization, the  tax would  instead  be
imposed  on such agent. However, a transferor of a Residual Certificate would in
no event be liable  for such tax  with respect to a  transfer if the  transferee
furnishes  to the transferor an  affidavit stating that the  transferee is not a
Disqualified Organization and, as  of the time of  the transfer, the  transferor
does not have actual knowledge that such affidavit is false. The tax also may be
waived by the Internal Revenue Service if the Disqualified Organization promptly
disposes  of the  residual interest  and the transferor  pays income  tax at the
highest corporate  rate on  the excess  inclusion for  the period  the  Residual
Certificate is actually held by the Disqualified Organization.

    In  addition,  if  a "Pass-Through  Entity"  (as defined  below)  has excess
inclusion income with respect  to a Residual Certificate  during a taxable  year
and  a Disqualified Organization is  the record holder of  an equity interest in
such entity, then a tax  is imposed on such entity  equal to the product of  (i)
the  amount  of excess  inclusions that  are  allocable to  the interest  in the
Pass-Through Entity during the period such interest is held by such Disqualified
Organization, and (ii) the highest  marginal federal corporate income tax  rate.
Such  tax would be deductible from the ordinary gross income of the Pass-Through
Entity for the  taxable year. The  Pass-Through Entity would  not be liable  for
such  tax if it has received an affidavit from such record holder that it is not
a Disqualified  Organization or  stating such  holder's taxpayer  identification
number  and, during the period such person  is the record holder of the Residual
Certificate, the Pass-Through Entity  does not have  actual knowledge that  such
affidavit is false.

    For these purposes, (i) "Disqualified Organization" means the United States,
any  state  or  political  subdivision  thereof,  any  foreign  government,  any
international  organization,  any  agency  or  instrumentality  of  any  of  the
foregoing  (provided, that such term does  not include an instrumentality if all
of its activities are subject to tax and a majority of its board of directors is
not selected  by any  such governmental  entity), any  cooperative  organization
furnishing  electric energy or  providing telephone service  to persons in rural
areas as described in  Code Section 1381(a)(2)(C),  and any organization  (other
than  a farmers' cooperative described in Code  Section 521) that is exempt from
taxation under  the Code  unless such  organization  is subject  to the  tax  on
unrelated  business income imposed  by Code Section  511, and (ii) "Pass-Through
Entity" means any  regulated investment company,  real estate investment  trust,
common  trust  fund,  partnership,  trust  or  estate  and  certain corporations
operating on  a  cooperative  basis.  Except as  may  be  provided  in  Treasury
regulations,  any  person holding  an  interest in  a  Pass-Through Entity  as a
nominee for  another  will, with  respect  to such  interest,  be treated  as  a
Pass-Through Entity.

    The  Pooling and Servicing  Agreement with respect to  a Series will provide
that  no  legal  or  beneficial  interest  in  a  Residual  Certificate  may  be
transferred  or registered unless  (i) the proposed  transferee furnishes to the
Seller and the Trustee an affidavit providing its taxpayer identification number
and stating  that  such transferee  is  the  beneficial owner  of  the  Residual
Certificate  and is not  a Disqualified Organization and  is not purchasing such
Residual Certificate  on  behalf of  a  Disqualified Organization  (I.E.,  as  a
broker,  nominee,  or  middleman thereof)  and  (ii) the  transferor  provides a
statement in  writing to  the  Seller and  the Trustee  that  it has  no  actual
knowledge  that such  affidavit is  false. Moreover,  the Pooling  and Servicing
Agreement will provide that any attempted or purported transfer in violation  of
these transfer restrictions will be null and void and will vest no rights in any
purported  transferee. Each Residual  Certificate with respect  to a Series will
bear a legend  referring to  such restrictions  on transfer,  and each  Residual
Holder  will be deemed to  have agreed, as a  condition of ownership thereof, to
any amendments to the related Pooling and Servicing Agreement required under the
Code  or   applicable  Treasury   regulations   to  effectuate   the   foregoing
restrictions.  Information necessary to compute an applicable excise tax must be
furnished to the Internal Revenue Service and to the requesting party within  60
days  of  the request,  and  the Seller  or  the Trustee  may  charge a  fee for
computing and providing such information.

    NONECONOMIC RESIDUAL  INTERESTS.    The REMIC  Regulations  would  disregard
certain  transfers of Residual Certificates, in  which case the transferor would
continue to be treated as the owner of the Residual

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<PAGE>
Certificates and  thus would  continue to  be subject  to tax  on its  allocable
portion  of the  net income of  the REMIC  Pool. Under the  REMIC Regulations, a
transfer of a "noneconomic residual interest"  (as defined below) to a  Residual
Holder  (other than a Residual Holder who is not a U.S. Person, as defined below
under "Foreign Investors") is disregarded for all federal income tax purposes if
a significant  purpose  of  the  transferor  is  to  impede  the  assessment  or
collection of tax. A residual interest in a REMIC (including a residual interest
with  a positive value at issuance) is a "noneconomic residual interest" unless,
at the  time of  the transfer,  (i) the  present value  of the  expected  future
distributions  on  the residual  interest  at least  equals  the product  of the
present value of  the anticipated  excess inclusions and  the highest  corporate
income  tax rate in effect  for the year in which  the transfer occurs, and (ii)
the transferor reasonably expects that the transferee will receive distributions
from the REMIC at  or after the  time at which taxes  accrue on the  anticipated
excess  inclusions in an amount sufficient to  satisfy the accrued taxes on each
excess inclusion. The anticipated excess  inclusions and the present value  rate
are  determined  in  the same  manner  as  set forth  above  under "Disqualified
Organizations." The  REMIC Regulations  explain that  a significant  purpose  to
impede the assessment or collection of tax exists if the transferor, at the time
of  the transfer, either knew or should  have known that the transferee would be
unwilling or unable to pay taxes due on  its share of the taxable income of  the
REMIC. A safe harbor is provided if (i) the transferor conducted, at the time of
the  transfer,  a reasonable  investigation of  the  financial condition  of the
transferee and found that the transferee historically had paid its debts as they
came due and found no significant evidence to indicate that the transferee would
not continue to  pay its  debts as they  came due  in the future,  and (ii)  the
transferee  represents to the transferor that it understands that, as the holder
of the non-economic residual interest, the transferee may incur tax  liabilities
in  excess of any cash  flows generated by the  interest and that the transferee
intends to  pay taxes  associated with  holding the  residual interest  as  they
become  due. The Pooling and Servicing Agreement  with respect to each Series of
Certificates will require the transferee of a Residual Certificate to certify to
the matters in the preceding sentence  as part of the affidavit described  above
under the heading "Disqualified Organizations."

    FOREIGN  INVESTORS.   The REMIC Regulations  provide that the  transfer of a
Residual Certificate that has  "tax avoidance potential"  to a "foreign  person"
will  be disregarded for all federal tax purposes. This rule appears intended to
apply to a transferee who is not a "U.S. Person" (as defined below), unless such
transferee's income is  effectively connected  with the  conduct of  a trade  or
business  within the United States. A Residual Certificate is deemed to have tax
avoidance potential unless, at the time of the transfer, (i) the future value of
expected distributions equals at least 30% of the anticipated excess  inclusions
after  the  transfer,  and  (ii)  the  transferor  reasonably  expects  that the
transferee will receive sufficient distributions from the REMIC Pool at or after
the time at which the excess inclusions accrue and prior to the end of the  next
succeeding  taxable year  for the  accumulated withholding  tax liability  to be
paid. If the non-U.S. Person transfers  the Residual Certificate back to a  U.S.
Person,  the  transfer  will  be disregarded  and  the  foreign  transferor will
continue to be treated  as the owner  unless arrangements are  made so that  the
transfer  does not have  the effect of  allowing the transferor  to avoid tax on
accrued excess inclusions.

    The Prospectus  Supplement relating  to  the Certificates  of a  Series  may
provide  that a Residual Certificate  may not be purchased  by or transferred to
any person that  is not  a U.S.  Person or  may describe  the circumstances  and
restrictions  pursuant to  which such  a transfer  may be  made. The  term "U.S.
Person" means  a  citizen or  resident  of  the United  States,  a  corporation,
partnership  or other entity  created or organized  in or under  the laws of the
United States or any political subdivision  thereof, or an estate or trust  that
is subject to U.S. federal income tax regardless of the source of its income.

  SALE OR EXCHANGE OF A RESIDUAL CERTIFICATE

    Upon  the sale  or exchange of  a Residual Certificate,  the Residual Holder
will recognize gain or loss equal to the excess, if any, of the amount  realized
over  the  adjusted  basis  (as  described  above  under  "Taxation  of Residual
Certificates--Basis and  Losses")  of  such Residual  Holder  in  such  Residual
Certificate  at the time of  the sale or exchange.  In addition to reporting the
taxable income of the REMIC Pool, a Residual Holder will have taxable income  to
the  extent  that  any cash  distribution  to  it from  the  REMIC  Pool exceeds

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such adjusted basis on  that Distribution Date. Such  income will be treated  as
gain  from the sale or exchange of the Residual Certificate. It is possible that
the termination of  the REMIC Pool  may be treated  as a sale  or exchange of  a
Residual  Holder's Residual Certificate,  in which case,  if the Residual Holder
has an adjusted basis in its Residual Certificate remaining when its interest in
the REMIC  Pool terminates,  and if  it  holds such  Residual Certificate  as  a
capital  asset under Code Section 1221, then it will recognize a capital loss at
that time in the amount of such remaining adjusted basis.

    The Conference Committee  Report to the  1986 Act provides  that, except  as
provided  in Treasury regulations yet to be  issued, the wash sale rules of Code
Section 1091  will apply  to  dispositions of  Residual Certificates  where  the
seller  of  the Residual  Certificate, during  the  period beginning  six months
before the sale or disposition of the Residual Certificate and ending six months
after such sale or disposition, acquires  (or enters into any other  transaction
that  results in the application of Code  Section 1091) any residual interest in
any REMIC or  any interest in  a "taxable  mortgage pool" (such  as a  non-REMIC
owner trust) that is economically comparable to a Residual Certificate.

  TAXES THAT MAY BE IMPOSED ON THE REMIC POOL

    PROHIBITED  TRANSACTIONS.   Income  from certain  transactions by  the REMIC
Pool, called prohibited  transactions, will not  be part of  the calculation  of
income or loss includible in the federal income tax returns of Residual Holders,
but  rather will be taxed directly to the  REMIC Pool at a 100% rate. Prohibited
transactions generally include (i) the disposition of a qualified mortgage other
than for (a) substitution within  two years of the  Startup Day for a  defective
(including  a defaulted) obligation (or repurchase  in lieu of substitution of a
defective (including a defaulted) obligation at  any time) or for any  qualified
mortgage  within three months  of the Startup Day,  (b) foreclosure, default, or
imminent default of a  qualified mortgage, (c) bankruptcy  or insolvency of  the
REMIC  Pool,  or (d)  a qualified  (complete) liquidation,  (ii) the  receipt of
income from assets that are  not the type of  mortgages or investments that  the
REMIC Pool is permitted to hold, (iii) the receipt of compensation for services,
or (iv) the receipt of gain from disposition of cash flow investments other than
pursuant  to a qualified liquidation. Notwithstanding (i)  and (iv), it is not a
prohibited transaction  to sell  REMIC Pool  property to  prevent a  default  on
Regular  Certificates as  a result  of a  default on  qualified mortgages  or to
facilitate  a  clean-up  call  (generally,  an  optional  termination  to   save
administrative costs when no more than a small percentage of the Certificates is
outstanding). The REMIC Regulations indicate that the modification of a Mortgage
Loan  generally will not  be treated as a  disposition if it  is occasioned by a
default or reasonably foreseeable default,  an assumption of the Mortgage  Loan,
the  waiver of a due-on-sale or  due-on-encumbrance clause, or the conversion of
an interest  rate  by  a  mortgagor  pursuant to  the  terms  of  a  convertible
adjustable rate Mortgage Loan.

    CONTRIBUTIONS  TO THE  REMIC POOL  AFTER THE STARTUP  DAY.   In general, the
REMIC Pool will be subject to a tax at a 100% rate on the value of any  property
contributed to the REMIC Pool after the Startup Day. Exceptions are provided for
cash  contributions to the REMIC Pool (i)  during the three months following the
Startup Day, (ii) made to a qualified  reserve fund by a Residual Holder,  (iii)
in the nature of a guarantee, (iv) made to facilitate a qualified liquidation or
clean-up  call, and (v) as otherwise permitted in Treasury regulations yet to be
issued.

    NET INCOME FROM  FORECLOSURE PROPERTY.   The REMIC Pool  will be 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. Generally, property acquired  by deed in lieu of  foreclosure
would  be treated  as "foreclosure  property" for  a period  of two  years, with
possible extensions. 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.

  LIQUIDATION OF THE REMIC POOL

    If a REMIC Pool adopts a plan of complete liquidation, within the meaning of
Code  Section 860F(a)(4)(A)(i), which may be  accomplished by designating in the
REMIC Pool's final tax return a date

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on which such adoption is  deemed to occur, and sells  all of its assets  (other
than  cash) within a 90-day  period beginning on such  date, the REMIC Pool will
recognize no gain or  loss on the  sale of its assets,  provided that the  REMIC
Pool  credits or distributes  in liquidation all  of the sale  proceeds plus its
cash (other  than  amounts  retained  to meet  claims)  to  holders  of  Regular
Certificates and Residual Holders within the 90-day period.

  ADMINISTRATIVE MATTERS

    The  REMIC Pool will  be required to  maintain its books  on a calendar year
basis and to file federal income tax returns for federal income tax purposes  in
a  manner similar to a partnership. The form  for such income tax return is Form
1066, U.S.  Real  Estate Mortgage  Investment  Conduit Income  Tax  Return.  The
Trustee  will be required to sign the REMIC Pool's returns. Treasury regulations
provide that,  except where  there is  a single  Residual Holder  for an  entire
taxable   year,  the  REMIC   Pool  will  be  subject   to  the  procedural  and
administrative rules  of  the Code  applicable  to partnerships,  including  the
determination by the Internal Revenue Service of any adjustments to, among other
things,  items of REMIC  income, gain, loss,  deduction, or credit  in a unified
administrative proceeding. The Servicer will be obligated to act as "tax matters
person," as  defined in  applicable Treasury  regulations, with  respect to  the
REMIC  Pool, in its capacity as either  Residual Holder or agent of the Residual
Holders. If  the Code  or  applicable Treasury  regulations  do not  permit  the
Servicer  to act as tax matters person in  its capacity as agent of the Residual
Holders, the Residual Holder chosen by the Residual Holders or such other person
specified pursuant  to Treasury  regulations  will be  required  to act  as  tax
matters person.

LIMITATIONS ON DEDUCTION OF CERTAIN EXPENSES

    An  investor  who is  an individual,  estate,  or trust  will be  subject to
limitation with respect to certain itemized deductions described in Code Section
67, to the extent that such itemized deductions, in the aggregate, do not exceed
2% of  the  investor's adjusted  gross  income.  In addition,  Code  Section  68
provides  that itemized deductions otherwise allowable  for a taxable year of an
individual taxpayer will be reduced  by the lesser of (i)  3% of the excess,  if
any,  of adjusted gross income  over $100,000 ($50,000 in  the case of a married
individual filing a  separate return),  or (ii) 80%  of the  amount of  itemized
deductions  otherwise allowable for such year. In the case of a REMIC Pool, such
deductions may include deductions under Code  Section 212 for the Servicing  Fee
and  all administrative and  other expenses relating  to the REMIC  Pool, or any
similar expenses allocated to the REMIC Pool with respect to a regular  interest
it  holds in  another REMIC. Such  investors who hold  REMIC Certificates either
directly or indirectly through certain pass-through entities may have their  pro
rata  share of such expenses  allocated to them as  additional gross income, but
may be subject to such limitation on deductions. In addition, such expenses  are
not deductible at all for purposes of computing the alternative minimum tax, and
may  cause such investors to be subject to significant additional tax liability.
Temporary Treasury  regulations provide  that the  additional gross  income  and
corresponding  amount of expenses generally are  to be allocated entirely to the
holders of Residual  Certificates in the  case of  a REMIC Pool  that would  not
qualify as a fixed investment trust in the absence of a REMIC election. However,
such  additional gross  income and  limitation on  deductions will  apply to the
allocable portion of such expenses to  holders of Regular Certificates, as  well
as  holders of Residual Certificates, where such Regular Certificates are issued
in a manner that is similar  to pass-through certificates in a fixed  investment
trust.  In general, such allocable portion will be determined based on the ratio
that a REMIC Certificateholder's income, determined  on a daily basis, bears  to
the income of all holders of Regular Certificates and Residual Certificates with
respect  to a REMIC  Pool. As a  result, individuals, estates  or trusts holding
REMIC Certificates  (either  directly or  indirectly  through a  grantor  trust,
partnership,  S  corporation,  REMIC,  or  certain  other  pass-through entities
described in  the foregoing  temporary Treasury  regulations) may  have  taxable
income  in excess  of the  interest income at  the pass-through  rate on Regular
Certificates that are issued  in a single class  or otherwise consistently  with
fixed investment trust status or in excess of cash distributions for the related
period on Residual Certificates.

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TAXATION OF CERTAIN FOREIGN INVESTORS

  REGULAR CERTIFICATES

    Interest,  including  original  issue  discount,  distributable  to  Regular
Certificateholders who are non-resident  aliens, foreign corporations, or  other
Non-U.S.  Persons (as  defined below),  will be  considered "portfolio interest"
and, therefore, generally will not be  subject to 30% United States  withholding
tax,  provided that such  Non-U.S. Person (i) is  not a "10-percent shareholder"
within the  meaning  of  Code  Section  871(h)(3)(B)  or  a  controlled  foreign
corporation  described  in  Code  Section  881(c)(3)(C)  and  (ii)  provides the
Trustee, or the person who would otherwise be required to withhold tax from such
distributions under Code Section  1441 or 1442,  with an appropriate  statement,
signed under penalties of perjury, identifying the beneficial owner and stating,
among  other things, that the  beneficial owner of the  Regular Certificate is a
Non-U.S. Person. If  such statement,  or any  other required  statement, is  not
provided, 30% withholding will apply unless reduced or eliminated pursuant to an
applicable  tax  treaty or  unless the  interest on  the Regular  Certificate is
effectively connected with the conduct of a trade or business within the  United
States by such Non-U.S. Person. In the latter case, such Non-U.S. Person will be
subject  to United States federal income tax at regular rates. Investors who are
Non-U.S. Persons should consult  their own tax  advisors regarding the  specific
tax  consequences to  them of owning  a Regular Certificate.  The term "Non-U.S.
Person" means any person who is not a U.S. Person.

  RESIDUAL CERTIFICATES

    The Conference Committee Report to the 1986 Act indicates that amounts  paid
to  Residual  Holders  who are  Non-U.S.  Persons  are treated  as  interest for
purposes of  the 30%  (or  lower treaty  rate)  United States  withholding  tax.
Treasury  regulations provide that  amounts distributed to  Residual Holders may
qualify as "portfolio interest," subject to the conditions described in "Regular
Certificates" above, but  only to the  extent that (i)  the Mortgage Loans  were
issued  after July  18, 1984  and (ii)  the Trust  Estate or  segregated pool of
assets therein (as to which  a separate REMIC election  will be made), to  which
the  Residual Certificate relates, consists of obligations issued in "registered
form" within the meaning  of Code Section  163(f)(1). Generally, Mortgage  Loans
will  not be, but  regular interests in  another REMIC Pool  will be, considered
obligations issued in registered form.  Furthermore, a Residual Holder will  not
be entitled to any exemption from the 30% withholding tax (or lower treaty rate)
to  the  extent of  that portion  of  REMIC taxable  income that  constitutes an
"excess inclusion."  See  "Taxation  of  Residual  Certificates--Limitations  on
Offset  or Exemption of REMIC  Income." If the amounts  paid to Residual Holders
who are Non-U.S. Persons are effectively  connected with the conduct of a  trade
or  business within the  United States by  such Non-U.S. Persons,  30% (or lower
treaty rate)  withholding will  not apply.  Instead, the  amounts paid  to  such
Non-U.S.  Persons will be subject to United States federal income tax at regular
rates. If 30%  (or lower treaty  rate) withholding is  applicable, such  amounts
generally  will be taken into account for purposes of withholding only when paid
or otherwise distributed (or when the Residual Certificate is disposed of) under
rules similar  to withholding  upon disposition  of debt  instruments that  have
original  issue discount. See "Tax-Related  Restrictions on Transfer of Residual
Certificates--Foreign Investors"  above  concerning  the  disregard  of  certain
transfers  having "tax avoidance potential."  Investors who are Non-U.S. Persons
should consult their own tax advisors regarding the specific tax consequences to
them of owning Residual Certificates.

BACKUP WITHHOLDING

    Distributions made on the Regular  Certificates, and proceeds from the  sale
of  the Regular Certificates to or through  certain brokers, may be subject to a
"backup" withholding tax under Code Section 3406 of 31% on "reportable payments"
(including interest distributions, original  issue discount, and, under  certain
circumstances,  principal  distributions) unless  the  Regular Certificateholder
complies with certain reporting  and/or certification procedures, including  the
provision of its taxpayer identification number to the Trustee, its agent or the
broker   who   effected  the   sale  of   the   Regular  Certificate,   or  such
Certificateholder is otherwise an  exempt recipient under applicable  provisions
of  the  Code. Any  amounts  to be  withheld  from distribution  on  the Regular
Certificates would be refunded by the  Internal Revenue Service or allowed as  a
credit against the Regular Certificateholder's federal income tax liability.

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REPORTING REQUIREMENTS

    Reports  of  accrued  interest,  original  issue  discount  and  information
necessary to compute the accrual of market discount will be made annually to the
Internal  Revenue   Service  and   to  individuals,   estates,  non-exempt   and
non-charitable  trusts, and  partnerships who  are either  holders of  record of
Regular Certificates or beneficial owners who own Regular Certificates through a
broker or middleman as nominee. All  brokers, nominees and all other  non-exempt
holders  of record of Regular Certificates (including corporations, non-calendar
year taxpayers,  securities  or  commodities  dealers,  real  estate  investment
trusts,  investment  companies,  common  trust  funds,  thrift  institutions and
charitable trusts)  may request  such information  for any  calendar quarter  by
telephone  or in writing by contacting the person designated in Internal Revenue
Service  Publication  938  with  respect  to  a  particular  Series  of  Regular
Certificates.  Holders through nominees  must request such  information from the
nominee.

    The Internal Revenue  Service's Form  1066 has an  accompanying Schedule  Q,
Quarterly  Notice to  Residual Interest Holders  of REMIC Taxable  Income or Net
Loss Allocation. Treasury regulations  require that Schedule  Q be furnished  by
the  REMIC Pool to  each Residual Holder by  the end of  the month following the
close of  each calendar  quarter  (41 days  after the  end  of a  quarter  under
proposed Treasury regulations) in which the REMIC Pool is in existence.

    Treasury   regulations   require  that,   in   addition  to   the  foregoing
requirements, information  must  be  furnished quarterly  to  Residual  Holders,
furnished annually, if applicable, to holders of Regular Certificates, and filed
annually  with the Internal Revenue Service  concerning Code Section 67 expenses
(see "Limitations on  Deduction of  Certain Expenses" above)  allocable to  such
holders.  Furthermore,  under such  regulations,  information must  be furnished
quarterly  to  Residual  Holders,  furnished  annually  to  holders  of  Regular
Certificates,  and filed annually  with the Internal  Revenue Service concerning
the percentage of  the REMIC  Pool's assets  meeting the  qualified asset  tests
described above under "Status of REMIC Certificates."

                FEDERAL INCOME TAX CONSEQUENCES FOR CERTIFICATES
                     AS TO WHICH NO REMIC ELECTION IS MADE

STANDARD CERTIFICATES

  GENERAL

    In  the  event that  no  election is  made  to treat  a  Trust Estate  (or a
segregated pool  of  assets  therein)  with respect  to  a  Series  of  Standard
Certificates  as a REMIC, the Trust Estate will be classified as a grantor trust
under subpart E, Part 1  of subchapter J of the  Code and not as an  association
taxable as a corporation or a "taxable mortgage pool" within the meaning of Code
Section  7701(i). Where  there is  no Fixed Retained  Yield with  respect to the
Mortgage  Loans  underlying  the  Certificates  of  a  Series,  and  where  such
Certificates  are not designated  as "Stripped Certificates"  the holder of each
such Certificate in  such Series  will be  treated as the  owner of  a pro  rata
undivided  interest  in the  ordinary income  and corpus  portions of  the Trust
Estate represented  by  his Standard  Certificate  and will  be  considered  the
beneficial owner of a pro rata undivided interest in each of the Mortgage Loans,
subject  to the discussion  below under "Recharacterization  of Servicing Fees."
Accordingly, the holder of a Standard Certificate of a particular Series will be
required to report on its  federal income tax return its  pro rata share of  the
entire  income from the Mortgage Loans  represented by his Standard Certificate,
including interest at  the coupon rate  on such Mortgage  Loans, original  issue
discount  (if any), prepayment  fees, assumption fees,  and late payment charges
received by the Servicer, in  accordance with such Standard  Certificateholder's
method  of accounting.  A Standard Certificateholder  generally will  be able to
deduct its share of the Servicing Fee and all administrative and other  expenses
of  the Trust Estate in accordance with  its method of accounting, provided that
such amounts are  reasonable compensation  for services rendered  to that  Trust
Estate.  However,  investors  who are  individuals,  estates or  trusts  who own
Standard Certificates,  either  directly  or indirectly  through  certain  pass-
through entities, will be subject to limitation with respect to certain itemized
deductions described in Code Section 67, including deductions under Code Section
212 for the Servicing Fee and all such administrative

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and  other expenses of the Trust Estate,  to the extent that such deductions, in
the aggregate, do not exceed two percent of an investor's adjusted gross income.
In addition,  Code  Section  68  provides  that  itemized  deductions  otherwise
allowable  for a taxable year  of an individual taxpayer  will be reduced by the
lesser of (i) 3% of the excess,  if any, of adjusted gross income over  $100,000
($50,000  in the case of a married individual filing a separate return) (in each
case, as  adjusted  for  inflation), or  (ii)  80%  of the  amount  of  itemized
deductions  otherwise  allowable  for such  year.  As a  result,  such investors
holding Standard  Certificates, directly  or indirectly  through a  pass-through
entity,  may have aggregate taxable income in  excess of the aggregate amount of
cash received on  such Standard  Certificates with  respect to  interest at  the
pass-through  rate  or  as discount  income  on such  Standard  Certificates. In
addition, such expenses are not deductible at all for purposes of computing  the
alternative  minimum  tax,  and  may  cause  such  investors  to  be  subject to
significant additional tax  liability. Moreover, where  there is Fixed  Retained
Yield  with  respect  to the  Mortgage  Loans  underlying a  Series  of Standard
Certificates or where the servicing fees  are in excess of reasonable  servicing
compensation,  the  transaction  will  be  subject  to  the  application  of the
"stripped bond" and  "stripped coupon"  rules of  the Code,  as described  below
under  "Stripped  Certificates"  and  "Recharacterization  of  Servicing  Fees,"
respectively.

  TAX STATUS

    Cadwalader, Wickersham & Taft has advised the Seller that:

        1.   A Standard  Certificate  owned by  a  "domestic building  and  loan
    association"  within  the  meaning  of  Code  Section  7701(a)(19)  will  be
    considered to represent  "loans...secured by an  interest in real  property"
    within the meaning of Code Section 7701(a)(19)(C)(v), provided that the real
    property   securing  the   Mortgage  Loans  represented   by  that  Standard
    Certificate is of the type described in such section of the Code.

        2.  A Standard Certificate owned by a financial institution described in
    Code Section  593(a)  will  be  considered  to  represent  "qualifying  real
    property  loans" within the meaning of Code Section 593(d)(1), provided that
    the real property securing the  Mortgage Loans represented by that  Standard
    Certificate is of the type described in such section of the Code.

        3.   A Standard Certificate owned by a real estate investment trust will
    be considered to represent "real estate  assets" within the meaning of  Code
    Section  856(c)(5)(A) to  the extent  that the  assets of  the related Trust
    Estate consist of qualified assets, and interest income on such assets  will
    be  considered  "interest  on  obligations  secured  by  mortgages  on  real
    property" within the meaning of Code Section 856(c)(3)(B).

        4.   A Standard  Certificate owned  by  a REMIC  will be  considered  to
    represent  an  "obligation (including  any  participation or  certificate of
    beneficial ownership therein) which is principally secured by an interest in
    real property"  within the  meaning  of Code  Section 860G(a)(3)(A)  to  the
    extent  that the  assets of the  related Trust Estate  consist of "qualified
    mortgages" within the meaning of Code Section 860G(a)(3).

    An issue arises as to whether  Buy-Down Loans may be characterized in  their
entirety under the Code provisions cited in the immediately preceding paragraph.
Code Section 593(d)(1)(C) provides that the term "qualifying real property loan"
does  not include a loan "to the extent secured  by a deposit in or share of the
taxpayer." The application of  this provision to a  Buy-Down Fund is  uncertain,
but  may require that a  taxpayer's investment in a  Buy-Down Loan be reduced by
the Buy-Down Fund.  As to the  treatment of Buy-Down  Loans as "qualifying  real
property  loans" under Code  Section 593(d)(1) if the  exception of Code Section
593(d)(1)(C) is  inapplicable,  as  "loans...secured  by  an  interest  in  real
property"  under Code Section  7701(a)(19)(C)(v), as "real  estate assets" under
Code Section 856(c)(5)(A), and as "obligation[s] . . . principally secured by an
interest in real property" under  Code Section 860G(a)(3)(A), there is  indirect
authority  supporting treatment of an investment  in a Buy-Down Loan as entirely
secured by real property if the fair market value of the real property  securing
the loan exceeds the principal amount of the

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loan  at the time  of issuance or acquisition,  as the case may  be. There is no
assurance that the  treatment described above  is proper. Accordingly,  Standard
Certificateholders  are urged to  consult their own  tax advisors concerning the
effects  of  such  arrangements  on   the  characterization  of  such   Standard
Certificateholder's investment for federal income tax purposes.

  PREMIUM AND DISCOUNT

    Standard  Certificateholders are advised to  consult with their tax advisors
as to the federal  income tax treatment of  premium and discount arising  either
upon initial acquisition of Standard Certificates or thereafter.

    PREMIUM.   The treatment of premium incurred upon the purchase of a Standard
Certificate will  be  determined generally  as  described above  under  "Federal
Income   Tax   Consequences   for  REMIC   Certificates--Taxation   of  Residual
Certificates--Premium."

    ORIGINAL ISSUE DISCOUNT.  The original issue discount rules of Code Sections
1271 through 1275 will be applicable to a Standard Certificateholder's  interest
in  those Mortgage Loans as to which the conditions for the application of those
sections are met. Rules regarding periodic inclusion of original issue  discount
income  are applicable  to mortgages  of corporations  originated after  May 27,
1969, mortgages of noncorporate  mortgagors (other than individuals)  originated
after July 1, 1982, and mortgages of individuals originated after March 2, 1984.
Under  the Proposed OID Regulations, such original issue discount could arise by
the charging of points by the originator  of the mortgages in an amount  greater
than  the statutory DE MINIMIS exception, including  a payment of points that is
currently deductible by the borrower under applicable Code provisions or,  under
certain circumstances, by the presence of "teaser" rates on the Mortgage Loans.

    Original  issue discount generally must be reported as ordinary gross income
as it  accrues under  a constant  interest method  that takes  into account  the
compounding  of interest,  in advance of  the cash attributable  to such income.
However, Code Section 1272  provides for a reduction  in the amount of  original
issue  discount  includible in  the income  of  a holder  of an  obligation that
acquires the obligation after its initial  issuance at a price greater than  the
sum  of  the original  issue  price and  the  previously accrued  original issue
discount, less prior payments of principal. Accordingly, if such Mortgage  Loans
acquired  by a Standard Certificateholder are purchased  at a price equal to the
then unpaid principal amount of such Mortgage Loans, no original issue  discount
attributable  to  the  difference  between  the  issue  price  and  the original
principal amount of  such Mortgage Loans  (I.E., points) will  be includible  by
such holder.

    MARKET  DISCOUNT.  Standard  Certificateholders also will  be subject to the
market discount rules to the extent that the conditions for application of those
sections are met. Market discount on  the Mortgage Loans will be determined  and
will  be reported  as ordinary  income generally  in the  manner described above
under "Federal  Income  Tax  Consequences for  REMIC  Certificates--Taxation  of
Residual Certificates--Market Discount."

  RECHARACTERIZATION OF SERVICING FEES

    If  the servicing fees paid to the Servicer were deemed to exceed reasonable
servicing compensation, the amount of  such excess would be nondeductible  under
Code  Section 162 or 212. In this  regard, there are no authoritative guidelines
for federal income  tax purposes as  to either the  maximum amount of  servicing
compensation that may be considered reasonable in the context of this or similar
transactions   or  whether,  in  the  case  of  the  Standard  Certificate,  the
reasonableness of  servicing compensation  should be  determined on  a  weighted
average  or  loan-by-loan basis.  If a  loan-by-loan  basis is  appropriate, the
likelihood that such amount would exceed reasonable servicing compensation as to
some of the Mortgage Loans would be increased. Recently issued Internal  Revenue
Service  guidance  indicates  that  a  servicing  fee  in  excess  of reasonable
compensation ("excess servicing") will  cause the Mortgage  Loans to be  treated
under the

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"stripped  bond" rules. Such guidance provides safe harbors for servicing deemed
to be  reasonable  and requires  taxpayers  to  demonstrate that  the  value  of
servicing  fees in excess of  such amounts is not greater  than the value of the
services provided.

    Accordingly, if  the  Internal  Revenue  Service's  approach  is  upheld,  a
Servicer  who receives a servicing fee in excess of such amounts would be viewed
as retaining an ownership interest in a portion of the interest payments on  the
Mortgage  Loans.  Under  the  rules  of Code  Section  1286,  the  separation of
ownership of the right  to receive some  or all of the  interest payments on  an
obligation  from the right to  receive some or all  of the principal payments on
the obligation would  result in treatment  of such Mortgage  Loans as  "stripped
coupons"  and "stripped bonds."  Subject to the DE  MINIMIS rule discussed below
under "--Stripped Certificates," each stripped bond or stripped coupon could  be
considered  for this purpose as a  non-interest bearing obligation issued on the
date of issue  of the  Standard Certificates,  and the  original issue  discount
rules   of  the  Code  would  apply   to  the  holder  thereof.  While  Standard
Certificateholders would still be treated as owners of beneficial interests in a
grantor trust for federal income tax purposes, the corpus of such trust could be
viewed as excluding the portion of the Mortgage Loans the ownership of which  is
attributed  to the Servicer, or  as including such portion  as a second class of
equitable interest. Applicable Treasury regulations treat such an arrangement as
a fixed investment trust, since the  multiple classes of trust interests  should
be treated as merely facilitating direct investments in the trust assets and the
existence  of  multiple classes  of ownership  interests  is incidental  to that
purpose. In general, such a  recharacterization should not have any  significant
effect   upon  the   timing  or  amount   of  income  reported   by  a  Standard
Certificateholder, except that the income reported  by a cash method holder  may
be  slightly  accelerated.  See  "Stripped  Certificates"  below  for  a further
description of the federal income tax  treatment of stripped bonds and  stripped
coupons.

    In  the alternative, the amount, if any, by which the servicing fees paid to
the Servicer are deemed to exceed reasonable compensation for servicing could be
treated   as   deferred   payments   of   purchase   price   by   the   Standard
Certificateholders  to  the Seller  to purchase  its  undivided interest  in the
Mortgage Loans. In  such event, the  present value of  such additional  payments
might  be included in  the Standard Certificateholder's  basis in such undivided
interests for  purposes  of determining  whether  the Standard  Certificate  was
acquired  at  a discount,  at  par, or  at  a premium.  Under  this alternative,
Standard Certificateholders may  also be  entitled to a  deduction for  unstated
interest with respect to each deferred payment. The Internal Revenue Service may
take  the position that  the specific statutory provisions  of Code Section 1286
described above override the alternative  described in this paragraph.  Standard
Certificateholders  are advised to  consult their tax advisors  as to the proper
treatment of the amounts paid to the  Servicer as set forth herein as  servicing
compensation or under either of the alternatives set forth above.

  SALE OR EXCHANGE OF STANDARD CERTIFICATES

    Upon   sale   or   exchange   of   a   Standard   Certificate,   a  Standard
Certificateholder will recognize gain  or loss equal  to the difference  between
the amount realized on the sale and its aggregate adjusted basis in the Mortgage
Loans  and other assets represented by the Standard Certificate. In general, the
aggregate adjusted basis  will equal the  Standard Certificateholder's cost  for
the  Standard  Certificate, increased  by the  amount  of any  income previously
reported with respect to the Standard Certificate and decreased by the amount of
any losses previously reported with respect to the Standard Certificate and  the
amount  of any  distributions received  thereon. Except  as provided  above with
respect to  market  discount on  any  Mortgage  Loans, and  except  for  certain
financial  institutions subject  to the provisions  of Code  Section 582(c), any
such gain or loss would be capital gain or loss if the Standard Certificate  was
held  as a capital asset. The preferential rates applicable to long-term capital
gains were eliminated by the  Tax Reform Act of 1986,  but were restored by  the
Revenue Reconciliation Act of 1990 with respect to certain individuals.

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<PAGE>
STRIPPED CERTIFICATES

  GENERAL

    Pursuant  to Code Section 1286, the separation  of ownership of the right to
receive some or all of the principal payments on an obligation from ownership of
the right  to receive  some  or all  of the  interest  payments results  in  the
creation  of "stripped bonds"  with respect to  principal payments and "stripped
coupons" with respect  to interest  payments. For purposes  of this  discussion,
Certificates  that are subject to  those rules will be  referred to as "Stripped
Certificates." The Certificates will be subject to those rules if (i) the Seller
or any  of its  affiliates  retains (for  its own  account  or for  purposes  of
resale), in the form of Fixed Retained Yield or otherwise, an ownership interest
in  a portion of the payments  on the Mortgage Loans, (ii)  the Seller or any of
its affiliates is treated as having an ownership interest in the Mortgage  Loans
to  the  extent it  is paid  (or  retains) servicing  compensation in  an amount
greater than  reasonable consideration  for servicing  the Mortgage  Loans  (see
"Standard  Certificates--Recharacterization of Servicing Fees" above), and (iii)
a Class  of  Certificates  are issued  in  two  or more  Classes  or  Subclasses
representing the right to non-pro-rata percentages of the interest and principal
payments on the Mortgage Loans.

    In  general, a holder  of a Stripped  Certificate will be  considered to own
"stripped bonds" with respect to its pro rata  share of all or a portion of  the
principal  payments on each Mortgage Loan and/or "stripped coupons" with respect
to its pro  rata share  of all or  a portion  of the interest  payments on  each
Mortgage  Loan,  including the  Stripped  Certificate's allocable  share  of the
servicing fees paid  to the  Servicer, to the  extent that  such fees  represent
reasonable  compensation  for  services  rendered.  See  discussion  above under
"Standard Certificates--Recharacterization of Servicing Fees." For this  purpose
the  servicing fees will be allocated to the Stripped Certificates in proportion
to the  respective  offering price  of  each  Class (or  Subclass)  of  Stripped
Certificates. The holder of a Stripped Certificate generally will be entitled to
a deduction each year in respect of the servicing fees, as described above under
"Standard Certificates-- General," subject to the limitation described therein.

    Code  Section 1286 treats a stripped bond  or a stripped coupon generally as
an obligation  issued  at an  original  issue discount  on  the date  that  such
stripped  interest is purchased. Although the treatment of Stripped Certificates
for federal income tax purposes is not  clear in certain respects at this  time,
particularly  where  such Stripped  Certificates are  issued  with respect  to a
Mortgage Pool  containing  variable-rate Mortgage  Loans,  the Seller  has  been
advised  by counsel that (i) the Trust Estate will be treated as a grantor trust
under subpart E, Part I  of subchapter J of the  Code and not as an  association
taxable as a corporation or a "taxable mortgage pool" within the meaning of Code
Section  7701(i),  and (ii)  each Stripped  Certificate should  be treated  as a
single  installment  obligation  for  purposes  of  calculating  original  issue
discount  and  gain or  loss  on disposition.  This  treatment is  based  on the
interrelationship of Code Section 1286, Code Sections 1272 through 1275, and the
Proposed OID  Regulations.  While  under Code  Section  1286  computations  with
respect  to Stripped  Certificates arguably  should be made  in one  of the ways
described below under "Taxation  of Stripped Certificates--Possible  Alternative
Characterizations,"  the Proposed OID Regulations state, in general, that two or
more debt instruments issued by a single issuer to a single investor in a single
transaction should be treated as a single debt instrument. Accordingly, for  OID
purposes,  all payments  on any Stripped  Certificates should  be aggregated and
treated as though they were  made on a single  debt instrument. The Pooling  and
Servicing   Agreement  will  require  that  the  Trustee  make  and  report  all
computations described below using  this aggregate approach, unless  substantial
legal authority requires otherwise.

    Furthermore,  Treasury  regulations  issued December  28,  1992  provide for
treatment of a Stripped  Certificate as a single  debt instrument issued on  the
date  it is originated for purposes  of calculating any original issue discount.
In addition, under these regulations,  a Stripped Certificate that represents  a
right  to payments of both interest and principal may be viewed either as issued
with original issue discount  or market discount (as  described below), at a  DE
MINIMIS  original issue discount,  or, presumably, at  a premium. This treatment
indicates that the interest  component of such a  Stripped Certificate would  be
treated as

                                       88
<PAGE>
qualified  stated interest  under the  Proposed OID  Regulations. Further, these
final regulations provide that the purchaser of such a Stripped Certificate will
be required to account for any discount as market discount rather than  original
issue  discount if either (i) the initial  discount with respect to the Stripped
Certificate was treated as zero under the DE MINIMIS rule, or (ii) no more  than
100  basis points in excess of reasonable  servicing is stripped off the related
Mortgage Loans. Any such market discount would be reportable as described  above
under  "Federal  Income  Tax Consequences  for  REMIC  Certificates--Taxation of
Regular Certificates--Market Discount,"  without regard to  the DE MINIMIS  rule
therein.  Pursuant to Revenue Procedure 91-49,  issued August 8, 1991, investors
using a method of accounting inconsistent  with the above treatment must  change
their  method  of accounting  and request  the consent  to the  Internal Revenue
Service to such  change on a  statement attached to  their first timely  federal
income tax returned for the first tax year ending after August 8, 1991.

  STATUS OF STRIPPED CERTIFICATES

    No  specific  legal authority  exists  as to  whether  the character  of the
Stripped Certificates, for federal income tax purposes, will be the same as that
of the Mortgage Loans. Although  the issue is not  free from doubt, counsel  has
advised the Seller that Stripped Certificates owned by applicable holders should
be  considered to represent "qualifying real  property loans" within the meaning
of Code  Section 593(d)(1),  "real estate  assets" within  the meaning  of  Code
Section 856(c)(5)(A), "obligation[s] . . . principally secured by an interest in
real   property"  within  the   meaning  of  Code   Section  860G(a)(3)(A),  and
"loans...secured by an  interest in real  property" within the  meaning of  Code
Section  7701(a)(19)(C)(v),  and  interest (including  original  issue discount)
income attributable to Stripped Certificates  should be considered to  represent
"interest  on  obligations secured  by mortgages  on  real property"  within the
meaning of Code Section  856(c)(3)(B), provided that in  each case the  Mortgage
Loans  and  interest on  such  Mortgage Loans  qualify  for such  treatment. The
application of  such  Code  provisions  to  Buy-Down  Loans  is  uncertain.  See
"Standard Certificates--Tax Status" above.

  TAXATION OF STRIPPED CERTIFICATES

    ORIGINAL  ISSUE DISCOUNT.   Except as described  above under "General," each
Stripped Certificate will be considered to have been issued at an original issue
discount for federal income tax  purposes. Original issue discount with  respect
to  a Stripped Certificate must be included in ordinary income as it accrues, in
accordance  with  a  constant  interest  method  that  takes  into  account  the
compounding  of  interest,  which  may  be prior  to  the  receipt  of  the cash
attributable to such income. Based in  part on the Proposed OID Regulations  and
the  amendments to the original issue discount  sections of the Code made by the
1986 Act,  counsel has  advised the  Seller that  the amount  of original  issue
discount  required  to be  included  in the  income of  a  holder of  a Stripped
Certificate (referred to in this  discussion as a "Stripped  Certificateholder")
in  any taxable year likely will be  computed generally as described above under
"Federal Income  Tax Consequences  for REMIC  Certificates--Taxation of  Regular
Certificates--Original Issue Discount" and
"--Variable  Rate Regular Certificates." However, with the apparent exception of
a Stripped  Certificate  issued  with  DE MINIMIS  original  issue  discount  as
described  above under "General," the issue price of a Stripped Certificate will
be the purchase  price paid by  each holder thereof,  and the stated  redemption
price  at maturity will include the aggregate  amount of the payments to be made
on the Stripped Certificate to such Stripped Certificateholder, presumably under
the Prepayment Assumption.

    If the Mortgage Loans  prepay at a  rate either faster  or slower than  that
under  the Prepayment Assumption, a  Stripped Certificateholder's recognition of
original issue discount will be either accelerated or decelerated and the amount
of such original issue discount will be either increased or decreased  depending
on  the  relative interests  in  principal and  interest  on each  Mortgage Loan
represented by such Stripped Certificateholder's Stripped Certificate. While the
matter is not free from  doubt, the holder of  a Stripped Certificate should  be
entitled  in the year that it  becomes certain (assuming no further prepayments)
that the  holder will  not  recover a  portion of  its  adjusted basis  in  such
Stripped  Certificate to  recognize an  ordinary loss  equal to  such portion of
unrecoverable basis.

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<PAGE>
    As an alternative to the method described  above, the fact that some or  all
of  the interest payments with respect to  the Stripped Certificates will not be
made if the  Mortgage Loans are  prepaid could lead  to the interpretation  that
such  interest payments are "contingent" within the meaning of proposed Treasury
regulations issued April 8, 1986 (the "Prior Proposed OID Regulations"). If  the
rules  of the  Prior Proposed  OID Regulations  relating to  contingent payments
apply, treatment of a Stripped Certificate  under such rules depends on  whether
the  aggregate amount of principal payments, if  any, to be made on the Stripped
Certificate is  less than  or greater  than its  issue price.  If the  aggregate
principal  payments are greater than or equal  to the issue price, the principal
payments would be treated as a separate installment obligation issued at a price
equal to the purchase price for the Stripped Certificate. In such case, original
issue discount would be calculated and accrued under the method described  above
without  consideration of  the interest  payments with  respect to  the Stripped
Certificate. Such  payments of  interest  would be  includible in  the  Stripped
Certificateholder's gross income in the taxable year in which the amounts become
fixed.  If the aggregate amount of principal payments to be made on the Stripped
Certificate is less  than its issue  price, each payment  of principal would  be
treated  as a  return of  basis. Each  payment of  interest would  be treated as
includible in gross income  to the extent of  the applicable Federal rate  under
Code  Section  1274(d),  as  applied  to  the  adjusted  basis  of  the Stripped
Certificate, while amounts received in excess of the applicable Federal rate, as
applied  to  the  adjusted   basis  of  the   Stripped  Certificate,  would   be
characterized  as a return of basis until  the total amount of interest payments
treated as a return of basis equalled the excess of the purchase price over  the
aggregate stated principal payments. Any additional interest payments thereafter
would  be treated as ordinary income. While not free from doubt, counsel for the
Seller believes that  uncertainty as  to the payment  of interest  arising as  a
result  of the possibility of prepayment of  the Mortgage Loans should not cause
the contingent payment  rules under  the Proposed  OID Regulations  to apply  to
interest with respect to the Stripped Certificates.

    SALE  OR EXCHANGE OF STRIPPED CERTIFICATES.   Sale or exchange of a Stripped
Certificate prior to  its maturity  will result  in gain  or loss  equal to  the
difference,   if   any,   between   the  amount   received   and   the  Stripped
Certificateholder's adjusted basis  in such Stripped  Certificate, as  described
above under "Federal Income Tax Consequences for REMIC Certificates--Taxation of
Regular  Certificates--Sale or Exchange of  Regular Certificates." To the extent
that a  subsequent  purchaser's purchase  price  is exceeded  by  the  remaining
payments  on  the  Stripped  Certificates,  such  subsequent  purchaser  will be
required for federal income tax purposes to accrue and report such excess as  if
it  were original issue discount in the  manner described above. It is not clear
for this purpose whether the assumed prepayment  rate that is to be used in  the
case   of  a  Stripped   Certificateholder  other  than   an  original  Stripped
Certificateholder should be the Prepayment Assumption or a new rate based on the
circumstances at the date of subsequent purchase.

    PURCHASE OF MORE THAN ONE CLASS OF STRIPPED CERTIFICATES.  When an  investor
purchases  more than one Class of Stripped Certificates, it is currently unclear
whether for federal income  tax purposes such  Classes of Stripped  Certificates
should  be treated separately or aggregated  for purposes of the rules described
above.

    POSSIBLE  ALTERNATIVE  CHARACTERIZATIONS.    The  characterizations  of  the
Stripped  Certificates discussed above are not the only possible interpretations
of the applicable Code provisions.  For example, the Stripped  Certificateholder
may be treated as the owner of (i) one installment obligation consisting of such
Stripped  Certificate's pro rata share of the payments attributable to principal
on each Mortgage  Loan and a  second installment obligation  consisting of  such
Stripped  Certificate's pro rata share of  the payments attributable to interest
on each Mortgage Loan, (ii) as many stripped bonds or stripped coupons as  there
are  scheduled payments of  principal and/or interest on  each Mortgage Loan, or
(iii) a separate installment obligation for each Mortgage Loan, representing the
Stripped Certificate's pro rata share  of payments of principal and/or  interest
to  be  made with  respect thereto.  Alternatively,  the holder  of one  or more
Classes of Stripped  Certificates may  be treated  as the  owner of  a pro  rata
fractional  undivided interest  in each  Mortgage Loan  to the  extent that such
Stripped Certificate,  or Classes  of Stripped  Certificates in  the  aggregate,
represent  the same  pro rata  portion of  principal and  interest on  each such
Mortgage Loan, and a stripped bond or

                                       90
<PAGE>
stripped coupon (as the  case may be), treated  as an installment obligation  or
contingent  payment obligation, as to the remainder. Final regulations issued on
December 28, 1992 regarding original issue discount on stripped obligations make
the foregoing  interpretations less  likely to  be applicable.  The preamble  to
those  regulations  states that  they  are premised  on  the assumption  that an
aggregation approach  is  appropriate  for determining  whether  original  issue
discount  on a  stripped bond  or stripped  coupon is  DE MINIMIS,  and solicits
comments on  appropriate  rules  for aggregating  stripped  bonds  and  stripped
coupons under Code Section 1286.

    Because of these possible varying characterizations of Stripped Certificates
and   the  resultant   differing  treatment  of   income  recognition,  Stripped
Certificateholders are urged  to consult  their own tax  advisors regarding  the
proper treatment of Stripped Certificates for federal income tax purposes.

REPORTING REQUIREMENTS AND BACKUP WITHHOLDING

    The  Trustee will furnish,  within a reasonable  time after the  end of each
calendar year, to each Standard Certificateholder or Stripped  Certificateholder
at  any time during such year, such information (prepared on the basis described
above) as  the  Trustee  deems to  be  necessary  or desirable  to  enable  such
Certificateholders to prepare their federal income tax returns. Such information
will  include the amount of original issue discount accrued on Certificates held
by  persons   other  than   Certificateholders  exempted   from  the   reporting
requirements. The amount required to be reported by the Trustee may not be equal
to  the proper  amount of  original issue  discount required  to be  reported as
taxable income by a Certificateholder, other than an original Certificateholder.
The Trustee will  also file such  original issue discount  information with  the
Internal  Revenue Service.  If a Certificateholder  fails to  supply an accurate
taxpayer identification number or  if the Secretary  of the Treasury  determines
that  a  Certificateholder has  not reported  all  interest and  dividend income
required to be shown  on his federal income  tax return, 31% backup  withholding
may  be required in respect of any reportable payments, as described above under
"Federal Income Tax Consequences for REMIC Certificates--Backup Withholding."

TAXATION OF CERTAIN FOREIGN INVESTORS

    To the extent that a Standard Certificate or Stripped Certificate  evidences
ownership in Mortgage Loans that are issued on or before July 18, 1984, interest
or  original issue discount  paid by the  person required to  withhold tax under
Code Section 1441 or 1442 to nonresident aliens, foreign corporations, or  other
non-U.S.  persons ("foreign  persons") generally will  be subject  to 30% United
States withholding tax, or such lower rate as may be provided for interest by an
applicable tax  treaty.  Accrued  original  issue  discount  recognized  by  the
Standard Certificateholder or Stripped Certificateholder on the sale or exchange
of  such a Certificate  also will be subject  to federal income  tax at the same
rate.

    Treasury regulations provide that interest  or original issue discount  paid
by  the  Trustee  or other  withholding  agent  to a  foreign  person evidencing
ownership interest  in  Mortgage  Loans  issued after  July  18,  1984  will  be
"portfolio interest" and will be treated in the manner, and such persons will be
subject  to the same certification  requirements, described above under "Federal
Income Tax  Consequences for  REMIC  Certificates--Taxation of  Certain  Foreign
Investors--Regular Certificates."

                              ERISA CONSIDERATIONS

GENERAL

    The  Employee Retirement Income Security Act  of 1974, as amended ("ERISA"),
imposes certain requirements on those employee benefit plans to which it applies
("Plans") and on those persons who  are fiduciaries with respect to such  Plans.
The  following  is  a  general  discussion  of  such  requirements,  and certain
applicable exceptions to and  administrative exemptions from such  requirements.
For  purposes of this discussion, a person  investing on behalf of an individual
retirement account established under Code Section 408 (an "IRA") is regarded  as
a fiduciary and the IRA as a Plan.

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<PAGE>
    Before purchasing any Certificates, a Plan fiduciary should consult with its
counsel  and determine  whether there  exists any  prohibition to  such purchase
under the requirements of ERISA, whether prohibited transaction exemptions  such
as  PTE 83-1  or any  individual administrative  exemption (as  described below)
applies, including whether the appropriate conditions set forth therein would be
met, or whether  any statutory prohibited  transaction exemption is  applicable,
and further should consult the applicable Prospectus Supplement relating to such
Series of Certificates.

CERTAIN REQUIREMENTS UNDER ERISA

    GENERAL.   In  accordance with  ERISA's general  fiduciary standards, before
investing in a Certificate a Plan fiduciary should determine whether to do so is
permitted under the governing Plan instruments  and is appropriate for the  Plan
in view of its overall investment policy and the composition and diversification
of  its  portfolio.  A  Plan  fiduciary  should  especially  consider  the ERISA
requirement of investment  prudence and  the sensitivity  of the  return on  the
Certificates  to the rate of principal repayments (including prepayments) on the
Mortgage Loans, as discussed in "Prepayment and Yield Considerations" herein.

    PARTIES IN INTEREST/DISQUALIFIED  PERSONS.  Other  provisions of ERISA  (and
corresponding  provisions of  the Code) prohibit  certain transactions involving
the assets of a Plan and persons who have certain specified relationships to the
Plan  (so-called  "parties  in  interest"   within  the  meaning  of  ERISA   or
"disqualified persons" within the meaning of the Code). The Seller, the Servicer
or the Trustee or certain affiliates thereof might be considered or might become
"parties  in interest" or "disqualified persons" with  respect to a Plan. If so,
the acquisition or holding of Certificates by or on behalf of such Plan could be
considered to give  rise to  a "prohibited  transaction" within  the meaning  of
ERISA  and the Code  unless an administrative exemption  described below or some
other exemption is available.

    Special caution should be exercised before the assets of a Plan are used  to
purchase a Certificate if, with respect to such assets, the Seller, the Servicer
or  the Trustee  or an affiliate  thereof either: (a)  has investment discretion
with respect to the investment of such assets of such Plan; or (b) has authority
or responsibility to give, or regularly gives, investment advice with respect to
such assets for a fee  and pursuant to an  agreement or understanding that  such
advice  will serve as a  primary basis for investment  decisions with respect to
such assets and  that such  advice will be  based on  the particular  investment
needs of the Plan.

    DELEGATION  OF FIDUCIARY DUTY.   Further, if the assets  included in a Trust
Estate were  deemed to  constitute Plan  assets, it  is possible  that a  Plan's
investment in the Certificates might be deemed to constitute a delegation, under
ERISA,  of the duty to manage Plan assets by the fiduciary deciding to invest in
the Certificates,  and certain  transactions involved  in the  operation of  the
Trust  Estate might be deemed to  constitute prohibited transactions under ERISA
and the Code. Neither ERISA nor the Code define the term "plan assets."

    The U.S. Department of Labor (the "Department") has issued regulations  (the
"Regulations")  concerning whether  or not  a Plan's  assets would  be deemed to
include an interest  in the  underlying assets  of an  entity (such  as a  Trust
Estate)  for  purposes of  the reporting  and  disclosure and  general fiduciary
responsibility provisions of ERISA,  as well as  for the prohibited  transaction
provisions  of ERISA  and the  Code, if the  Plan acquires  an "equity interest"
(such as a Certificate) in such an entity.

    Certain exceptions  are provided  in the  Regulations whereby  an  investing
Plan's assets would be deemed merely to include its interest in the Certificates
instead  of being deemed to include an interest in the assets of a Trust Estate.
However, it  cannot be  predicted in  advance nor  can there  be any  continuing
assurance  whether such exceptions may be met,  because of the factual nature of
certain of the  rules set  forth in  the Regulations.  For example,  one of  the
exceptions  in the  Regulations states that  the underlying assets  of an entity
will not  be considered  "plan assets"  if less  than 25%  of the  value of  all
classes of equity

                                       92
<PAGE>
interests  are held  by "benefit  plan investors,"  which are  defined as Plans,
IRAs, and employee benefit plans not subject to ERISA (for example, governmental
plans), but this exception  is tested immediately after  each acquisition of  an
equity  interest in the entity whether upon initial issuance or in the secondary
market.

ADMINISTRATIVE EXEMPTIONS

    INDIVIDUAL   ADMINISTRATIVE   EXEMPTIONS.       Several   underwriters    of
mortgage-backed  securities  have  applied  for  and  obtained  ERISA prohibited
transaction exemptions (each,  an "Underwriter's Exemption")  which are in  some
respects  broader than  Prohibited Transaction  Class Exemption  83-1 (described
below). Such  exemptions can  only apply  to mortgage-backed  securities  which,
among  other conditions,  are sold  in an  offering with  respect to  which such
underwriter serves as the  sole or a  managing underwriter, or  as a selling  or
placement  agent. If  such an Underwriter's  Exemption might be  applicable to a
Series of Certificates,  the related  Prospectus Supplement will  refer to  such
possibility.

    Among  the conditions that must be  satisfied for an Underwriter's Exemption
to apply are the following:

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

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

        (3)  The Certificates acquired by the Plan have received a rating at the
    time of such  acquisition that is  one of the  three highest generic  rating
    categories  from  either  Standard  &  Poors  Corporation  ("S&P"),  Moody's
    Investors Service, Inc.  ("Moody's"), Duff  & Phelps Rating  Co. ("D&P")  or
    Fitch Investors Service, Inc. ("Fitch");

        (4)  The Trustee  must not be  an affiliate  of any other  member of the
    Restricted Group (as defined below);

        (5) The sum of all payments made  to and retained by the underwriter  in
    connection  with the distribution  of Certificates represents  not more than
    reasonable compensation for  underwriting the Certificates.  The sum of  all
    payments  made to and retained  by the Seller pursuant  to the assignment of
    the Mortgage Loans  to the Trust  Estate represents not  more than the  fair
    market  value of such  Mortgage Loans. The  sum of all  payments made to and
    retained by the Servicer (and any  other servicer) represents not more  than
    reasonable  compensation for  such person's  services under  the Pooling and
    Servicing Agreement and reimbursement  of such person's reasonable  expenses
    in connection therewith; and

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

    The Trust Estate must also meet the following requirements:

            (i)  the assets of the Trust Estate must consist solely of assets of
       the type  that  have been  included  in  other investment  pools  in  the
       marketplace;

           (ii) certificates in such other investment pools must have been rated
       in  one of the three highest rating  categories of S&P, Moody's, Fitch or
       D&P for  at  least  one year  prior  to  the Plan's  acquisition  of  the
       Certificates; and

           (iii)  certificates  evidencing  interests in  such  other investment
       pools must have been purchased by investors other than Plans for at least
       one year prior to any Plan's acquisition of the Certificates.

                                       93
<PAGE>
    If the conditions to  an Underwriter's Exemption are  met, whether or not  a
Plan's  assets would be deemed to include  an ownership interest in the Mortgage
Loans  in  a  mortgage  pool,  the  acquisition,  holding  and  resale  of   the
Certificates by Plans would be exempt from the prohibited transaction provisions
of ERISA and the Code.

    Moreover,  an  Underwriter's  Exemption  can  provide  relief  from  certain
self-dealing/conflict of interest  prohibited transactions that  may occur if  a
Plan  fiduciary causes a Plan to acquire Certificates in a Trust Estate in which
the fiduciary (or its affiliate) is an obligor on the Mortgage Loans held in the
Trust Estate provided  that, among  other requirements: (i)  in the  case of  an
acquisition  in connection with  the initial issuance  of Certificates, at least
fifty percent of  each class  of Certificates in  which Plans  have invested  is
acquired  by  persons independent  of the  Restricted Group  and at  least fifty
percent of the  aggregate interest in  the Trust Estate  is acquired by  persons
independent  of the Restricted Group (as defined below); (ii) such fiduciary (or
its affiliate) is an obligor  with respect to five percent  or less of the  fair
market  value of  the Mortgage  Loans contained in  the Trust  Estate; (iii) the
Plan's investment  in Certificates  of  any Class  does not  exceed  twenty-five
percent  of all of the Certificates of that Class outstanding at the time of the
acquisition and (iv) immediately after the acquisition no more than  twenty-five
percent  of  the assets  of the  Plan with  respect  to which  such person  is a
fiduciary are invested in Certificates representing  an interest in one or  more
trusts containing assets sold or served by the same entity.

    An  Underwriter's Exemption does not apply to Plans sponsored by the Seller,
the underwriter specified in the applicable Prospectus Supplement, the  Trustee,
the  Servicer, any obligor with respect to  Mortgage Loans included in the Trust
Estate  constituting  more  than  five  percent  of  the  aggregate  unamortized
principal  balance of the assets  in the Trust Estate,  or any affiliate of such
parties (the "Restricted Group").

    PTE  83-1.    Prohibited  Transaction  Class  Exemption  83-1  for   Certain
Transactions  Involving  Mortgage Pool  Investment  Trusts ("PTE  83-1") permits
certain transactions  involving the  creation,  maintenance and  termination  of
certain  residential mortgage pools  and the acquisition  and holding of certain
residential mortgage pool pass-through certificates by Plans, whether or not the
Plan's assets would be deemed to include an ownership interest in the  mortgages
in  such mortgage pools, and whether or not such transactions would otherwise be
prohibited under ERISA.

    The term "mortgage pool pass-through certificate" is defined in PTE 83-1  as
"a  certificate  representing a  beneficial undivided  fractional interest  in a
mortgage pool and  entitling the holder  of such a  certificate to  pass-through
payment  of principal and interest from the pooled mortgage loans, less any fees
retained by the pool sponsor."  It appears that, for  purposes of PTE 83-1,  the
term  "mortgage pool pass-through certificate" would include Certificates issued
in a single Class or in multiple Classes that evidence the beneficial  ownership
of  both a  specified percentage  of future  interest payments  (after permitted
deductions) and a specified percentage of  future principal payments on a  Trust
Estate.

    However,  it appears that PTE  83-1 does or might  not apply to the purchase
and holding of (a) Certificates that evidence the beneficial ownership only of a
specified percentage of future interest payments (after permitted deductions) on
a Trust Estate or only of a specified percentage of future principal payments on
a Trust Estate, (b) Residual Certificates, (c) Certificates evidencing ownership
interests in a Trust Estate which includes Mortgage Loans secured by multifamily
residential properties or shares issued by cooperative housing corporations,  or
(d) Certificates which are subordinated to other Classes of Certificates of such
Series.  Accordingly, unless exemptive relief other than PTE 83-1 applies, Plans
should not purchase any such Certificates.

    PTE 83-1 sets forth  "general conditions" and  "specific conditions" to  its
applicability.  Section  II  of  PTE  83-1  sets  forth  the  following  general
conditions to the application of the exemption: (i) the maintenance of a  system
of  insurance or other protection for the  pooled mortgage loans or the property
securing such loans, and for indemnifying certificateholders against  reductions
in  pass-through payments due  to property damage or  defaults in loan payments;
(ii) the  existence of  a pool  trustee  who is  not an  affiliate of  the  pool
sponsor;  and  (iii) a  requirement that  the sum  of all  payments made  to and
retained by the pool sponsor, and

                                       94
<PAGE>
all funds  inuring to  the  benefit of  the  pool sponsor  as  a result  of  the
administration  of  the mortgage  pool, must  represent  not more  than adequate
consideration for selling  the mortgage loans  plus reasonable compensation  for
services  provided by the pool  sponsor to the pool.  The system of insurance or
protection referred to  in clause  (i) above  must provide  such protection  and
indemnification  up to an amount not less than the greater of one percent of the
aggregate unpaid  principal  balance  of  the pooled  mortgages  or  the  unpaid
principal  balance of the largest mortgage in  the pool. It should be noted that
in promulgating PTE 83-1 (and a  predecessor exemption), the Department did  not
have  under its consideration interests in pools  of the exact nature as some of
the Certificates described herein.

EXEMPT PLANS

    Employee benefit plans which are  governmental plans (as defined in  Section
3(32) of ERISA), and certain church plans (as defined in Section 3(33) of ERISA)
are  not subject to ERISA requirements and  assets of such plans may be invested
in Certificates without regard to  the ERISA considerations described above  but
such  plans may  be subject  to the provisions  of other  applicable federal and
state law.

UNRELATED BUSINESS TAXABLE INCOME--RESIDUAL CERTIFICATES

    The purchase  of  a  Residual  Certificate  by  any  employee  benefit  plan
qualified  under Code Section 401(a) and exempt from taxation under Code Section
501(a), including most  varieties of ERISA  Plans, may give  rise to  "unrelated
business  taxable  income"  as  described in  Code  Sections  511-515  and 860E.
Further,  prior  to  the  purchase  of  Residual  Certificates,  a   prospective
transferee  may be required to  provide an affidavit to  a transferor that it is
not, nor is it purchasing a  Residual Certificate on behalf of, a  "Disqualified
Organization,"  which term as defined above includes certain tax-exempt entities
not subject to Code Section 511 such as certain governmental plans, as discussed
above under the caption "Certain Federal Income Tax Consequences--Federal Income
Tax Consequences for REMIC Certificates--Taxation of Residual
Certificates--Tax-Related Restrictions on Transfer of Residual
Certificates--Disqualified Organizations."

    DUE TO THE COMPLEXITY OF THESE RULES AND THE PENALTIES IMPOSED UPON  PERSONS
INVOLVED IN PROHIBITED TRANSACTIONS, IT IS PARTICULARLY IMPORTANT THAT POTENTIAL
INVESTORS  WHO ARE  PLAN FIDUCIARIES  CONSULT WITH  THEIR COUNSEL  REGARDING THE
CONSEQUENCES UNDER ERISA OF THEIR ACQUISITION AND OWNERSHIP OF CERTIFICATES.

    THE SALE OF CERTIFICATES TO A PLAN IS IN NO RESPECT A REPRESENTATION BY  THE
SELLER  OR THE  APPLICABLE UNDERWRITER THAT  THIS INVESTMENT  MEETS ALL RELEVANT
LEGAL REQUIREMENTS  WITH  RESPECT  TO  INVESTMENTS BY  PLANS  GENERALLY  OR  ANY
PARTICULAR  PLAN, OR THAT THIS INVESTMENT  IS APPROPRIATE FOR PLANS GENERALLY OR
ANY PARTICULAR PLAN.

                                LEGAL INVESTMENT

    Standard Certificates which are not rated, as discussed below under "Rating"
will not constitute "mortgage related securities" for purposes of the  Secondary
Mortgage  Market  Enhancement  Act  of  1984  (the  "Enhancement  Act").  Unless
otherwise specified in the related Prospectus Supplement, the Certificates other
than Residual  Certificates  (and if  so  specified in  the  related  Prospectus
Supplement,   the  Residual  Certificates)  will  constitute  "mortgage  related
securities" for  purposes of  the Enhancement  Act  and as  such will  be  legal
investments  for  persons,  trusts,  corporations,  partnerships,  associations,
business  trusts  and   business  entities   (including  but   not  limited   to
state-chartered  savings banks, commercial banks,  savings and loan associations
and insurance  companies, as  well  as trustees  and state  government  employee
retirement systems) created pursuant to or existing under the laws of the United
States  or of  any state  (including the District  of Columbia  and Puerto Rico)
whose authorized investments are subject to state regulation 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 such entities. Pursuant to the Enhancement Act,
a number of states enacted legislation, on or before the October 3, 1991 cut-off
for such enactments, limiting to varying extents the ability of certain entities
(in

                                       95
<PAGE>
particular  insurance companies)  to invest  in mortgage  related securities, in
most cases by  requiring the  affected investors  to rely  solely upon  existing
state  law, and not the Enhancement  Act. Accordingly, the investors affected by
such legislation will be  authorized to invest in  the Certificates only to  the
extent provided in such legislation.

    The Enhancement Act 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  mortgage
related  securities, and national banks may purchase mortgage related securities
for their own account without regard to the limitations generally applicable  to
investment  securities set forth  in 12 U.S.C. Section  24 (Seventh), subject in
each case to such regulations as the applicable federal regulatory authority may
prescribe. In  this connection,  federal credit  unions should  review  National
Credit  Union  Administration Letter  to Credit  Unions No.  96, as  modified by
Letter to Credit  Unions No. 108,  which includes guidelines  to assist  federal
credit  unions in making  investment decisions for  mortgage related securities.
The National Credit Union Administration  has adopted rules, effective  December
2,  1991, that prohibit federal credit unions from investing in certain mortgage
related  securities  such  as  the   Residual  Certificates  and  the   Stripped
Certificates, except under limited circumstances.

    All  depository institutions  considering an investment  in the Certificates
should review the "Supervisory Policy Statement on Securities Activities"  dated
January  28, 1992 (the "Policy Statement") of the Federal Financial Institutions
Examination Council. The Policy Statement, which  has been adopted by the  Board
of  Governors  of  the Federal  Reserve  System, the  Federal  Deposit Insurance
Corporation,  the  Comptroller  of  the  Currency  and  the  Office  of   Thrift
Supervision,  effective  February 10,  1992, and  by  the National  Credit Union
Administration (with certain modifications), effective June 26, 1992,  prohibits
depository   institutions   from  investing   in  certain   "high-risk  mortgage
securities" (including  securities such  as certain  series and  classes of  the
Certificates),  except  under  limited  circumstances,  and  sets  forth certain
investment practices deemed to be unsuitable for regulated institutions.

    Institutions whose  investment  activities  are  subject  to  regulation  by
federal  or state authorities should review policies and guidelines adopted from
time to time by such authorities  before purchasing any of the Certificates,  as
certain  Series or Classes (in particular,  Stripped Certificates) may be deemed
unsuitable investments, or may otherwise  be restricted, under such policies  or
guidelines (in certain instances irrespective of the Enhancement Act).

    The  foregoing  does  not  take  into  consideration  the  applicability  of
statutes,  rules,  regulations,  orders,  guidelines  or  agreements   generally
governing  investments made by a particular investor, including, but not limited
to, "prudent investor" provisions, percentage-of-assets limits, provisions which
may  restrict   or   prohibit   investment   in   securities   which   are   not
"interest-bearing"  or  "income-paying," and,  with  regard to  any Certificates
issued in book-entry form, provisions which may restrict or prohibit investments
in securities which are issued in book-entry form.

    All investors should consult  with their own  legal advisors in  determining
whether  and to  what extent the  Certificates constitute  legal investments for
such investors.

                              PLAN OF DISTRIBUTION

    The Certificates are being offered hereby  in Series through one or more  of
the  methods  described below.  The  applicable Prospectus  Supplement  for each
Series will describe the method of  offering being utilized for that Series  and
will  state the public offering or purchase  price of each Class of Certificates
of such Series, or the method by which  such price is to be determined, and  the
net proceeds to the Seller from such sale.

                                       96
<PAGE>
    The  Certificates will be offered through the following methods from time to
time and  offerings may  be made  concurrently through  more than  one of  these
methods  or  an offering  of a  particular  Series of  Certificates may  be made
through a combination of two or more of these methods:

        1.  By negotiated firm commitment underwriting and public re-offering by
    underwriters specified in the applicable Prospectus Supplement;

        2.  By placements by the Seller with investors through dealers; and

        3.  By direct placements by the Seller with investors.

    If underwriters are used  in a sale of  any Certificates, such  Certificates
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  a fixed  public offering  price  or at  varying prices  to be
determined at the  time of  sale or  at the  time of  commitment therefor.  Firm
commitment  underwriting  and  public  reoffering by  underwriters  may  be done
through underwriting syndicates or through one  or more firms acting alone.  The
specific managing underwriter or underwriters, if any, with respect to the offer
and  sale of a particular Series of Certificates  will be set forth on the cover
of the Prospectus Supplement  applicable to such Series  and the members of  the
underwriting syndicate, if any, will be named in such Prospectus Supplement. The
Prospectus  Supplement will describe any discounts and commissions to be allowed
or paid  by  the  Seller  to the  underwriters,  any  other  items  constituting
underwriting  compensation and  any discounts and  commissions to  be allowed or
paid to the  dealers. The  obligations of the  underwriters will  be subject  to
certain  conditions precedent.  The underwriters with  respect to a  sale of any
Class of Certificates will be obligated to purchase all such Certificates if any
are purchased. The Seller  and PHMC will  indemnify the applicable  underwriters
against  certain civil  liabilities, including liabilities  under the Securities
Act of 1933, as amended (the "Act").

    The Prospectus Supplement with respect to any Series of Certificates offered
other than through underwriters will contain information regarding the nature of
such offering  and any  agreements to  be entered  into between  the Seller  and
dealers and/or the Seller and purchasers of Certificates of such Series.

    Purchasers  of Certificates, including dealers,  may, depending on the facts
and circumstances of such purchases, be  deemed to be "underwriters" within  the
meaning   of  the  Act  in  connection  with  reoffers  and  sales  by  them  of
Certificates. Certificateholders  should consult  with their  legal advisors  in
this regard prior to any such reoffer or sale.

    If   specified  in  the  Prospectus  Supplement  relating  to  a  Series  of
Certificates, the Seller or  any affiliate thereof may  purchase some or all  of
one  or more  Classes of  Certificates of  such Series  from the  underwriter or
underwriters at a price  specified or described  in such Prospectus  Supplement.
Such purchaser may thereafter from time to time offer and sell, pursuant to this
Prospectus,  some or all of such Certificates so purchased directly, through one
or more  underwriters to  be designated  at the  time of  the offering  of  such
Certificates  or through dealers acting as agent and/or principal. Such offering
may be restricted in  the matter specified in  such Prospectus Supplement.  Such
transactions may be effected at market prices prevailing at the time of sale, at
negotiated prices or at fixed prices. The underwriters and dealers participating
in  such purchaser's offering  of such Certificates  may receive compensation in
the form of underwriting discounts or  commissions from such purchaser and  such
dealers  may receive commissions from the investors purchasing such Certificates
for whom they may act as agent  (which discounts or commissions will not  exceed
those  customary  in  those types  of  transactions involved).  Any  dealer that
participates in the  distribution of such  Certificates may be  deemed to be  an
"underwriter"  within the meaning of the  Act, and any commissions and discounts
received by such dealer  and any profit  on the resale  of such Certificates  by
such  dealer might be deemed to  be underwriting discounts and commissions under
the Act.

    One or more affiliates of the Seller and the Servicer, including  Prudential
Securities  Incorporated,  may  act as  underwriter  or dealer  with  respect to
Certificates of  any  Series. Any  such  affiliate  will be  identified  in  the
applicable Prospectus Supplement.

                                       97
<PAGE>
                                 LEGAL MATTERS

    Certain  legal matters  will be  passed upon  for the  Seller by Cadwalader,
Wickersham & Taft, New York, New York and for any underwriters by Brown &  Wood,
New York, New York.

                                     RATING

    It  is a  condition to  the issuance  of the  Stripped Certificates  and the
Multi-Class Certificates of any  Series that they  be rated in  one of the  four
highest  categories by at least one  Rating Agency. Standard Certificates may or
may not be rated by a Rating Agency.

    A securities 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
Agency.  Each securities rating  should be evaluated  independently of any other
rating.

                                       98
<PAGE>
                        INDEX OF SIGNIFICANT DEFINITIONS

<TABLE>
<CAPTION>
TERM                                                                                                            PAGE
- -----------------------------------------------------------------------------------------------------------     -----
<S>                                                                                                          <C>
Aggregate Losses...........................................................................................          34
Assumed Reinvestment Rate..................................................................................          33
Balloon Loan...............................................................................................          15
Balloon Period.............................................................................................          15
Buy-Down Fund..............................................................................................          15
Buy-Down Loans.............................................................................................          15
Certificate Account........................................................................................          48
Certificates...............................................................................................           1
Class......................................................................................................           1
Code.......................................................................................................          11
Compound Interest Certificates.............................................................................          24
Cross-Over Date............................................................................................          29
Curtailments...............................................................................................          24
Cut-Off Date...............................................................................................           8
Depository.................................................................................................          48
Determination Date.........................................................................................          24
Distributable Amount.......................................................................................          24
Distribution Date..........................................................................................           8
Due Date...................................................................................................          13
Due Period.................................................................................................          32
Eligible Investments.......................................................................................          35
ERISA......................................................................................................          11
FDIC.......................................................................................................          49
FHLMC......................................................................................................          14
Fixed Retained Yield.......................................................................................           9
FNMA.......................................................................................................          14
Initial Deposit............................................................................................          34
Interest Rate..............................................................................................           1
Last Scheduled Distribution Date...........................................................................          33
Late Payment...............................................................................................          25
Late Payment Period........................................................................................          25
Liquidation Proceeds.......................................................................................          49
Loan-to-Value Ratio........................................................................................          13
Mortgage Interest Rate.....................................................................................           9
Mortgage Loans.............................................................................................           1
Mortgage Notes.............................................................................................          12
Mortgaged Properties.......................................................................................          12
Mortgages..................................................................................................          12
Multi-Class Certificate Distribution Amount................................................................          32
Multi-Class Certificates...................................................................................           1
Net Foreclosure Profits....................................................................................          27
Net Mortgage Interest Rate.................................................................................           9
OTS........................................................................................................          65
Payment Deficiencies.......................................................................................          34
Pass-Through Rate..........................................................................................           9
Percentage Certificates....................................................................................          23
Periodic Advances..........................................................................................          11
PHMC.......................................................................................................           1
PMCC.......................................................................................................          42
Pool Distribution Amount...................................................................................          26
Pool Scheduled Principal Balance...........................................................................          29
Pool Value.................................................................................................          32
</TABLE>

                                       99
<PAGE>
<TABLE>
<CAPTION>
TERM                                                                                                            PAGE
- -----------------------------------------------------------------------------------------------------------     -----
Pool Value Group...........................................................................................          32
<S>                                                                                                          <C>
Pooling and Servicing Agreement............................................................................           7
Prepayment Assumptions.....................................................................................          71
Prepayment Interest Shortfall..............................................................................          25
Prudential Insurance.......................................................................................           7
Rating Agency..............................................................................................          11
Record Date................................................................................................           9
Registration Statement.....................................................................................           2
Regular Certificateholder..................................................................................          70
Regular Certificates.......................................................................................          22
REMIC......................................................................................................           1
Residual Certificates......................................................................................          22
Scheduled Principal........................................................................................          24
Scheduled Principal Balance................................................................................          25
Seller.....................................................................................................           1
Senior Certificates........................................................................................           1
Senior Class...............................................................................................          24
Senior Class Carryover Shortfall...........................................................................          27
Senior Class Distributable Amount..........................................................................          24
Senior Class Distribution Amount...........................................................................          28
Senior Class Principal Portion.............................................................................          24
Senior Class Pro Rata Share................................................................................          27
Senior Class Shortfall.....................................................................................          27
Senior Class Shortfall Accruals............................................................................          28
Series.....................................................................................................           1
Servicer...................................................................................................           1
Servicing Fee..............................................................................................           9
Shifting Interest Certificate..............................................................................          23
Special Distributions......................................................................................          33
Special Hazard Loss Amount.................................................................................          37
Special Hazard Mortgage Loan...............................................................................          37
Special Hazard Termination Date............................................................................          37
Specified Subordination Reserve Fund Balance...............................................................          34
Spread.....................................................................................................          32
Standard Certificates......................................................................................           1
Standard Hazard Insurance Policy...........................................................................          15
Stated Amount..............................................................................................           1
Stripped Certificates......................................................................................           1
Subclass...................................................................................................           1
Subordinated Amount........................................................................................           9
Subordinated Certificates..................................................................................           1
Subordinated Class Distributable Amount....................................................................          25
Subordinated Class Principal Portion.......................................................................          25
Subordinated Class Pro Rata Share..........................................................................          27
Subordination Reserve Fund.................................................................................          10
Subsidy Account............................................................................................          14
Subsidy Loans..............................................................................................          14
Treasury Regulations.......................................................................................          17
Trust Estate...............................................................................................           1
Trustee....................................................................................................          61
UCC........................................................................................................          63
Unpaid Interest Shortfall..................................................................................          28
Voting Interests...........................................................................................          58
</TABLE>

                                      100
<PAGE>
- -----------------------------------------------------------------
               -----------------------------------------------------------------
- -----------------------------------------------------------------
               -----------------------------------------------------------------

    No  dealer, salesman  or any  other person has  been authorized  to give any
information or to make  any representations other than  those contained in  this
Supplement,  the Prospectus Supplement or the  Prospectus in connection with the
offer  herein   contained  and,   if  given   or  made,   such  information   or
representations  must  not  be  relied  upon  as  having  been  authorized. This
Supplement, the Prospectus Supplement  and the Prospectus  do not constitute  an
offer to sell or a solicitation of an offer to buy any securities other than the
Class  A-11 Certificates offered  by this Supplement,  the Prospectus Supplement
and the Prospectus or any offer to sell  or the solicitation of an offer to  buy
the  Class A-11  Certificates in any  jurisdiction to  any person to  whom it is
unlawful to make such  offer or solicitation in  such jurisdiction. Neither  the
delivery  of this Supplement,  the Prospectus Supplement  and the Prospectus nor
any sale made hereunder shall,  under any circumstances, create any  implication
that  information herein or therein is correct as  of any time since the date of
this Supplement, the Prospectus Supplement or the Prospectus.
                          ---------------------------

                                     INDEX

                                   SUPPLEMENT

<TABLE>
<CAPTION>
                                                                           PAGE
                                                                           -----
<S>                                                                        <C>
General..................................................................   S1-3
Risk Factors and Special Considerations..................................   S1-3
Description of the Certificates..........................................   S1-6
Description of the Mortgage Loans........................................   S1-7
Origination, Delinquency and Foreclosure Experience......................  S1-15
Restrictions on Transfer of the Class A-11 Certificates..................  S1-17
Historical Prepayments...................................................  S1-18
Sensitivity of the Pre-Tax Yield and Weighted Average Life of the Class
  A-11 Certificates......................................................  S1-19
Certain Federal Income Tax Consequences..................................  S1-20
Underwriting.............................................................  S1-21
Secondary Market.........................................................  S1-21
ERISA Considerations.....................................................  S1-21
Legal Investment.........................................................  S1-22
Legal Matters............................................................  S1-22
Use of Proceeds..........................................................  S1-22
Ratings..................................................................  S1-22
Incorporation of Certain Information by Reference........................  S1-23
</TABLE>

                             PROSPECTUS SUPPLEMENT

<TABLE>
<S>                                                                        <C>
Table of Contents........................................................    S-3
Summary Information......................................................    S-4
Description of the Certificates..........................................   S-20
Description of the Mortgage Loans........................................   S-49
Origination, Delinquency and Foreclosure
  Experience.............................................................   S-57
Prepayment and Yield Considerations......................................   S-60
Pooling and Servicing Agreement..........................................   S-69
Federal Income Tax Considerations........................................   S-71
ERISA Considerations.....................................................   S-73
Legal Investment.........................................................   S-74
Secondary Market.........................................................   S-74
Underwriting.............................................................   S-75
Legal Matters............................................................   S-75
Use of Proceeds..........................................................   S-75
Ratings..................................................................   S-76
Index of Significant Prospectus Supplement
  Definitions............................................................   S-77
</TABLE>

                                   PROSPECTUS

<TABLE>
<S>                                                                        <C>
Reports..................................................................      2
Additional Information...................................................      2
Additional Detailed Information..........................................      2
Table of Contents........................................................      3
Summary of Prospectus....................................................      7
The Trust Estates........................................................     12
Description of the Certificates..........................................     22
Credit Support...........................................................     34
Prepayment and Yield Considerations......................................     39
The Seller...............................................................     41
PHMC.....................................................................     42
Use of Proceeds..........................................................     48
Servicing of the Mortgage Loans..........................................     48
The Pooling and Servicing Agreement......................................     58
Certain Legal Aspects of the Mortgage Loans..............................     61
Certain Federal Income Tax Consequences..................................     67
ERISA Considerations.....................................................     91
Legal Investment.........................................................     95
Plan of Distribution.....................................................     96
Legal Matters............................................................     98
Rating...................................................................     98
Index of Significant Definitions.........................................     99
</TABLE>

                              THE PRUDENTIAL HOME
                              MORTGAGE SECURITIES
                                 COMPANY, INC.

                      MORTGAGE PASS-THROUGH CERTIFICATES,
                                 SERIES 1993-18

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

                                   SUPPLEMENT
                              -------------------

                                VARIABLE RATE(1)
                            CLASS A-11 CERTIFICATES

                      (1)ON THE CLASS A-11 NOTIONAL AMOUNT

                                LEHMAN BROTHERS

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