GREENWICH CAPITAL ACCEPTANCE INC
424B5, 2000-11-16
ASSET-BACKED SECURITIES
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<PAGE>
                                              Filed Pursuant to Rule 424(b)5
                                              Registration File No.: 333-34330

Prospectus Supplement
(To Prospectus dated November 13, 2000)


                                 $386,235,100
                                 (APPROXIMATE)

                      HSBC MORTGAGE LOAN TRUST 2000-HSBC1
             MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2000-HSBC1




                                   [HSBC LOGO]




      $137,000,000          CLASS A-1      FIXED INITIAL PASS-THROUGH RATE
       $99,000,000          CLASS A-2      FIXED INITIAL PASS-THROUGH RATE
      $137,493,000          CLASS A-3      FIXED INITIAL PASS-THROUGH RATE
  NOTIONAL BALANCE          CLASS X          VARIABLE PASS-THROUGH RATE
              $100          CLASS A-R      FIXED INITIAL PASS-THROUGH RATE
        $5,881,000          CLASS B-1      FIXED INITIAL PASS-THROUGH RATE
        $3,921,000          CLASS B-2      FIXED INITIAL PASS-THROUGH RATE
        $2,940,000          CLASS B-3      FIXED INITIAL PASS-THROUGH RATE


                       GREENWICH CAPITAL ACCEPTANCE, INC.
                                    Depositor

                         HSBC MORTGAGE CORPORATION (USA)
                               Seller and Servicer

[SIDEBAR]
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE S-7 IN THIS PROSPECTUS
SUPPLEMENT AND ON PAGE 6 IN THE PROSPECTUS.

The certificates represent obligations of the trust only and do not represent an
interest in or obligation of the depositor, the seller, any servicer, the
trustee or any of their affiliates.

This prospectus supplement may be used to offer and sell the certificates only
if accompanied by the prospectus.
[END SIDEBAR]

THE CERTIFICATES

o   The certificates represent ownership interests in a trust consisting
    primarily of adjustable-rate, first lien, residential mortgage loans.

o   The Class A-1, Class A-2, Class A-3, Class X and Class A-R Certificates will
    be senior certificates. The Class B-1, Class B-2, Class B-3, Class B-4,
    Class B-5 and Class B-6 Certificates will be subordinate certificates.

o   Only the Class A-1, Class A-2, Class A-3, Class X, Class A-R, Class B-1,
    Class B-2 and Class B-3 Certificates are being offered by this prospectus
    supplement and the accompanying prospectus. The Class B-4, Class B-5 and
    Class B-6 Certificates are not being offered by this prospectus supplement
    and the accompanying prospectus.

o   Each class of offered certificates will bear interest at the applicable
    interest rate calculated as described in this prospectus supplement.

o   The Class X Certificates will have no principal balance and will bear
    interest at the rate described in this prospectus supplement calculated on a
    notional balance.

CREDIT ENHANCEMENT

o   Subordination -- The subordinate certificates will be subordinate in right
    of certain payments to the senior certificates and may be subordinate to
    certain other classes of subordinate certificates as described in this
    prospectus supplement.

o   Allocation of Losses -- Losses on the mortgage loans generally will be
    allocated to the classes of subordinate certificates in reverse numerical
    order until the principal balances of those classes are reduced to zero.
    Thereafter, such losses will be allocated to the classes of senior
    certificates as described in this prospectus supplement.

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

     The offered certificates are being offered by Greenwich Capital Markets,
Inc. from time to time in negotiated transactions or otherwise at varying
prices to be determined at the time of sale. Proceeds to the depositor with
respect to the offered certificates are expected to be approximately 99.78%,
before deducting issuance expenses payable by the depositor, estimated to be
approximately $625,000. See "Method of Distribution" in this prospectus
supplement.

     Delivery of the offered certificates (other than the Class A-R
Certificate) will be made in book-entry form through the facilities of The
Depository Trust Company, Clearstream, Luxembourg and the Euroclear System on
or about November 16, 2000.


[GREENWICH CAPITAL LOGO]

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

November 13, 2000
<PAGE>


                                TABLE OF CONTENTS


PROSPECTUS SUPPLEMENT
                                                 Page
                                                 ----

Summary of Terms..................................S-1
Risk Factors......................................S-7
The Mortgage Loans...............................S-13
The Seller.......................................S-22
Servicing of Mortgage Loans......................S-24
The Pooling and Servicing Agreement..............S-26
Description of the Certificates..................S-37
Yield, Prepayment and Maturity Considerations....S-56
Certain Material Federal Income Tax Consequences.S-69
State Taxes......................................S-75
ERISA Considerations.............................S-75
Legal Investment Considerations..................S-79
Method of Distribution...........................S-77
Legal Matters....................................S-78
Ratings..........................................S-79
Index of Defined Terms...........................S-81


PROSPECTUS

                                                 Page
                                                 ----

Important Notice About Information in
 This Prospectus and Each
 Accompanying Prospectus Supplement ................5
Risk Factors........................................6
The Trust Fund.....................................14
Use of Proceeds....................................29
The Depositor......................................29
Mortgage Loan Program..............................29
Description of the Certificates....................32
Credit Enhancement.................................41
Yield and Prepayment Considerations................50
The Pooling and Servicing Agreement................52
Certain Legal Aspects of the Mortgage Loans........68
Certain Material Federal Income Tax Consequences...79
REMIC Certificates.................................92
State Tax Considerations..........................114
ERISA Considerations..............................114
Legal Investment..................................118
Method of Distribution............................119
Legal Matters.....................................120
Financial Information.............................121
Available Information.............................121
Ratings...........................................121
Index of Defined Terms............................122


<PAGE>


                                Summary of Terms

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

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



                                       S-1


<PAGE>


OFFERED CERTIFICATES

On the closing date, HSBC Mortgage Loan Trust 2000-HSBC1 will issue eleven
classes of certificates. Only the Class A-1, Class A-2, Class A-3, Class X,
Class A-R, Class B-1, Class B-2 and Class B-3 Certificates are being offered by
this prospectus supplement and the accompanying prospectus. The assets of the
trust that will support the certificates will consist primarily of a pool of
adjustable rate, first lien, residential mortgage loans having the
characteristics described in this prospectus supplement.

The mortgage pool will consist of mortgage loans having an aggregate principal
balance of approximately $392,119,409 as of the cut-off date.

Except for the Class A-R Certificate, the offered certificates will be
book-entry securities clearing through The Depository Trust Company (in the
U.S.) or Clearstream, Luxembourg or Euroclear (in Europe) in minimum
denominations of $25,000. The Class A-R Certificate will be issued in fully
registered certificated form.

ADDITIONAL CERTIFICATES

In addition to the eight classes of offered certificates, the trust will issue
three other classes of certificates. These certificates will be designated the
Class B-4, Class B-5 and Class B-6 Certificates and are not being offered by
this prospectus supplement and the prospectus. Information about these classes
is being included because these classes provide credit enhancement for the
offered certificates. The Class B-4, Class B-5 and Class B-6 Certificates will
have original aggregate principal balances of approximately $2,156,000,
$1,372,000 and $2,356,309, respectively.

See "Description of the Certificates--General", "--Book-Entry Certificates" and
"The Mortgage Loans", in this prospectus supplement and "The Trust Fund--The
Mortgage Loans--General" in the prospectus for additional information.


CUT-OFF DATE

November 1, 2000.


CLOSING DATE

On or about November 16, 2000.


SELLER AND SERVICER

HSBC Mortgage Corporation (USA).

See "The Seller" and "Servicing of Mortgage Loans" in this prospectus supplement
for additional information.


THE DEPOSITOR

Greenwich Capital Acceptance, Inc.
600 Steamboat Road
Greenwich, Connecticut  06830
(203) 625-2700.


THE TRUSTEE

Wells Fargo Bank Minnesota, N.A.

See "The Pooling and Servicing Agreement--The Trustee" in this prospectus
supplement for additional information.


STANDBY PURCHASER

HSBC Bank USA.


                                      S-2

<PAGE>


DESIGNATIONS

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

o    Offered Certificates

     Class A-1, Class A-2, Class A-3, Class X, Class A-R, Class B-1, Class B-2
     and Class B-3 Certificates.

o    Senior Certificates

     Class A-1, Class A-2, Class A-3, Class X and Class A-R Certificates.

o    Subordinate Certificates

     Class B-1, Class B-2, Class B-3, Class B-4, Class B-5 and Class B-6
     Certificates.

o    Interest Only Certificates

     Class X Certificates.

o    Book-Entry Certificates

     All classes of offered certificates other than the Class A-R Certificate.

o    Residual Certificate

     Class A-R Certificate.


MORTGAGE LOANS

A pool of conventional first lien, fully amortizing mortgage loans with interest
rates that adjust, based on the one year CMT index (being an index determined in
accordance with the rate of United States Treasury securities adjusted to a
constant maturity of one year), after an initial 60-month fixed-rate period.


DISTRIBUTION DATE

Beginning in December 2000, the trustee will make distributions on the 15th day
of each calendar month or, if the 15th day is not a business day, on the next
business day.


INTEREST PAYMENTS ON THE CERTIFICATES

Class A-1, Class A-2, Class A-3, Class A-R, Class B-1, Class B-2 and Class B-3

Interest on the offered certificates, other than the Class X Certificates, for
any specified distribution date will be calculated at the applicable annual rate
described below:

o    on any distribution date on or prior to the distribution date in July 2004,
     the lesser of (1) 7.11% and (2) the weighted average of the interest rates
     of the mortgage loans less the sum of the rates at which the trustee fee
     and the servicing fee are calculated; and

o    on each distribution date thereafter, the lesser of (1) the weighted
     average of (A) the weighted average of the fixed interest rates of any
     mortgage loans with respect to which an initial fixed-rate period is
     continuing, less the sum of the rates at which the trustee fee and the
     servicing fee are calculated, and (B) the underlying index of all mortgage
     loans, other than those referenced in clause (A) above, plus 2.25% and (2)
     the weighted average of the interest rates of the mortgage loans less the
     sum of the rates at which the trustee fee and the servicing fee are
     calculated.


Class X

Interest on the Class X Certificates will be calculated at an annual rate equal
to:

o    the weighted average of the interest rates of the mortgage loans less the
     sum of the rates at which the trustee fee and the servicing fee are
     calculated

     less

o    the weighted average of the interest rates of the certificates (other than
     the Class X Certificates).


                                      S-3
<PAGE>

General

Interest on the offered certificates will accrue on the basis of a 360-day year
composed of twelve 30-day months.

The interest accrual period with respect to the offered certificates will be the
calendar month immediately preceding the month in which such distribution date
occurs. See "Description of the Certificates--Pass-Through Rates" in this
prospectus supplement.

PRINCIPAL PAYMENTS ON THE CERTIFICATES

Principal will be paid to holders of the offered certificates (other than the
Class X Certificates) on each distribution date in the amounts described in this
prospectus supplement under "Description of the Certificates--Principal".

PAYMENT PRIORITIES

On each distribution date, the trustee will apply the amounts available for
distribution generally in the following order of priority:

o    interest on the senior certificates;

o    principal of the Class A-R Certificate;

o    principal of the Class A-1, Class A-2 and Class A-3 Certificates,
     sequentially;

o    interest on, and then principal of, each class of subordinated certificates
     in the order of their numerical class designations, beginning with the
     Class B-1 Certificates; and

o    any remaining available funds to the Class A-R Certificate.

See "Description of the Certificates" in this prospectus supplement for
additional information.

ADVANCES

The servicer is required to make cash advances to cover delinquent payments of
principal and interest in respect of the mortgage loans unless it reasonably
believes that the cash advances are not recoverable from future payments on the
mortgage loans. Advances are intended to maintain a regular flow of scheduled
interest and principal payments on the certificates and are not intended to
guarantee or insure against losses. The servicer is also required to make
certain servicing related advances.

See "The Pooling and Servicing Agreement--Advances" in this prospectus
supplement for additional information.


OPTION TO PUT CLASS A-1, CLASS A-2 AND CLASS A-3 CERTIFICATES

General

Certificateholders of Class A-1, Class A-2 and Class A-3 Certificates, will have
a one-time option to sell their certificates to the Standby Purchaser. The
option may be exercised in whole or in part with respect to any such class of
certificates during the applicable option period.

Put Option Period

The 5 business days ending on the distribution date in May 2004.

Purchase Price

The outstanding principal balance of the certificates after distributions on the
distribution date in July 2004, plus accrued and unpaid interest at the
applicable pass-through rate on the outstanding principal balance of those
certificates immediately prior to that distribution date.


                                      S-4
<PAGE>

Optional Call

If the put option is exercised with respect to more than 90% of the aggregate
outstanding principal balance of the Class A-1, Class A-2 and Class A-3
Certificates, the Standby Purchaser will have the right to purchase all of the
Class A-1, Class A-2 and Class A-3 Certificates on the same terms.

See "The Pooling and Servicing Agreement--Put Option and Optional Call" in this
prospectus supplement for additional information.


OPTIONAL TERMINATION

The servicer may purchase all of the assets in the trust and retire all
outstanding certificates when the outstanding principal balance of the mortgage
loans and any real estate owned by the trust is 10% or less of the aggregate
principal balance of the mortgage loans as of the cut-off date.

See "The Pooling and Servicing Agreement--Termination" in this prospectus
supplement for additional information.


CREDIT ENHANCEMENT

The senior certificates will have a prior right of payment over the subordinated
certificates. Among the classes of subordinated certificates, the Class B-1
Certificates will have the highest payment priority and the Class B-6
Certificates will have the lowest payment priority.

Subordination is designed to provide the holders of certificates with a higher
payment priority with protection against most losses realized when the remaining
unpaid principal balance on a mortgage loan exceeds the amount of proceeds
recovered upon the liquidation of that mortgage loan. In general, this loss
protection is accomplished by allocating the realized losses, first, among the
subordinated certificates, beginning with the subordinated certificates with the
lowest payment priority and, second, to the classes of senior certificates on a
pro rata basis. However, special hazard losses, bankruptcy losses, and fraud
losses realized on the mortgage loans in excess of the amounts set forth in this
prospectus supplement are allocated simultaneously to the senior certificates
and to the subordinated certificates in the manner specified in this prospectus
supplement under "Description of the Certificates--Allocation of Losses".

In addition, until the distribution date in December 2010, the subordinate
certificates will be locked out from receipt of any principal unless the senior
certificates are paid down to zero or the credit enhancement provided by the
subordinate certificates has, among other things, doubled prior to that date and
certain performance triggers have been satisfied. After that time and subject to
certain performance triggers, the subordinate certificates will receive their
pro rata share of scheduled principal and increasing portions of principal
prepayments over time.

See "Description of the Certificates--Principal", "-- Allocation of Losses" and
"--Subordination of the Subordinate Certificates" in this prospectus supplement.


RATINGS

It is a condition to the issuance of the offered certificates that the Class
A-1, Class A-2, Class A-3 and Class X Certificates be rated "AAA", "AAA" and
"Aaa", that the Class B-1 Certificates be rated at least "AA", "AA" and "Aa2",
that the Class B-2 Certificates be rated at least "A", "A" and "A2", and that
the Class B-3 Certificates be rated at least "BBB", "BBB" and "Baa2", in each
case by Standard &


                                      S-5
<PAGE>

Poor's Ratings Services, a division of The McGraw-Hill Companies, Fitch, Inc.
and Moody's Investors Service, Inc., respectively; and that the Class A-R
Certificate be rated "AAA" by each of Standard & Poor's and Fitch.

In respect of the put option, Standard & Poor's and Fitch also will assign
ratings of "A-1+" and "AA-", respectively, to HSBC Bank USA's obligation under
the put option with respect to the Class A-1, Class A-2 and Class A-3
Certificates. In the case of Moody's, HSBC Bank USA's ability or obligation to
purchase the Class A-1, Class A-2 and Class A-3 Certificates under the put
option is directly linked to their short term rating, which is currently "P-1",
and their long term rating, which is currently "Aa3".

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

See "Ratings" in this prospectus supplement for additional information.


TAX STATUS

In the opinion of Brown & Wood LLP, for federal income tax purposes, the trust
will comprise several "real estate mortgage investment conduits" or REMICs
organized in a tiered REMIC structure. The offered certificates, other than the
Class A-R Certificate, will constitute "regular interests" in the upper tier
REMIC. The Class A-R Certificate will represent the sole class of "residual
interests" in each REMIC created under the pooling and servicing agreement.
Holders of the Class A-1, Class A-2 and Class A-3 Certificates will also hold a
separate put option right for federal income tax purposes.

The offered certificates (other than the Class A-R Certificate) generally will
be treated as newly originated debt instruments for federal income tax purposes.
Beneficial owners of the offered certificates (other than the Class A-R
Certificate) will be required to report income on the offered certificates in
accordance with the accrual method of accounting.

See "Certain Material Federal Income Tax Consequences" in this prospectus
supplement and "Certain Material Federal Income Tax Consequences" in the
prospectus for additional information.


ERISA CONSIDERATIONS

Subject to satisfaction of certain conditions, ERISA Plans may purchase the
offered certificates other than the Class A-R Certificate.

See "ERISA Considerations" in this prospectus supplement and in the prospectus.


LEGAL INVESTMENT CONSIDERATIONS

The senior certificates and Class B-1 Certificates will be "mortgage related
securities" for purposes of the Secondary Mortgage Market Enhancement Act of
1984, or SMMEA, as long as they are rated in one of the two highest rating
categories by at least one nationally recognized statistical rating
organization. The Class B-2 and Class B-3 Certificates will not be rated in one
of the two highest rating categories by a nationally recognized statistical
rating organization and, therefore, will not be "mortgage related securities"
for purposes of SMMEA.

See "Legal Investment Considerations" in this prospectus supplement and "Legal
Investment" in the prospectus.


                                      S-6
<PAGE>


                                  Risk Factors

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

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

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

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

                                       o  If you purchase the Class X
                                          Certificates and principal of the
                                          mortgage loans is repaid at an
                                          extremely rapid rate, you may not
                                          recover your initial investment.

                                       o  The rate of prepayments on the
                                          mortgage loans will be sensitive to
                                          prevailing interest rates. Generally,
                                          if prevailing interest rates decline
                                          significantly below the interest rates
                                          on the mortgage loans, those mortgage
                                          loans are more likely to prepay than
                                          if prevailing rates remain above the
                                          interest rates on the mortgage loans.
                                          Conversely, if prevailing interest
                                          rates rise significantly, prepayments
                                          on the mortgage loans are likely to
                                          decrease.

                                       o  The seller is required to purchase
                                          from the trust any mortgage loan in
                                          the event certain breaches of
                                          representations and warranties occur
                                          and are not cured. In addition, the
                                          servicer has the option to purchase
                                          mortgage loans that become 90 days or
                                          more delinquent, subject to certain
                                          limitations and conditions described
                                          in this prospectus supplement. These
                                          purchases will have the same effect on
                                          the holders of the offered
                                          certificates as a prepayment of the
                                          mortgage loans.

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



                                      S-7
<PAGE>


                                      o  The priorities governing payments of
                                         principal will have the effect of
                                         accelerating the rate of principal
                                         payments to holders of the classes of
                                         senior certificates relative to the
                                         classes of subordinate certificates.

                                      See "Yield, Prepayment and Maturity
                                      Considerations" in this prospectus
                                      supplement for a description of factors
                                      that may influence the rate and timing of
                                      prepayments on the mortgage loans.

POTENTIAL INADEQUACY OF
CREDIT ENHANCEMENT FOR
THE OFFERED CERTIFICATES............  Credit enhancement will be provided for
                                      the certificates, first, by the right of
                                      the holders of certificates to receive
                                      payments before the classes subordinated
                                      to them and, second, by the allocation of
                                      realized losses on the mortgage loans to
                                      the subordinated classes in the reverse
                                      order of their numerical class
                                      designations. This first form of credit
                                      enhancement uses collections on the
                                      mortgage loans otherwise payable to
                                      holders of subordinated classes to pay
                                      interest or principal due on more senior
                                      classes. Collections otherwise payable to
                                      subordinated classes represent the sole
                                      source of funds from which this type of
                                      credit enhancement is provided. Except as
                                      described below, realized losses are
                                      allocated, first, to the subordinated
                                      certificates in the reverse order of
                                      their priority of payment, beginning with
                                      the subordinated certificates with the
                                      lowest payment priority, until the
                                      principal amount of that class has been
                                      reduced to zero and, second, to the
                                      senior certificates on a pro rata basis
                                      until the principal amount of each class
                                      has been reduced to zero. Accordingly, if
                                      the aggregate principal balance of each
                                      subordinated class were to be reduced to
                                      zero, delinquencies and defaults on the
                                      mortgage loans would reduce the amount of
                                      funds available for monthly distributions
                                      to holders of the senior certificates.
                                      Furthermore, the subordinated classes of
                                      certificates will provide only limited
                                      protection against certain categories of
                                      losses such as special hazard losses,
                                      bankruptcy losses and fraud losses as
                                      specified in this prospectus supplement.
                                      Once the specified loss amounts have been
                                      exceeded, holders of the senior
                                      certificates will bear their
                                      proportionate share of any losses
                                      realized on the mortgage loans. Among the
                                      classes of subordinated certificates, the
                                      Class B-1 Certificates have the highest
                                      payment priority and the Class B-6
                                      Certificates have the lowest payment
                                      priority.

                                      See "Description of the Certificates--
                                      Allocation of Losses" and "--Subordination
                                      of the Subordinate Certificates" in this
                                      prospectus supplement for additional
                                      information.


                                      S-8
<PAGE>

INTEREST PAYMENTS MAY
BE INSUFFICIENT.....................   When a mortgage loan is prepaid in full,
                                       the borrower is charged interest only up
                                       to the date on which payment is made,
                                       rather than for an entire month. This may
                                       result in a shortfall in interest
                                       collections available for payment on the
                                       next distribution date. The servicer is
                                       required to cover the shortfall in
                                       interest collections that is attributable
                                       to prepayments on the loans but only to
                                       the extent of the servicing fee. In
                                       addition, certain shortfalls in interest
                                       collections arising from the application
                                       of the Soldiers' and Sailors' Civil
                                       Relief Act of 1940 will not be covered by
                                       the servicer.

                                       Any uncovered interest shortfall may
                                       adversely affect the yield on your
                                       investment.

DELAY IN RECEIPT OF
LIQUIDATION PROCEEDS;
LIQUIDATION PROCEEDS
MAY BE LESS THAN
MORTGAGE LOAN BALANCE...............   Substantial delays could be encountered
                                       in connection with the liquidation of
                                       delinquent mortgage loans. Further,
                                       liquidation expenses such as legal fees,
                                       real estate taxes and maintenance and
                                       preservation expenses may reduce the
                                       portion of liquidation proceeds payable
                                       to you. If a mortgaged property fails to
                                       provide adequate security for the related
                                       mortgage loan, you will incur a loss on
                                       your investment if the credit enhancement
                                       is insufficient to cover that loss.

CERTIFICATES MAY NOT BE
APPROPRIATE FOR SOME
INVESTORS...........................   The offered certificates may not be an
                                       appropriate investment for investors who
                                       do not have sufficient resources or
                                       expertise to evaluate the particular
                                       characteristics of the offered
                                       certificates. This may be the case due to
                                       the reasons specified below.

                                       o  The yield to maturity of offered
                                          certificates purchased at a price
                                          other than par will be sensitive to
                                          the uncertain rate and timing of
                                          principal prepayments on the mortgage
                                          loans.

                                       o  The rate of principal distributions on
                                          and the weighted average lives of the
                                          offered certificates will be sensitive
                                          to the uncertain rate and timing of
                                          principal prepayments on the mortgage
                                          loans and the priority of principal
                                          distributions among the classes of
                                          certificates. Accordingly, the offered
                                          certificates may be an inappropriate
                                          investment if you require a
                                          distribution of a particular amount of
                                          principal on a specific date or an
                                          otherwise predictable stream of
                                          distributions.


                                      S-9
<PAGE>


                                       o  You may not be able to reinvest
                                          distributions on an offered
                                          certificate (which, in general, are
                                          expected to be greater during periods
                                          of relatively low interest rates) at a
                                          rate at least as high as the
                                          pass-through rate applicable to your
                                          certificate.

                                       o  Your investment in the offered
                                          certificates may be ended before you
                                          desire if the optional call or
                                          optional termination is exercised.

                                       o  A secondary market for the offered
                                          certificates may not develop or
                                          provide you with liquidity of
                                          investment.

RISK OF NON-PERFORMANCE
BY THE STANDBY PURCHASER............   The put options are the obligations
                                       solely of the standby purchaser and do
                                       not represent obligations of, or an
                                       interest in, the seller, the depositor,
                                       the underwriter or their respective
                                       affiliates, other than the standby
                                       purchaser. The obligations of the standby
                                       purchaser under the put options are not
                                       insured or guaranteed by any person or
                                       entity. As a result, if the standby
                                       purchaser should be unable to pay the
                                       purchase price upon the exercise of a put
                                       option, you may not be able to sell your
                                       certificate to the standby purchaser.

GEOGRAPHIC CONCENTRATION
OF THE MORTGAGE LOANS...............   The following chart lists the states and
                                       related percentage with concentrations of
                                       mortgage loans in excess of 5% of the
                                       aggregate principal balance as of the
                                       cut-off date.

                                        California                 26.38%
                                        Illinois                   10.07%
                                        Virginia                   9.68%
                                        Washington                 5.16%

                                       In addition, the conditions below will
                                       have a disproportionate impact on the
                                       mortgage loans in general:

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

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



                                      S-10
<PAGE>


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

LACK OF LIQUIDITY...................   There is currently no secondary market
                                       for the offered certificates and there
                                       can be no assurance that a secondary
                                       market for the offered certificates will
                                       develop. Consequently, you may not be
                                       able to sell your certificates readily or
                                       at prices that will enable you to realize
                                       your desired yield. The market values of
                                       the certificates are likely to fluctuate.
                                       Any of these fluctuations may be
                                       significant and could result in
                                       significant losses to you.

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

SERVICER ALTERNATIVES
TO FORECLOSURE......................   The servicer may foreclose on any
                                       delinquent mortgage loan or, subject to
                                       certain limitations set forth in the
                                       pooling and servicing agreement, work out
                                       an agreement with the related borrower,
                                       which may involve waiving or modifying
                                       any term of the mortgage loan. The
                                       servicer may also sell any mortgage loan
                                       if such mortgage loan is at least 90 days
                                       delinquent.

BANKRUPTCY OR INSOLVENCY MAY
AFFECT THE TIMING AND AMOUNT
OF DISTRIBUTIONS ON THE
CERTIFICATES........................   The transfer of the mortgage loans by the
                                       seller to the depositor will be
                                       characterized in the mortgage loan
                                       purchase agreement as a sale transaction.
                                       Nevertheless, in the event of a
                                       bankruptcy of the seller, the trustee in
                                       bankruptcy could attempt to
                                       recharacterize the sale of the mortgage
                                       loans to the depositor as a borrowing
                                       secured by a pledge of the mortgage
                                       loans.

                                       If such an attempt to recharacterize the
                                       transfer of the mortgage loans were
                                       successful, a trustee in bankruptcy could
                                       elect to accelerate payment of the
                                       certificates and liquidate the mortgage
                                       loans, with the holders of the
                                       certificates entitled to


                                      S-11
<PAGE>


                                       no more than the outstanding class
                                       principal balances, if any, of the
                                       classes of certificates, together with
                                       interest thereon at the applicable
                                       pass-through rate to the date of payment.
                                       In the event of an acceleration of the
                                       certificates, the holders of the
                                       certificates would lose the right to
                                       future payments of interest, might suffer
                                       reinvestment losses in a lower interest
                                       rate environment and may fail to recover
                                       their initial investment. Regardless of
                                       whether an acceleration takes place,
                                       delays in payments on the certificates
                                       and possible reductions in the amount of
                                       such payments could occur. The depositor
                                       will warrant in the pooling and servicing
                                       agreement that the transfer of the
                                       mortgage loans to the trust fund is a
                                       valid transfer and sale of all of the
                                       depositor's right, title and interest in
                                       the mortgage loans to the trust fund.









                                      S-12
<PAGE>


                               THE MORTGAGE LOANS

         The information set forth in the following paragraphs has been provided
by the Seller. None of the Depositor or any of its other affiliates or the
Trustee or any of its affiliates has made or will make any representation as to
the accuracy or completeness of the information that appears under this heading.

GENERAL

         The assets held by HSBC Mortgage Loan Trust 2000-HSBC1 (the "TRUST")
will consist principally of adjustable rate, first lien, residential mortgage
loans (each, a "MORTGAGE LOAN"). The Mortgage Loans have interest rates that
adjust based on the One Year CMT index following an initial fixed-rate period.
There are 1,061 Mortgage Loans with an aggregate Principal Balance (the "POOL
BALANCE") of approximately $392,119,409 as of the Cut-Off Date, after
application of payments of principal due on or before the Cut-Off Date whether
or not received and also subject to a permitted variance of plus or minus 10%.
All weighted averages specified in this prospectus supplement are based on the
Principal Balances of the Mortgage Loans as of the Cut-Off Date. The "PRINCIPAL
BALANCE" of a Mortgage Loan as of any date is equal to the unpaid principal
balance of that Mortgage Loan at its origination, less the sum of scheduled and
unscheduled payments in respect of principal made on that Mortgage Loan since
its origination. References in this prospectus supplement to percentages of the
Mortgage Loans mean percentages based on the aggregate of the Principal Balances
of the Mortgage Loans as of the Cut-Off Date, unless otherwise specified.

         Pursuant to a purchase agreement between the Seller and the Depositor
(the "MORTGAGE LOAN PURCHASE AGREEMENT"), the Depositor will purchase the
Mortgage Loans from the Seller, and pursuant to the Pooling and Servicing
Agreement, the Depositor will cause the Mortgage Loans to be assigned to the
Trustee for the benefit of the Certificateholders. See "The Pooling and
Servicing Agreement" in this prospectus supplement.

         Each of the Mortgage Loans was originated by the Seller or purchased by
the Seller in the secondary market in the ordinary course of business.

         Under the Mortgage Loan Purchase Agreement, the Seller will make
certain representations and warranties which will be assigned by the Depositor
to the Trustee. The representations and warranties relate to, among other
things, certain characteristics of the Mortgage Loans and, subject to certain
limitations, the Seller will be obligated to repurchase or substitute a similar
mortgage loan for any such Mortgage Loan as to which there exists deficient
documentation or an uncured breach of any such representation or warranty, if
the breach of the representation or warranty materially and adversely affects
the Certificateholders' interests in the Mortgage Loan. The Depositor will make
no representations or warranties with respect to the Mortgage Loans and will
have no obligation to repurchase or substitute Mortgage Loans with deficient
documentation or that are otherwise defective. The Seller is selling the
Mortgage Loans without recourse and will have no obligation with respect to the
Certificates in its capacity as Seller other than the repurchase or substitution
obligations described above.


                                      S-13
<PAGE>


MORTGAGE LOAN STATISTICS

         The following statistical information, unless otherwise specified, is
based upon the Pool Balance as of the Cut-Off Date (the "CUT-OFF DATE POOL
BALANCE").

         The Mortgage Loans are secured by mortgages or deeds of trust or other
similar security instruments (each, a "MORTGAGE") creating first liens on one-
to four-family residential properties consisting of detached or semi-detached
one- to four-family dwelling units, individual condominium units and planned
unit developments (each, a "MORTGAGED PROPERTY"). Approximately 6.21% of the
Mortgage Loans had Loan-to-Value Ratios at origination in excess of 80.00%. With
respect to each Mortgage Loan and any date of determination, the "LOAN-TO-VALUE
RATIO" is calculated as a fraction, expressed as a percentage, the numerator of
which is the Principal Balance of the Mortgage Loan at such date of
determination and the denominator of which is the lesser of the sale price and
the appraised value of the Mortgaged Property.

         All of the Mortgage Loans have scheduled monthly payments due on the
first day of the month (with respect to each Mortgage Loan, a "DUE DATE").

         The Mortgage Loans have original terms to stated maturity ranging from
180 months to 360 months. The weighted average remaining term to stated maturity
of the Mortgage Loans was approximately 356 months as of the Cut-Off Date. None
of the Mortgage Loans had a first Due Date prior to December 1, 1999 or after
November 1, 2000 or had a remaining term to stated maturity of less than 176
months or greater than 359 months as of the Cut-Off Date. The latest stated
maturity date of any Mortgage Loan is October 1, 2030.

         The average Principal Balance of the Mortgage Loans at origination was
approximately $370,937.45. The average Principal Balance of the Mortgage Loans
as of the Cut-Off Date was approximately $369,575.32.

         No Mortgage Loan had a Principal Balance of greater than $997,921.85 or
less than $246,655.91 as of the Cut-Off Date.

         Subject to the limitation on loan rate adjustments described in the
next paragraph, each Mortgage Loan provides for adjustment, on an annual basis,
to the rate at which interest accrues thereon (each, a "LOAN RATE") and for
corresponding adjustments to the monthly payment amount due thereon, in each
case on each adjustment date applicable thereto (each such date, an "ADJUSTMENT
DATE"). The first Adjustment Date for each Mortgage Loan will occur 60 months
after the date of origination. Prior to the first Adjustment Date for any
Mortgage Loan, the Loan Rate will be a fixed rate of interest.

         On each Adjustment Date for a Mortgage Loan, the Loan Rate thereon will
be adjusted to equal the sum, generally rounded up to the nearest multiple of
0.125%, of the One Year CMT index (the "INDEX") as discussed under "--The Index"
in this prospectus supplement and a fixed percentage amount (the "GROSS
MARGIn"). On the first Adjustment Date, the Loan Rates on the Mortgage Loans
cannot increase or decrease (such initial cap, the "FIRST RATE CAP") by more
than 2.00% per annum. On any subsequent Adjustment Date, the Loan Rates on the
Mortgage Loans cannot increase or decrease (any such cap, a "PERIODIC RATE CAP")
by more than 2.00% per annum. The Loan Rate on each Mortgage Loan will not
exceed a specified maximum Loan Rate over the life of such Mortgage Loan (the
"MAXIMUM LOAN RATE") or be lower than a


                                      S-14
<PAGE>

specified minimum Loan Rate over the life of such Mortgage Loan (the "MINIMUM
LOAN RATE"). Effective with the first monthly payment due on each Mortgage Loan
after each related Adjustment Date, the monthly payment amount will be adjusted
to an amount that will amortize fully the outstanding Principal Balance of the
related Mortgage Loan over its remaining term, and pay interest at the Loan Rate
as so adjusted. Due to the application of the First Rate Cap, the Periodic Rate
Caps, the Maximum Loan Rates and the Minimum Loan Rates, the Loan Rate on each
such Mortgage Loan, as adjusted on any related Adjustment Date, may be less than
the sum of the Index and the related Gross Margin, rounded as described in this
prospectus supplement. See "--The Index".

         The Mortgage Loans had Loan Rates as of the Cut-Off Date of not less
than 7.125% per annum and not more than 8.750% per annum and the weighted
average Loan Rate was approximately 7.865% per annum. As of the Cut-Off Date,
the Mortgage Loans had Gross Margins ranging from 2.750% per annum to 3.125% per
annum, Maximum Loan Rates ranging from 13.125% per annum to 14.750% per annum
and Minimum Loan Rates ranging from 2.750% per annum to 3.125% per annum. As of
the Cut-Off Date, the weighted average Gross Margin was approximately 2.878% per
annum, the weighted average Maximum Loan Rate was approximately 13.865% per
annum and the weighted average Minimum Loan Rate was approximately 2.878% per
annum. The latest next Adjustment Date following the Cut-Off Date on any
Mortgage Loan occurs on October 1, 2005 and the weighted average next Adjustment
Date for all of the Mortgage Loans following the Cut-Off Date occurs in July 12,
2005.

         All of the Mortgage Loans were underwritten under full documentation or
alternative documentation program guidelines.

         The Mortgage Loans had the following characteristics as of the Cut-Off
Date (the sum in any column may not equal the total indicated due to rounding):








                                      S-15
<PAGE>


         PRINCIPAL BALANCES OF THE MORTGAGE LOANS AS OF THE CUT-OFF DATE

<TABLE>
<CAPTION>
                                     NUMBER OF     PRINCIPAL BALANCE         % OF
                                      MORTGAGE     OUTSTANDING AS OF     CUT-OFF DATE
      PRINCIPAL BALANCE ($)            LOANS        THE CUT-OFF DATE     POOL BALANCE
---------------------------------   -----------   -------------------   -------------
<S>                                 <C>             <C>                   <C>
246,655.91 - 250,000.00 .........          1        $    246,655.91           0.06%
250,000.01 - 300,000.00 .........        329          92,226,682.34          23.52
300,000.01 - 350,000.00 .........        243          78,740,499.57          20.08
350,000.01 - 400,000.00 .........        189          70,965,719.31          18.10
400,000.01 - 450,000.00 .........         98          41,646,923.13          10.62
450,000.01 - 500,000.00 .........         88          42,093,555.72          10.73
500,000.01 - 550,000.00 .........         39          20,570,700.50           5.25
550,000.01 - 600,000.00 .........         38          21,869,669.63           5.58
600,000.01 - 650,000.00 .........         33          21,067,659.19           5.37
700,000.01 - 750,000.00 .........          1             722,933.29           0.18
950,000.01 - 997,921.85 .........          2           1,968,410.99           0.50
                                       -----        ---------------         ------
   Total ........................      1,061        $392,119,409.58         100.00%
                                       =====        ===============         ======
</TABLE>

     The average Principal Balance of the Mortgage Loans as of the Cut-Off Date
was approximately $369,575.32.



           REMAINING TERMS TO STATED MATURITY OF THE MORTGAGE LOANS

<TABLE>
<CAPTION>
                             NUMBER OF     PRINCIPAL BALANCE         % OF
                              MORTGAGE     OUTSTANDING AS OF     CUT-OFF DATE
 REMAINING TERM (MONTHS)       LOANS        THE CUT-OFF DATE     POOL BALANCE
-------------------------   -----------   -------------------   -------------
<S>                         <C>             <C>                   <C>
176 - 180 ...............          1        $    444,630.29           0.11%
337 - 348 ...............          1             298,037.22           0.08
349 - 359 ...............      1,059         391,376,742.07          99.81
                               -----        ---------------         ------
   Total ................      1,061        $392,119,409.58         100.00%
                               =====        ===============         ======
</TABLE>

     The weighted average remaining term to stated maturity of the Mortgage
Loans as of the Cut-Off Date was approximately 356 months.



                     PROPERTY TYPES OF THE MORTGAGE LOANS

<TABLE>
<CAPTION>
                                      NUMBER OF     PRINCIPAL BALANCE         % OF
                                       MORTGAGE     OUTSTANDING AS OF     CUT-OFF DATE
           PROPERTY TYPE                LOANS        THE CUT-OFF DATE     POOL BALANCE
----------------------------------   -----------   -------------------   -------------
<S>                                  <C>             <C>                   <C>
Single Family ....................        687        $258,810,346.21         66.00%
Planned Unit Development .........        292         104,184,909.49         26.57
Condominium ......................         70          24,783,312.62          6.32
Two-Four Family ..................         12           4,340,841.26          1.11
                                        -----        ---------------        ------
   Total .........................      1,061        $392,119,409.58        100.00%
                                        =====        ===============        ======
</TABLE>



                 STATED OCCUPANCY STATUS OF THE MORTGAGE LOANS

<TABLE>
<CAPTION>
                                 NUMBER OF     PRINCIPAL BALANCE         % OF
                                  MORTGAGE     OUTSTANDING AS OF     CUT-OFF DATE
 STATED OCCUPANCY STATUS (1)       LOANS        THE CUT-OFF DATE     POOL BALANCE
-----------------------------   -----------   -------------------   -------------
<S>                             <C>             <C>                   <C>
Primary .....................      1,028        $378,346,133.36         96.49%
Second Home .................         33          13,773,276.22          3.51
                                   -----        ---------------        ------
   Total ....................      1,061        $392,119,409.58        100.00%
                                   =====        ===============        ======
</TABLE>

(1)   Occupancy as represented by the Mortgagor at the time of origination.



                                      S-16
<PAGE>


                      LOAN PURPOSE OF THE MORTGAGE LOANS

<TABLE>
<CAPTION>
                                    NUMBER OF     PRINCIPAL BALANCE         % OF
                                     MORTGAGE     OUTSTANDING AS OF     CUT-OFF DATE
             PURPOSE                  LOANS        THE CUT-OFF DATE     POOL BALANCE
--------------------------------   -----------   -------------------   -------------
<S>                                <C>             <C>                   <C>
Purchase .......................        947        $348,202,169.14         88.80%
Rate/Term Refinance ............         67          26,024,372.82          6.64
Cash Out Refinance .............         46          17,468,536.82          4.45
Construction Permanent .........          1             424,330.80          0.11
                                      -----        ---------------        ------
   Total .......................      1,061        $392,119,409.58        100.00%
                                      =====        ===============        ======
</TABLE>



              ORIGINAL LOAN-TO-VALUE RATIOS OF THE MORTGAGE LOANS

<TABLE>
<CAPTION>
                                      NUMBER OF     PRINCIPAL BALANCE         % OF
                                       MORTGAGE     OUTSTANDING AS OF     CUT-OFF DATE
 ORIGINAL LOAN-TO-VALUE RATIO (%)       LOANS        THE CUT-OFF DATE     POOL BALANCE
----------------------------------   -----------   -------------------   -------------
<S>                                  <C>             <C>                   <C>
16.53 - 20.00 ....................          2        $    783,408.66           0.20%
20.01 - 25.00 ....................          1             299,575.15           0.08
25.01 - 30.00 ....................          1             602,994.24           0.15
30.01 - 35.00 ....................          5           1,716,487.74           0.44
35.01 - 40.00 ....................          4           1,444,311.55           0.37
40.01 - 45.00 ....................         12           3,943,161.85           1.01
45.01 - 50.00 ....................         14           5,172,295.42           1.32
50.01 - 55.00 ....................         22           9,260,868.56           2.36
55.01 - 60.00 ....................         33          12,572,249.33           3.21
60.01 - 65.00 ....................         51          20,541,125.60           5.24
65.01 - 70.00 ....................         65          24,544,444.46           6.26
70.01 - 75.00 ....................        103          41,350,493.39          10.55
75.01 - 80.00 ....................        669         245,526,533.88          62.62
80.01 - 85.00 ....................          9           3,078,298.34           0.79
85.01 - 90.00 ....................         54          16,753,069.28           4.27
90.01 - 95.00 ....................         16           4,530,092.13           1.16
                                        -----        ---------------         ------
   Total .........................      1,061        $392,119,409.58         100.00%
                                        =====        ===============         ======
</TABLE>

     The weighted average original Loan-to-Value Ratio of the Mortgage Loans as
of the Cut-Off Date was approximately 75.23%.



                                      S-17
<PAGE>


              GEOGRAPHIC DISTRIBUTION OF THE MORTGAGED PROPERTIES

<TABLE>
<CAPTION>
                                  NUMBER OF     PRINCIPAL BALANCE         % OF
                                   MORTGAGE     OUTSTANDING AS OF     CUT-OFF DATE
             STATE                  LOANS        THE CUT-OFF DATE     POOL BALANCE
------------------------------   -----------   -------------------   -------------
<S>                              <C>             <C>                   <C>
Alabama ......................         17        $  5,422,176.58           1.38%
Arizona ......................          8           2,900,916.61           0.74
California ...................        254         103,455,185.68          26.38
Colorado .....................         32          11,333,211.66           2.89
Connecticut ..................         19           8,094,387.51           2.06
Delaware .....................          2             762,848.17           0.19
District of Columbia .........         13           4,983,506.76           1.27
Florida ......................         19           6,994,729.47           1.78
Georgia ......................         54          19,401,712.67           4.95
Illinois .....................        114          39,481,175.56          10.07
Indiana ......................          4           1,117,552.54           0.29
Kansas .......................          2             675,089.83           0.17
Kentucky .....................          1             304,350.01           0.08
Maine ........................          2           1,075,489.44           0.27
Maryland .....................         43          14,636,604.82           3.73
Massachusetts ................         42          16,704,126.34           4.26
Michigan .....................         52          18,403,622.30           4.69
Minnesota ....................          5           1,792,239.72           0.46
Missouri .....................         13           5,306,402.68           1.35
Nebraska .....................          1             292,715.24           0.07
Nevada .......................          2             761,294.91           0.19
New Hampshire ................          1             246,655.91           0.06
New Jersey ...................         22           7,494,271.51           1.91
New Mexico ...................          1             418,515.62           0.11
New York .....................         15           5,626,698.68           1.43
North Carolina ...............         55          19,350,566.94           4.93
Ohio .........................         24           8,492,400.99           2.17
Oregon .......................          5           2,285,308.25           0.58
Pennsylvania .................          3             908,075.52           0.23
Rhode Island .................          1             309,240.74           0.08
South Carolina ...............         12           4,767,885.76           1.22
Tennessee ....................          3           1,035,064.56           0.26
Texas ........................         44          16,507,682.48           4.21
Utah .........................          3             863,837.41           0.22
Virginia .....................        110          37,951,418.07           9.68
Washington ...................         59          20,249,367.89           5.16
West Virginia ................          2             704,122.16           0.18
Wyoming ......................          2           1,008,958.59           0.26
                                    -----        ---------------         ------
   Total .....................      1,061        $392,119,409.58         100.00%
                                    =====        ===============         ======
</TABLE>

     The greatest five-digit ZIP Code geographic concentration of Mortgage
Loans, by Principal Balance as of the Cut-Off Date, was approximately 1.72% in
the 95129 ZIP Code.


                                      S-18
<PAGE>


            LOAN RATES OF THE MORTGAGE LOANS AS OF THE CUT-OFF DATE

<TABLE>
<CAPTION>
                                              PRINCIPAL BALANCE         % OF
                              NUMBER OF       OUTSTANDING AS OF     CUT-OFF DATE
     LOAN RATE (%)         MORTGAGE LOANS      THE CUT-OFF DATE     POOL BALANCE
-----------------------   ----------------   -------------------   -------------
<S>                       <C>                  <C>                   <C>
7.125 - 7.250 .........            18          $  6,169,416.07           1.57%
7.251 - 7.500 .........           110            40,458,771.33          10.32
7.501 - 7.750 .........           271           100,059,446.85          25.52
7.751 - 8.000 .........           461           172,373,853.31          43.96
8.001 - 8.250 .........           171            63,287,235.74          16.14
8.251 - 8.500 .........            24             7,517,741.09           1.92
8.501 - 8.750 .........             6             2,252,945.19           0.57
                                -----          ---------------         ------
   Total ..............         1,061          $392,119,409.58         100.00%
                                =====          ===============         ======
</TABLE>

     The weighted average Loan Rate of the Mortgage Loans as of the Cut-Off
Date was approximately 7.865%.



                   MAXIMUM LOAN RATES OF THE MORTGAGE LOANS

<TABLE>
<CAPTION>
                             NUMBER OF     PRINCIPAL BALANCE         % OF
                              MORTGAGE     OUTSTANDING AS OF     CUT-OFF DATE
  MAXIMUM LOAN RATE (%)        LOANS        THE CUT-OFF DATE     POOL BALANCE
-------------------------   -----------   -------------------   -------------
<S>                         <C>             <C>                   <C>
13.125 - 13.250 .........         18        $  6,169,416.07           1.57%
13.251 - 13.500 .........        110          40,458,771.33          10.32
13.501 - 13.750 .........        271         100,059,446.85          25.52
13.751 - 14.000 .........        461         172,373,853.31          43.96
14.001 - 14.250 .........        171          63,287,235.74          16.14
14.251 - 14.500 .........         24           7,517,741.09           1.92
14.501 - 14.750 .........          6           2,252,945.19           0.57
                               -----        ---------------         ------
   Total ................      1,061        $392,119,409.58         100.00%
                               =====        ===============         ======
</TABLE>

     The weighted average Maximum Loan Rate of the Mortgage Loans as of the
Cut-Off Date was approximately 13.865%.



                   MINIMUM LOAN RATES OF THE MORTGAGE LOANS

<TABLE>
<CAPTION>
                           NUMBER OF     PRINCIPAL BALANCE         % OF
                            MORTGAGE     OUTSTANDING AS OF     CUT-OFF DATE
 MINIMUM LOAN RATE (%)       LOANS        THE CUT-OFF DATE     POOL BALANCE
-----------------------   -----------   -------------------   -------------
<S>                       <C>             <C>                   <C>
2.750 .................          1        $    278,383.96           0.07%
2.875 .................      1,042         384,882,192.34          98.15
3.000 .................         15           4,267,489.00           1.09
3.125 .................          3           2,691,344.28           0.69
                             -----        ---------------         ------
   Total ..............      1,061        $392,119,409.58         100.00%
                             =====        ===============         ======
</TABLE>

     The weighted average Minimum Loan Rate of the Mortgage Loans as of the
Cut-Off Date was approximately 2.878%.


                                      S-19
<PAGE>


                      GROSS MARGINS OF THE MORTGAGE LOANS

<TABLE>
<CAPTION>
                      NUMBER OF     PRINCIPAL BALANCE         % OF
                       MORTGAGE     OUTSTANDING AS OF     CUT-OFF DATE
 GROSS MARGIN (%)       LOANS        THE CUT-OFF DATE     POOL BALANCE
------------------   -----------   -------------------   -------------
<S>                  <C>             <C>                   <C>
2.750 ............          1        $    278,383.96           0.07%
2.875 ............      1,042         384,882,192.34          98.15
3.000 ............         15           4,267,489.00           1.09
3.125 ............          3           2,691,344.28           0.69
                        -----        ---------------         ------
   Total .........      1,061        $392,119,409.58         100.00%
                        =====        ===============         ======
</TABLE>

     The weighted average Gross Margin of the Mortgage Loans as of the Cut-Off
Date was approximately 2.878%.



                  NEXT ADJUSTMENT DATES OF THE MORTGAGE LOANS

<TABLE>
<CAPTION>
                          NUMBER OF     PRINCIPAL BALANCE         % OF
                           MORTGAGE     OUTSTANDING AS OF     CUT-OFF DATE
 NEXT ADJUSTMENT DATE       LOANS        THE CUT-OFF DATE     POOL BALANCE
----------------------   -----------   -------------------   -------------
<S>                      <C>             <C>                   <C>
11/01/04 .............          1        $    298,037.22           0.08%
01/01/05 .............          1             297,819.99           0.08
02/01/05 .............          1             341,812.54           0.09
03/01/05 .............          5           1,785,414.60           0.46
04/01/05 .............         10           3,445,473.48           0.88
05/01/05 .............         72          25,499,993.12           6.50
06/01/05 .............        231          82,788,878.08          21.11
07/01/05 .............        243          88,837,204.02          22.66
08/01/05 .............        224          83,760,674.74          21.36
09/01/05 .............        265         101,861,294.12          25.98
10/01/05 .............          8           3,202,807.67           0.82
                            -----        ---------------         ------
   Total .............      1,061        $392,119,409.58         100.00%
                            =====        ===============         ======
</TABLE>



                       FICO SCORES OF THE MORTGAGE LOANS

<TABLE>
<CAPTION>
                       NUMBER OF     PRINCIPAL BALANCE         % OF
                        MORTGAGE     OUTSTANDING AS OF     CUT-OFF DATE
     FICO SCORE          LOANS        THE CUT-OFF DATE     POOL BALANCE
-------------------   -----------   -------------------   -------------
<S>                   <C>             <C>                   <C>
574 - 600 .........          2        $    966,967.84           0.25%
601 - 650 .........         35          13,242,179.28           3.38
651 - 700 .........        181          66,975,270.99          17.08
701 - 750 .........        383         143,143,766.28          36.51
751 - 800 .........        449         163,863,753.92          41.79
801 - 818 .........         11           3,927,471.27           1.00
                         -----        ---------------         ------
   Total ..........      1,061        $392,119,409.58         100.00%
                         =====        ===============         ======
</TABLE>

     The weighted average FICO score of the Mortgage Loans as of the Cut-Off
Date was approximately 735.



                                      S-20
<PAGE>


THE INDEX

         The Index for the Mortgage Loans is the weekly average yield on United
States Treasury securities adjusted to a constant maturity of one year as
published by the Federal Reserve Board in Statistical Release H.15(519) and most
recently available as of a day specified in the related note ("ONE YEAR CMT").



























                                      S-21
<PAGE>


                                   THE SELLER

THE SELLER

         All of the Mortgage Loans have been originated by HSBC Mortgage
Corporation (USA) (the "SELLER") or purchased by the Seller in the secondary
market in the ordinary course of business. The Seller is a direct, wholly-owned
subsidiary of HSBC Bank USA.

         The Seller originates mortgage loans on single family properties,
multifamily properties and manufactured home properties nationwide directly with
consumers and through mortgage brokers; purchases mortgage loans from lenders
and mortgage bankers on a wholesale basis; assembles and sells pools of
mortgages to commercial banks and other financial institutions; and services the
mortgage portfolios it has placed with investors. The Seller's executive offices
and servicing facilities are located at 2929 Walden Avenue, Depew, New York
14043. In addition, the Seller underwrites mortgage loans from its offices in
Encino, California and Fairfax, Virginia.

UNDERWRITING STANDARDS

         The underwriting standards of the Seller generally allow a
Loan-to-Value Ratio at origination of (i) up to 95% for mortgage loans with
original principal balances of up to $300,000, (ii) up to 90% for mortgage loans
with original principal balances of up to $400,000, (iii) up to 85% for mortgage
loans with original principal balances of up to $500,000, (iv) up to 75% for
mortgage loans with original principal balances of up to $700,000, (v) up to 70%
for mortgage loans with original principal balances of up to $850,000, (vi) up
to 65% for mortgage loans with original principal balances of up to $1,000,000
and (vii) up to 60% for mortgage loans with original principal balances of up to
$1,500,000. Any mortgage loan with a Loan-to-Value Ratio at origination in
excess of 80% is required to have primary mortgage insurance. The Seller
utilizes automated underwriting systems that take into account the relevant
variables that predict the likelihood of default. These systems evaluate each
prospective borrower's credit profile, their monthly income available to meet
monthly obligations on the proposed mortgage loan, monthly housing expenses and
other financial obligations, their liquid financial assets and other
characteristics of the property, including the Loan-to-Value Ratio. For mortgage
loans that do not utilize these systems, the Seller generally applies qualifying
ratios of up to 33% and 38% respectively. Ratios are calculated using the
proposed borrower's stable monthly gross income. Occasionally, the Seller makes
loans where these ratios are exceeded, provided there exists sufficient
compensating factors.

         The nature of the information that a borrower is required to disclose,
and whether the information is verified, depends, in part, on the documentation
program used in the origination process.

         HSBC Mortgage Corporation (USA) offers the Full Documentation Program
or the Alternative Documentation Program.

         In general, under the Full Documentation Loan Program (the "FULL
DOCUMENTATION PROGRAM"), each prospective borrower is required to complete an
application which includes information with respect to the applicant's assets,
liabilities, income, credit history, employment history and other personal
information. Self-employed individuals are generally required to


                                      S-22
<PAGE>


submit their two most recent federal income tax returns. Under the Full
Documentation Program, the underwriter verifies the information contained in the
application relating to employment, income, assets or mortgages.

         The Alternative Documentation Program (the "ALTERNATIVE DOCUMENTATION
PROGRAM") permits a borrower to provide W-2 forms instead of tax returns
covering the most recent two years, permits bank statements in lieu of
verification of deposits and permits alternative methods of employment
verification.

         The Seller's methodology includes analyzing all relevant risk factors
inherent in the loan file. From time to time, exceptions to underwriting
policies may be made on a loan by loan basis, at the discretion of the Seller's
underwriter and with management approval. Exceptions are made only after careful
consideration of certain mitigating factors such as the borrower's liquidity,
capacity and repayment history, employment and collateral stability as well as
local market economic conditions.

         When each mortgage loan is originated, the borrower's credit report is
generally reviewed. Generally, each credit report provides a credit score for
the borrower. The credit score is based upon the credit evaluation methodology
developed by Fair, Isaac and Company ("FICO"), a consulting firm specializing in
creating evaluation predictive models through a high number of variables
components. FICO scores generally range from 350 to 850 and are available from
three major credit bureaus: Experian (formerly TRW), Equifax and Trans Union.
These scores estimate, on a relative basis, which loans are most likely to
default in the future. Lower scores imply higher default risk relative to a
higher score. FICO scores are empirically derived from historical credit bureau
data and represent a numerical weighting of a borrower's credit characteristics
over a two-year period. A FICO score is generated through the statistical
analysis of a number of credit-related characteristics or variables. Common
characteristics include number of credit lines (trade lines), payment history,
past delinquencies, severity of delinquencies, current levels of indebtedness,
types of credit and length of credit history. Attributes are specific values of
each characteristic. A scorecard (the model) is created with weights or points
assigned to each attribute. An individual loan applicant's credit score is
derived by adding together the attribute weights for the applicant. With respect
to the Mortgage Loans, all of the related borrowers have FICO scores and their
weighted average FICO score was 735 as of the Cut-Off Date.

         In respect of Mortgage Loans purchased by the Seller in the secondary
market, each entity from which the Seller purchased the Mortgage Loans has
represented and warranted that each of the Mortgage Loans sold by such entity
was underwritten in accordance with standards utilized by it or the applicable
originator in originating mortgage loans generally comparable to such Mortgage
Loans during the period of origination. Underwriting criteria in accordance with
which Mortgage Loans were originated are described in this prospectus supplement
under "--Underwriting Standards".


                                      S-23
<PAGE>


                           SERVICING OF MORTGAGE LOANS

GENERAL

         Under the Pooling and Servicing Agreement, HSBC Mortgage Corporation
(USA) will act as servicer (in such capacity, the "SERVICER").

         The Servicer will be responsible for servicing the Mortgage Loans under
the terms of the Pooling and Servicing Agreement, employing that degree of skill
and care which it employs in servicing mortgage loans comparable to those
Mortgage Loans serviced by it for itself or others.

         The Servicer will make reasonable efforts to collect or cause to be
collected all payments called for under the terms and provisions of the Mortgage
Loans and, to the extent those procedures are consistent with the Pooling and
Servicing Agreement, will follow collection procedures as are followed for
mortgage loans comparable to the Mortgage Loans in the trust in the local areas
where each mortgaged property is located.

         Under the Pooling and Servicing Agreement, the Servicer may contract
with subservicers to perform some or all of its servicing duties. Regardless of
its subservicing arrangement, the Servicer will remain liable for its servicing
duties and obligations under the Pooling and Servicing Agreement as if it alone
were servicing the Mortgage Loans.

SERVICER'S DELINQUENCY AND FORECLOSURE EXPERIENCE

         The information set forth in this section has been provided by the
Servicer and none of the Seller, the Depositor or the Underwriter makes any
representations or warranties as to the accuracy or completeness of such
information.

         Delinquency and Foreclosure Experience. The following table sets forth
the delinquency and foreclosure experience of the total portfolio of residential
mortgage loans serviced by the Servicer, as of the dates indicated. The
Servicer's total portfolio of mortgage loans serviced by it may differ
significantly from the Mortgage Loans in the Trust in terms of interest rates,
principal balances, geographic distribution, Loan-to-Value Ratios and other
possibly relevant characteristics. There can be no assurance, and no
representation is made, that the delinquency and foreclosure experience with
respect to the Mortgage Loans will be similar to that reflected in the table
below, nor is any representation made as to the rate at which losses may be
experienced on liquidation of defaulted Mortgage Loans. The actual loss and
delinquency experience on the Mortgage Loans will depend upon, among other
things, the value of the real estate securing those Mortgage Loans and the
ability of borrowers to make required payments.





                                      S-24
<PAGE>


                   DELINQUENCY AND FORECLOSURE EXPERIENCE (1)

<TABLE>
<CAPTION>
                                                                  AS OF DECEMBER 31
                                     ----------------------------------------------------------------------------
                                                     1997                                   1998
                                     -------------------------------------- -------------------------------------
                                       NO. OF LOANS     PRINCIPAL BALANCE     NO. OF LOANS     PRINCIPAL BALANCE
                                     ------------------ ------------------- ------------------ ------------------
<S>                                        <C>             <C>                   <C>             <C>
Total Portfolio                            231,649         $20,357,891           219,854         $20,179,068
Period of Delinquency
  30-59 days                                 6,961             490,973             6,222             430,932
  60-89 days                                 1,703             119,146             1,163              78,549
  90 days or more                            1,547             110,226             1,219              83,871
                                     ------------------ ------------------- ------------------ ------------------
Total Delinquencies (2)                     10,211            $720,345             8,604            $593,352
                                     ================== =================== ================== ==================
Foreclosures/ Bankruptcies/
Real Estate Owned                            3,259            $241,116             3,216            $224,913
</TABLE>

<TABLE>
<CAPTION>
                                               AS OF DECEMBER 31                     AS OF SEPTEMBER 30
                                     -------------------------------------- -------------------------------------
                                                     1999                                 2000 (3)
                                     ------------------ ------------------- ------------------ ------------------
                                       NO. OF LOANS     PRINCIPAL BALANCE     NO. OF LOANS     PRINCIPAL BALANCE
                                     ------------------ ------------------- ------------------ ------------------
<S>                                        <C>             <C>                   <C>             <C>
Total Portfolio                            218,341         $21,320,952           296,358         $32,481,193
                                     ------------------ ------------------- ------------------ ------------------
Period of Delinquency
  30-59 days                                 5,054             352,875             7,177             607,150
  60-89 days                                   919              60,992             1,259             100,164
  90 days or more                            1,090              72,803             1,173              87,166
                                     ------------------ ------------------- ------------------ ------------------
Total Delinquencies (2)                      7,063            $486,670             9,609            $794,480
                                     ================== =================== ================== ==================
Foreclosures/ Bankruptcies/
Real Estate Owned                            2,172            $126,274             1,843            $124,993

</TABLE>


--------------
(1)  All dollar amounts in thousands.
(2)  Bankruptcies are included in total portfolio or delinquency category.
     Foreclosures and REOs are segregated, and are not included in deliquency
     categories.
(3)  The information for September 30, 2000 includes mortgage loans originated
     by Republic New York Corporation.



                                      S-25
<PAGE>


         The following table presents, for the Servicer's portfolio of mortgage
loans, the net losses on the disposition of properties acquired in foreclosure
or by deed-in-lieu of foreclosure during the periods indicated.


                            YEAR ENDED DECEMBER 31           NINE MONTHS ENDED
                  ------------------------------------------ ------------------
                       1997          1998          1999      SEPTEMBER 30, 2000
                  -------------- ------------- ------------- ------------------
Net Losses (1)        $6,131        $5,876        $5,878          $1,180


--------------
(1)  All dollar amounts in thousands.


         The lower loss level for the period ending September 30, 2000 is
attributable to a variety of factors, including seasonal fluctuations in loss
rates and a shift in the composition of the total portfolio to include a greater
proportion of recent originations and a lower proportion of nonperforming loans.
While the above foreclosure and delinquency experience is typical of the
Servicer's recent experience, there can be no assurance that experience on the
Mortgage Loans will be similar. Accordingly, the information should not be
considered to reflect the credit quality of the Mortgage Loans, or as a basis
for assessing the likelihood, amount or severity of losses on the Mortgage
Loans. The statistical data in the table is based on all of the loans in the
Servicer's servicing portfolio. The Mortgage Loans may be more recently
originated than, and are likely to have other characteristics which distinguish
them from, the majority of the loans in the Servicer's servicing portfolio.


                       THE POOLING AND SERVICING AGREEMENT

GENERAL

         The Certificates will be issued pursuant to the Pooling and Servicing
Agreement, dated as of November 1, 2000 (the "POOLING AND SERVICING AGREEMENT"),
by and among the Depositor, the Seller, HSBC Mortgage Corporation (USA) in its
capacity as Servicer, and the Trustee. The Trust created under the Pooling and
Servicing Agreement will consist of (i) all of the Depositor's right, title and
interest in the Mortgage Loans, including the related mortgage notes, mortgages
and other related documents, (ii) all payments on or collections in respect of
the Mortgage Loans due after the Cut-Off Date, together with any proceeds
thereof, (iii) any Mortgaged Properties acquired on behalf of Certificateholders
by foreclosure or by deed in lieu of foreclosure, and any revenues received
thereon, (iv) the rights of the Trustee under all insurance policies required to
be maintained pursuant to the Pooling and Servicing Agreement and (v) the rights
of the Trustee to enforce the representations and warranties made by the Seller
with respect to the Mortgage Loans pursuant to the Mortgage Loan Purchase
Agreement.

ASSIGNMENT OF THE MORTGAGE LOANS

         On the Closing Date, the Depositor will transfer to the Trust all of
its right, title and interest in and to each of the Mortgage Loans, together
with the related mortgage notes, mortgages and other related documents
(collectively, the "RELATED DOCUMENTS"), including all scheduled payments with
respect to each Mortgage Loan due after the Cut-Off Date. The Trustee,
concurrently with the transfer, will deliver the Certificates to the Depositor.
Each Mortgage Loan transferred to the Trust will be identified on a schedule
prepared by the Seller


                                      S-26
<PAGE>


(the "MORTGAGE LOAN SCHEDULE") and delivered to the Trustee pursuant to the
Pooling and Servicing Agreement. The Mortgage Loan Schedule will include
information such as the Principal Balance of each Mortgage Loan as of the
Cut-Off Date, its Loan Rate and certain additional information.

         The Pooling and Servicing Agreement will require that, prior to the
Closing Date, the Seller deliver or cause to be delivered to the Trustee (or a
custodian, as the Trustee's agent for such purpose) the mortgage notes
evidencing the Mortgage Loans endorsed to the Trustee on behalf of the
Certificateholders, together with the other Related Documents. In lieu of
delivery of an original Mortgage, if an original is not available or lost, the
Seller may deliver or cause to be delivered a true and complete copy of the
original.

         Within 45 days after the receipt by the Trustee or its agent of the
Related Documents, the Trustee will review the Mortgage Loans and the Related
Documents pursuant to the Pooling and Servicing Agreement. If any Mortgage Loan
or Related Document is found to be defective in any material respect and the
defect is not cured within 90 days following notification to the Seller by the
Trustee (or a custodian, as the Trustee's agent for such purpose), the Seller
will be obligated to either

o        substitute for the defective Mortgage Loan an Eligible Substitute
         Mortgage Loan (provided that a substitution is permitted only within
         two years of the Closing Date and may not be made unless an opinion of
         counsel is provided to the effect that the substitution will not
         disqualify the Trust as a REMIC or result in a prohibited transaction
         tax under the Code), or

o        repurchase the defective Mortgage Loan at a price (the "PURCHASE
         PRICE") equal to its outstanding Principal Balance as of the date of
         purchase, plus all accrued and unpaid interest thereon, computed at the
         Loan Rate through the end of the calendar month in which the purchase
         is effected, plus the amount of any unreimbursed Advances and Servicing
         Advances made by the Servicer.

         The Purchase Price will be deposited in the Collection Account on or
prior to the next Determination Date after such obligation arises. The
obligation of the Seller to repurchase or substitute for a defective Mortgage
Loan is the sole remedy regarding any defect in that Mortgage Loan and the
Related Documents available to the Trustee or the Certificateholders.

         In connection with the substitution of an Eligible Substitute Mortgage
Loan, the Seller will be required to deposit in the related Collection Account,
on or prior to the next Determination Date after such obligation arises, an
amount (the "SUBSTITUTION ADJUSTMENT") equal to the excess of the Principal
Balance of the related defective Mortgage Loan over the Principal Balance of the
Eligible Substitute Mortgage Loan.

         An "ELIGIBLE SUBSTITUTE MORTGAGE LOAN" is a Mortgage Loan substituted
by the Seller for a defective Mortgage Loan which must, on the date of the
substitution:

o        have an outstanding Principal Balance (or in the case of a substitution
         of more than one Mortgage Loan for a single defective Mortgage Loan, an
         aggregate Principal Balance), not in excess of, and not more than 5%
         less than, the Principal Balance of the defective


                                      S-27
<PAGE>

         Mortgage Loan as of the Due Date in the calendar month during which
         the substitution occurs;

o        have a Maximum Loan Rate, a Minimum Loan Rate and a Gross Margin not
         less than those of the defective Mortgage Loan and have the same Index
         as the defective Mortgage Loan;

o        have the same Due Date as the defective Mortgage Loan;

o        have a remaining term to maturity not more than one year earlier and
         not greater than the remaining term to maturity of the defective
         Mortgage Loan;

o        comply with each representation and warranty as to the Mortgage Loans
         set forth in the Pooling and Servicing Agreement (deemed to be made as
         of the date of substitution);

o        have been underwritten or re-underwritten by the Seller in accordance
         with the same underwriting criteria and guidelines as the Mortgage Loan
         being replaced;

o        be of the same or better credit quality as the Mortgage Loan being
         replaced;

o        be current as of the date of substitution; and

o        satisfy certain other conditions specified in the Pooling and Servicing
         Agreement.

         The Seller will make certain representations and warranties as to the
accuracy in all material respects of certain information furnished by it to the
Trustee with respect to each Mortgage Loan (e.g., Principal Balance as of the
Cut-Off Date and the Loan Rate). In addition, the Seller will represent and
warrant, on the Closing Date, that, among other things, (i) at the time of
transfer, the Seller has transferred or assigned all of its right, title and
interest in each Mortgage Loan and the Related Documents, free of any lien, and
(ii) each Mortgage Loan complied, at the time of origination, in all material
respects with applicable state and federal laws. Upon discovery of a breach of
any such representation and warranty which materially and adversely affects the
interests of the Certificateholders in the related Mortgage Loan and Related
Documents, the Seller will have a period of 90 days after discovery or notice of
the breach to effect a cure. If the breach cannot be cured within the 90-day
period, the Seller will be obligated to (i) substitute for the defective
Mortgage Loan an Eligible Substitute Mortgage Loan or (ii) repurchase the
defective Mortgage Loan from the Trust. The same procedure and limitations that
are set forth above for the substitution or repurchase of defective Mortgage
Loans as a result of deficient documentation will apply to the substitution or
purchase of a defective Mortgage Loan as a result of a breach of a
representation or warranty in the Pooling and Servicing Agreement that
materially and adversely affects the interests of the Certificateholders.

PAYMENTS ON MORTGAGE LOANS; DEPOSITS TO COLLECTION ACCOUNTS AND
DISTRIBUTION ACCOUNT

         The Servicer will establish and maintain or cause to be maintained a
separate trust account (the "COLLECTION ACCOUNT") for the benefit of the holders
of the Certificates. The Collection Account will be an Eligible Account (as
defined below). Upon receipt by the Servicer of amounts in respect of the
Mortgage Loans (excluding amounts representing the Servicing Fee, reimbursement
for Advances and Servicing Advances and insurance proceeds to be applied to


                                      S-28
<PAGE>

the restoration or repair of a Mortgaged Property or similar items), the
Servicer will deposit these amounts in the Collection Account. Amounts deposited
in the Collection Account may be invested in Permitted Investments (as set forth
in the Pooling and Servicing Agreement) maturing no later than one business day
prior to the date on which the amount on deposit is required to be deposited in
the Distribution Account.

         The Trustee will establish and maintain an account (the "DISTRIBUTION
ACCOUNT") into which will be deposited amounts withdrawn from the Collection
Account for distribution to Certificateholders on a Distribution Date. The
Distribution Account will be an Eligible Account. Amounts on deposit in the
Distribution Account may, at the option of the Trustee and for its own account,
be invested in Permitted Investments maturing on or before the business day
prior to the related Distribution Date unless such Permitted Investments are
invested in investments managed or advised by the Trustee or one of its
affiliates, in which case the Permitted Investments may mature on the related
Distribution Date.

         The "SERVICER REMITTANCE DATE" with respect to any Distribution Date is
the day prior to such Distribution Date or, if such day is not a business day,
the first business day prior to such day. The first Servicer Remittance Date
will be December 14, 2000.

         An "ELIGIBLE ACCOUNT" is a segregated account that is

o        an account or accounts maintained with a federal or state chartered
         depository institution or trust company the short-term unsecured debt
         obligations of which (or, in the case of a depository institution or
         trust company that is the principal subsidiary of a holding company,
         the short-term unsecured debt obligations of that holding company) are
         rated A-1 or its equivalent by each of S&P and Moody's, and F-1 by
         Fitch, at the time any amounts are held on deposit therein,

o        an account or accounts the deposits in which are fully insured by the
         Federal Deposit Insurance Corporation (to the limits established by
         it), the uninsured deposits in which account are otherwise secured such
         that, as evidenced by an opinion of counsel delivered to the Trustee
         and to the Rating Agencies, the Certificateholders will have a claim
         with respect to the funds in such account or a perfected first priority
         security interest against such collateral (which shall be limited to
         Permitted Investments) securing such funds that is superior to claims
         of any other depositors or creditors of the depository institution with
         which such account is maintained,

o        a trust account or accounts maintained with the trust department of a
         federal or state chartered depository institution, national banking
         association or trust company acting in its fiduciary capacity or

o        otherwise acceptable to the Rating Agencies without reduction or
         withdrawal of its then current ratings of the Offered Certificates as
         evidenced by a letter from each Rating Agency to the Trustee.

         Permitted Investments are specified in the Pooling and Servicing
Agreement and are limited to investments which meet the criteria of each Rating
Agency from time to time as being consistent with its then current ratings of
the Offered Certificates.


                                      S-29
<PAGE>


ADVANCES

         Subject to the following limitations, the Servicer will be obligated to
advance or cause to be advanced not later than the Servicer Remittance Date its
own funds, or funds in the Collection Account that are not included in the
Available Funds for the related Distribution Date, in an amount equal to the
aggregate of all payments of principal and interest, net of the related
Servicing Fee, that were due during the related Due Period on Mortgage Loans and
that were delinquent on the related Determination Date, plus certain amounts
representing assumed payments not covered by any current net income on the
related Mortgaged Properties acquired by foreclosure or deed in lieu of
foreclosure (any such advance, an "ADVANCE").

         The purpose of making Advances is to maintain a regular cash flow to
the Certificateholders, rather than to guarantee or insure against losses. The
Servicer is obligated to make Advances on each Mortgage Loan unless, in the
Servicer's reasonable judgment, such Advances are deemed to be non-recoverable
from related late collections, insurance proceeds or liquidation proceeds. The
Servicer will not be required, however, to make any Advances with respect to
reductions in the amount of the monthly payments on the Mortgage Loans due to
bankruptcy proceedings or the application of the Soldiers' and Sailors' Civil
Relief Act of 1940 (the "RELIEF ACT"). Subject to the recoverability standard
above, the Servicer's obligation to make Advances as to any Mortgage Loan will
continue until the Mortgage Loan is paid in full or until the recovery of all
related liquidation proceeds.

         Any Advance made by the Servicer will be reimbursable to the Servicer
from late collections, insurance proceeds and liquidation proceeds from the
Mortgage Loan as to which such unreimbursed Advance was made. In addition, any
Advances previously made in respect of any Mortgage Loan that are deemed by the
Servicer to be non-recoverable from related late collections, insurance proceeds
or liquidation proceeds may be reimbursed to the Servicer out of any funds in
the Collection Account prior to payments on the Certificates. In the event that
the Servicer fails in its obligation to make an Advance, the Trustee, in its
capacity as successor Servicer, will be obligated to make the Advance to the
extent required in the Pooling and Servicing Agreement.

         In the course of performing its servicing obligations, the Servicer
will pay all reasonable and customary "out-of-pocket" costs and expenses
(including reasonable attorneys' fees and disbursements) incurred in the
performance of its servicing obligations, including, but not limited to, the
cost of (i) the preservation, restoration, inspection and protection of the
Mortgaged Properties, (ii) any enforcement or judicial proceedings, including
foreclosures, and (iii) the management and liquidation of Mortgaged Properties
acquired in satisfaction of the related Mortgages. Each such expenditure will
constitute a "SERVICING ADVANCE". The Servicer is obligated to pay certain
insurance premiums and certain ongoing expenses associated with the Mortgage
Loans and incurred by the Servicer in connection with its responsibilities under
the Pooling and Servicing Agreement, and is entitled to reimbursement for them
as provided in the Pooling and Servicing Agreement.

         The Servicer's right to reimbursement for Servicing Advances is limited
to late collections on the related Mortgage Loan, including liquidation
proceeds, released Mortgaged Property proceeds, insurance proceeds and such
other amounts as may be collected by the Servicer from the related borrower (the
"MORTGAGOR") or otherwise relating to the Mortgage Loan in respect of which the
unreimbursed amounts are owed, unless the amounts are deemed to


                                      S-30
<PAGE>


be non-recoverable by the Servicer, in which event the Servicer will be
reimbursed from general funds in the Collection Account.

SERVICING FEES AND OTHER COMPENSATION AND PAYMENT OF EXPENSES

         The Expense Fees are payable out of the interest payments on each
Mortgage Loan. The Expense Fees will vary from Mortgage Loan to Mortgage Loan.

         The Expense Fees accrue at a per annum rate (each, an "EXPENSE FEE
RATE") calculated on the Principal Balance of the related Mortgage Loan. The
"EXPENSE FEES" consist of (i) the servicing compensation (each a "SERVICING
FEE") to be paid to the Servicer in respect of its servicing activities for the
Certificates at the rate of 0.60% per annum (the "SERVICING FEE RATE")
calculated on the Principal Balance of each Mortgage Loan and (ii) compensation
payable to the Trustee at the rate of 0.005% per annum (the "TRUSTEE FEE RATE")
calculated on the Principal Balance of each Mortgage Loan. The amount of the
Servicer's Servicing Fee is subject to adjustment with respect to prepaid
Mortgage Loans, as described below under "--Adjustment to Servicing Fee in
Connection with Prepaid Mortgage Loans". As additional servicing compensation,
the Servicer is entitled to retain all Servicer-related fees, including
assumption fees, modification fees, extension fees, late payment charges and
other ancillary fees, to the extent collected from Mortgagors, together with any
interest or other income earned on funds held in the Collection Account and any
escrow accounts.

         The "DETERMINATION DATE" with respect to any Distribution Date will be
the fifth business day prior to such Distribution Date.

ADJUSTMENTS TO SERVICING FEES IN CONNECTION WITH PREPAID MORTGAGE LOANS

         When a Mortgagor makes a full or partial prepayment of a Mortgage Loan
between Due Dates, the Mortgagor is required to pay interest on the amount
prepaid only to the date of prepayment. Principal prepayments by Mortgagors
received by the Servicer in a calendar month will be distributed to
Certificateholders on the Distribution Date in the month following the month of
receipt and, accordingly, a shortfall in the amount of interest to be
distributed to Certificateholders with respect to the prepaid Mortgage Loans
will result (a "PREPAYMENT INTEREST SHORTFALL"). Pursuant to the Pooling and
Servicing Agreement, the related Servicing Fee payable to the Servicer for any
month will be reduced by an amount ("COMPENSATING INTEREST") equal to the lesser
of (i) the Prepayment Interest Shortfall for such month and (ii) an amount equal
to 0.375% per annum on the Principal Balance of the Mortgage Loans (the
"COMPENSATING INTEREST CAP"), so as to pass through to Certificateholders the
full amount of interest to which they otherwise would be entitled, in the
absence of such a prepayment, for each prepaid Mortgage Loan on the related
Distribution Date. If the Prepayment Interest Shortfall exceeds the Compensating
Interest Cap for the related Distribution Date, the amount of interest available
to be distributed to Certificateholders will be reduced by the amount of the
excess. See "Description of the Certificates--Interest."

THE TRUSTEE

         Wells Fargo Bank Minnesota, N.A., a national banking association, will
act as Trustee (the "TRUSTEE") under the Pooling and Servicing Agreement. For
the purpose of meeting the legal requirements of some jurisdictions, the
Servicer and the Trustee, acting jointly (or in some


                                      S-31
<PAGE>

instances, the Trustee, acting alone), will have the power to appoint
co-trustees or separate trustees, if necessary, to comply with the fiduciary
requirements imposed by any jurisdiction in which a Mortgaged Property is
located. In the event of an appointment, all rights, powers, duties and
obligations conferred or imposed upon the Trustee by the Agreement will be
conferred or imposed upon the Trustee and the co-trustee or separate trustee
jointly, or, in any jurisdiction where the Trustee is incompetent or unqualified
to perform some acts, singly upon the applicable co-trustee or separate trustee,
who shall exercise and perform those rights, powers, duties and obligations
solely at the direction of the Trustee.

         The Trustee may resign at any time, in which event the Depositor will
be obligated to appoint a successor trustee. The Depositor may also remove the
Trustee if the Trustee ceases to be eligible to serve, becomes legally unable to
act, is adjudged insolvent or is placed in receivership or similar proceedings.
In those circumstances, the Depositor will be obligated to appoint a successor
trustee. However, any resignation or removal of the Trustee and appointment of a
successor trustee will not become effective until acceptance of the appointment
by the successor trustee.

         The Trustee's Corporate Trust Office is located, for Certificate
transfer purposes, at Wells Fargo Center, Sixth Street and Marquette Avenue,
Minneapolis, Minnesota 55479-0113, Attn: Corporate Trust Services -HSBC Mortgage
Loan Trust 2000-HSBC1 and, for all other purposes, at 11000 Broken Land Parkway,
Columbia, Maryland 21044-3562, Attention: Corporate Trust Services - HSBC
Mortgage Loan Trust 2000-HSBC1. Offered Certificates may be surrendered at the
Corporate Trust Office or at any other address as the Trustee may designate from
time to time. The Seller, the Depositor, the Servicer and their respective
affiliates may have other banking relationships with the Trustee and its
affiliates in the ordinary course of their business.

VOTING RIGHTS

         With respect to any date of determination, 1% of the voting rights will
be allocated to the Class X Certificates, and the remainder of the voting rights
will be allocated to each of the other Classes of Certificates, pro rata, based
on a fraction, expressed as a percentage, the numerator of which is the
Certificate Principal Balance of such Class and the denominator of which is the
aggregate of the Certificate Principal Balances of all Classes then outstanding;
provided, however, that the Class A-R Certificate and the Subordinate
Certificates will not be entitled to any voting rights for so long as any Class
A-1, Class A-2 or Class A-3 Certificates remain outstanding; and, provided
further, that when none of the Regular Certificates is outstanding, 100% of the
voting rights will be allocated to the Holder of the Class A-R Certificate. The
voting rights allocated to a Class of Certificates will be allocated among all
Holders of such Class, pro rata, based on a fraction the numerator of which is
the Certificate Principal Balance of each Certificate of such Class and the
denominator of which is the Certificate Principal Balance of such Class;
provided, however, that any Certificate registered in the name of the Seller,
the Servicer, the Depositor or the Trustee or any of their respective affiliates
will not be included in the calculation of Voting Rights.

AMENDMENT

         The Pooling and Servicing Agreement may be amended by the Depositor,
the Servicer, the Seller and the Trustee, without the consent of the holders of
the Certificates, for any of the


                                      S-32
<PAGE>


purposes set forth under "The Pooling and Servicing Agreement--Amendment" in the
prospectus. A proposed amendment shall be deemed not to adversely affect in any
material respect the interests of any Certificateholder if, among other things,
the Rating Agencies deliver written confirmation that such amendment will not
result in the reduction or withdrawal of their ratings of any outstanding Class
of Offered Certificates. In addition, the Pooling and Servicing Agreement may be
amended by the Depositor, the Servicer, the Seller and the Trustee, with the
consent of holders of a majority in interest of each Class of Offered
Certificates affected thereby, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Pooling and
Servicing Agreement or of modifying in any manner the rights of the holders of
any Class of Offered Certificates; provided, however, that no such amendment may

o        reduce in any manner the amount of, or delay the timing of,
         distributions required to be made on any Class of Offered Certificates
         without the consent of the holders of all the affected Certificates;

o        adversely affect in any material respect the interests of the holders
         of any Class of Offered Certificates in a manner other than as
         described in clause (i) above, without the consent of the holders of
         that Class evidencing percentage interests aggregating at least 66%; or

o        reduce the aforesaid percentages of the aggregate outstanding principal
         amounts of the Offered Certificates, the holders of which are required
         to consent to any such amendment, without the consent of the holders of
         all those Certificates.

TERMINATION

         The Servicer will have the right to repurchase all of the Mortgage
Loans and REO Properties, and thereby effect the early retirement of the
Certificates, on any Distribution Date on which the Pool Balance is equal to or
less than 10% of the Cut-Off Date Pool Balance (the "OPTIONAL TERMINATION
DATE"). In the event that the option is exercised, the repurchase will be made
at a price (the "TERMINATION PRICE") generally equal to par plus accrued
interest for each Mortgage Loan at the related Loan Rate up to but not including
the first day of the month in which the Termination Price is paid plus the
amount of any unreimbursed Advances and Servicing Advances made by the Servicer,
if any. Proceeds from the repurchase will be included in Available Funds and
will be distributed to the holders of the Certificates in accordance with the
Pooling and Servicing Agreement. Any repurchase of the Mortgage Loans and REO
Properties in accordance with this paragraph will result in the early retirement
of any outstanding Certificates.

OPTIONAL PURCHASE OF DEFAULTED LOANS

         As to any Mortgage Loan which is Delinquent in payment by 90 days or
more, the Servicer may, at its option, purchase that Mortgage Loan from the
Trust at its Purchase Price.

PUT OPTION AND OPTIONAL CALL

         During the five business day period ending at the close of business on
the Distribution Date in May 2004, (the "PUT OPTION PERIOD"), each holder of a
Class A-1, Class A-2 or Class


                                      S-33
<PAGE>


A-3 Certificate will have the option to require HSBC Bank USA (the "STANDBY
PURCHASER") to purchase all or part of such Certificateholder's Certificates
(the "PUT OPTION"). If the Put Option is exercised with respect to more than 90%
of the aggregate outstanding Certificate Principal Balance of the Class A-1,
Class A-2 and Class A-3 Certificates, the Standby Purchaser will have the option
to purchase on the same terms, as described below, all of the outstanding Class
A-1, Class A-2 and Class A-3 Certificates, including Class A-1, Class A-2 and
Class A-3 Certificates with respect to which the applicable Certificateholder
has not exercised the Put Option (the "OPTIONAL CALL"). The purchase price for
any Class A-1, Class A-2 or Class A-3 Certificate for which the related
Certificateholder has exercised the Put Option or the Standby Purchaser has
exercised the Optional Call will be the sum of (A) the outstanding Certificate
Principal Balance of such Certificate on the Distribution Date in July 2004 (the
"PUT AND CALL Date"), after giving effect to distributions otherwise made on
such date, plus (B) accrued and unpaid interest on the outstanding Certificate
Principal Balance of such Certificate immediately prior to the Put and Call Date
at the applicable Pass-Through Rate.

         Certificateholders will be required to give written notice to the
Trustee of their intention to exercise the Put Option during the Put Option
Period. Notice of exercise of the Put Option delivered to the Servicer by a
Certificateholder will be irrevocable. Any exercise by a Certificateholder of
its Put Option shall be void and without effect unless, at all times during the
period beginning on the date of such exercise to and including the Put and Call
Date, such Certificateholder is the beneficial owner of the related Class A-1,
Class A-2 or Class A-3 Certificate, as applicable.

         Receipt by the Trustee of notices from Certificateholders holding more
than 90% of the aggregate outstanding Certificate Principal Balance of the Class
A-1, Class A-2 and Class A-3 Certificates will permit the Standby Purchaser to
exercise the Optional Call. If the Standby Purchaser intends to exercise the
Optional Call, the Standby Purchaser will cause the Trustee to provide notice to
the Certificateholders of the Class A-1, Class A-2 and Class A-3 Certificates at
least ten days prior to the Distribution Date in July 2004.

HSBC BANK USA

         HSBC Bank USA is the principal operating subsidiary of HSBC USA, Inc.,
a New York-based U.S. bank holding company, which is a principal operating
subsidiary of HSBC Holdings plc ("HSBC HOLDINGS"). HSBC Holdings, the ultimate
parent company of The Hongkong and Shanghai Banking Corporation Limited and HSBC
Bank plc, is an international banking and financial services organization with
major commercial and investment banking franchises operating through long
established businesses in Asia, Europe, the Americas, the Middle East and
Africa. The principal executive offices of HSBC Holdings are located in London.

         HSBC Bank USA is supervised and routinely examined by the State of New
York Banking Department and the Federal Reserve.

         HSBC Bank USA's domestic operations encompass the entire State of New
York as well as two branches in Pennsylvania and seven branches in Florida.
Selected commercial and consumer banking products are offered on a national
basis. HSBC Bank USA is engaged in a general commercial banking business, which
offers a full range of banking products and services to individuals, including
high net worth individuals, corporations, institutions and governments. Through
its affiliation with the HSBC Group, HSBC Bank USA offers its customers access
to


                                      S-34
<PAGE>


global markets and services. Resulting from the Merger (as defined below), HSBC
Bank USA currently maintains foreign branch offices, subsidiaries or
representative offices that span the Caribbean, Canada, Europe, Asia and Latin
America. In addition, HSBC Bank USA owns a 49% investment in HSBC Republic
Holdings (Luxembourg) S.A., formerly Safra Republic Holdings S.A.

         HSBC Holdings completed the purchase of Republic New York Corporation
("REPUBLIC"), a bank holding company with consolidated total assets of $46.9
billion, on December 31, 1999. Also on December 31, 1999, following the
purchase, HSBC USA, Inc. merged with and into Republic. At December 31, 1999,
the combined company had assets of $90.2 billion dollars and employed
approximately 15,100 full- and part-time employees.

         Republic engaged in five principal lines of business: private banking;
consumer financial services; lending; treasury; and markets. Its principal
subsidiary, Republic Bank, had 83 branches in the greater New York metropolitan
area, where it was the third-largest deposit-taking institution, and seven
branches in Florida, as well as 36 branches, representative offices or
wholly-owned subsidiaries in Latin America, the Caribbean, Europe and Asia.
Republic was a world leader in banknotes and bullion trading and provided the
fifth largest factoring service in the United States.

         HSBC Bank USA merged with and into Republic National Bank of New York
on December 31, 1999 (the "Merger"). After the Merger, on a combined basis, HSBC
Bank USA had assets of $79.6 billion and deposits of $58.6 billion at December
31, 1999, making it the third largest depository institution in New York State.
Integration of the businesses, including systems conversion, is proceeding
smoothly and is expected to be substantially completed by the end of the year.

         At December 31, 1999, HSBC Bank USA's expanded customer base included
more than two million personal and 120,000 commercial and institutional
customers. As a result of the Merger, HSBC Bank USA is now a world leader in
banknotes and bullion trading and provides the fifth largest factoring service
in the United States.

         A more complete description of the Merger, including pro forma
financial information reflecting amortization of necessary acquisition
adjustments as if the combination had taken place in the beginning of 1999 and
other financial information relating thereto, is set out in HSBC USA, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1999.

         HSBC USA, Inc. is subject to the informational requirements of the
Exchange Act and, in accordance with the Exchange Act, files reports, proxy
statements and other information with the SEC. Such reports, proxy statements
and other information can be inspected and copied at the public reference
facilities of the SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the SEC's regional offices at Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center, Suite
1300, New York, New York 10048. Copies of such material can be obtained form the
Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates. Such material is also available on the SEC's internet
site on the World Wide Web, located at http://www.sec.gov. In addition, such
reports, proxy statements and other information concerning HSBC USA, Inc. can be
inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street,
New York, New York 10005.


                                      S-35
<PAGE>


EVENTS OF SERVICING TERMINATION

         An "EVENT OF SERVICING TERMINATION" will consist of, among other
things:

o        any failure by the Servicer to make an Advance and any other failure by
         the Servicer to deposit in the Collection Account or the Distribution
         Account the required amounts or to remit to the Trustee any payment
         which continues unremedied for one business day following written
         notice to the Servicer;

o        any failure by the Servicer to make a Servicing Advance or 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 after the first date on which (x) the Servicer
         has actual knowledge of the failure or (y) written notice of the
         failure is given to the Servicer; or

o        insolvency, readjustment of debt, marshalling of assets and liabilities
         or similar proceedings, and certain actions by or on behalf of the
         Servicer indicating its insolvency or inability to pay its obligations.

RESIGNATION OF SERVICER

         The Pooling and Servicing Agreement prohibits the resignation of the
Servicer thereunder, except upon (a) appointment of a successor Servicer and
receipt by the Trustee of a letter from each Rating Agency that such a
resignation and appointment will not result in a downgrading of the rating of
any of the Certificates or (b) a determination that its duties thereunder are no
longer permitted under applicable law. No such resignation will be effective
until a successor Servicer has assumed such servicing obligations in the manner
provided in the Pooling and Servicing Agreement.

RIGHTS UPON EVENT OF SERVICING TERMINATION

         So long as an Event of Servicing Termination under the Pooling and
Servicing Agreement remains unremedied, the Trustee or the holders of Offered
Certificates evidencing not less than 51% of the Voting Rights may terminate all
of the rights and obligations of the Servicer in its capacity as servicer of the
Mortgage Loans, as provided in the Pooling and Servicing Agreement. Upon such a
termination, the Trustee will succeed or appoint a successor to succeed to all
of the responsibilities and duties of the Servicer under the Pooling and
Servicing Agreement, including the obligation to make Advances. There generally
will be a period of transition, not to exceed 90 days, for the transfer of
actual servicing of the Mortgage Loans to the Trustee or any successor Servicer
appointed by the Trustee. In connection with the termination of the Servicer,
the Trustee will be entitled to be reimbursed by the Trust Fund (in the event
that the Servicer does not timely reimburse the Trustee) for all of the
reasonable costs associated with the termination of the Servicer, appointment of
any successor Servicer and the transfer of servicing to a successor Servicer,
including without limitation all reasonable costs or expenses associated with
the completion, correction or manipulation of servicing data as may be required
to correct any errors or insufficiencies in the servicing data or otherwise to
enable the Trustee or the successor Servicer to service the Mortgage Loans
properly and effectively. No assurance can be given that termination of the
rights and obligations of the Servicer under the Pooling and


                                      S-36
<PAGE>

Servicing Agreement would not adversely affect the servicing of the Mortgage
Loans, including the loss and delinquency experience of the Mortgage Loans.

         No holder of an Offered Certificate, solely by virtue of its status as
a holder of an Offered Certificate, will have any right under the Pooling and
Servicing Agreement to institute any proceeding with respect thereto, unless the
holder previously has given to the Trustee written notice of default and unless
the holders of Offered Certificates having not less than 51% of the Voting
Rights so agree and have offered indemnity reasonably acceptable to the Trustee.


                         DESCRIPTION OF THE CERTIFICATES

GENERAL

         The Certificates will be issued pursuant to the Pooling and Servicing
Agreement. Set forth below are summaries of the specific terms and provisions
pursuant to which the Offered Certificates will be issued. The following
summaries do not purport to be complete and are subject to, and are qualified in
their entirety by reference to, the provisions of the Pooling and Servicing
Agreement. When particular provisions or terms used in the Pooling and Servicing
Agreement are referred to, the actual provisions (including definitions of
terms) are incorporated in this prospectus supplement by reference.

         HSBC Mortgage Loan Trust 2000-HSBC1 will issue the Class A-1, Class
A-2, Class A-3, Class X and Class A-R Certificates (together, the "SENIOR
CERTIFICATES"), the Class B-1, Class B-2, and Class B-3 Certificates (together
with the Senior Certificates, the "OFFERED CERTIFICATES") and the Class B-4,
Class B-5 and Class B-6 Certificates (together with the Class B-1, Class B-2 and
Class B-3 Certificates, the "SUBORDINATE Certificates"). The Senior Certificates
and the Subordinate Certificates are collectively referred to in this prospectus
supplement as the "CERTIFICATES." Only the Offered Certificates are offered by
this prospectus supplement and the accompanying prospectus.

         The Classes of Offered Certificates (other than the Class X
Certificates) will have the respective initial Certificate Principal Balances
set forth on the cover page. THE CERTIFICATE PRINCIPAL BALANCES MAY VARY IN THE
AGGREGATE BY 10%.

         The Classes of Offered Certificates will have the respective
Pass-Through Rates described in this prospectus supplement under "--Interest"
below.

         The Class X Certificates will not have a Certificate Principal Balance
and will be entitled only to interest on the Certificate Notional Balance. The
"CERTIFICATE NOTIONAL BALANCE" will be equal to the Pool Balance from time to
time. The initial Certificate Notional Balance will be $392,119,409 (plus or
minus 10% in the aggregate). Interest distributable to holders of the Class X
Certificates on any Distribution Date will be calculated on the basis of
interest accrued on the Mortgage Loans during the related Interest Accrual
Period (as defined in this prospectus supplement).

         The Class B-4, Class B-5 and Class B-6 Certificates are not offered by
this prospectus supplement. The initial Certificate Principal Balances of the
Class B-4, Class B-5 and Class B-6


                                      S-37
<PAGE>


Certificates will be approximately $2,156,000, $1,372,000 and $2,356,309,
respectively (plus or minus 10%). The pass-through rates for the Class B-4,
Class B-5 and Class B-6 Certificates will be equal to the pass-through rate on
the Class B-1, Class B-2 and Class B-3 Certificates.

         The Offered Certificates, other than the Class A-R Certificate, will be
issued in book-entry form as described below. The Offered Certificates, other
than the Class A-R Certificate, will be issued in minimum dollar denominations
(or, in the case of the Class X Certificates, notional balances) of $25,000 and
integral multiples of $1 in excess thereof. The assumed final maturity date
(each, an "ASSUMED FINAL DISTRIBUTION DATE") for each of the Class A-1, Class
A-2, Class A-3, Class X, Class A-R, Class B-1, Class B-2 and Class B-3
Certificates is the Distribution Date in December 2030. The Assumed Final
Distribution Date is the Distribution Date in the second month following the
month of the latest scheduled maturity date of any Mortgage Loan as of the
Cut-Off Date.

         Distributions on the Offered Certificates will be made by the Trustee
on the 15th day of each calendar month or, if the 15th day is not a business
day, the first business day after the 15th day, commencing in December 2000
(each, a "DISTRIBUTION DATE"), to the persons in whose names the Offered
Certificates are registered at the close of business on the Record Date. The
"RECORD DATE" for any Distribution Date with respect to the Offered Certificates
is the last business day of the month immediately preceding the month in which
such Distribution Date occurs.

BOOK-ENTRY CERTIFICATES

         The Offered Certificates (other than the Class A-R Certificate) will be
book-entry certificates ("BOOK-ENTRY CERTIFICATES"). Persons acquiring
beneficial ownership interests in the Book-Entry Certificates ("CERTIFICATE
OWNERS") will hold such Certificates through The Depository Trust Company
("DTC") in the United States, or Clearstream, Luxembourg or Euroclear (in
Europe) if they are participants of such systems (each, a "PARTICIPANT"), or
indirectly through organizations which are Participants in such systems. The
Book-Entry Certificates will be issued in one or more certificates which equal
the aggregate Certificate Principal Balance of such Certificates and will
initially be registered in the name of Cede & Co., the nominee of DTC.
Clearstream, Luxembourg and Euroclear will hold omnibus positions on behalf of
their participants through customers' securities accounts in Clearstream,
Luxembourg's and Euroclear's names on the books of their respective depositaries
which in turn will hold such positions in customers' securities accounts in the
depositaries' names on the books of DTC. Citibank will act as depositary for
Clearstream, Luxembourg and The Chase Manhattan Bank will act as depositary for
Euroclear (in such capacities, individually the "RELEVANT DEPOSITARY" and
collectively the "EUROPEAN DEPOSITARIES"). Investors may hold such beneficial
interests in the Book-Entry Certificates in minimum denominations of $25,000.
Except as described below, no person acquiring a Book-Entry Certificate (each, a
"BENEFICIAL OWNER") will be entitled to receive a physical certificate
representing such Certificate (a "DEFINITIVE CERTIFICATE"). Unless and until
Definitive Certificates are issued, it is anticipated that the only
"CERTIFICATEHOLDER" of the Offered Certificates will be Cede & Co., as nominee
of DTC. Certificate Owners will not be Certificateholders as that term is used
in the Pooling and Servicing Agreement. Certificate Owners are only permitted to
exercise their rights indirectly through Participants and DTC.

         The beneficial owner's ownership of a Book-Entry Certificate will be
recorded on the records of the brokerage firm, bank, thrift institution or other
financial intermediary (each, a


                                      S-38
<PAGE>


"FINANCIAL INTERMEDIARY") that maintains the beneficial owner's account for such
purpose. In turn, the Financial Intermediary's ownership of the Book-Entry
Certificate will be recorded on the records of DTC (or of a Participant that
acts as agent for the Financial Intermediary, whose interest will in turn be
recorded on the records of DTC, if the beneficial owner's Financial Intermediary
is not a Participant and on the records of Clearstream, Luxembourg or Euroclear,
as appropriate).

         Certificate Owners will receive all distributions of principal of and
interest on the Book-Entry Certificates from the Trustee through DTC and DTC
Participants. While the Book-Entry Certificates are outstanding (except under
the circumstances described below), under the rules, regulations and procedures
creating and affecting DTC and its operations ("DTC'S RULES"), DTC is required
to make book-entry transfers among Participants on whose behalf it acts with
respect to the Book-Entry Certificates and is required to receive and transmit
distributions of principal of, and interest on, the Book-Entry Certificates.
Participants and indirect participants with which Certificate Owners have
accounts with respect to Book-Entry Certificates similarly are required to make
book-entry transfers and receive and transmit such distributions on behalf of
their respective Certificate Owners. Accordingly, although Certificate Owners
will not possess certificates representing their respective interests in the
Book-Entry Certificates, DTC's Rules provide a mechanism by which Certificate
Owners will receive distributions and will be able to transfer their interest.

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

         Because of time zone differences, credits of securities received in
Clearstream, Luxembourg or Euroclear as a result of a transaction with a
Participant will be made during subsequent securities settlement processing and
dated the business day following the DTC settlement date. Such credits or any
transactions in such securities settled during such processing will be reported
to the relevant Euroclear or Clearstream, Luxembourg Participants on such
business day. Cash received in Clearstream, Luxembourg or Euroclear as a result
of sales of securities by or through a Clearstream, Luxembourg Participant (as
defined below) or Euroclear Participant (as defined below) to a DTC Participant
will be received with value on the DTC settlement date but will be available in
the relevant Clearstream, Luxembourg or Euroclear cash account only as of the
business day following settlement in DTC. For information with respect to tax
documentation procedures relating to the Certificates, see "Certain Material
Federal Income Tax Consequences--REMIC Certificates--Regular
Certificates--Non-U.S. Persons", "--Information Reporting and Backup
Withholding" and "New Withholding Regulations" in the prospectus.


                                      S-39
<PAGE>


         Transfers between Participants will occur in accordance with DTC's
rules. Transfers between Clearstream, Luxembourg Participants and Euroclear
Participants will occur in accordance with their respective rules and operating
procedures.

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

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

         Clearstream Banking, societe anonyme (formerly Cedelbank, "CLEARSTREAM,
LUXEMBOURG"), 67 Bd Grande-Duchesse Charlotte, L-2967 Luxembourg, was
incorporated in 1970 as a limited company under Luxembourg law. Clearstream,
Luxembourg is owned by banks, securities dealers and financial institutions, and
currently has about 92 shareholders, including U.S. financial institutions or
their subsidiaries. No single entity may own more than five percent of
Clearstream, Luxembourg's stock.

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

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

         Clearstream, Luxembourg's customers are world-wide financial
institutions including underwriters, securities brokers and dealers, banks,
trust companies and clearing corporations.


                                      S-40
<PAGE>


Clearstream, Luxembourg's United States customers are limited to securities
brokers and dealers and banks. Currently, Clearstream, Luxembourg has
approximately 2,000 customers located in over 80 countries, including all major
European countries, Canada, and the United States. Indirect access to
Clearstream, Luxembourg is available to other institutions which clear through
or maintain a custodial relationship with an account holder of Clearstream,
Luxembourg.

         The Euroclear System ("EUROCLEAR") was created in 1968 to hold
securities for its participants ("EUROCLEAR PARTICIPANTS") and to clear and
settle transactions between Euroclear Participants through simultaneous
electronic book-entry delivery against payment, thereby eliminating the need for
physical movement of certificates and any risk from lack of simultaneous
transfers of securities and cash. Transactions may be settled in any of 29
currencies, including United States dollars. Euroclear includes various other
services, including securities lending and borrowing and interfaces with
domestic markets in several countries generally similar to the arrangements for
cross-market transfers with DTC described above. Euroclear is operated by the
Brussels, Belgium office of Morgan Guaranty Trust Company of New York (the
"EUROCLEAR OPERATOR"), under contract with Euroclear Clearance Systems S.C., a
Belgian cooperative corporation (the "COOPERATIVE"). All operations are
conducted by the Euroclear Operator, and all Euroclear securities clearance
accounts and Euroclear cash accounts are accounts with the Euroclear Operator,
not the Cooperative. The Cooperative establishes policy for Euroclear on behalf
of Euroclear Participants. Euroclear Participants include banks (including
central banks), securities brokers and dealers and other professional financial
intermediaries. Indirect access to Euroclear is also available to other firms
that clear through or maintain a custodial relationship with a Euroclear
Participant, either directly or indirectly.

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

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

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

         Under a book-entry format, beneficial owners of the Book-Entry
Certificates may experience some delay in their receipt of payments, since such
payments will be forwarded by


                                      S-41
<PAGE>


the Trustee to Cede & Co. Distributions with respect to Certificates held
through Clearstream, Luxembourg or Euroclear will be credited to the cash
accounts of Clearstream, Luxembourg Participants or Euroclear Participants in
accordance with the relevant system's rules and procedures, to the extent
received by the Relevant Depositary. Such distributions will be subject to tax
reporting in accordance with relevant United States tax laws and regulations.
See "Certain Material Federal Income Tax Consequences--Non-U.S. Persons",
"--Backup Withholding" and "--New Withholding Regulations" in the prospectus.
Because DTC can only act on behalf of Financial Intermediaries, the ability of a
beneficial owner to pledge Book-Entry Certificates to persons or entities that
do not participate in the DTC system, or otherwise take actions in respect of
the Book-Entry Certificates, may be limited due to the lack of physical
certificates for the Book-Entry Certificates. In addition, issuance of the
Book-Entry Certificates in book-entry form may reduce the liquidity of such
Certificates in the secondary market since certain potential investors may be
unwilling to purchase Certificates for which they cannot obtain physical
certificates.

         Monthly and annual reports on the Trust will be provided to Cede & Co.,
as nominee of DTC, and may be made available by Cede & Co. to beneficial owners
upon request, in accordance with DTC's Rules, and to the Financial
Intermediaries to whose DTC accounts the Book-Entry Certificates of such
beneficial owners are credited.

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

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

         Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Trustee will use all reasonable efforts to notify all
beneficial owners of the occurrence of such event and the availability through
DTC of Definitive Certificates. Upon surrender by DTC of the global certificate
or certificates representing the Book-Entry Certificates and instructions for
re-registration, the Trustee will issue Definitive Certificates, and


                                      S-42
<PAGE>


thereafter the Trustee will recognize the holders of such Definitive
Certificates as Certificateholders under the Pooling and Servicing Agreement.

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

         None of the Seller, the Depositor, the Servicer or the Trustee will
have any responsibility for any aspect of the records relating to or payments
made on account of beneficial ownership interests of the Book-Entry Certificates
held by Cede & Co., as nominee for DTC, or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests. The
Trustee will not be required to monitor, determine or inquire as to compliance
with the transfer restrictions with respect to the Subordinate Certificates in
the form of Book-Entry Certificates, and the Trustee will have no liability for
transfers of Book-Entry Certificates or any interests therein made in violation
of the restrictions on transfer described in this prospectus supplement and the
Pooling and Servicing Agreement.

         According to DTC, the foregoing information with respect to DTC has
been provided to the Industry for informational purposes only and is not
intended to serve as a representation, warranty, or contract modification of any
kind.

PRIORITY OF DISTRIBUTIONS OF THE CERTIFICATES

         As more fully described in this prospectus supplement, on each
Distribution Date distribution of Available Funds will be made in the following
order of priority:

         (i)   to interest on the Classes of Senior Certificates, on a pro rata
               basis;

         (ii)  to principal of the Class A-R Certificate;

         (iii) to principal of the Class A-1, Class A-2 and Class A-3
               Certificates, sequentially, calculated as described in this
               prospectus supplement under "--Principal";

         (iv)  to interest on and then principal of each Class of Subordinate
               Certificates, in the order of their numerical Class designations,
               beginning with the Class B-1 Certificates, subject to certain
               limitations described in this prospectus supplement under
               "--Principal"; and

         (v)   to the Class A-R Certificate.

         The "AVAILABLE FUNDS" for any Distribution Date will be equal to

         (A)   the sum of the following with respect to the Mortgage Loans:

               o    all scheduled installments of interest (net of the related
                    Expense Fees) and principal due on the Due Date in the month
                    in which such Distribution Date occurs and received prior to
                    the related Determination Date, together with any Advances
                    in respect thereof;


                                      S-43
<PAGE>


               o    all proceeds of any insurance policies with respect to the
                    Mortgage Loans, to the extent such proceeds are not applied
                    to the restoration of the related Mortgaged Property or
                    released to the Mortgagor in accordance with the Servicer's
                    normal servicing procedures (collectively, "INSURANCE
                    PROCEEDS") and all other cash amounts received and retained
                    in connection with the liquidation of defaulted Mortgage
                    Loans, by foreclosure or otherwise ("LIQUIDATION PROCEEDS")
                    during the month preceding the month of such Distribution
                    Date (in each case, net of unreimbursed expenses incurred in
                    connection with a liquidation or foreclosure and
                    unreimbursed Advances, if any (such net amount, "NET
                    LIQUIDATION PROCEEDS"));

               o    amount of Compensating Interest received from the Servicer
                    for such Distribution Date;

               o    all partial or full prepayments of the Mortgage Loans
                    received during the month preceding the month of such
                    Distribution Date; and

               o    amounts received with respect to such Distribution Date as
                    the Substitution Adjustment or Purchase Price in respect of
                    a defective Mortgage Loan repurchased by the Seller or the
                    Servicer as of such Distribution Date;

     reduced by

         (B)   amounts in reimbursement for Advances previously made and other
               amounts as to which the Servicer or the Trustee is entitled to be
               reimbursed pursuant to the Pooling and Servicing Agreement.

INTEREST

         The Classes of Offered Certificates will have the respective
pass-through rates described below.

         On each Distribution Date, to the extent of funds available therefor,
each Class of Offered Certificates will be entitled to receive an amount
allocable to interest for the related Interest Accrual Period. This interest
distributable amount for any such Class will be equal to the sum of (i) interest
at the applicable pass-through rate on the related Certificate Principal Balance
or Certificate Notional Balance and (ii) the sum of the amounts, if any, by
which the amount described in clause (i) above on each prior Distribution Date
exceeded the amount actually distributed as interest on the prior Distribution
Dates and not subsequently distributed (which are called unpaid interest
amounts).

         The "INTEREST ACCRUAL PERIOD" for each Distribution Date will be, for
all Offered Certificates, the calendar month preceding the month of such
Distribution Date, determined on the basis of an assumed 360-day year consisting
of twelve 30-day months.


                                      S-44
<PAGE>

         The interest entitlement described above for each Class of Certificates
for any Distribution Date will be reduced by the amount of Net Interest
Shortfall experienced by the Mortgage Loans. With respect to any Distribution
Date, the "NET INTEREST SHORTFALL" is equal to

         o    any Net Prepayment Interest Shortfalls for that Distribution Date
              and

         o    the amount of interest that would otherwise have been received
              with respect to any Mortgage Loan that was the subject of a
              Relief Act Reduction or a Special Hazard Loss, Fraud Loss, Debt
              Service Reduction or Deficient Valuation, after the exhaustion of
              the respective amounts of coverage provided by the Subordinate
              Certificates for those types of losses.

         Net Interest Shortfalls on any Distribution Date will be allocated pro
rata among all Classes of Senior Certificates and all Classes of the Subordinate
Certificates, based on the amount of interest each such Class of Certificates
would otherwise be entitled to receive on such Distribution Date before taking
into account any reduction in such amounts from such Net Interest Shortfalls.

         A "RELIEF ACT REDUCTION" is a reduction in the amount of the monthly
interest payment on a Mortgage Loan pursuant to the Soldiers' and Sailors' Civil
Relief Act of 1940. See "Certain Legal Aspects of the Mortgage Loans--Soldiers'
and Sailors' Civil Relief Act" in the prospectus. With respect to any
Distribution Date, the "NEt PREPAYMENT INTEREST SHORTFALL" is the amount by
which the aggregate of Prepayment Interest Shortfalls experienced by the
Mortgage Loans during the calendar month preceding the month of the Distribution
Date exceeds the Compensating Interest payable on the Distribution Date by the
Servicer as described under "The Pooling and Servicing Agreement--Adjustments to
Servicing Fees in Connection with Prepaid Mortgage Loans".

         If on a particular Distribution Date, Available Funds in the
Certificate Account applied in the order described above under "--Priority of
Distributions of the Certificates" are not sufficient to make a full
distribution of the interest entitlement on the Certificates, interest will be
distributed on each Class of Certificates of equal priority based on the amount
of interest it would otherwise have been entitled to receive in the absence of
the shortfall. Any unpaid interest amount will be carried forward and added to
the amount holders of each Class of Certificates will be entitled to receive on
the next Distribution Date. A shortfall could occur, for example, if losses
realized on the Mortgage Loans were exceptionally high or were concentrated in a
particular month. Any unpaid interest amount so carried forward will not bear
interest.

PASS-THROUGH RATES

         The "PASS-THROUGH RATE" for each Class of Offered Certificates, other
than the Class X Certificates, on any Distribution Date on or prior to the
Distribution Date in July 2004 will equal the lesser of 7.11% and the Net WAC
for the Mortgage Loans. On each Distribution Date thereafter, the Pass-Through
Rate for the Class A-1, Class A-2, Class A-3, Class B-1, Class B-2 and Class B-3
Certificates will equal the lesser of (1) the weighted average of (a) the
weighted average of the fixed interest rates of any Mortgage Loans with respect
to which an initial fixed-rate period is continuing, minus the sum of the rates
at which the trustee fee and the servicing fee are calculated, and (b) the Index
of all Mortgage Loans other than those referenced in clause (a) above plus 2.25%
and (2) the Net WAC for the Mortgage Loans.


                                      S-45
<PAGE>


         The "PASS-THROUGH RATE" for the Class X Certificates on any
Distribution Date will equal positive difference, if any, between the Net WAC
for the Mortgage Loans and the weighted average of the Pass-Through Rates for
all other Classes of Certificates for such Distribution Date.

         "NET WAC" for the Mortgage Loans for any Distribution Date will be
equal to the weighted average of the difference between (x) the Loan Rates of
the Mortgage Loans as of the first day of the month preceding the month of that
Distribution Date (or, in the case of the first Distribution Date, the Cut-Off
Date) and (y) the Expense Fee Rates, weighted on the basis of the related
Principal Balances as of the first day of the month preceding the month in which
such Distribution Date occurs (or, in the case of the first Distribution Date,
as of the Cut-Off Date).

PRINCIPAL

         General. All payments and other amounts received in respect of
principal of the Mortgage Loans will be allocated between the Senior
Certificates (other than the Class X Certificates) and Subordinate Certificates.

         Principal Distribution Amount. On each Distribution Date, the Principal
Distribution Amount with respect to each Class of Certificates (other than the
Class X Certificates) will be applied as principal.

         The "PRINCIPAL DISTRIBUTION AMOUNT" for any Distribution Date will be
equal to the sum of:

         (i)   each scheduled payment of principal collected or advanced on the
               Mortgage Loans by the Servicer in the related Due Period;

         (ii)  that portion of the Purchase Price, representing principal of any
               repurchased Mortgage Loan, deposited in the Collection Account
               during the related Prepayment Period;

         (iii) the principal portion of any related Substitution Adjustments
               deposited in the Collection Account during the related Prepayment
               Period;

         (iv)  the principal portion of all Insurance Proceeds received during
               the related Prepayment Period with respect to Mortgage Loans that
               are not yet Liquidated Mortgage Loans;

         (v)   the principal portion of all Net Liquidation Proceeds received
               during the related Prepayment Period with respect to Liquidated
               Mortgage Loans; and

         (vi)  the principal portion of all partial and full principal
               prepayments of the Mortgage Loans received during the related
               Prepayment Period.

         Senior Principal Distribution Amount. On each Distribution Date, the
Principal Distribution Amount, up to the Senior Principal Distribution Amount,
will be distributed as principal of, firstly, (i) the Class A-R Certificate and
then (ii) the Class A-1, Class A-2 and Class A-3 Certificates, sequentially,
until their respective Certificate Principal Balances are reduced to zero.


                                      S-46
<PAGE>


         The "CERTIFICATE PRINCIPAL BALANCE" of any Class of Offered
Certificates on any Distribution Date will be equal to its Certificate Principal
Balance on the Closing Date (the "ORIGINAL CERTIFICATE PRINCIPAL BALANCE")
reduced by the sum of (i) all amounts actually distributed in respect of
principal of that Class on all prior Distribution Dates and (ii) all Realized
Losses applied in reduction of principal of that Class on all prior Distribution
Dates.

         A "DUE PERIOD" for any Distribution Date is the period commencing on
the second day of the month preceding the month in which that Distribution Date
occurs and ending on the first day of the month in which that Distribution Date
occurs.

         The "PREPAYMENT PERIOD" for any Distribution Date means the calendar
month preceding the month in which that Distribution Date occurs.

         The "SENIOR PRINCIPAL DISTRIBUTION AMOUNT" for any Distribution Date
will equal the sum of:

         (i)   the Senior Percentage of all amounts described in clauses (i)
               through (iv) of the definition of "Principal Distribution Amount"
               for that Distribution Date;

         (ii)  for each Mortgage Loan that became a Liquidated Mortgage Loan
               prior to the related Determination Date, the lesser of

               (a)  the Senior Percentage of the Stated Principal Balance of
                    that Mortgage Loan and

               either

               (b)  the Senior Prepayment Percentage of the amount of the Net
                    Liquidation Proceeds allocable to principal received on that
                    Mortgage Loan; or

               (c)  if an Excess Loss was sustained on the Liquidated Mortgage
                    Loan during the preceding calendar month, the Senior
                    Percentage of the applicable amount of the Net Liquidation
                    Proceeds allocable to principal received on that Mortgage
                    Loan; and

         (iii) the Senior Prepayment Percentage of the amounts described in
               clause (vi) of the definition "Principal Distribution Amount" for
               that Distribution Date;

provided, however, that if a Bankruptcy Loss that is an Excess Loss is sustained
on a Mortgage Loan that is not a Liquidated Mortgage Loan, the Senior Principal
Distribution Amount will be reduced on the related Distribution Date by the
Senior Percentage of the principal portion of the Bankruptcy Loss.

         "STATED PRINCIPAL BALANCE" means, for any Mortgage Loan and Due Date,
the unpaid Principal Balance of the Mortgage Loan as of the Due Date, as
specified in its amortization schedule at the time (before any adjustment to the
amortization schedule for any moratorium or similar waiver or grace period),
after giving effect to any previous partial prepayments and Net Liquidation
Proceeds received and to the payment of principal due on the Due Date and
irrespective of any delinquency in payment by the related mortgagor. The
"AGGREGATE STATED PRINCIPAL BALANCE" with respect to any Distribution Date
equals the aggregate of the Stated


                                      S-47
<PAGE>


Principal Balances of the Mortgage Loans outstanding on the Due Date in the
month preceding the month of the Distribution Date.

         Except as described below, the "SENIOR PERCENTAGE" for any Distribution
Date occurring before December 2010 will equal 100%. The Senior Percentage for
any Distribution Date occurring (i) before December 2010 but in or after
November 2003 on which the Two Times Test is satisfied, or (ii) in or after
December 2010, is the Pro Rata Senior Percentage. If the Two Times Test is
satisfied prior to November 2003, the Senior Percentage is the Pro Rata Senior
Percentage plus 50% of an amount equal to 100% minus the related Pro Rata Senior
Percentage.

         The "PRO RATA SENIOR PERCENTAGE" is the percentage equivalent of a
fraction the numerator of which is the aggregate of the Certificate Principal
Balances of all Classes of Senior Certificates immediately prior to such
Distribution Date and the denominator of which is the Aggregate Stated Principal
Balance of all Mortgage Loans for such Distribution Date.

         The "SUBORDINATE PERCENTAGE" for any Distribution Date will be the
difference between 100% and the Senior Percentage for such Distribution Date.

         The "SENIOR PREPAYMENT PERCENTAGE" for any Distribution Date occurring
before December 2010 will equal 100%. Thereafter, each Senior Prepayment
Percentage will be subject to gradual reduction as described in the following
paragraphs. This disproportionate allocation of unscheduled payments of
principal will have the effect of accelerating the amortization of the Senior
Certificates while, in the absence of Realized Losses, increasing the interest
in the Principal Balance of the Mortgage Loans evidenced by the Subordinate
Certificates. Increasing the respective interest of the Subordinate Certificates
relative to that of the Senior Certificates is intended to preserve the
availability of the subordination provided by the Subordinate Certificates. The
"SUBORDINATE PREPAYMENT PERCENTAGE" for any Distribution Date will be calculated
as the difference between 100% and the related Senior Prepayment Percentage.

         The Senior Prepayment Percentage of a Class of Senior Certificates
(other than the Class X Certificates) for any Distribution Date occurring on or
after the tenth anniversary of the first Distribution Date will be as follows:

o        for any Distribution Date in the first year thereafter, the Senior
         Percentage plus 70% of the Subordinate Percentage for the Distribution
         Date;

o        for any Distribution Date in the second year thereafter, the Senior
         Percentage plus 60% of the Subordinate Percentage for the Distribution
         Date;

o        for any Distribution Date in the third year thereafter, the Senior
         Percentage plus 40% of the Subordinate Percentage for the Distribution
         Date;

o        for any Distribution Date in the fourth year thereafter, the Senior
         Percentage plus 20% of the Subordinate Percentage for the Distribution
         Date; and

o        for any Distribution Date thereafter, the Senior Percentage for the
         Distribution Date


                                      S-48
<PAGE>


unless on any Distribution Date the Senior Percentage exceeds the initial Pro
Rata Senior Percentage, in which case such Senior Prepayment Percentage for the
Distribution Date will once again equal 100%.

         Notwithstanding the foregoing, no decrease in the Senior Prepayment
Percentage will occur unless both of the step down conditions listed below are
satisfied with respect to the Mortgage Loans:

         first,            the outstanding Principal Balance of all Mortgage
                           Loans delinquent 60 days or more, including Mortgage
                           Loans in respect of REO Properties (averaged over the
                           preceding six month period), as a percentage of the
                           aggregate Certificate Principal Balance of the
                           Subordinate Certificates, does not equal or exceed
                           50%, and

         second            cumulative Realized Losses on the Mortgage Loans do
                           not exceed

                           o    for the Distribution Date on the tenth
                                anniversary of the first Distribution Date, 30%
                                of the aggregate Certificate Principal Balances
                                of the Subordinate Certificates as of the
                                Closing Date (the "ORIGINAL SUBORDINATE
                                CERTIFICATE PRINCIPAL BALANCE"),

                           o    for the Distribution Date on the eleventh
                                anniversary of the first Distribution Date, 35%
                                of the Original Subordinate Certificate
                                Principal Balance,

                           o    for the Distribution Date on the twelfth
                                anniversary of the first Distribution Date, 40%
                                of the Original Subordinate Certificate
                                Principal Balance,

                           o    for the Distribution Date on the thirteenth
                                anniversary of the first Distribution Date, 45%
                                of the Original Subordinate Certificate
                                Principal Balance, and

                           o    for the Distribution Date on the fourteenth
                                anniversary of the first Distribution Date, 50%
                                of the Original Subordinate Certificate
                                Principal Balance.

         Notwithstanding the preceding paragraphs, if on any Distribution Date

         (a)  the Aggregate Subordinated Percentage is at least two times the
              Aggregate Subordinated Percentage as of the Closing Date,

         (b)  the delinquency test set forth above is satisfied, and

         (c)  cumulative Realized Losses do not exceed 30% of the Original
              Subordinate Certificate Principal Balance (collectively, the "TWO
              TIMES TEST"),

the Senior Prepayment Percentage will equal the related Senior Percentage.


                                      S-49
<PAGE>


         For any Distribution Date, the "AGGREGATE SUBORDINATED PERCENTAGE" is
the percentage equivalent of a fraction, the numerator of which is the aggregate
Certificate Principal Balance of the Subordinate Certificates immediately prior
to such Distribution Date and the denominator of which is the Pool Balance for
such Distribution Date.

         If on any Distribution Date the allocation to the Senior Certificates
then entitled to distributions of scheduled principal and full and partial
principal prepayments and other amounts in the percentages required above would
reduce the outstanding Certificate Principal Balance of the Class or Classes
below zero, the distribution to the Classes of Certificates of the Senior
Prepayment Percentage and Senior Percentage of those amounts for the
Distribution Date will be limited to the percentages necessary to reduce the
related Certificate Principal Balance(s) to zero.

         Subordinate Principal Distribution Amount. Except as provided in the
next paragraph, each Class of Subordinate Certificates will be entitled to
receive on each Distribution Date its pro rata share of the Subordinate
Principal Distribution Amount (based on its respective Certificate Principal
Balance), in each case to the extent of the amount available from Available
Funds for distribution of principal on such Class, as described above under
"--Priority of Distributions Among Certificates". Distributions of principal of
the Subordinate Certificates will be made on each Distribution Date sequentially
to the Classes of Subordinate Certificates in the order of their numerical Class
designations, beginning with the Class B-1 Certificates, until each such Class
has received its respective pro rata share for such Distribution Date.

         With respect to each Class of Subordinate Certificates, if on any
Distribution Date the sum of the related Class Subordination Percentages of such
Class and all Classes of Subordinate Certificates which have higher numerical
Class designations than such Class (the "APPLICABLE CREDIT SUPPORT PERCENTAGE")
is less than the Applicable Credit Support Percentage for such Class on the date
of issuance of the Certificates (the "ORIGINAL APPLICABLE CREDIT SUPPORT
PERCENTAGE"), no distribution of principal prepayments will be made to any such
Classes (the "RESTRICTED CLASSES") and the amount otherwise distributable to the
Restricted Classes in respect of such principal prepayments will be allocated
among the remaining Classes of Subordinate Certificates, pro rata, based upon
their respective Certificate Principal Balances, and distributed in the order
described above.

         The "CLASS SUBORDINATION PERCENTAGE" with respect to any Distribution
Date and each Class of Subordinate Certificates, will equal the fraction
(expressed as a percentage) the numerator of which is the Certificate Principal
Balance of the Class of Subordinate Certificates immediately before the
Distribution Date and the denominator of which is the aggregate of the
Certificate Principal Balances of all Classes of Certificates immediately before
the Distribution Date.

         The approximate Original Applicable Credit Support Percentages for the
Subordinate Certificates on the date of issuance of the certificates are
expected to be as follows:


                                Class B-1 3.25%
                                Class B-2 2.25%
                                Class B-3 1.50%
                                Class B-4 0.95%
                                Class B-5 0.60%
                                Class B-6 0.00%


                                      S-50
<PAGE>


         The "SUBORDINATE PRINCIPAL DISTRIBUTION AMOUNT" for any Distribution
Date will equal the sum of:

         o    the Subordinate Percentage of all amounts described in clauses
              (i) through (iv) of the definition of "Principal Distribution
              Amount" for the Distribution Date,

         o    for each Mortgage Loan that became a Liquidated Mortgage Loan
              during the calendar month preceding the month of the Distribution
              Date, that portion of the Net Liquidation Proceeds allocable to
              principal received on the Mortgage Loan, after application of the
              amounts pursuant to clause (ii) of the definition of "Senior
              Principal Distribution Amount" up to the Subordinate Percentage
              of the Stated Principal Balance of the Mortgage Loan, and

         o    the Subordinate Prepayment Percentage of the applicable amounts
              described in clause (vi) of the definition of "Principal
              Distribution Amount" for the Distribution Date.

ALLOCATION OF LOSSES

         On each Distribution Date, all Realized Losses, other than Excess
Losses, with respect to the Mortgage Loans will be allocated first to the
Classes of Subordinate Certificates, in the reverse order of their numerical
Class designations (beginning with the Class of Subordinate Certificates then
outstanding with the highest numerical Class designation), in each case until
the Certificate Principal Balances of the respective Classes of Subordinate
Certificates have been reduced to zero, and then to the Classes of Senior
Certificates other than the Class X Certificates (pro rata, until their
respective Certificate Principal Balances have been reduced to zero). If on any
Distribution Date, the aggregate of the Certificate Principal Balances of all
Classes of Certificates following all distributions and the allocation of
Realized Losses on such Distribution Date exceeds the Pool Balance as of the Due
Date occurring in the month of such Distribution Date, the Certificate Principal
Balance of the Class of Subordinate Certificates then outstanding with the
highest numerical Class designation will be reduced by the amount of the excess.

         On each Distribution Date, the Excess Losses will be allocated pro rata
among all Classes of Certificates other than the Class X Certificates, based
upon their respective Certificate Principal Balances, immediately prior to such
Distribution Date.

         In general, a "REALIZED LOSS" means, for a Liquidated Mortgage Loan,
the amount by which the remaining unpaid Principal Balance of the Mortgage Loan
exceeds the amount of Net Liquidation Proceeds applied to the Principal Balance
of the related Mortgage Loan.

         "EXCESS LOSSES" are Special Hazard Losses in excess of the Special
Hazard Loss Coverage Amount, Bankruptcy Losses in excess of the Bankruptcy Loss
Coverage Amount and Fraud Losses in excess of the Fraud Loss Coverage Amount.

         "BANKRUPTCY LOSSES" are losses that are incurred as a result of Debt
Service Reductions and Deficient Valuations. "SPECIAL HAZARD LOSSES" are
Realized Losses in respect of Special Hazard Mortgage Loans. "FRAUD LOSSES" are
losses sustained on a Liquidated Mortgage Loan by reason of a default arising
from fraud, dishonesty or misrepresentation.


                                      S-51
<PAGE>


         A "LIQUIDATED MORTGAGE LOAN" is a defaulted Mortgage Loan as to which
the Servicer has determined that all recoverable liquidation and insurance
proceeds have been received. A "SPECIAL HAZARD MORTGAGE LOAN" is a Liquidated
Mortgage Loan as to which the ability to recover the full amount due thereunder
was substantially impaired by a hazard not insured against under a standard
hazard insurance policy of the type described in the prospectus under "Credit
Enhancement--Special Hazard Insurance Policies".

SUBORDINATION OF THE SUBORDINATE CERTIFICATES

         The rights of the holders of the Subordinate Certificates to receive
distributions with respect to the Mortgage Loans will be subordinated to the
rights of the holders of the Senior Certificates and the rights of the holders
of each Class of Subordinate Certificates (other than the Class B-1
Certificates) to receive the distributions will be further subordinated to the
rights of the Class or Classes of Subordinate Certificates with lower numerical
Class designations, in each case only to the extent described in this prospectus
supplement. The subordination of the Subordinate Certificates to the Senior
Certificates and the further subordination among the Subordinate Certificates is
intended to provide the Certificateholders having higher relative payment
priority with protection against Realized Losses, other than Excess Losses. In
addition, the Subordinate Certificates will provide limited protection against
Special Hazard Losses, Bankruptcy Losses and Fraud Losses up to the Special
Hazard Loss Coverage Amount, Bankruptcy Loss Coverage Amount and Fraud Loss
Coverage Amount, respectively, as described in the following paragraphs.
Realized Losses, other than Excess Losses, will be allocated to the Class of
Subordinate Certificates then outstanding with the highest numerical Class
designation.

         The Subordinate Certificates will provide limited protection to the
Classes of certificates of higher relative priority against

         o    Special Hazard Losses in an initial amount expected to be up to
              approximately $6,733,281 (the "SPECIAL HAZARD LOSS COVERAGE
              AMOUNT"),

         o    Bankruptcy Losses in an initial amount expected to be up to
              approximately $200,000 (the "BANKRUPTCY LOSS COVERAGE AMOUNT")
              and

         o    Fraud Losses in an initial amount expected to be up to
              approximately $7,842,388 (the "FRAUD LOSS COVERAGE AMOUNT").

         The Special Hazard Loss Coverage Amount will be reduced, from time to
time, to be an amount equal on any Distribution Date to the lesser of

         o    the Special Hazard Loss Coverage Amount as of the closing date
              less the amount, if any, of losses attributable to Special Hazard
              Mortgage Loans incurred since the Closing Date, or

         o    the greatest of

              o    1% of the aggregate of the Principal Balances of the
                   Mortgage Loans,


                                      S-52
<PAGE>

              o    twice the Principal Balance of the largest Mortgage Loan and

              o    the aggregate Principal Balances of the Mortgage Loans
                   secured by mortgaged properties located in the single
                   California postal ZIP code area having the highest aggregate
                   Principal Balance of any such ZIP code area.

         All Principal Balances for the purpose of this definition will be
calculated as of the first day of the month before the month in which the
Distribution Date occurs after giving effect to scheduled installments of
principal and interest on the Mortgage Loans then due, whether or not paid.

         The Fraud Loss Coverage Amount will be reduced, from time to time, by
the amount of Fraud Losses allocated to the certificates. In addition, on each
anniversary of the Cut-Off Date, the Fraud Loss Coverage Amount will be reduced
as follows:

         o    on the first, second, third and fourth anniversaries of the
              Cut-Off Date, to an amount equal to the lesser of (a) 1.00% of
              the then current Pool Balance and (b) the excess of the Fraud
              Loss Coverage Amount as of the preceding anniversary of the
              Cut-Off Date (or, in the case of the first anniversary, as of the
              Cut-Off Date) over the cumulative amount of Fraud Losses
              allocated to the Certificates since such preceding anniversary or
              the Cut-Off Date, as the case may be, and

         o    on the fifth anniversary of the Cut-Off Date, to zero.

         The Bankruptcy Loss Coverage Amount will be reduced, from time to time,
by the amount of Bankruptcy Losses allocated to the Certificates.

         The amount of coverage provided by each Class of Subordinate
Certificates for Special Hazard Losses, Bankruptcy Losses and Fraud Losses may
be cancelled or reduced from time to time for each of the risks covered,
provided that the then current ratings of the Certificates assigned by the
Rating Agencies are not adversely affected as a result. In addition, a reserve
fund or other form of credit enhancement may be substituted for the protection
provided by the Subordinate Certificates for Special Hazard Losses, Bankruptcy
Losses and Fraud Losses.

         A "DEFICIENT VALUATION" is a bankruptcy proceeding whereby the
bankruptcy court may establish the value of a Mortgaged Property at an amount
less than the then outstanding Principal Balance of the Mortgage Loan secured by
the Mortgaged Property or may reduce the outstanding Principal Balance of the
related Mortgage Loan. In the case of a reduction in that value of the related
Mortgaged Property, the amount of the secured debt could be reduced to that
value, and the holder of the Mortgage Loan thus would become an unsecured
creditor to the extent the outstanding Principal Balance of the Mortgage Loan
exceeds the value so assigned to the Mortgaged Property by the bankruptcy court.
In addition, other modifications of the terms of a Mortgage Loan can result from
a bankruptcy proceeding, including the reduction (a "DEBT SERVICE REDUCTION") of
the amount of the monthly payment on the related Mortgage Loan. However, none of
these shall be considered a Debt Service Reduction or Deficient Valuation with
respect to any Mortgage Loan so long as the Servicer is pursuing any other
remedies that may be available with respect to the related Mortgage Loan and
either the Mortgage Loan has


                                      S-53
<PAGE>


not incurred payment default or scheduled monthly payments of principal and
interest are being advanced by the Servicer without giving effect to any Debt
Service Reduction or Deficient Valuation.

REPORTS TO CERTIFICATEHOLDERS

         On each Distribution Date, the Trustee will make available to each
holder of a Certificate and the Rating Agencies a statement (based on
information received from each Servicer) generally setting forth, among other
things:

         o    the amount of the distributions, separately identified, with
              respect to each Class of Certificates;

         o    the amount of the distributions set forth in clause (i) allocable
              to principal, separately identifying the aggregate amount of any
              principal prepayments or other unscheduled recoveries of
              principal included therein;

         o    the amount of the distributions set forth in clause (i) allocable
              to interest and the calculation thereof;

         o    the amount of any unpaid interest shortfall amount with respect
              to each Class of Certificates;

         o    the Certificate Principal Balance (or Certificate Notional
              Balance, if applicable) of each Class of Certificates after
              giving effect to the distribution of principal on that
              Distribution Date;

         o    the Pool Balance and the Net WAC at the end of the related
              Prepayment Period;

         o    the Pro Rata Senior Percentage, Senior Percentage and Subordinate
              Percentage for the following Distribution Date;

         o    the Senior Prepayment Percentage for the following Distribution
              Date;

         o    the amount of the related Servicing Fee paid to or retained by
              the Servicer;

         o    the amount of Advances for the related Due Period;

         o    the number and aggregate Principal Balance of Mortgage Loans that
              were (A) delinquent (exclusive of Mortgage Loans in foreclosure)
              (1) 30 to 59 days, (2) 60 to 89 days and (3) 90 or more days, (B)
              in foreclosure and delinquent (1) 30 to 59 days, (2) 60 to 89
              days and (3) 90 or more days and (C) in bankruptcy as of the
              close of business on the last day of the calendar month preceding
              that Distribution Date;

         o    the rolling six month delinquency rate for that Distribution
              Date;

         o    the total number and principal balance of the Mortgaged
              Properties acquired by the Trust in foreclosure or by deed in
              lieu of foreclosure (any such property, an


                                      S-54
<PAGE>


              "REO PROPERTY") as of the close of business on the last day of
              the preceding Due Period;

         o    the aggregate amount of Realized Losses incurred during the
              preceding calendar month;

         o    the cumulative amount of Realized Losses;

         o    the aggregate amount of Special Hazard Losses, Bankruptcy Losses
              and Fraud Losses incurred during the preceding calendar month;

         o    the cumulative amount of Special Hazard Losses, Bankruptcy Losses
              and Fraud Losses;

         o    the Special Hazard Loss Coverage Amount, the Fraud Loss Coverage
              Amount and the Bankruptcy Loss Coverage Amount, in each case as
              of the related Determination Date;

         o    the Realized Losses and Excess Losses, if any, allocated to each
              Class of Certificates on that Distribution Date; and

         o    the Pass-Through Rate for each Class of Certificates for that
              Distribution Date.

         The Trustee will make such statement available each month, to any
interested party, via the Trustee's website. The Trustee's website can be
accessed at "http://www.ctslink.com". Assistance in using the website may be
obtained by calling the Trustee's customer service desk at (301) 815-6600.

         In addition, upon request, within a reasonable period of time after the
end of each calendar year, the Trustee will prepare and deliver to each holder
of a Certificate of record during the previous calendar year a statement
containing information necessary to enable holders of the Certificates to
prepare their tax returns. These statements will not have been examined and
reported upon by an independent public accountant.


                  YIELD, PREPAYMENT AND MATURITY CONSIDERATIONS

GENERAL

         The effective yields to the holders of the Offered Certificates will be
lower than the yields otherwise produced by the applicable rate at which
interest is passed through to those holders and the purchase price of such
Certificates because monthly distributions will not be payable to those holders
until generally the 15th day of the month following the month in which interest
accrues on the Mortgage Loans, without any additional distribution of interest
or earnings thereon in respect of the delay.

         Delinquencies on the Mortgage Loans which are not advanced by the
Servicer or the Trustee as successor Servicer, as the case may be, because
amounts, if advanced, would be nonrecoverable, will adversely affect the yield
on the Senior Certificates and the Subordinate Certificates. Because of the
priority of distributions, shortfalls resulting from delinquencies not


                                      S-55
<PAGE>


so advanced will be borne first by the Subordinate Certificates in the reverse
order of their numerical Class designations, and then by the Senior
Certificates. If, as a result of these shortfalls, the aggregate of the
Certificate Principal Balances of all Classes of Certificates following all
distributions and the allocation of Realized Losses on a Distribution Date
exceeds the Pool Balance as of the Due Date occurring in the month of such
Distribution Date, the Certificate Principal Balance of the Class of Subordinate
Certificates then outstanding with the highest numerical Class designation will
be reduced by the amount of the excess.

         Net Interest Shortfalls will adversely affect the yields on the Senior
Certificates and the Subordinate Certificates. In addition, although all losses
initially will be borne by the Subordinate Certificates, in the reverse order of
their numerical Class designations, Excess Losses will be borne by the Senior
Certificates and the Subordinate Certificates in the manner set forth in this
prospectus supplement under "Description of the Certificates--Allocation of
Losses" and "--Subordination of the Subordination Certificates". As a result,
the yields on the Offered Certificates will depend on the rate and timing of
Realized Losses, including Excess Losses, on the Mortgage Loans. Excess Losses
could occur at a time when one or more Classes of Subordinate Certificates are
still outstanding and otherwise available to absorb other types of Realized
Losses.

PREPAYMENT CONSIDERATIONS AND RISKS

         The rate of principal payments on the Offered Certificates, the
aggregate amount of distributions on the Offered Certificates and the yields to
maturity of the Offered Certificates will be related to the rate and timing of
payments of principal on the Mortgage Loans. The rate of principal payments on
the Mortgage Loans will in turn be affected by the amortization schedules of the
Mortgage Loans and by the rate of principal prepayments, including for this
purpose prepayments resulting from refinancing, liquidations of the Mortgage
Loans due to defaults, casualties, condemnations and repurchases by the Seller
and purchases by the Servicer. The Mortgage Loans may be prepaid by the
Mortgagors at any time. The Mortgage Loans are subject to the "due-on-sale"
provisions included therein. See "The Mortgage Loans" in this prospectus
supplement.

         Prepayments, liquidations and purchases of the Mortgage Loans,
including any purchase by the Servicer of a defaulted Mortgage Loan and any
optional repurchase of the remaining Mortgage Loans in connection with the
termination of the Trust Fund, in each case as described in this prospectus
supplement, will result in distributions on the Offered Certificates of
principal amounts which would otherwise be distributed over the remaining terms
of the Mortgage Loans. Since the rate of payment of principal on the Mortgage
Loans will depend on future events and a variety of other factors, no assurance
can be given as to such rate or the rate of principal prepayments. The extent to
which the yield to maturity of a Class of Offered Certificates may vary from the
anticipated yield will depend upon the degree to which such Offered Certificate
is purchased at a discount or premium, and the degree to which the timing of
payments thereon is sensitive to prepayments, liquidations and purchases of the
applicable Mortgage Loans. Further, an investor should consider the risk that,
in the case of any Offered Certificates purchased at a discount, a slower than
anticipated rate of principal payments, including prepayments, on the applicable
Mortgage Loans could result in an actual yield to such investor that is lower
than the anticipated yield and, in the case of any Offered Certificates
purchased at a premium, a faster than anticipated rate of principal payments on
the applicable Mortgage Loans could result in an actual yield to such investor
that is lower than the anticipated yield.


                                      S-56
<PAGE>


         The rate of principal payments, including prepayments, on pools of
mortgage loans may vary significantly over time and may be influenced by a
variety of economic, geographic, social and other factors. These factors include
changes in mortgagors' housing needs, job transfers, unemployment, mortgagors'
net equity in the mortgaged properties and servicing decisions, as well as the
characteristics of the mortgage loans as described under "The Mortgage Loans
--General" and "--Mortgage Loan Statistics" in this prospectus supplement. If
prevailing interest rates were to fall significantly below the Loan Rates on the
Mortgage Loans, the Mortgage Loans could be subject to higher prepayment rates
than if prevailing interest rates were to remain at or above the Loan Rates on
the Mortgage Loans because the Mortgagors may seek to "lock in" a lower interest
rate. Conversely, if prevailing interest rates were to rise significantly, the
rate of prepayments on the Mortgage Loans would generally be expected to
decrease. The existence of a periodic rate cap on some of the Mortgage Loans
also may affect the likelihood of prepayments in either a rising or falling
interest rate environment.

         The rate of prepayment will affect the Pass-Through Rates on the
Offered Certificates. Prepayments of Mortgage Loans with net Loan Rates in
excess of the then-current Net WAC may reduce the Pass-Through Rate on the
Senior Certificates. Mortgage Loans with higher Loan Rates may prepay at faster
rates than Mortgage Loans with relatively lower Loan Rates in response to a
given change in market interest rates. Any such disproportionate rate of
prepayments may adversely affect the Pass-Through Rate on the Subordinate
Certificates.

         The exercise of the Put Option by Certificateholders holding Class A-1,
Class A-2 and Class A-3 Certificates of less than the amount necessary to permit
the exercise of the Optional Call may adversely affect the liquidity for the
Class A-1, Class A-2 and Class A-3 Certificates of the non-exercising
Certificateholders. Similarly, if the Standby Purchaser does not exercise its
Optional Call right when it is permitted to do so, the liquidity for the Class
A-1, Class A-2 and Class A-3 Certificates of the remaining Certificateholders
will likely be adversely affected.

         As described in this prospectus supplement under "Description of the
Certificates--Principal", the applicable Senior Prepayment Percentage of all
principal prepayments on the Mortgage Loans will be distributed to the Classes
of Senior Certificates then entitled to receive principal distributions. This
may result in all or a disproportionate percentage of principal prepayments
being distributed to holders of Senior Certificates and none or less than their
pro rata share of principal prepayments being distributed to holders of the
Subordinate Certificates during the periods of time described in the definition
of "Senior Prepayment Percentage".

         The timing of changes in the rate of prepayments on the Mortgage Loans
may significantly affect an investor's actual yield to maturity, even if the
average rate of principal payments is consistent with an investor's expectation.
In general, the earlier a prepayment of principal on the Mortgage Loans, the
greater the effect on an investor's yield to maturity. The effect on an
investor's yield as a result of principal payments occurring at a rate higher or
lower than the rate anticipated by the investor during the period immediately
following the issuance of the Offered Certificates may not be offset by a
subsequent like decrease or increase in the rate of principal payments.

THE SUBORDINATE CERTIFICATES

         The weighted average lives of, and the yields to maturity on, the
Subordinate Certificates, in increasing order of their numerical Class
designations, will be progressively more sensitive to


                                      S-57
<PAGE>


the rate and timing of Mortgagor defaults and the severity of ensuing losses on
the Mortgage Loans. If the actual rate and severity of losses on the Mortgage
Loans are higher than those assumed by a holder of a Subordinate Certificate,
the actual yield to maturity of that Certificate may be lower than the yield
expected by the holder based on such assumption. The timing of losses on the
Mortgage Loans will also affect an investor's actual yield to maturity, even if
the rate of defaults and severity of losses over the life of the mortgage pool
are consistent with an investor's expectations. In general, the earlier a loss
occurs, the greater the effect on an investor's yield to maturity. Realized
Losses on the Mortgage Loans will reduce the Certificate Principal Balances of
the applicable Class of Subordinate Certificates to the extent of any losses
allocated thereto (as described under "Description of the Certificates--
Allocation of Losses"), without the receipt of cash attributable to such
reduction. In addition, shortfalls in cash available for distributions on the
Subordinate Certificates will result in a reduction in the Certificate Principal
Balance of the Class of Subordinate Certificates then outstanding with the
highest numerical Class designation if and to the extent that the aggregate of
the Certificate Principal Balances of all Classes of Certificates, following all
distributions and the allocation of Realized Losses on a Distribution Date,
exceeds the Pool Balance as of the Due Date occurring in the month of such
Distribution Date. As a result of these reductions, less interest will accrue on
such Class of Subordinate Certificates than otherwise would be the case. The
yields to maturity of the Subordinate Certificates will also be affected by the
disproportionate allocation of principal prepayments to the Senior Certificates,
Net Interest Shortfalls and other cash shortfalls in Available Funds.

         If on any Distribution Date the Applicable Credit Support Percentage
for any Class of Subordinate Certificates is less than its Original Applicable
Credit Support Percentage, all principal payments available for distribution on
the Subordinate Certificates will be allocated solely to all other Classes of
Subordinate Certificates with lower numerical designations, thereby accelerating
the amortization thereof relative to that of the Restricted Classes and reducing
the weighted average lives of such Classes of Subordinate Certificates receiving
such distributions. Accelerating the amortization of the Classes of Subordinate
Certificates with lower numerical designations relative to the other Classes of
Subordinate Certificates is intended to preserve the availability of the
subordination provided by such other Classes.

WEIGHTED AVERAGE LIVES

         The projected weighted average life of each Class of Offered
Certificates is the average amount of time that will elapse from the Closing
Date, until each dollar of principal is scheduled to be repaid to the investors
in that Class. Because it is expected that there will be prepayments and
defaults on the Mortgage Loans, the actual weighted average lives of the Classes
of Offered Certificates are expected to vary substantially from the weighted
average remaining terms to stated maturity of the Mortgage Loans as set forth in
this prospectus supplement under "The Mortgage Loans".

         In general, the weighted average lives of the Offered Certificates will
be shortened if the level of prepayments of principal of the Mortgage Loans
increases. However, the weighted average lives of the Offered Certificates will
depend upon a variety of other factors, including the timing of changes in such
rate of principal payments and the priority sequence of distributions of
principal of the Classes of Certificates. See "Description of the
Certificates--Principal" in this prospectus supplement.


                                      S-58
<PAGE>


         The interaction of the foregoing factors may have different effects on
various Classes of Offered Certificates and the effects on any Class may vary at
different times during the life of such Class. Accordingly, no assurance can be
given as to the weighted average life of any Class of Offered Certificates.
Further, to the extent that the prices of the Offered Certificates represent
discounts or premiums to their respective original Certificate Principal
Balances, variability in the weighted average lives of such Classes of Offered
Certificates will result in variability in the related yields to maturity.

         The assumed final maturity date for each Class of Offered Certificates
is as set forth in this prospectus supplement under "Description of the
Certificates--General" above. The assumed final maturity date for each Class of
Offered Certificates is the Distribution Date in the first month following the
month of the latest maturity date of any Mortgage Loan. The weighted average
life of each Class of Offered Certificates is likely to be shorter than would be
the case if payments actually made on the Mortgage Loans conformed to the
foregoing assumptions, and the final Distribution Date with respect to the
Offered Certificates could occur significantly earlier than the related assumed
final maturity date because (i) prepayments are likely to occur, and (ii) the
Servicer may cause a termination of the Trust as provided in this prospectus
supplement.

STRUCTURING ASSUMPTIONS

         Prepayments of mortgage loans are commonly measured relative to a
prepayment standard or model. The model used with respect to the Mortgage Loans
assumes a constant prepayment rate ("CPR"). This is not 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 on pages S-62 through S-66 were prepared on the basis of the
assumptions in the following paragraph and the table set forth below. There are
certain differences between the loan characteristics included in such
assumptions and the characteristics of the actual Mortgage Loans. Any such
discrepancy may have an effect upon the percentages of Original Certificate
Principal Balances outstanding and weighted average lives of the Offered
Certificates set forth in the tables on pages S-62 through S-66. In addition,
since the actual Mortgage Loans in the Trust will have characteristics that
differ from those assumed in preparing the tables set forth below, the
distributions of principal of the Classes of Offered Certificates may be made
earlier or later than indicated in the tables.

         The percentages and weighted average lives in the tables on pages S-62
through S-66 and the Class X yield table on page S-67 were determined assuming
that (the "STRUCTURING ASSUMPTIONS"):

         (i)   the Mortgage Loans collectively have the characteristics set
               forth in the table below,

         (ii)  distributions on the Certificates are received, in cash, on the
               15th day of each month, commencing in December 2000,

         (iii)  the Mortgage Loans prepay at the indicated constant percentages,


                                      S-59
<PAGE>


        (iv)   (a) no defaults or delinquencies occur in the payment by the
               mortgagors of principal and interest on the Mortgage Loans and
               (b) no shortfalls due to the application of the Relief Act are
               incurred,

        (v)    no Mortgage Loan is purchased by the Seller or the Servicer from
               the Trust Fund pursuant to any obligation or option under the
               Pooling and Servicing Agreement,

        (vi)   scheduled monthly payments on the Mortgage Loans are received on
               the first day of each month commencing in December 2000, and are
               computed prior to giving effect to any prepayments received in
               the prior month,

        (vii)  prepayments representing payment in full of individual Mortgage
               Loans are received on the last day of each month (commencing in
               November 2000) and include 30 days' interest thereon,

        (viii) the scheduled monthly payment for each Mortgage Loan is
               calculated based on its Principal Balance, Loan Rate and
               remaining term to maturity such that the Mortgage Loan will
               amortize in amounts sufficient to repay the remaining Principal
               Balance of such Mortgage Loan by its remaining term to maturity,

        (ix)   interest accrues on each Certificate at the applicable rate
               described under "Description of the Certificates--Pass-Through
               Rates" in this prospectus supplement,

        (x)    the Initial Certificate Principal Balances of the Certificates
               (or Certificate Notional Balance, in the case of the Class X
               Certificates) are those set forth on the cover of this prospectus
               supplement or as described in this prospectus supplement,

        (xi)   One Year CMT is 6.05%,

        (xii)  no optional termination or exercise of the Put Option or the
               Optional Call will occur, except that such assumption does not
               apply to the calculation of weighted average lives to the
               optional termination, the Put Option or the Optional Call, as
               applicable, and

        (xiii) the Certificates are purchased on November 16, 2000.



                     ASSUMED MORTGAGE LOAN CHARACTERISTICS

<TABLE>
<CAPTION>
                                               WEIGHTED    WEIGHTED    WEIGHTED
                                   WEIGHTED     AVERAGE    AVERAGE      AVERAGE
                                    AVERAGE    ORIGINAL   REMAINING      GROSS
                   CURRENT           LOAN        TERM        TERM       MARGIN
 LOAN INDEX      BALANCE ($)       RATE (%)    (MONTHS)    (MONTHS)       (%)
------------ ------------------- ------------ ---------- ----------- ------------
<S>          <C>                 <C>          <C>        <C>         <C>
1 YR CMT        392,119,409.58      7.86506       360        356        2.87799



<CAPTION>
                                                                               WEIGHTED
                                          WEIGHTED     WEIGHTED    WEIGHTED    AVERAGE
                WEIGHTED     WEIGHTED      AVERAGE      AVERAGE     AVERAGE      RATE
                AVERAGE       AVERAGE     PERIODIC       FIRST      MONTHS    ADJUSTMENT
                MAXIMUM       MINIMUM       RATE         RATE       TO ROLL   FREQUENCY
                RATE (%)     RATE (%)      CAP (%)      CAP (%)    (MONTHS)    (MONTHS)
             ------------- ------------ ------------ ------------ ---------- -----------
<S>          <C>           <C>          <C>          <C>          <C>        <C>
                13.86506      2.87799      2.00000      2.00000        56         12
</TABLE>





                                      S-60
<PAGE>


         There will be discrepancies between the characteristics of the actual
Mortgage Loans and the characteristics assumed in preparing the tables. Any such
discrepancy may have an effect upon the percentages of the initial Certificate
Principal Balance outstanding (and the weighted average lives) of the Senior
Certificates set forth in the table. In addition, to the extent that the actual
Mortgage Loans have characteristics that differ from those assumed in preparing
the tables set forth below, the Senior Certificates may mature earlier or later
than indicated by the table. Based on the foregoing assumptions, the following
tables indicate the projected weighted average lives of each Class of Offered
Certificates and set forth the percentages of the initial Certificate Principal
Balance of each such Class that would be outstanding after each of the
Distribution Dates shown, at various constant prepayment percentages. Neither
the prepayment model used in this prospectus supplement nor any other prepayment
model or assumption purports to be an historical description of prepayment
experience or a prediction of the anticipated rate of prepayment of any pool of
mortgage loans, including the Mortgage Loans included in the Trust. Variations
in the prepayment experience and the balance of the Mortgage Loans that prepay
may increase or decrease the percentages of initial Certificate Principal
Balances (and weighted average lives) shown in the following tables. Such
variations may occur even if the average prepayment experience of all such
Mortgage Loans equals any of the specified percentages of CPR.






                                      S-61
<PAGE>


        PERCENT OF ORIGINAL CERTIFICATE PRINCIPAL BALANCE OUTSTANDING*

<TABLE>
<CAPTION>
                                                          CLASS A-1
                                  ----------------------------------------------------------
                                                      PERCENTAGE OF CPR
                                  ----------------------------------------------------------
       DISTRIBUTION DATE              0%          10%         18%         30%         40%
-------------------------------   ----------   ---------   ---------   ---------   ---------
<S>                                 <C>          <C>          <C>         <C>         <C>
Initial Percent ...............      100%        100%         100%        100%        100%
 November 15, 2001 ............       97%         69%          46%         12%          0%
 November 15, 2002 ............       95%         41%           3%          0%          0%
 November 15, 2003 ............       92%         16%           0%          0%          0%
 November 15, 2004 ............       89%          0%           0%          0%          0%
 November 15, 2005 ............       85%          0%           0%          0%          0%
 November 15, 2006 ............       82%          0%           0%          0%          0%
 November 15, 2007 ............       79%          0%           0%          0%          0%
 November 15, 2008 ............       75%          0%           0%          0%          0%
 November 15, 2009 ............       71%          0%           0%          0%          0%
 November 15, 2010 ............       66%          0%           0%          0%          0%
 November 15, 2011 ............       62%          0%           0%          0%          0%
 November 15, 2012 ............       56%          0%           0%          0%          0%
 November 15, 2013 ............       51%          0%           0%          0%          0%
 November 15, 2014 ............       45%          0%           0%          0%          0%
 November 15, 2015 ............       38%          0%           0%          0%          0%
 November 15, 2016 ............       31%          0%           0%          0%          0%
 November 15, 2017 ............       23%          0%           0%          0%          0%
 November 15, 2018 ............       14%          0%           0%          0%          0%
 November 15, 2019 ............        5%          0%           0%          0%          0%
 November 15, 2020 ............        0%          0%           0%          0%          0%
 November 15, 2021 ............        0%          0%           0%          0%          0%
 November 15, 2022 ............        0%          0%           0%          0%          0%
 November 15, 2023 ............        0%          0%           0%          0%          0%
 November 15, 2024 ............        0%          0%           0%          0%          0%
 November 15, 2025 ............        0%          0%           0%          0%          0%
 November 15, 2026 ............        0%          0%           0%          0%          0%
 November 15, 2027 ............        0%          0%           0%          0%          0%
 November 15, 2028 ............        0%          0%           0%          0%          0%
 November 15, 2029 ............        0%          0%           0%          0%          0%
 November 15, 2030 ............        0%          0%           0%          0%          0%
Weighted Average Life (Years)
 To Maturity (1) ..............     12.08        1.78         1.00        0.59        0.42
 To Optional Call (1) .........      3.49        1.78         1.00        0.59        0.42
</TABLE>

----------
(1)   The weighted average life of any Class of Certificates is determined by
      (i) multiplying the assumed net reduction, if any, in the principal
      amount on each Distribution Date on that Class of Certificates by the
      number of years from the date of issuance of the Certificates to the
      related Distribution Date, (ii) summing the results, and (iii) dividing
      the sum by the aggregate amount of the assumed net reductions in
      principal amount on that Class of Certificates.

*     Rounded to the nearest whole percentage.



                                      S-62
<PAGE>


        PERCENT OF ORIGINAL CERTIFICATE PRINCIPAL BALANCE OUTSTANDING*

<TABLE>
<CAPTION>
                                                          CLASS A-2
                                  ----------------------------------------------------------
                                                      PERCENTAGE OF CPR
                                  ----------------------------------------------------------
       DISTRIBUTION DATE              0%          10%         18%         30%         40%
-------------------------------   ----------   ---------   ---------   ---------   ---------
<S>                                 <C>           <C>         <C>         <C>         <C>
Initial Percent ...............      100%         100%        100%        100%        100%
 November 15, 2001 ............      100%         100%        100%        100%         78%
 November 15, 2002 ............      100%         100%        100%         33%          0%
 November 15, 2003 ............      100%         100%         54%          0%          0%
 November 15, 2004 ............      100%          92%         17%          0%          0%
 November 15, 2005 ............      100%          64%          0%          0%          0%
 November 15, 2006 ............      100%          40%          0%          0%          0%
 November 15, 2007 ............      100%          20%          0%          0%          0%
 November 15, 2008 ............      100%           2%          0%          0%          0%
 November 15, 2009 ............      100%           0%          0%          0%          0%
 November 15, 2010 ............      100%           0%          0%          0%          0%
 November 15, 2011 ............      100%           0%          0%          0%          0%
 November 15, 2012 ............      100%           0%          0%          0%          0%
 November 15, 2013 ............      100%           0%          0%          0%          0%
 November 15, 2014 ............      100%           0%          0%          0%          0%
 November 15, 2015 ............      100%           0%          0%          0%          0%
 November 15, 2016 ............      100%           0%          0%          0%          0%
 November 15, 2017 ............      100%           0%          0%          0%          0%
 November 15, 2018 ............      100%           0%          0%          0%          0%
 November 15, 2019 ............      100%           0%          0%          0%          0%
 November 15, 2020 ............       92%           0%          0%          0%          0%
 November 15, 2021 ............       76%           0%          0%          0%          0%
 November 15, 2022 ............       59%           0%          0%          0%          0%
 November 15, 2023 ............       40%           0%          0%          0%          0%
 November 15, 2024 ............       20%           0%          0%          0%          0%
 November 15, 2025 ............        0%           0%          0%          0%          0%
 November 15, 2026 ............        0%           0%          0%          0%          0%
 November 15, 2027 ............        0%           0%          0%          0%          0%
 November 15, 2028 ............        0%           0%          0%          0%          0%
 November 15, 2029 ............        0%           0%          0%          0%          0%
 November 15, 2030 ............        0%           0%          0%          0%          0%
Weighted Average Life (Years)
 To Maturity (1) ..............     22.42         5.72        3.21        1.84        1.30
 To Optional Call (1) .........      3.66         3.66        3.08        1.84        1.30
</TABLE>

----------
(1)   The weighted average life of any Class of Certificates is determined by
      (i) multiplying the assumed net reduction, if any, in the principal
      amount on each Distribution Date on that Class of Certificates by the
      number of years from the date of issuance of the Certificates to the
      related Distribution Date, (ii) summing the results, and (iii) dividing
      the sum by the aggregate amount of the assumed net reductions in
      principal amount on that Class of Certificates.

*     Rounded to the nearest whole percentage.


                                      S-63
<PAGE>


         PERCENT OF ORIGINAL CERTIFICATE PRINCIPAL BALANCE OUTSTANDING*

<TABLE>
<CAPTION>
                                                           CLASS A-3
                                  -----------------------------------------------------------
                                                       PERCENTAGE OF CPR
                                  -----------------------------------------------------------
       DISTRIBUTION DATE              0%           10%         18%         30%         40%
-------------------------------   ----------   ----------   ---------   ---------   ---------
<S>                                  <C>          <C>          <C>         <C>         <C>
Initial Percent ...............      100%         100%         100%        100%        100%
 November 15, 2001 ............      100%         100%         100%        100%        100%
 November 15, 2002 ............      100%         100%         100%        100%         89%
 November 15, 2003 ............      100%         100%         100%         84%         51%
 November 15, 2004 ............      100%         100%         100%         58%         30%
 November 15, 2005 ............      100%         100%          91%         40%         18%
 November 15, 2006 ............      100%         100%          74%         28%         11%
 November 15, 2007 ............      100%         100%          60%         19%          6%
 November 15, 2008 ............      100%         100%          48%         13%          4%
 November 15, 2009 ............      100%          90%          39%          9%          2%
 November 15, 2010 ............      100%          79%          31%          6%          1%
 November 15, 2011 ............      100%          70%          25%          4%          1%
 November 15, 2012 ............      100%          62%          20%          3%          0%
 November 15, 2013 ............      100%          54%          16%          2%          0%
 November 15, 2014 ............      100%          47%          13%          1%          0%
 November 15, 2015 ............      100%          41%          10%          1%          0%
 November 15, 2016 ............      100%          36%           8%          1%          0%
 November 15, 2017 ............      100%          31%           6%          0%          0%
 November 15, 2018 ............      100%          27%           5%          0%          0%
 November 15, 2019 ............      100%          23%           4%          0%          0%
 November 15, 2020 ............      100%          19%           3%          0%          0%
 November 15, 2021 ............      100%          16%           2%          0%          0%
 November 15, 2022 ............      100%          13%           2%          0%          0%
 November 15, 2023 ............      100%          11%           1%          0%          0%
 November 15, 2024 ............      100%           9%           1%          0%          0%
 November 15, 2025 ............       98%           7%           1%          0%          0%
 November 15, 2026 ............       80%           5%           0%          0%          0%
 November 15, 2027 ............       61%           3%           0%          0%          0%
 November 15, 2028 ............       40%           2%           0%          0%          0%
 November 15, 2029 ............       17%           1%           0%          0%          0%
 November 15, 2030 ............        0%           0%           0%          0%          0%
Weighted Average Life (Years)
 To Maturity (1) ..............     27.48        15.00         9.16        5.27        3.68
 To Optional Call (1) .........      3.66         3.66         3.66        3.47        2.98
</TABLE>

----------
(1)   The weighted average life of any Class of Certificates is determined by
      (i) multiplying the assumed net reduction, if any, in the principal
      amount on each Distribution Date on that Class of Certificates by the
      number of years from the date of issuance of the Certificates to the
      related Distribution Date, (ii) summing the results, and (iii) dividing
      the sum by the aggregate amount of the assumed net reductions in
      principal amount on that Class of Certificates.

*     Rounded to the nearest whole percentage.



                                      S-64
<PAGE>


         PERCENT OF ORIGINAL CERTIFICATE PRINCIPAL BALANCE OUTSTANDING*

<TABLE>
<CAPTION>
                                                                 CLASS A-R
                                         ---------------------------------------------------------
                                                             PERCENTAGE OF CPR
                                         ---------------------------------------------------------
           DISTRIBUTION DATE                 0%         10%         18%         30%         40%
--------------------------------------   ---------   ---------   ---------   ---------   ---------
<S>                                        <C>         <C>          <C>         <C>         <C>
Initial Percentage ...................     100%        100%         100%        100%        100%
 November 15, 2001 ...................       0%          0%           0%          0%          0%
 November 15, 2002 ...................       0%          0%           0%          0%          0%
 November 15, 2003 ...................       0%          0%           0%          0%          0%
 November 15, 2004 ...................       0%          0%           0%          0%          0%
 November 15, 2005 ...................       0%          0%           0%          0%          0%
 November 15, 2006 ...................       0%          0%           0%          0%          0%
 November 15, 2007 ...................       0%          0%           0%          0%          0%
 November 15, 2008 ...................       0%          0%           0%          0%          0%
 November 15, 2009 ...................       0%          0%           0%          0%          0%
 November 15, 2010 ...................       0%          0%           0%          0%          0%
 November 15, 2011 ...................       0%          0%           0%          0%          0%
 November 15, 2012 ...................       0%          0%           0%          0%          0%
 November 15, 2013 ...................       0%          0%           0%          0%          0%
 November 15, 2014 ...................       0%          0%           0%          0%          0%
 November 15, 2015 ...................       0%          0%           0%          0%          0%
 November 15, 2016 ...................       0%          0%           0%          0%          0%
 November 15, 2017 ...................       0%          0%           0%          0%          0%
 November 15, 2018 ...................       0%          0%           0%          0%          0%
 November 15, 2019 ...................       0%          0%           0%          0%          0%
 November 15, 2020 ...................       0%          0%           0%          0%          0%
 November 15, 2021 ...................       0%          0%           0%          0%          0%
 November 15, 2022 ...................       0%          0%           0%          0%          0%
 November 15, 2023 ...................       0%          0%           0%          0%          0%
 November 15, 2024 ...................       0%          0%           0%          0%          0%
 November 15, 2025 ...................       0%          0%           0%          0%          0%
 November 15, 2026 ...................       0%          0%           0%          0%          0%
 November 15, 2027 ...................       0%          0%           0%          0%          0%
 November 15, 2028 ...................       0%          0%           0%          0%          0%
 November 15, 2029 ...................       0%          0%           0%          0%          0%
 November 15, 2030 ...................       0%          0%           0%          0%          0%
Weighted Average Life Years (1)
 To Maturity .........................     0.08        0.08         0.08        0.08        0.08
 To Optional Termination (1) .........     0.08        0.08         0.08        0.08        0.08
</TABLE>

----------
(1)   The weighted average life of any Class of Certificates is determined by
      (i) multiplying the assumed net reduction, if any, in the principal
      amount on each Distribution Date on that Class of Certificates by the
      number of years from the date of issuance of the Certificates to the
      related Distribution Date, (ii) summing the results, and (iii) dividing
      the sum by the aggregate amount of the assumed net reductions in
      principal amount on that Class of Certificates.

*     Rounded to the nearest whole percentage.



                                      S-65
<PAGE>


         PERCENT OF ORIGINAL CERTIFICATE PRINCIPAL BALANCE OUTSTANDING*

<TABLE>
<CAPTION>
                                                     CLASS B-1, CLASS B-2 AND CLASS B-3
                                         -----------------------------------------------------------
                                                              PERCENTAGE OF CPR
                                         -----------------------------------------------------------
           DISTRIBUTION DATE                 0%           10%         18%         30%         40%
--------------------------------------   ----------   ----------   ---------   ---------   ---------
<S>                                        <C>          <C>           <C>         <C>         <C>
Initial Percent ......................      100%         100%         100%        100%        100%
 November 15, 2001 ...................      100%         100%         100%        100%        100%
 November 15, 2002 ...................      100%         100%         100%         98%         86%
 November 15, 2003 ...................      100%         100%         100%         81%         65%
 November 15, 2004 ...................      100%         100%          87%         56%         39%
 November 15, 2005 ...................      100%         100%          70%         39%         23%
 November 15, 2006 ...................      100%         100%          57%         27%         14%
 November 15, 2007 ...................      100%          89%          46%         18%          8%
 November 15, 2008 ...................      100%          79%          37%         13%          5%
 November 15, 2009 ...................      100%          70%          30%          9%          3%
 November 15, 2010 ...................      100%          62%          24%          6%          2%
 November 15, 2011 ...................       98%          54%          20%          4%          1%
 November 15, 2012 ...................       96%          48%          16%          3%          1%
 November 15, 2013 ...................       94%          42%          13%          2%          0%
 November 15, 2014 ...................       91%          37%          10%          1%          0%
 November 15, 2015 ...................       88%          32%           8%          1%          0%
 November 15, 2016 ...................       85%          28%           6%          1%          0%
 November 15, 2017 ...................       82%          24%           5%          0%          0%
 November 15, 2018 ...................       78%          21%           4%          0%          0%
 November 15, 2019 ...................       74%          18%           3%          0%          0%
 November 15, 2020 ...................       70%          15%           2%          0%          0%
 November 15, 2021 ...................       65%          13%           2%          0%          0%
 November 15, 2022 ...................       60%          10%           1%          0%          0%
 November 15, 2023 ...................       54%           8%           1%          0%          0%
 November 15, 2024 ...................       48%           7%           1%          0%          0%
 November 15, 2025 ...................       41%           5%           1%          0%          0%
 November 15, 2026 ...................       34%           4%           0%          0%          0%
 November 15, 2027 ...................       26%           3%           0%          0%          0%
 November 15, 2028 ...................       17%           2%           0%          0%          0%
 November 15, 2029 ...................        7%           1%           0%          0%          0%
 November 15, 2030 ...................        0%           0%           0%          0%          0%
Weighted Average Life  (Years)
 To Maturity (1) .....................     22.60        13.23         7.99        5.12        4.00
 To Optional Termination (1) .........     22.54        12.33         7.14        4.48        3.42
</TABLE>

----------
(1)   The weighted average life of any Class of Certificates is determined by
      (i) multiplying the assumed net reduction, if any, in the principal
      amount on each Distribution Date on that Class of Certificates by the
      number of years from the date of issuance of the Certificates to the
      related Distribution Date, (ii) summing the results, and (iii) dividing
      the sum by the aggregate amount of the assumed net reductions in
      principal amount on that Class of Certificates.

*     Rounded to the nearest whole percentage.


                                      S-66
<PAGE>


SENSITIVITY OF THE CLASS X CERTIFICATES

         The yield to maturity of the Class X Certificates will be highly
sensitive to the principal prepayment, repurchase and default experience of the
Mortgage Loans. Investors should carefully consider the associated risks,
including the risk that a rapid rate of principal prepayments on the Mortgage
Loans or repurchases of Mortgage Loans could result in the failure of investors
in the Class X Certificates to recover their initial investments. The yield to
holders of the Class X Certificates could also be adversely affected in the
event that the holder of the Class A-R Certificate exercises the right under the
Pooling and Servicing Agreement to repurchase all remaining Mortgage Loans and
REO Properties in the Trust Fund and thereby effects the early retirement of the
Certificates, as described in "The Pooling and Servicing
Agreement--Termination".

         The following table (the "CLASS X YIELD TABLE") demonstrates the
sensitivity of the pre-tax yields on the Class X Certificates to various
percentages of CPR by projecting the aggregate payments of interest on such
Certificates and the corresponding pre-tax yields on a corporate bond equivalent
("CBE") basis, assuming distributions on the Mortgage Loans are made as set
forth above under "--Weighted Average Lives."


                 PRE-TAX YIELDS (%) ON THE CLASS X CERTIFICATES
                              (PRICED TO MATURITY)

       Assumed                         PERCENTAGE OF CPR
       Purchase     --------------------------------------------------------
       Price*(%)       0%         10%         18%          30%         40%
    -------------   --------   ---------   ---------   ---------   ---------
       0.18750        82.6       69.1        57.6         39.3        22.8
       0.25000        54.1       41.7        31.3         14.7        (0.4)
       0.31250        37.1       25.4        15.7          0.0       (14.1)
       0.37500        26.0       14.9         5.5         (9.6)      (23.1)
       0.43750        18.5        7.7        (1.5)       (16.1)      (29.3)
       0.50000        13.3        2.7        (6.3)       (20.6)      (33.6)
       0.56250         9.6       (0.9)       (9.8)       (23.9)      (36.7)
       0.62500         6.8       (3.6)      (12.3)       (26.4)      (39.0)
       0.68750         4.7       (5.6)      (14.3)       (28.2)      (40.8)
       0.75000         3.0       (7.3)      (15.9)       (29.7)      (42.1)


   -------------
   * The price shown does not include accrued interest. Accrued interest has
     been added to such price for calculating the yields set forth in the
     table above.


         The pre-tax yields set forth in the preceding Yield Table were
calculated by determining the monthly discount rates which, when applied to the
assumed streams of cash flows to be paid on the Class X Certificates, would
cause the discounted present value of such assumed streams of cash flows to the
Closing Date to equal the assumed purchase prices (plus accrued interest), and
converting such monthly rates to CBE rates. Such calculations do not take into
account the interest rates at which funds received by holders of the Class X
Certificates may be reinvested and consequently does not purport to reflect the
return on any investment in the Class X Certificates when such reinvestment
rates are considered.


                                      S-67
<PAGE>


         It is highly unlikely that the Mortgage Loans will prepay at the same
rate until maturity or that all of the Mortgage Loans will prepay at the same
rate or time. As a result of these factors, the pre-tax yield on the Class X
Certificates is likely to differ from those shown in such tables, even if all of
the Mortgage Loans prepay at the indicated percentages of CPR. No representation
is made as to the actual rate of principal payments on the Mortgage Loans (or
the Loan Rates thereon) for any period or over the life of the Class X
Certificates or as to the yield on the Class X Certificates. Investors must make
their own decisions as to the appropriate prepayment assumptions to be used in
deciding whether to purchase the Class X Certificates.



                CERTAIN MATERIAL FEDERAL INCOME TAX CONSEQUENCES

GENERAL

         For federal income tax purposes, the Trust Fund will consist of
multiple segregated asset pools, each of which will constitute a "real estate
mortgage investment conduit" ("REMIC") for federal income tax purposes.

         It is anticipated that the Offered Certificates (other than the Class
A-R Certificate and exclusive of the Put Option related to each Class A-1, Class
A-2 and Class A-3 Certificates, and the rights associated therewith) will
constitute "regular interests" in the upper tier REMIC ("REGULAR INTEREST") for
tax purposes. The Class A-R Certificate will represent beneficial ownership of
the sole Class of "residual interests" in each REMIC created pursuant to the
Pooling and Servicing Agreement (the "AGREEMENT"). Upon issuance of the Offered
Certificates, Brown & Wood LLP ("TAX COUNSEL") will deliver its opinion
concluding, assuming compliance with the Agreement, for U.S. federal income tax
purposes, each REMIC created pursuant to the Agreement will be characterized as
a REMIC within the meaning of Section 860D of the Code.

TAXATION OF REGULAR INTERESTS

         A holder of a Class B-1, Class B-2, Class B-3 or Class X Certificate
will be treated for federal income tax purposes as owning a regular interest in
the upper tier REMIC. See "Certain Material Federal Income Tax Considerations"
in the prospectus.

         A holder of a Class A-1, Class A-2 or Class A-3 Certificate will be
treated for federal income tax purposes as owning two separate assets: (a) the
Certificate without the related Put Option (which constitute a Regular Interest
-- see "Certain Material Federal Income Tax Considerations" in the prospectus)
and (b) the related Put Option. Such a Certificateholder will also be treated
for federal income tax purposes as having written a call option to sell the
related Certificates in exchange for an option premium equal to the fair market
value of the call option. An owner of an interest in the Class A-1, Class A-2 or
Class A-3 Certificates should be considered to have purchased Regular Interests
and the related Put Option for an amount equal to the sum of the actual purchase
price paid for the Certificates plus the fair market value of the call option
premium. Consequently, the sum of the bases to an owner of Class A-1, Class A-2
or Class A-3 Certificates in the Regular Interests and the related Put Option
will be greater in the aggregate than the purchase price paid directly by the
owner to acquire those Certificates.


                                      S-68
<PAGE>


         When an owner sells an interest in Class A-1, Class A-2 or Class A-3
Certificates, the owner will be deemed to have made a payment to the purchaser
in an amount equal to the fair market value of the call option because the
purchaser will have assumed the owner's obligation under the call option.
Consequently, the amount realized by the owner upon the sale of Class A-1, Class
A-2 or Class A-3 Certificates may be greater than the purchase price paid
directly by the purchaser.

         An owner of Class A-1, Class A-2 or Class A-3 Certificates will not be
required to include immediately in income the call option premium that such
owner is deemed to have received upon the purchase of such Certificates.
Instead, the owner must account for such premium when the call rights are
exercised, or when those rights lapse, or when those rights are otherwise
terminated with respect to the owner.

         An owner of Class A-1, Class A-2 or Class A-3 Certificates will include
option premium in income as short-term capital gain when the option lapses. The
principal balance of the Certificates likely will be reduced over time through
principal payments. Under existing authorities, it is not entirely clear whether
the rights held by the Standby Purchaser would be deemed to lapse as the
underlying Mortgage Loans pay down. Each owner of Certificates is urged to
consult its own tax advisor on these matters.

         If the Standby Purchaser exercises the Optional Call to call the Class
A-1, Class A-2 and Class A-3 Certificates, an owner of such Certificates would
include in its amount realized from the sale of such Certificates an amount
equal to the unamortized portion of the option premium. If an owner transfers
its interest in such Certificates, the transfer will be treated as a closing
transaction with respect to the call option the owner is deemed to have written.
As a result, the owner will recognize a short-term capital gain or loss equal to
the difference between the unamortized amount of option premium and the amount
the owner is deemed to pay to be relieved from the obligation under the option.

         Accordingly, the purchaser of a Class A-1, Class A-2 or Class A-3
Certificate must allocate its purchase price between the two assets comprising
the applicable Certificate. In general, the allocation would be based on the
relative fair market values of such assets on the date of purchase of the
Certificate. No representation is or will be made as to the relative fair market
values and all holders of such Certificates should consult their tax advisors
concerning the determination of such fair market values. Upon exercise of a Put
Option, the holder of such Put Option, for the purposes of computing gain or
loss, would reduce the amount realized on the sale of the related Certificate by
the amount of unrecognized option premium. The holder of a Put Option should
recognize a loss if the put rights lapse. The principal balance of the Mortgage
Loans as to which the Put Option relates will likely be reduced over time
through principal payments. Under existing authorities, it is not entirely clear
whether the rights held by the holder of a Put Option would be deemed to lapse
as principal from the underlying Mortgage Loans is allocated to the related
Certificate. There is no assurance that the Internal Revenue Service (the "IRS")
would agree with this methodology. Furthermore, the allocation of the purchase
price to the Put Option may cause some Certificates to be issued with more
original issue discount (or more than de minimis original issue discount) or
less premium.


                                      S-69
<PAGE>


         Interest on the Offered Certificates must be included in income by a
Certificateholder under the accrual method of accounting, regardless of the
Certificateholder's regular method of accounting. In addition, the Class X
Certificates will, and the other Classes of Offered Certificates may, be issued
with original issue discount ("OID") for federal income tax purposes. See
"Certain Material Federal Income Tax Considerations" in the prospectus. OID must
be included in income as it accrues on a constant yield method, regardless of
whether the Certificateholder receives currently the cash attributable to such
OID. The prepayment assumption that will be used in determining the accrual of
any OID, market discount, or bond premium, if any, will be 18% CPR for all the
Mortgage Loans. No representation is made that the Mortgage Loans will prepay at
such a rate or at any other rate.

         The Offered Certificates (exclusive of the Put Option related to each
Class A-1, Class A-2 and Class A-3 Certificate, and the rights associated
therewith) will generally constitute:

         (a) a "real estate asset" within the meaning of section 856(c)(4)(A) of
the Code for a real estate investment trust;

         (b) an "obligation secured by an interest in real property" within the
meaning of section 860G(a)(3) Code if held by a REMIC; or

         (c) an asset described in section 7701(a)(19)(C)(xi) of the Code if
held by a domestic building and loan association.

         The Put Option related to each Class A-1, Class A-2 and Class A-3
Certificate will not constitute any of the above.

         As indicated above, the characterization of the Class A-1, Class A-2
and Class A-3 Certificates for federal income tax purposes is not clear. The
combination of put rights and call rights under the instruments could be viewed
for federal income tax purposes as vesting in the Standby Purchaser ownership of
the regular interest represented by such Certificates. If such a
characterization were to prevail, a holder would be treated as owning debt of
the Standby Purchaser secured by the regular interest. Holders of Class A-1,
Class A-2 and Class A-3 Certificates are encouraged to consult their tax
advisors concerning the tax treatment of owning such Certificates.

APPLICATION OF THE STRADDLE RULES

         With respect to a holder of the Class A-1, Class A-2 and Class A-3
Certificates, the IRS might take the position that those Certificates and the
related Put Options constitute positions in a straddle. If the IRS successfully
asserted this position, holders of the Class A-1, Class A-2 and Class A-3
Certificates may have their losses deferred (including losses from the lapse of
the put rights) and have their holding periods suspended for purposes of
determining whether any gains on a sale or exchange of their Certificates was
long term or short term capital gain. The straddle rules would then require the
holder to capitalize, rather than deduct, interest and carrying charges
allocable to the holder's interest in the straddle. The Put Option and the
related Offered Certificate may be required to be treated as part of a
conversion transaction, in which case gain on sale will be treated as ordinary
to the extent the holder's yield from the investment is less than 120% of the
applicable federal rate instead of the rule generally applicable to REMIC


                                      S-70
<PAGE>


regular interests that treats gain on sale as ordinary to the extent the
holder's yield from the REMIC regular interest is less than 110% of the
applicable federal rate. Each holder of Class A-1, Class A-2 and Class A-3
Certificates is encouraged to consult its own tax advisor regarding these
matters.

THE RESIDUAL CERTIFICATE

         The holder of the Class A-R Certificate must include the taxable income
of each REMIC in its federal taxable income. The resulting tax liability of such
holder may exceed cash distributions to such holder during certain periods. All
or a portion of the taxable income from the Class A-R Certificate recognized by
a holder may be treated as "excess inclusion" income, which, with limited
exceptions, is subject to U.S. federal income tax.

         Proposed Treasury regulations issued on February 4, 2000 (the "NEW
PROPOSED REGULATIONS") would modify the safe harbor which, if satisfied,
provides that transfers of noneconomic residual interests are not disregarded
for federal income tax purposes. Under the New Proposed Regulations, a transfer
of a noneconomic residual interest will not qualify under this safe harbor
unless the present value of the anticipated tax liabilities associated with
holding the residual interest does not exceed the present value of the sum of
(i) any consideration given to the transferee to acquire the interest, (ii)
expected future distributions on the interest, and (iii) any anticipated tax
savings associated with holding the interest as the REMIC generates losses. For
purposes of this calculation, the present value generally is calculated using a
discount rate equal to applicable federal rate. The Proposed Regulations
indicate that the effective date of the modification to the safe harbor
requirements could be as early as February 4, 2000.

         Also, purchasers of the Class A-R Certificate should consider carefully
the tax consequences of an investment in Residual Certificates discussed in the
prospectus and should consult their own tax advisors with respect to those
consequences. See "Certain Material Federal Income Tax Consequences--REMIC
Certificates--Residual Certificates" in the prospectus. Specifically,
prospective holders of the Class A-R Certificate should consult their tax
advisors regarding whether, at the time of acquisition, the Class A-R
Certificate will be treated as a "non-economic" residual interest, a
"non-significant value" residual interest and a "tax avoidance potential"
residential interest. See "Certain Material Federal Income Tax
Consequences--REMIC Certificates--Tax-Related Restrictions on Transfer of
Residual Certificates" and "-- Residual Certificates" in the prospectus.
Additionally, for information regarding prohibited transactions and treatment of
Realized Losses, see "Certain Material Federal Income Tax Consequences--REMIC
Certificates--Prohibited Transactions and Other Taxes" and "-- Regular
Certificates--Treatment of Realized Losses" in the prospectus.

NEW WITHHOLDING REGULATIONS

         On October 6, 1997 and on May 22, 2000, the Treasury Department issued
new regulations (the "NEW REGULATIONS") which make certain modifications to the
withholding, backup withholding and information reporting rules described above.
The New Regulations attempt to unify certification requirements and modify
reliance standards and have detailed rules regarding the determination of
beneficial ownership. The New Regulations will generally be effective for
payments made after December 31, 2000, subject to certain transition rules.
Prospective investors are urged to consult their own tax advisors regarding the
New Regulations.


                                      S-71
<PAGE>


NON-U.S. PERSONS

         For purposes of the following discussion, the term "NON-U.S. PERSON"
means any person other than (i) a citizen or resident of the United States; (ii)
a corporation (or entity treated as a corporation for tax purposes) created or
organized in the United States or under the laws of the United States or of any
state thereof, including, for this purpose, the District of Columbia; (iii) a
partnership (or entity treated as a partnership for tax purposes) organized in
the United States or under the laws of the United States or of any state
thereof, including, for this purpose, the District of Columbia (unless provided
otherwise by future Treasury regulations); (iv) an estate whose income is
includible in gross income for United States income tax purposes regardless of
its source; or (v) a trust, if a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more U.S. Persons have authority to control all substantial decisions of the
trust. Notwithstanding the last clause of the preceding sentence, to the extent
provided in Treasury regulations, certain trusts in existence on August 20,
1996, and treated as U.S. Persons prior to such date, may elect to continue to
be U.S. Persons.

         Interest paid to or accrued by a Certificateholder (other than the
Class A-R Certificateholder) who is a non-U.S. Person will be considered
"portfolio interest", and will not be subject to U.S. federal income tax and
withholding tax, if the interest is not effectively connected with the conduct
of a trade or business within the United States by the non-U.S. Person and the
non-U.S. Person (i) is not actually or constructively a "10 percent shareholder"
of the Trust or a "controlled foreign corporation" with respect to which the
Trust is a "related person" within the meaning of the Code and (ii) provides the
Trust or other person who is otherwise required to withhold U.S. tax with
respect to the Offered Certificates (other than the Class A-R Certificate) with
an appropriate statement (on Form W-8BEN or a substantially similar form),
signed under penalties of perjury, certifying that the beneficial owner of the
Offered Certificate is a non-U.S. Person and providing the non-U.S. Person's
name and address. If an Offered Certificate (other than the Class A-R
Certificate) is held through a securities clearing organization or certain other
financial institutions, the organization or institution may provide the relevant
signed statement to the withholding agent; in that case, however, the signed
statement must be accompanied by a Form W-8BEN or substitute form provided by
the non-U.S. Person that owns the Certificate.

         Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of an Offered Certificate (other than the Class A-R
Certificate) by a non-U.S. Person will be exempt from United States federal
income and withholding tax, provided that (i) such gain is not effectively
connected with the conduct of a trade or business in the United States by the
non-U.S. Person and (ii) in the case of an individual, the individual is not
present in the United States for 183 days or more in the taxable year.

PROHIBITED TRANSACTIONS TAX AND OTHER TAXES

         The Code imposes a tax on REMICs equal to 100% of the net income
derived from "prohibited transactions" (the "PROHIBITED TRANSACTIONS TAX"). In
general, subject to certain specified exceptions, a prohibited transaction means
the disposition of a Mortgage Loan, the receipt of income from a source other
than a Mortgage Loan or certain other permitted investments, the receipt of
compensation for services, or gain from the disposition of an asset purchased
with the payments on the Mortgage Loans for temporary investment pending


                                      S-72
<PAGE>


distribution on the Certificates. It is not anticipated that the Trust will
engage in any prohibited transactions in which it would recognize a material
amount of net income.

         In addition, certain contributions to a trust that elects to be treated
as a REMIC made after the day on which such trust issues all of its interests
could result in the imposition of a tax on the trust equal to 100% of the value
of the contributed property (the "CONTRIBUTIONS TAX"). It is anticipated that
the Trust will not accept contributions that would subject it to such tax.

         In addition, a trust that elects to be treated as a REMIC may also 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. "Net income from foreclosure property" generally means
gain from the sale of a foreclosure property other than qualifying rents and
other qualifying income for a real estate investment trust. It is not
anticipated that the Trust will recognize net income from foreclosure property
subject to federal income tax.

BACKUP WITHHOLDING

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

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

         Such amounts will be deemed distributed to the affected Certificate
Owner for all purposes of the related Certificates and the Pooling and Servicing
Agreement.


                                      S-73
<PAGE>


                                  STATE TAXES

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

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


                              ERISA CONSIDERATIONS

GENERAL

         Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and Section 4975 of the Code prohibit "parties in interest"
(under ERISA) and "disqualified persons" (under the Code) with respect to an
employee benefit plan subject to ERISA and/or a plan or other arrangement
subject to Section 4975 of the Code (each of the foregoing, a "PLAN") from
engaging in certain transactions involving such Plan and its assets unless a
statutory, regulatory or administrative exemption applies to the transaction.
Section 4975 of the Code imposes certain excise taxes on prohibited transactions
involving plans described under that Section. ERISA authorizes the imposition of
civil penalties for prohibited transactions involving plans not covered under
Section 4975 of the Code. Any Plan fiduciary which proposes to cause a Plan to
acquire any of the Offered Certificates should consult with its counsel with
respect to the potential consequences under ERISA and the Code of the Plan's
acquisition and ownership of such Certificates. See "ERISA Considerations" in
the prospectus.

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

         Investments by Plans that are subject to ERISA are subject to ERISA's
general fiduciary requirements, including the requirement of investment prudence
and diversification and the requirement that a Plan's investments be made in
accordance with the documents governing the Plan. A fiduciary which decides to
invest the assets of a Plan in the Offered Certificates should consider, among
other factors, the extreme sensitivity of the investments to the rate of
principal payments (including prepayments) on the Mortgage Loans.

         The U.S. Department of Labor has granted to Greenwich Capital Markets,
Inc. Prohibited Transaction Exemption 90-59, Application No. D-8374, 55 Fed.
Reg. 36724 (September 6, 1990), as amended (the "EXEMPTION") which exempts from
the application of the prohibited transaction rules transactions relating to (1)
the acquisition, sale and holding by Plans of certain securities representing an
undivided interest in certain asset-backed pass-through entities with respect to
which Greenwich Capital Markets, Inc. or any of its affiliates is the sole
underwriter or


                                      S-74
<PAGE>


the manager or co-manager of the underwriting syndicate; and (2) the servicing,
operation and management of such asset-backed pass-through entities, provided
that the general conditions and certain other conditions set forth in the
Exemption are satisfied.

         Among the conditions which must be satisfied for the Exemption to apply
are the following:

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

                 (2) The rights and interests evidenced by the securities
        acquired by the Plan are not subordinated to the rights and interests
        evidenced by other securities of the entity, except when the trust holds
        certain types of assets, including assets of the type held in the Trust;

                 (3) The securities acquired by the Plan have received a rating
        at the time of such acquisition that is in one of the three (four, if
        the trust holds certain types of assets, including assets of the type
        held in the Trust) highest generic rating categories from S&P, Moody's
        or Fitch;

                 (4) The sum of all payments made to and retained by the
        underwriter in connection with the distribution of the securities
        represents not more than reasonable compensation for underwriting such
        certificates; the sum of all payments made to and retained by the seller
        pursuant to the sale of the trust assets to the trust represents not
        more than the fair market value of such assets; and the sum of all
        payments made to and retained by any servicer represents not more than
        reasonable compensation for such servicer's services under the
        applicable servicing agreement and reimbursement of such servicer's
        reasonable expenses in connection therewith;

                 (5) The trustee is not an affiliate of any underwriter, the
        seller, any servicer, the certificate insurer, any borrower whose
        obligations constitute more than 5% of the aggregate unamortized
        principal balance of the assets in the Trust, or any of their respective
        affiliates (together with the trustee, the "RESTRICTED GROUP");

                 (6) The Plan investing in the securities is an "accredited
        investor" as defined in Rule 501(a)(1) of Regulation D of the SEC under
        the Securities Act of 1933, as amended; and

                 (7) The documents establishing the issuer must contain certain
        provisions to ensure that its assets may not be reached by creditors of
        the sponsor in the event of the bankruptcy or other insolvency of the
        sponsor.

         In addition, (i) the investment pool must consist only of assets of
types enumerated in the Exemption which have been included in other investment
pools; (ii) certificates evidencing interests in such other investment pools
must have been rated in one of the three (four, if the pool holds certain types
of assets) highest generic rating categories by a rating agency for at least one
year prior to a Plan's acquisition of securities; and (iii) securities
evidencing interests in such


                                      S-75
<PAGE>


other investment pools must have been purchased by investors other than Plans
for at least one year prior to a Plan's acquisition of securities.

         The Exemption will not apply to a Plan's investment in a Certificate if
the Plan fiduciary responsible for the decision to invest in the Certificates is
a mortgagor or obligor with respect to obligations held in the Trust or an
affiliate of such a person, unless: (1) in the case of an acquisition in
connection with the initial issuance of any Certificates, at least 50% of each
Class of Certificates in which Plans have invested is acquired by persons
independent of the Restricted Group and at least 50% of the aggregate interest
in the Trust is acquired by persons independent of the Restricted Group; (2) a
Plan's investment in any Class of Certificates does not exceed 25% of the
outstanding certificates of that Class at the time of acquisition; (3)
immediately after such acquisition, no more than 25% of the assets of any Plan
with respect to which the investing fiduciary has discretionary authority or
renders investment advice are invested in securities evidencing interests in
entities sponsored or containing assets sold or serviced by the same entity; and
(4) the Plan is not sponsored by any member of the Restricted Group; and (5) the
fiduciary (or its affiliates) is an obligor with respect to 5% or less of the
fair market value of obligations contained in the Trust.

         It is expected that the Exemption will apply to the acquisition and
holding by Plans of the Offered Certificates other than the Class A-R
Certificate and that all conditions of the Exemption other than those within the
control of the investors will be met.

         BECAUSE THE CHARACTERISTICS OF THE CLASS A-R CERTIFICATE MAY NOT MEET
THE REQUIREMENTS OF THE EXEMPTION OR ANY OTHER ISSUED EXEMPTION UNDER ERISA, THE
PURCHASE AND HOLDING OF THE CLASS A-R CERTIFICATE BY A PLAN OR BY AN INDIVIDUAL
RETIREMENT ACCOUNT OR OTHER PLAN SUBJECT TO SECTION 4975 OF THE CODE MAY RESULT
IN PROHIBITED TRANSACTIONS OR THE IMPOSITION OF EXCISE TAXES OR CIVIL PENALTIES.
CONSEQUENTLY, TRANSFERS OF THE CLASS A-R CERTIFICATE WILL NOT BE REGISTERED BY
THE TRUSTEE UNLESS THE TRUSTEE RECEIVES:

         1.     A REPRESENTATION FROM THE TRANSFEREE OF SUCH CERTIFICATE,
                ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY TO THE
                TRUSTEE, TO THE EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE
                BENEFIT PLAN SUBJECT TO SECTION 406 OF ERISA OR A PLAN OR
                ARRANGEMENT SUBJECT TO SECTION 4975 OF THE CODE, NOR A PERSON
                ACTING ON BEHALF OF ANY SUCH PLAN OR ARRANGEMENT NOR USING THE
                ASSETS OF ANY SUCH PLAN OR ARRANGEMENT TO EFFECT SUCH
                TRANSFER;

         2.     IF THE PURCHASER IS AN INSURANCE COMPANY, A REPRESENTATION
                THAT THE PURCHASER IS AN INSURANCE COMPANY WHICH IS PURCHASING
                SUCH CERTIFICATE WITH FUNDS CONTAINED IN AN "INSURANCE COMPANY
                GENERAL ACCOUNT" (AS SUCH TERM IS DEFINED IN SECTION V(E) OF
                PROHIBITED TRANSACTION CLASS EXEMPTION ("PTCE") 95-60 AND THAT
                THE PURCHASE AND HOLDING OF SUCH CERTIFICATE ARE COVERED UNDER
                SECTIONS I AND III OF PTCE 95-60; OR

         3.     AN OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE THAT THE
                PURCHASE AND HOLDING OF SUCH CERTIFICATE BY A PLAN, OR ANY
                PERSON ACTING ON BEHALF OF A PLAN OR USING SUCH PLAN'S ASSETS,
                WILL NOT RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER
                EITHER TITLE I OF ERISA OR SECTION 4975 OF THE CODE AND WILL
                NOT SUBJECT THE TRUSTEE, THE SERVICER OR THE DEPOSITOR TO ANY
                OBLIGATION IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.


                                      S-76
<PAGE>


         IN THE EVENT THAT SUCH REPRESENTATIONS ARE VIOLATED, OR ANY ATTEMPT TO
TRANSFER TO A PLAN OR PERSON ACTING ON BEHALF OF A PLAN OR USING SUCH PLAN'S
ASSETS IS ATTEMPTED WITHOUT SUCH OPINION OF COUNSEL, SUCH ATTEMPTED TRANSFER OR
ACQUISITION SHALL BE VOID AND OF NO EFFECT.

         Prospective Plan investors should consult with their legal advisors
concerning the impact of ERISA and the Code, the applicability of the Exemption,
and the potential consequences in their specific circumstances, prior to making
an investment in the Offered Certificates. Moreover, each Plan fiduciary should
determine whether, under the general fiduciary standards of investment prudence
and diversification, an investment in the Offered Certificates is appropriate
for the Plan, taking into account the overall investment policy of the Plan and
the composition of the Plan's investment portfolio.


                         LEGAL INVESTMENT CONSIDERATIONS

         The Senior Certificates and the Class B-1 Certificates will constitute
"mortgage related securities" for purposes of the Secondary Mortgage Market
Enhancement Act of 1984 ("SMMEA") so long as they are rated in one of the two
highest rating categories by at least one nationally recognized statistical
rating organization and, as such, are legal investments for certain entities to
the extent provided for in SMMEA.

         There may be restrictions on the ability of certain investors,
including depository institutions, either to purchase the Offered Certificates
or to purchase Offered Certificates representing more than a specified
percentage of the investor's assets. Investors should consult their own legal
advisors in determining whether and to what extent the Offered Certificates
constitute legal investments for such investors. See "Legal Investment" in the
prospectus.


                             METHOD OF DISTRIBUTION

         Subject to the terms and conditions set forth in the Underwriting
Agreement between the Depositor and Greenwich Capital Markets, Inc. (the
"UNDERWRITER"), which is an affiliate of the Depositor, the Depositor has agreed
to sell to the Underwriter, and the Underwriter has agreed to purchase from the
Depositor, all of the Offered Certificates.

         Distribution of the Offered Certificates will be made by the
Underwriter from time to time in negotiated transactions or otherwise at varying
prices to be determined at the time of sale. The Underwriter may effect such
transactions by selling Offered Certificates to or through dealers and such
dealers may receive from the Underwriter, for which they act as agent,
compensation in the form of underwriting discounts, concessions or commissions.
The Underwriter and any dealers that participate with the Underwriter in the
distribution of the Offered Certificates may be deemed to be underwriters, and
any discounts, commissions or concessions received by them, and any profits on
resale of the Offered Certificates purchased by them, may be deemed to be
underwriting discounts and commissions under the Securities Act.

         The Depositor has been advised by the Underwriter that it intends to
make a market in the Offered Certificates but has no obligation to do so. There
can be no assurance that a secondary market for the Offered Certificates will
develop or, if it does develop, that it will continue.


                                      S-77
<PAGE>


         The Depositor has agreed to indemnify the Underwriter against, or make
contributions to the Underwriter with respect to, certain liabilities, including
liabilities under the Securities Act.


                                  LEGAL MATTERS

         Certain legal matters in connection with the issuance of the Offered
Certificates will be passed upon by Brown & Wood LLP, New York, New York, as
counsel for the Depositor and the Underwriter. Certain legal matters will be
passed upon for the Seller and the Standby Purchaser by Thacher Proffitt & Wood,
New York, New York. Certain federal income tax consequences with respect to the
Certificates will be passed upon for the Trust by Brown & Wood LLP, New York,
New York.


                                     RATINGS

         It is a condition to the issuance of the Offered Certificates that the
Class A-1, Class A-2, Class A-3 and Class X Certificates be rated "AAA", "AAA"
and "Aaa", that the Class B-1 Certificates be rated at least "AA", "AA" and
"Aa2", that the Class B-2 Certificates be rated at least "A", "A" and "A2", and
that the Class B-3 Certificates be rated at least "BBB", "BBB" and "Baa2", in
each case by Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies ("S&P"), Fitch, Inc. ("FITCH") and Moody's Investor Service, Inc.
("Moody's"), respectively (each a "RATING AGENCY"); and that the Class A-R
Certificate be rated "AAA" by each of S&P and Fitch.

         The ratings assigned by each Rating Agency to mortgage pass-through
certificates address the likelihood of the receipt of all distributions on the
mortgage loans by the related certificateholders under the agreements pursuant
to which those certificates are issued. Each Rating Agency's ratings take into
consideration the credit quality of the related mortgage pool, including any
credit support providers, structural and legal aspects associated with those
certificates, and the extent to which the payment stream on that mortgage pool
is adequate to make payments required by those certificates. Each Rating
Agency's ratings on those certificates do not, however, constitute a statement
regarding frequency of prepayments on the related mortgage loans.

         The ratings of each Rating Agency do not address the possibility that,
as a result of principal prepayments, holders of the Offered Certificates may
receive a lower than anticipated yield or that holders of the Class X
Certificates may fail to recoup their initial investments.

         Dependent ratings of "A-1+" and "AA-" will be assigned by S&P and
Fitch, respectively, to the Class A-1, Class A-2 and Class A-3 Certificates to
address the creditworthiness of HSBC Bank USA to fulfill its obligations with
respect to the related Put Options. In the case of Moody's, HSBC Bank USA's
ability or obligation to purchase the Class A-1, Class A-2 and Class A-3
Certificates under the related Put Options is directly linked to their short
term rating, which is currently "P-1", and their long term rating, which is
currently "Aa3". Each rating is dependent on the Credit Rating received by HSBC
Bank USA from S&P or Moody's, as applicable. Credit Ratings are based on current
information furnished by the obligors or obtained by either S&P or Moody's, as
the case may be, from other sources it considers reliable. Neither S&P nor
Moody's performs an audit in connection with any credit rating and either may,
on occasion, rely on unaudited financial information. Credit Ratings may be
changed, suspended


                                      S-78
<PAGE>


or withdraw as a result of changes in, or unavailability of, such information,
or based on other circumstances.

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

         The Depositor has not engaged any rating agency other than the Rating
Agencies to provide ratings on the Offered Certificates. However, there can be
no assurance as to whether any other rating agency will rate the Offered
Certificates or, if it does, what rating would be assigned by that rating
agency. Any rating on the Offered Certificates by another rating agency, if
assigned at all, may be lower than the ratings assigned to the Offered
Certificates by the Rating Agencies.

















                                      S-79
<PAGE>


                  INDEX OF DEFINED TERMS

Adjustment Date......................................S-14
Advance..............................................S-30
Aggregate Stated Principal Balance...................S-47
Aggregate Subordinated Percentage....................S-50
Agreement............................................S-68
Alternative Documentation Program....................S-23
Applicable Credit Support Percentage.................S-50
Assumed Final Distribution Date......................S-38
Available Funds......................................S-43
Bankruptcy Loss Coverage Amount......................S-52
Bankruptcy Losses....................................S-51
Beneficial Owner.....................................S-38
Book-Entry Certificates..............................S-38
CBE..................................................S-67
Certificate Notional Balance.........................S-37
Certificate Owners...................................S-38
Certificate Principal Balance........................S-47
Certificateholder....................................S-38
Certificates.........................................S-37
Class Subordination Percentage.......................S-50
Class X Yield Table..................................S-67
Clearstream, Luxembourg..............................S-40
Clearstream, Luxembourg Participants.................S-40
Collection Account...................................S-28
Compensating Interest................................S-31
Compensating Interest Cap............................S-31
Contributions Tax....................................S-73
Cooperative..........................................S-41
CPR..................................................S-59
Cut-Off Date Pool Balance............................S-14
Debt Service Reduction...............................S-53
Deficient Valuation..................................S-53
Definitive Certificate...............................S-38
Determination Date...................................S-31
Distribution Account.................................S-29
Distribution Date....................................S-38
DTC..................................................S-38
DTC's Rules..........................................S-39
Due Date.............................................S-14
Due Period...........................................S-47
Eligible Account.....................................S-29
Eligible Substitute Mortgage Loan....................S-27
ERISA................................................S-74
Euroclear............................................S-41
Euroclear Operator...................................S-41
Euroclear Participants...............................S-41
European Depositaries................................S-38
Event of Servicing Termination.......................S-36
Excess Losses........................................S-51
Exemption............................................S-74
Expense Fee Rate.....................................S-31
Expense Fees.........................................S-31
FICO.................................................S-23
Financial Intermediary...............................S-39
First Rate Cap.......................................S-14
Fitch................................................S-78
Fraud Loss Coverage Amount...........................S-52
Fraud Losses.........................................S-51
Full Documentation Program...........................S-22
Gross Margin.........................................S-14
HSBC Holdings........................................S-34
IML..................................................S-40
Index................................................S-14
Insurance Proceeds...................................S-44
Interest Accrual Period..............................S-44
IRS..................................................S-69
Liquidated Mortgage Loan.............................S-52
Liquidation Proceeds.................................S-44
Loan Rate............................................S-14
Loan-to-Value Ratio..................................S-14
Maximum Loan Rate....................................S-14
Merger...............................................S-35
Minimum Loan Rate....................................S-15
Moody's..............................................S-78
Mortgage.............................................S-14
Mortgage Loan........................................S-13
Mortgage Loan Purchase Agreement.....................S-13
Mortgage Loan Schedule...............................S-27
Mortgaged Property...................................S-14
Mortgagor............................................S-30
Net Interest Shortfall...............................S-45
Net Liquidation Proceeds.............................S-44
Net Prepayment Interest Shortfall....................S-45
Net WAC..............................................S-46
New Proposed Regulations.............................S-71
New Regulations......................................S-71
non-U.S. Person......................................S-72
Offered Certificates.................................S-37
OID..................................................S-70
One Year CMT.........................................S-21
Optional Call........................................S-34
Optional Termination Date............................S-33
Original Applicable Credit Support Percentage........S-50
Original Certificate Principal Balance...............S-47
Original Subordinate Certificate Principal Balance...S-49
Participant..........................................S-38
Pass-Through Rate....................................S-45
Periodic Rate Cap....................................S-14
Plan.................................................S-74
Pool Balance.........................................S-13
Pooling and Servicing Agreement......................S-26
Prepayment Interest Shortfall........................S-31
Prepayment Period....................................S-47
Principal Balance....................................S-13
Principal Distribution Amount........................S-46
Pro Rata Senior Percentage...........................S-48
Prohibited Transactions Tax..........................S-72
PTCE.................................................S-76
Purchase Price.......................................S-27
Put and Call Date....................................S-34
Put Option...........................................S-34
Put Option Period....................................S-33
Rating Agency........................................S-78
Realized Loss........................................S-51
Record Date..........................................S-38
Regular Interest.....................................S-68
Related Documents....................................S-26
Relevant Depositary..................................S-38
Relief Act...........................................S-30
Relief Act Reduction.................................S-45
REMIC................................................S-68
REO Property.........................................S-55
Republic.............................................S-35
Restricted  Group....................................S-75


                                      S-80
<PAGE>


Restricted Classes...................................S-50
S&P..................................................S-78
Seller...............................................S-22
Senior Certificates..................................S-37
Senior Percentage....................................S-48
Senior Prepayment Percentage.........................S-48
Senior Principal Distribution Amount.................S-47
Servicer.............................................S-24
Servicer Remittance Date.............................S-29
Servicing Advance....................................S-30
Servicing Fee........................................S-31
Servicing Fee Rate...................................S-31
SMMEA................................................S-77
Special Hazard Loss Coverage Amount..................S-52
Special Hazard Losses................................S-51
Special Hazard Mortgage Loan.........................S-52
Standby Purchaser....................................S-34
Stated Principal Balance.............................S-47
Structuring Assumptions..............................S-59
Subordinate Certificates.............................S-37
Subordinate Percentage...............................S-48
Subordinate Prepayment Percentage....................S-48
Subordinate Principal Distribution Amount............S-51
Substitution Adjustment..............................S-27
Tax Counsel..........................................S-68
Termination Price....................................S-33
Terms and Conditions.................................S-41
Trust................................................S-13
Trustee..............................................S-31
Trustee Fee Rate.....................................S-31
Two Times Test.......................................S-49
Underwriter..........................................S-77





                                      S-81
<PAGE>
















                     [THIS PAGE INTENTIONALLY LEFT BLANK.]



<PAGE>

                                   PROSPECTUS

                       MORTGAGE PASS-THROUGH CERTIFICATES
                              (ISSUABLE IN SERIES)
                       GREENWICH CAPITAL ACCEPTANCE, INC.
                                    DEPOSITOR

THE CERTIFICATES

Greenwich Capital Acceptance, Inc., as depositor, will sell the certificates.
Each issue of certificates will have its own series designation and will
evidence the ownership of certain trust assets.

Each series of certificates will consist of one or more classes. Each class of
certificates will represent the entitlement to a specified portion of future
interest payments and a specified portion of future principal payments on the
assets in the related trust. In each case, the specified portion may equal from
100% to 0%. A series may include one or more classes of securities that are
senior in right of payment to one or more other classes. One or more classes of
securities may be entitled to receive distributions of principal, interest or
both prior to one or more other classes or before or after certain specified
events have occurred. The related prospectus supplement will specify each of
these features.

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

CONSIDER CAREFULLY THE RISK FACTORS
BEGINNING ON PAGE 6 OF THIS
PROSPECTUS.

The certificates represent obligations
of the trust only and do not represent
an interest in or obligation of the
depositor, the seller, the master
servicer or any of their affiliates.

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

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


THE TRUST AND ITS ASSETS

As specified in the related prospectus supplement, the assets of a trust will
include primarily the following:

     o    mortgage loans secured by senior liens on one- to four-family
          residential properties or participation interests in loans of this
          type;

     o    mortgage loans secured by senior liens on multifamily residential
          properties (including cooperative apartment buildings) or
          participation interests in loans of this type;

     o    conditional sales contracts, installment sales agreements or loan
          agreements secured by manufactured housing;

     o    mortgage pass-through securities issued or guaranteed by the
          Government National Mortgage Association (Ginnie Mae), the Federal
          National Mortgage Association (Fannie Mae) or the Federal Home Loan
          Mortgage Corporation (Freddie Mac); or

     o    private mortgage-backed securities.

Each trust may be subject to early termination in certain circumstances.

MARKET FOR THE CERTIFICATES

No market will exist for the certificates of any series before they are issued.
In addition, even after the certificates of a series have been issued and sold,
there can be no assurance that a resale market will develop.

OFFERS OF THE CERTIFICATES

Offers of the certificates may be made through one or more different methods,
including through underwriters. All certificates will be distributed by, or sold
through underwriters managed by, Greenwich Capital Markets, Inc.

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


                       November 13, 2000
<PAGE>



                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                                         <C>

IMPORTANT NOTICE ABOUT INFORMATION IN THIS PROSPECTUS AND EACH ACCOMPANYING PROSPECTUS SUPPLEMENT...............5

RISK FACTORS....................................................................................................6

THE TRUST FUND.................................................................................................14
The Mortgage Loans--General....................................................................................15
Single Family Loans............................................................................................18
Multifamily Loans..............................................................................................19
Contracts......................................................................................................19
Agency Securities..............................................................................................20
Private Mortgage-Backed Securities.............................................................................26
Incorporation of Certain Information by Reference..............................................................28

USE OF PROCEEDS................................................................................................29

THE DEPOSITOR..................................................................................................29

MORTGAGE LOAN PROGRAM..........................................................................................29
Underwriting Standards.........................................................................................29
Qualifications of Sellers......................................................................................31
Representations by Sellers; Repurchases........................................................................31

DESCRIPTION OF THE CERTIFICATES................................................................................32
General........................................................................................................33
Distributions on Certificates..................................................................................35
Advances.......................................................................................................38
Reports to Certificateholders..................................................................................39

CREDIT ENHANCEMENT.............................................................................................41
General........................................................................................................41
Subordination..................................................................................................41
Mortgage Pool Insurance Policies...............................................................................42
FHA Insurance; VA Guarantees...................................................................................44
Special Hazard Insurance Policies..............................................................................46
Bankruptcy Bonds...............................................................................................47
FHA Insurance on Multifamily Loans.............................................................................48
Reserve Accounts...............................................................................................48
Cross Support..................................................................................................49
Other Insurance, Surety Bonds, Guaranties, Letters of Credit and Similar Instruments or Agreements.............49
Financial Instruments..........................................................................................49

YIELD AND PREPAYMENT CONSIDERATIONS............................................................................50

                                               2
<PAGE>

THE POOLING AND SERVICING AGREEMENT............................................................................52
Assignment of Mortgage Assets..................................................................................52
Payments on Mortgage Loans; Deposits to Certificate Account....................................................54
Sub-Servicing by Sellers.......................................................................................56
Collection Procedures..........................................................................................58
Hazard Insurance...............................................................................................59
Realization upon Defaulted Mortgage Loans......................................................................61
Servicing and Other Compensation and Payment of Expenses.......................................................63
Evidence as to Compliance......................................................................................63
Certain Matters Regarding the Master Servicer and the Depositor................................................64
Events of Default..............................................................................................65
Rights upon Event of Default...................................................................................66
Amendment......................................................................................................66
Termination; Optional Termination..............................................................................67
The Trustee....................................................................................................67

CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS....................................................................68
General........................................................................................................68
Foreclosure/Repossession.......................................................................................71
Environmental Risks............................................................................................74
Rights of Redemption...........................................................................................76
Anti-Deficiency Legislation and Other Limitations on Lenders...................................................76
Due-on-Sale Clauses............................................................................................78
Prepayment Charges.............................................................................................78
Applicability of Usury Laws....................................................................................78
Soldiers' and Sailors' Civil Relief Act........................................................................79

CERTAIN MATERIAL FEDERAL INCOME TAX CONSEQUENCES...............................................................79
General........................................................................................................79
Non-REMIC Certificates.........................................................................................80
Single Class of Senior Certificates............................................................................80
Multiple Classes of Senior Certificates........................................................................84
Possible Application of Contingent Payment Regulations to Certain Non-REMIC Certificates.......................89
Sale or Exchange of a Senior Certificate.......................................................................90
Non-U.S. Persons...............................................................................................90
Information Reporting and Backup Withholding...................................................................91
New Withholding Regulations....................................................................................91

REMIC CERTIFICATES.............................................................................................92
Tiered REMIC Structures........................................................................................93
Regular Certificates...........................................................................................93
Residual Certificates.........................................................................................104
Prohibited Transactions and Other Taxes.......................................................................109
Liquidation and Termination...................................................................................110
Administrative Matters........................................................................................110
Tax-Exempt Investors..........................................................................................110
Non-U.S. Persons..............................................................................................111

                                               3
<PAGE>

Tax-Related Restrictions on Transfers of Residual Certificates................................................111

STATE TAX CONSIDERATIONS......................................................................................114

ERISA CONSIDERATIONS..........................................................................................114

LEGAL INVESTMENT..............................................................................................118

METHOD OF DISTRIBUTION........................................................................................119

LEGAL MATTERS.................................................................................................120

FINANCIAL INFORMATION.........................................................................................121

AVAILABLE INFORMATION.........................................................................................121

RATINGS.......................................................................................................121

INDEX OF DEFINED TERMS........................................................................................122
</TABLE>

                                              4
<PAGE>



              IMPORTANT NOTICE ABOUT INFORMATION IN THIS PROSPECTUS
                   AND EACH ACCOMPANYING PROSPECTUS SUPPLEMENT

Information about each series of certificates is contained in two separate
documents:

     o    this prospectus, which provides general information, some of which
          may not apply to a particular series; and

     o    the accompanying prospectus supplement for a particular series, which
          describes the specific terms of the certificates of that series. If
          the prospectus supplement contains information about a particular
          series that differs from the information contained in this prospectus,
          you should rely on the information in the prospectus supplement.

You should rely only on the information contained in this prospectus and the
accompanying prospectus supplement. We have not authorized anyone to provide you
with information that is different from that contained in this prospectus and
the accompanying prospectus supplement. The information in this prospectus is
accurate only as of the date of this prospectus.

Beginning with the section titled "The Trust Fund", certain capitalized terms
are used in this prospectus to assist you in understanding the terms of the
certificates. The capitalized terms used in this prospectus are defined on the
pages indicated under the caption "Index of Defined Terms" beginning on page 122
of this prospectus.

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



If you require additional information, the mailing address of our principal
executive offices is Greenwich Capital Acceptance, Inc., 600 Steamboat Road,
Greenwich, Connecticut 06830 and the telephone number is (203) 625-2700. For
other means of acquiring additional information about us or a series of
securities, see "The Trust Fund -- Incorporation of Certain Information by
Reference" beginning on page 14 of this prospectus.

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

                                      5


<PAGE>

                                  RISK FACTORS

         You should carefully consider the following information, since it
identifies certain significant sources of risk associated with an investment in
the certificates.

Limited Liquidity......... No market will exist for the certificates of any
                           series before they are issued. In addition, there can
                           be no assurance that a resale market will develop
                           following the issuance and sale of any series of the
                           certificates. Even if a resale market does develop,
                           it might not provide investors with liquidity of
                           investment or continue for the life of the
                           certificates.

Limited Assets............ Unless the applicable prospectus supplement provides
                           otherwise, the certificates of each series will be
                           payable solely from the assets of the related trust,
                           including any applicable credit enhancement, and will
                           not have a claim against the assets of any other
                           trust. Moreover, at the times specified in the
                           related prospectus supplement, certain assets of the
                           trust (and/or the related security account) may be
                           released to the depositor, master servicer, any
                           servicer, credit enhancement provider or other
                           specified person, if:

                           o        all payments then due on the related
                                    certificates have been made;

                           o        adequate provision for future payments on
                                    certain classes of the certificates has been
                                    made; and

                           o        any other payments specified in the related
                                    prospectus supplement have been made.

                           Once released, such assets will no longer be
                           available to make payments to certificateholders.

                           There will be no recourse against the depositor or
                           the master servicer if any required distribution on
                           the certificates is not made.

                           The certificates will not represent an interest in
                           the depositor, the master servicer, any servicer or
                           any of their respective affiliates, nor will the
                           certificates represent an obligation of any of them.
                           The only obligations of the depositor with respect
                           to the related trust or the certificates would arise
                           from the representations and



                                       6
<PAGE>

                           warranties that the depositor may make concerning the
                           related trust assets. The depositor does not have
                           significant assets and is unlikely to have
                           significant assets in the future. If the depositor
                           should be required to repurchase a loan from a trust
                           because of the breach of a representation or
                           warranty, the depositor's sole source of funds for
                           the repurchase would be:

                           o        funds obtained from enforcing any similar
                                    obligation of the seller or originator of
                                    the loan, or

                           o        funds from a reserve account or similar
                                    credit enhancement established to pay for
                                    loan repurchases.

                           In addition, the master servicer may be obligated to
                           make certain advances if loans are delinquent, but
                           only to the extent it deems the advances to be
                           recoverable from amounts it expects to receive on
                           those loans.

Credit Enhancement........ Credit enhancement is intended to reduce the effect
                           of delinquent payments or loan losses on those
                           classes of certificates that have the benefit of the
                           credit enhancement. Nevertheless, the amount of any
                           credit enhancement is subject to the limits described
                           in the related prospectus supplement. Moreover, the
                           amount of credit enhancement may decline or be
                           depleted under certain circumstances before the
                           certificates are paid in full. As a result,
                           certificateholders may suffer losses. In addition,
                           credit enhancement may not cover all potential
                           sources of risk of loss, such as fraud or negligence
                           by a loan originator or other parties.

Financial Instruments..... As described under "Credit Enhancement--Financial
                           Instruments," a trust may include financial
                           instruments to protect against certain risks or to
                           provide certain cash flow characteristics for
                           particular classes of the certificates of a series.
                           If you invest in such a class and the issuer of the
                           financial instruments fails to perform its
                           obligations, the yield to maturity, market price and
                           liquidity of your certificates could be materially
                           adversely affected. In addition, if the issuer of the
                           related financial instruments experiences a credit
                           rating downgrade, the market price and liquidity of
                           your certificates could be reduced. Finally, if the
                           financial instruments are intended to provide an
                           approximate or partial hedge for certain risks or
                           cashflow characteristics, the yield to maturity,
                           market price and liquidity of your certificates could
                           be adversely


                                       7
<PAGE>

                           affected to the extent that the financial
                           instruments do not provide a perfect hedge.

Prepayment and Yield
Considerations............ The timing of principal payments on the certificates
                           of a series will be affected by a number of factors,
                           including the following:

                           o        the extent of prepayments on the underlying
                                    loans in the trust or, if the trust is
                                    comprised of underlying securities, on the
                                    loans backing the underlying securities;

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

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

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

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

                           The rate of prepayment of the loans included in or
                           underlying the assets in each trust may affect the
                           yield to maturity of the certificates.

                           Interest payable on the certificates on any given
                           distribution date will include all interest accrued
                           during the related interest accrual period. The
                           interest accrual period for the certificates of each
                           series will be specified in the applicable prospectus
                           supplement. If the interest accrual period ends two
                           or more days before the related distribution date,
                           your effective yield will be less than it would be if
                           the interest accrual period ended the day before the
                           distribution date. As a result, your effective yield
                           at par would be less than the indicated coupon rate.

Balloon Payments.......... Certain of the underlying loans may not be fully
                           amortizing and may require a substantial principal
                           payment (i.e., a "balloon" payment) at their stated
                           maturity. Loans of this type involve a greater degree
                           of risk than fully amortizing loans since the related
                           borrower must generally be able to refinance the loan
                           or sell the



                                       8
<PAGE>

                           related property prior to the loan's maturity date.
                           The borrower's ability to do so will depend on such
                           factors as the level of available mortgage rates at
                           the time of sale or refinancing, the relative
                           strength of the local housing market, the borrower's
                           equity in the property, the borrower's general
                           financial condition and tax laws.

Nature of Mortgages....... The following factors, among others, could adversely
                           affect property values in such a way that the
                           outstanding balance of the related loans would equal
                           or exceed those values:

                           o        an overall decline in the residential real
                                    estate markets where the properties are
                                    located,

                           o        failure of borrowers to maintain their
                                    properties adequately, and

                           o        natural disasters that are not necessarily
                                    covered by hazard insurance, such as
                                    earthquakes and floods.

                           If property values decline, actual rates of
                           delinquencies, foreclosures and losses on the
                           underlying loans could be higher than those currently
                           experienced by the mortgage lending industry in
                           general.

                           Even if you assume that the properties provide
                           adequate security for the loans, substantial delays
                           could occur before defaulted loans are liquidated and
                           the proceeds forwarded to investors. Property
                           foreclosure actions are regulated by state statutes
                           and rules and are subject to many of the delays and
                           expenses that characterize other types of lawsuits if
                           defenses or counterclaims are made. As a result,
                           foreclosure actions can sometimes take several years
                           to complete. Moreover, some states prohibit a
                           mortgage lender from obtaining a judgment against the
                           borrower for amounts not covered by property proceeds
                           if the property is sold outside of a judicial
                           proceeding. As a result, if a borrower defaults,
                           these restrictions may impede the servicer's ability
                           to dispose of the borrower's property and obtain
                           sufficient proceeds to repay the loan in full. In
                           addition, the servicer is entitled to deduct from
                           liquidation proceeds all the expenses it reasonably
                           incurs in trying to recover on the defaulted loan,
                           including legal fees and costs, real estate taxes,
                           and property preservation and maintenance expenses.

                                       9
<PAGE>

                           State laws generally regulate interest rates and
                           other loan charges, require certain disclosures, and
                           often require licensing of loan originators and
                           servicers. In addition, most states have other laws
                           and public policies for the protection of consumers
                           that prohibit unfair and deceptive practices in the
                           origination, servicing and collection of loans.
                           Depending on the provisions of the particular law or
                           policy and the specific facts and circumstances
                           involved, violations may limit the ability of the
                           servicer to collect interest or principal on the
                           loans. Also, the borrower may be entitled to a refund
                           of amounts previously paid and the servicer may be
                           subject to damage claims and administrative
                           sanctions.

Environmental Risks....... Federal, state and local laws and regulations impose
                           a wide range of requirements on activities that may
                           affect the environment, health and safety. In certain
                           circumstances, these laws and regulations impose
                           obligations on owners or operators of residential
                           properties such as those that secure the loans
                           included in a trust. Failure to comply with these
                           laws and regulations can result in fines and
                           penalties that could be assessed against the trust as
                           owner of the related property.

                           In some states, a lien on the property due to
                           contamination has priority over the lien of an
                           existing mortgage. Further, a mortgage lender may be
                           held liable as an "owner" or "operator" for costs
                           associated with the release of petroleum from an
                           underground storage tank under certain circumstances.
                           If the trust is considered the owner or operator of a
                           property, it will suffer losses as a result of any
                           liability imposed for environmental hazards on the
                           property.

Certain Other Legal
Considerations Regarding
the Loans................. The loans may also be subject to federal laws
                           relating to the origination and underwriting. These
                           laws

                           o        require certain disclosures to the borrowers
                                    regarding the terms of the loans;

                           o        prohibit discrimination on the basis of age,
                                    race, color, sex, religion, marital status,
                                    national origin, receipt of public
                                    assistance or the exercise of any right
                                    under the consumer credit protection act, in
                                    the extension of credit;

                                       10
<PAGE>

                           o        regulate the use and reporting of
                                    information related to the borrower's credit
                                    experience; and

                           o        require additional application disclosures,
                                    limit changes that may be made to the loan
                                    documents without the borrower's consent and
                                    restrict a lender's ability to declare a
                                    default or to suspend or reduce a borrower's
                                    credit limit to certain enumerated events.

                           Certain loans are also subject to federal laws which
                           impose additional disclosure requirements on
                           creditors with respect to non-purchase money mortgage
                           loans with high interest rates or high up-front fees
                           and charges. These laws can impose specific statutory
                           liabilities upon creditors that fail to comply and
                           may affect the enforceability of the related loans.
                           In addition, any assignee of the creditor (including
                           the trust) would generally be subject to all claims
                           and defenses that the borrower could assert against
                           the creditor, including the right to rescind the
                           loan.

                           Certain loans relating to home improvement contracts
                           are subject to federal laws that protect the borrower
                           from defective or incomplete work by a contractor.
                           These laws permit the borrower to withhold payment if
                           the work does not meet the quality and durability
                           standards agreed to between the borrower and the
                           contractor. These laws have the effect of subjecting
                           any assignee of the seller (including the trust) to
                           all claims and defenses which the borrower in a sale
                           transaction could assert against the seller of
                           defective goods.

                           If certain provisions of these federal laws are
                           violated, the master servicer may be unable to
                           collect all or part of the principal or interest on
                           the loans. The trust also could be subject to damages
                           and administrative enforcement.

Ratings of the
Certificates.............  Any class of certificates issued under this
                           prospectus and the accompanying prospectus supplement
                           will be rated in one of the four highest rating
                           categories of a nationally recognized rating agency.
                           A rating is based on the adequacy of the value of the
                           trust assets and any credit enhancement for that
                           class and reflects the rating agency's assessment of
                           how likely it is that holders of the class of
                           certificates will receive the payments to which they
                           are entitled. A rating does not constitute an
                           assessment of how likely it is that principal
                           prepayments on the

                                       11
<PAGE>

                           underlying loans will be made, the degree to which
                           the rate of prepayments might differ from that
                           originally anticipated or the likelihood of early,
                           optional termination of the certificates. You must
                           not view a rating as a recommendation to purchase,
                           hold or sell certificates because it does not address
                           the market price or suitability of the certificates
                           for any particular investor.

                           There is no assurance that any rating will remain in
                           effect for any given period of time or that the
                           rating agency will not lower or withdraw it entirely
                           in the future. The rating agency could lower or
                           withdraw its rating due to:

                           o        any decrease in the adequacy of the value of
                                    the trust assets or any related credit
                                    enhancement,

                           o        an adverse change in the financial or other
                                    condition of a credit enhancement provider
                                    or

                           o        a change in the rating of the credit
                                    enhancement provider's long-term debt.

Book-Entry Registration... Limit on Liquidity of Certificates. Certificates
                           issued in book-entry form may have only limited
                           liquidity in the resale market, since investors may
                           be unwilling to purchase certificates for which they
                           cannot obtain physical instruments.

                           Limit on Ability to Transfer or Pledge. Transactions
                           in book-entry certificates can be effected only
                           through The Depository Trust Company ("DTC"), its
                           participating organizations, its indirect
                           participants and certain banks. As a result, your
                           ability to transfer or pledge certificates issued in
                           book-entry form may be limited.

                           Delays in Distributions. You may experience some
                           delay in the receipt of distributions on book-entry
                           certificates since the distributions will be
                           forwarded by the trustee to DTC for DTC to credit the
                           accounts of its participants. In turn, these
                           participants will thereafter credit the distributions
                           to your account either directly or indirectly through
                           indirect participants.

Pre-Funding Accounts...... The related prospectus supplement may provide that
                           the depositor deposit a specified amount in a
                           pre-funding account on the date the securities are
                           issued. In this case, the deposited funds may only be
                           used to acquire



                                       12
<PAGE>

                           additional assets for the trust during a set period
                           after the initial issuance of the certificates. Any
                           amounts remaining in the account at the end of the
                           period will be distributed as a prepayment of
                           principal to the holders of the related certificates.

Lower Credit Quality
Trust Fund Assets......... Certain of the trust assets may have been made to
                           lower credit quality borrowers who fall into one of
                           two categories:

                           o        customers with moderate income, limited
                                    assets and other income characteristics
                                    that cause difficulty in borrowing from
                                    banks and other traditional lenders; and

                           o        customers with a history of irregular
                                    employment, previous bankruptcy filings,
                                    repossession of property, charged-off loans
                                    or garnishment of wages.

                           The average interest rate charged on loans made to
                           these types of borrowers is generally higher than
                           that charged by lenders that typically impose more
                           stringent credit requirements. There is a greater
                           likelihood of late payments on loans made to these
                           types of borrowers than on loans to borrowers with a
                           higher credit quality. Payments from borrowers with a
                           lower credit quality are more likely to be sensitive
                           to changes in the economic climate in the areas in
                           which they reside.

Delinquent Trust
Fund Assets............... No more than 20% (by principal balance) of the trust
                           assets for any particular series of certificates will
                           be contractually delinquent as of the related
                           cut-off date.

Other Considerations...... There is no assurance that the value of the trust
                           assets for any series of certificates at any time
                           will equal or exceed the principal amount of the
                           outstanding certificates of the series. If trust
                           assets have to be sold because of an event of
                           default or otherwise, providers of services to the
                           trust (including the trustee, the master servicer
                           and the credit enhancer, if any) generally will be
                           entitled to receive the proceeds of the sale to the
                           extent of their unpaid fees and other amounts due
                           them before any proceeds are paid to investors. As
                           a result, the proceeds of such a sale may be
                           insufficient to pay the full amount of interest and
                           principal of the related certificates.

                                       13

<PAGE>


                                 THE TRUST FUND

         The trust fund (each, a "TRUST FUND") for each series (each, a
"SERIES") of Mortgage Pass-Through Certificates (the "CERTIFICATES") will be
held by the Trustee for the benefit of the related Certificateholders. Each
Trust Fund will consist of certain mortgage-related assets (the "MORTGAGE
ASSETS") consisting of a mortgage pool (a "MORTGAGE POOL") comprised of (i)
first lien mortgage loans (or participation interests therein) secured by one-
to four-family residential properties ("SINGLE FAMILY LOANS"), (ii) first lien
mortgage loans (or participation interests therein) secured by multifamily
residential properties, including cooperative apartment buildings ("MULTIFAMILY
LOANS"), (iii) conditional sales contracts and installment sales or loan
agreements secured by manufactured housing ("CONTRACTS"), (iv) mortgage
pass-through securities (the "AGENCY SECURITIES") issued or guaranteed by the
Government National Mortgage Association ("GINNIE MAE"), the Federal National
Mortgage Association ("FANNIE MAE") or the Federal Home Loan Mortgage
Corporation ("FREDDIE MAC") or (v) Private Mortgage-Backed Securities (as
defined herein), in each case, as specified in the related Prospectus
Supplement, together with payments in respect of such Mortgage Assets and
certain other accounts, obligations or agreements, in each case as specified in
the related Prospectus Supplement.

         The Certificates* will be entitled to payment from the assets of the
related Trust Fund or Funds or other assets pledged for the benefit of the
holders of the Certificates as specified in the related Prospectus Supplement
and will not be entitled to payments in respect of the assets of any other trust
fund established by the Depositor. Unless otherwise specified in the related
Prospectus Supplement, the Mortgage Assets of any Trust Fund will consist of
Mortgage Loans, Agency Securities or Private Mortgage-Backed Securities but not
a combination thereof.

         The Mortgage Loans and Agency Securities will be acquired by the
Depositor, either directly or through affiliates, from originators or sellers
which may be affiliates of the Depositor (the "SELLERS"), and conveyed by the
Depositor to the related Trust Fund. Mortgage Loans acquired by the Depositor
will have been originated in accordance with the underwriting criteria specified
below under "Mortgage Loan Program--Underwriting Standards" or as otherwise
described in a related Prospectus Supplement. See "Mortgage Loan
Program--Underwriting Standards".

         The following is a brief description of the Mortgage Assets expected to
be included in the Trust Funds. If specific information respecting the Mortgage
Assets is not known at the time the related Series of Certificates initially is
offered, more general information of the nature described below will be provided
in the related Prospectus Supplement, and specific information will be set forth
in a report on Form 8-K to be filed with the Securities and Exchange Commission
within


------------
     *  Whenever the terms "Mortgage Pool" and "Certificates" are used in this
Prospectus, such terms will be deemed to apply, unless the context indicates
otherwise, to one specific Mortgage Pool and the Certificates representing
certain undivided interests, as described below, in a single Trust Fund
consisting primarily of the Mortgage Loans in such Mortgage Pool. Similarly, the
term "Pass-Through Rate" will refer to the Pass-Through Rate borne by the
Certificates of one specific Series and the term "Trust Fund" will refer to one
specific Trust Fund.



                                       14
<PAGE>


fifteen days after the initial issuance of such Certificates (the "DETAILED
DESCRIPTION"). A copy of the Agreement with respect to each Series of
Certificates will be attached to the Form 8-K and will be available for
inspection at the corporate trust office of the Trustee specified in the related
Prospectus Supplement. A schedule of the Mortgage Assets relating to such Series
will be attached to the Agreement delivered to the Trustee upon delivery of the
Certificates.

THE MORTGAGE LOANS--GENERAL

         For purposes hereof, Single Family Loans, Multifamily Loans and
Contracts are collectively referred to as "MORTGAGE LOANS", and the real
property and Manufactured Homes, as the case may be, which secure repayment of
the Mortgage Loans are collectively referred to as "MORTGAGED PROPERTIES". The
Mortgaged Properties may be located in any one of the fifty states, the District
of Columbia, Guam, Puerto Rico or any other territory of the United States.
Mortgage Loans with certain Loan-to-Value Ratios and/or certain principal
balances may be covered wholly or partially by primary mortgage guaranty
insurance policies (each, a "PRIMARY MORTGAGE INSURANCE POLICY"). The existence,
extent and duration of any such coverage will be described in the applicable
Prospectus Supplement.

         Unless otherwise specified in the related Prospectus Supplement, all of
the Mortgage Loans in a Mortgage Pool* will have monthly payments due on the
first day of each month. The payment terms of the Mortgage Loans to be included
in a Trust Fund will be described in the related Prospectus Supplement and may
include any of the following features or combination thereof or other features
described in the related Prospectus Supplement:

     (a)  Interest may be payable at a fixed rate, a rate adjustable from time
          to time in relation to an index (which will be specified in the
          related Prospectus Supplement), a rate that is fixed for a period of
          time or under certain circumstances and is followed by an adjustable
          rate, a rate that otherwise varies from time to time or a rate that is
          convertible from an adjustable rate to a fixed rate. Changes to an
          adjustable rate may be subject to periodic limitations, maximum rates,
          minimum rates or a combination of such limitations. Accrued interest
          may be deferred and added to the principal of a loan for such periods
          and under such circumstances as may be specified in the related
          Prospectus Supplement. Mortgage Loans may provide for the payment of
          interest at a rate lower than the specified interest rate borne by
          such Mortgage Loan (the "MORTGAGE RATE") for a period of time or for
          the life of the loan, and the amount of any difference may be
          contributed from funds supplied by the seller of the Mortgaged
          Property or another source.


--------
     *   Whenever the terms "Mortgage Pool" and "Certificates" are used in this
Prospectus, such terms will be deemed to apply, unless the context indicates
otherwise, to one specific Mortgage Pool and the Certificates representing
certain undivided interests, as described below, in a single Trust Fund
consisting primarily of the Mortgage Loans in such Mortgage Pool. Similarly, the
term "Pass-Through Rate" will refer to the Pass-Through Rate borne by the
Certificates of one specific Series and the term "Trust Fund" will refer to one
specific Trust Fund.


                                       15
<PAGE>




     (b)  Principal may be payable on a level debt service basis to fully
          amortize the Mortgage Loan over its term, may be calculated on the
          basis of an assumed amortization schedule that is significantly longer
          than the original term to maturity or on an interest rate that is
          different from the interest rate on the Mortgage Loan or may not be
          amortized during all or a portion of the original term. Payment of all
          or a substantial portion of the principal may be due on maturity (a
          "balloon payment"). Principal may include interest that has been
          deferred and added to the principal balance of the Mortgage Loan.

     (c)  Monthly payments of principal and interest may be fixed for the life
          of the Mortgage Loan, may increase over a specified period of time or
          may change from period to period. Mortgage Loans may include limits on
          periodic increases or decreases in the amount of monthly payments and
          may include maximum or minimum amounts of monthly payments.

     (d)  Prepayments of principal may be subject to a prepayment fee, which may
          be fixed for the life of the Mortgage Loan or may decline over time,
          and may be prohibited for the life of the Mortgage Loan or for certain
          periods ("lockout periods"). Certain Mortgage Loans may permit
          prepayments after expiration of the applicable lockout period and may
          require the payment of a prepayment fee in connection with any such
          subsequent prepayment. Other Mortgage Loans may permit prepayments
          without payment of a fee unless the prepayment occurs during specified
          time periods. The Mortgage Loans may include "due-on-sale" clauses
          which permit the mortgagee to demand payment of the entire Mortgage
          Loan in connection with the sale or certain transfers of the related
          Mortgaged Property. Other Mortgage Loans may be assumable by persons
          meeting the then applicable underwriting standards of the Seller.

         Each Prospectus Supplement will contain information, as of the date of
such Prospectus Supplement and to the extent then specifically known to the
Depositor, with respect to the Mortgage Loans contained in the related Mortgage
Pool, including (i) the aggregate outstanding principal balance and the average
outstanding principal balance of the Mortgage Loans as of the applicable Cut-off
Date, (ii) the type of property securing each Mortgage Loan (e.g., one- to
four-family houses, individual units in condominium projects or in buildings
owned by cooperative housing corporations, vacation and second homes,
Manufactured Homes, multifamily apartments or other real property), (iii) the
original terms to maturity of the Mortgage Loans, (iv) the largest principal
balance and the smallest principal balance of any of the Mortgage Loans, (v) the
earliest origination date and latest maturity date of any of the Mortgage Loans,
(vi) the aggregate principal balance of Mortgage Loans having Loan-to-Value
Ratios at origination exceeding 80%, (vii) the Mortgage Rates or APRs or range
of Mortgage Rates or APRs borne by the Mortgage Loans, and (viii) the
geographical location of the related Mortgaged Properties on a state-by-state
basis. If specific information respecting the Mortgage Loans is not known to the
Depositor at the time the related Certificates are initially offered, more
general information of the nature described above will be provided in the
related Prospectus Supplement, and specific information will be set forth in the
Detailed Description.

         The "LOAN-TO-VALUE RATIO" of a Mortgage Loan at any given time is the
ratio, expressed as a percentage, of the then outstanding principal balance of
the Mortgage Loan to the Collateral Value of the related Mortgaged Property.
Unless otherwise specified in the related Prospectus

                                       16
<PAGE>



Supplement, the "COLLATERAL VALUE" of a Mortgaged Property, other than with
respect to Contracts and certain Mortgage Loans the proceeds of which were used
to refinance an existing mortgage loan ("REFINANCE LOANS"), is the lesser of (a)
the appraised value determined in an appraisal obtained by the originator at
origination of such Mortgage Loan and (b) the sales price for such property. In
the case of Refinance Loans, the "COLLATERAL VALUE" of the related Mortgaged
Property is the appraised value thereof determined in an appraisal obtained at
the time of refinancing. Unless otherwise specified in the related Prospectus
Supplement, for purposes of calculating the Loan-to-Value Ratio of a Contract
relating to a new Manufactured Home, the Collateral Value is no greater than the
sum of a fixed percentage of the list price of the unit actually billed by the
manufacturer to the dealer (exclusive of freight to the dealer site) including
"accessories" identified in the invoice (the "MANUFACTURER INVOICE PRICE"), plus
the actual cost of any accessories purchased from the dealer, a delivery and
set-up allowance, depending on the size of the unit), and the cost of state and
local taxes, filing fees and up to three years' prepaid hazard insurance
premiums. Unless otherwise specified in the related Prospectus Supplement, the
Collateral Value of a used Manufactured Home is the least of the sales price,
appraised value, and National Automobile Dealers' Association book value plus
prepaid taxes and hazard insurance premiums. The appraised value of a
Manufactured Home is based upon the age and condition of the manufactured
housing unit and the quality and condition of the mobile home park in which it
is situated, if applicable.

         No assurance can be given that values of the Mortgaged Properties have
remained or will remain at their levels on the dates of origination of the
related Mortgage Loans. If the residential real estate market should experience
an overall decline in property values such that the outstanding principal
balances of the Mortgage Loans, and any secondary financing on the Mortgaged
Properties, in a particular Mortgage Pool become equal to or greater than the
value of the Mortgaged Properties, the actual rates of delinquencies,
foreclosures and losses could be higher than those now generally experienced in
the mortgage lending industry. In addition, adverse economic conditions and
other factors (which may or may not affect real property values) may affect the
timely payment by borrowers of scheduled payments of principal and interest on
the Mortgage Loans and, accordingly, the actual rates of delinquencies,
foreclosures and losses with respect to any Mortgage Pool. In the case of
Multifamily Loans, such other factors could include excessive building resulting
in an oversupply of rental housing stock or a decrease in employment reducing
the demand for rental units in an area; federal, state or local regulations and
controls affecting rents; prices of goods and energy; environmental
restrictions; increasing labor and material costs; and the relative
attractiveness to tenants of the Mortgaged Properties. To the extent that such
losses are not covered by subordination provisions or alternative arrangements,
such losses will be borne, at least in part, by the holders of the Certificates
of the related Series.

         The Depositor will cause the Mortgage Loans comprising each Mortgage
Pool to be assigned to the Trustee named in the related Prospectus Supplement
for the benefit of the holders of the Certificates of the related Series. The
Master Servicer named in the related Prospectus Supplement will service the
Mortgage Loans, either directly or through other mortgage servicing institutions
(each, a "SUB-SERVICER"), pursuant to a Pooling and Servicing Agreement (each,
an "AGREEMENT") among the Depositor, the Master Servicer and the Trustee, and
will receive a fee for such services. See "Mortgage Loan Program" and "The
Pooling and Servicing Agreement". With respect to Mortgage Loans serviced by the
Master Servicer through a Sub-Servicer, the

                                       17
<PAGE>


Master Servicer will remain liable for its servicing obligations under the
related Agreement as if the Master Servicer alone were servicing such Mortgage
Loans.

         Unless otherwise specified in the related Prospectus Supplement, the
only obligations of the Depositor with respect to a Series of Certificates will
be to obtain certain representations and warranties from the Sellers and to
assign to the Trustee for such Series of Certificates the Depositor's rights
with respect to such representations and warranties. See "The Pooling and
Servicing Agreement--Assignment of Mortgage Assets". The obligations of the
Master Servicer with respect to the Mortgage Loans will consist principally of
its contractual servicing obligations under the related Agreement (including its
obligation to enforce the obligations of the Sub-Servicers or Sellers, or both,
as more fully described herein under "Mortgage Loan Program--Representations by
Sellers; Repurchases" and "The Pooling and Servicing Agreement--Sub-Servicing by
Sellers" and "--Assignment of Mortgage Assets") and its obligation to make
certain cash advances in the event of delinquencies in payments on or with
respect to the Mortgage Loans in the amounts described herein under "Description
of the Certificates--Advances". The obligations of the Master Servicer to make
advances may be subject to limitations, to the extent provided herein and in the
related Prospectus Supplement.

SINGLE FAMILY LOANS

         Unless otherwise specified in the related Prospectus Supplement, Single
Family Loans will consist of mortgage loans, deeds of trust or participations or
other beneficial interests therein, secured by first liens on one- to
four-family residential properties. If so specified in the related Prospectus
Supplement, Single Family Loans may include cooperative apartment loans
("COOPERATIVE LOANS") secured by security interests in shares issued by private,
non-profit, cooperative housing corporations ("COOPERATIVES") and in the related
proprietary leases or occupancy agreements granting exclusive rights to occupy
specific dwelling units in such Cooperatives' buildings. If so specified in the
related Prospectus Supplement, the Mortgage Assets of the related Trust Fund may
include mortgage participation certificates evidencing interests in Single
Family Loans. Such loans may be conventional loans (i.e., loans that are not
insured or guaranteed by any governmental agency), loans insured by the Federal
Housing Administration (the "FHA") or partially guaranteed by the Veterans
Administration (the "VA"), as specified in the related Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, Single Family
Loans will all have individual principal balances at origination of not less
than $25,000 and not more than $1,000,000, and original terms to stated maturity
of from ten to 40 years.

         The Mortgaged Properties relating to Single Family Loans will consist
of detached or semi-detached one-family dwelling units, two- to four-family
dwelling units, townhouses, rowhouses, individual condominium units, individual
units in planned unit developments, and certain other dwelling units. Such
Mortgaged Properties may include vacation and second homes, investment
properties and leasehold interests. In the case of leasehold interests, the term
of the leasehold will exceed the scheduled maturity of the Mortgage Loan by at
least five years, unless otherwise specified in the related Prospectus
Supplement.

                                       18
<PAGE>

MULTIFAMILY LOANS

         Multifamily Loans will consist of mortgage loans, deeds of trust or
participations or other beneficial interests therein, secured by first liens on
rental apartment buildings or projects containing five or more residential
units. If so specified in the related Prospectus Supplement, the Mortgage Assets
of the related Trust Fund may include mortgage participation certificates
evidencing interests in Multifamily Loans. Such loans may be conventional loans
or FHA-insured loans, as specified in the related Prospectus Supplement. Unless
otherwise specified in the related Prospectus Supplement, Multifamily Loans will
all have original terms to stated maturity of not more than 40 years.

         Mortgaged Properties which secure Multifamily Loans may include
high-rise, mid-rise and garden apartments. Certain of the Multifamily Loans may
be secured by apartment buildings owned by Cooperatives. A Cooperative owns all
the apartment units in its building and all common areas and is owned by
tenant-stockholders who, through ownership of stock, shares or membership
certificates in the corporation, receive proprietary leases or occupancy
agreements which confer exclusive rights to occupy specific apartments or units.
Generally, a tenant-stockholder of a Cooperative must make a monthly payment to
the Cooperative representing such tenant-stockholder's pro rata share of the
Cooperative's payments for the Cooperative's mortgage loan, real property taxes,
maintenance expenses and other capital or ordinary expenses. Those payments are
in addition to any payments of principal and interest the tenant-stockholder
must make on any loans to the tenant-stockholder secured by his shares in the
Cooperative. The Cooperative will be directly responsible for building
management and, in most cases, payment of real estate taxes and hazard and
liability insurance. A Cooperative's ability to meet debt service obligations on
a Multifamily Loan, as well as all other operating expenses, will be dependent
in large part on the receipt of maintenance payments from the
tenant-stockholders, as well as any rental income from units or commercial areas
the Cooperative might control. Unanticipated expenditures may in some cases have
to be paid by special assessments on the tenant-stockholders.

CONTRACTS

         The Contracts will consist of manufactured housing conditional sales
contracts and installment sales or loan agreements each secured by a
Manufactured Home. Contracts may be conventional, insured by the FHA or
partially guaranteed by the VA, as specified in the related Prospectus
Supplement. Unless otherwise specified in the related Prospectus Supplement,
each Contract will be fully amortizing and will bear interest at a fixed
percentage rate ("APR"). Unless otherwise specified in the related Prospectus
Supplement, Contracts will all have individual principal balances at origination
of not less than $10,000 and not more than $1,000,000 and original terms to
stated maturity of from five to 30 years.

         "MANUFACTURED HOMES" securing the Contracts will consist of
manufactured homes within the meaning of 42 U.S.C. ss. 5402(6) which defines a
"manufactured home" as "a structure, transportable in one or more sections
which, in the traveling mode, is eight body feet or more in width or forty body
feet or more in length or, when erected on site, is three hundred twenty or more
square feet, and which is built on a permanent chassis and designed to be used
as a dwelling with or without a permanent foundation when connected to the
required utilities, and


                                       19
<PAGE>


includes the plumbing, heating, air conditioning, and electrical systems
contained therein; except that such term shall include any structure which meets
all the requirements of this paragraph except the size requirements and with
respect to which the manufacturer voluntarily files a certification required by
the Secretary of Housing and Urban Development and complies with the standards
established under this chapter."

         The related Prospectus Supplement will specify for the Contracts
contained in the related Trust Fund, among other things, the dates of
origination of the Contracts, the APRs on the Contracts, the Loan-to-Value
Ratios of the Contracts, the minimum and maximum outstanding principal balances
as of the Cut-off Date and the average outstanding principal balance, the
outstanding principal balances of the Contracts included in the related Trust
Fund, and the original maturities of the Contracts and the last maturity date of
any Contract.

AGENCY SECURITIES

         Government National Mortgage Association. The Government National
Mortgage Association ("Ginnie Mae") is a wholly-owned corporate instrumentality
of the United States within the Department of Housing and Urban Development.
Section 306(g) of Title II of the National Housing Act of 1934, as amended (the
"HOUSING ACT"), authorizes Ginnie Mae to guarantee the timely payment of the
principal of and interest on certificates which represent an interest in a pool
of mortgage loans insured by the FHA under the Housing Act or under Title V of
the Housing Act of 1949 ("FHA LOANS"), or partially guaranteed by the VA under
the Servicemen's Readjustment Act of 1944, as amended, or Chapter 37 of Title 38
of the United States Code ("VA LOANS").

         Section 306(g) of the Housing Act provides that "the full faith and
credit of the United States is pledged to the payment of all amounts which may
be required to be paid under any guaranty under this subsection." In order to
meet its obligations under any such guarantee, Ginnie Mae may, under Section
306(d) of the Housing Act, borrow from the United States Treasury in an
unlimited amount which is at any time sufficient to enable Ginnie Mae to perform
its obligations under its guarantee.

         Ginnie Mae Certificates. Each "GINNIE MAE CERTIFICATE" held in a Trust
Fund will be a "fully modified pass-through" mortgage-backed certificate issued
and serviced by a mortgage banking company or other financial concern (a "GINNIE
MAE ISSUER") approved by Ginnie Mae or approved by Fannie Mae as a
seller-servicer of FHA Loans and/or VA Loans. The Ginnie Mae Certificates may be
issued under either the Ginnie Mae I program ("GINNIE MAE I CERTIFICATES") or
under the Ginnie Mae II program ("GINNIE MAE II CERTIFICATES"). The mortgage
loans underlying the Ginnie Mae Certificates will consist of FHA Loans and/or VA
Loans. Each such mortgage loan is secured by a one- to four-family or
multifamily residential property. Ginnie Mae will approve the issuance of each
such Ginnie Mae Certificate in accordance with a guaranty agreement (each, a
"GUARANTY AGREEMENT") between Ginnie Mae and the Ginnie Mae Issuer. Pursuant to
its Guaranty Agreement, a Ginnie Mae Issuer will be required to advance its own
funds in order to make timely payments of all amounts due on each such Ginnie
Mae Certificate, even if the payments received by the Ginnie Mae Issuer on the
FHA Loans or VA Loans underlying each such Ginnie Mae Certificate are less than
the amounts due on each such Ginnie Mae Certificate.

                                       20
<PAGE>

         The full and timely payment of principal of and interest on each Ginnie
Mae Certificate will be guaranteed by Ginnie Mae, which obligation is backed by
the full faith and credit of the United States. Each such Ginnie Mae Certificate
will have an original maturity of not more than 30 years (but may have original
maturities of substantially less than 30 years). Each such Ginnie Mae
Certificate will be based on and backed by a pool of FHA Loans or VA Loans
secured by one- to four-family residential properties and will provide for the
payment by or on behalf of the Ginnie Mae Issuer to the registered holder of
such Ginnie Mae Certificate scheduled monthly payments of principal and interest
equal to the registered holder's proportionate interest in the aggregate amount
of the monthly principal and interest payment on each FHA Loan or VA Loan
underlying such Ginnie Mae Certificate, less the applicable servicing and
guarantee fee which together equal the difference between the interest on the
FHA Loan or VA Loan and the pass-through rate on the Ginnie Mae Certificate. In
addition, each payment will include proportionate pass-through payments of any
prepayments of principal on the FHA Loans or VA Loans underlying such Ginnie Mae
Certificate and liquidation proceeds in the event of a foreclosure or other
disposition of any such FHA Loans or VA Loans.

         If a Ginnie Mae Issuer is unable to make the payments on a Ginnie Mae
Certificate as it becomes due, it must promptly notify Ginnie Mae and request
Ginnie Mae to make such payment. Upon notification and request, Ginnie Mae will
make such payments directly to the registered holder of such Ginnie Mae
Certificate. In the event no payment is made by a Ginnie Mae Issuer and the
Ginnie Mae Issuer fails to notify and request Ginnie Mae to make such payment,
the holder of such Ginnie Mae Certificate will have recourse only against Ginnie
Mae to obtain such payment. The Trustee or its nominee, as registered holder of
the Ginnie Mae Certificates held in a Trust Fund, will have the right to proceed
directly against Ginnie Mae under the terms of the Guaranty Agreements relating
to such Ginnie Mae Certificates for any amounts that are not paid when due.

         All mortgage loans underlying a particular Ginnie Mae I Certificate
must have the same interest rate (except for pools of mortgage loans secured by
manufactured homes) over the term of the loan. The interest rate on such Ginnie
Mae I Certificate will equal the interest rate on the mortgage loans included in
the pool of mortgage loans underlying such Ginnie Mae I Certificate, less
one-half percentage point per annum of the unpaid principal balance of the
mortgage loans.

         Mortgage loans underlying a particular Ginnie Mae II Certificate may
have per annum interest rates that vary from each other by up to one percentage
point. The interest rate on each Ginnie Mae II Certificate will be between
one-half percentage point and one and one-half percentage points lower than the
highest interest rate on the mortgage loans included in the pool of mortgage
loans underlying such Ginnie Mae II Certificate (except for pools of mortgage
loans secured by manufactured homes).

         Regular monthly installment payments on each Ginnie Mae Certificate
held in a Trust Fund will be comprised of interest due as specified on such
Ginnie Mae Certificate plus the scheduled principal payments on the FHA Loans or
VA Loans underlying such Ginnie Mae Certificate due on the first day of the
month in which the scheduled monthly installments on such Ginnie Mae Certificate
are due. Such regular monthly installments on each such Ginnie Mae Certificate
are required to be paid to the Trustee as registered holder by the 15th day of
each month in the case of a Ginnie Mae I Certificate and are required to be
mailed to the Trustee by

                                       21
<PAGE>



the 20th day of each month in the case of a Ginnie Mae II Certificate. Any
principal prepayments on any FHA Loans or VA Loans underlying a Ginnie Mae
Certificate held in a Trust Fund or any other early recovery of principal on
such loan will be passed through to the Trustee as the registered holder of such
Ginnie Mae Certificate.

         Ginnie Mae Certificates may be backed by graduated payment mortgage
loans or by "buydown" mortgage loans for which funds will have been provided
(and deposited into escrow accounts) for application to the payment of a portion
of the borrowers' monthly payments during the early years of such mortgage
loans. Payments due the registered holders of Ginnie Mae Certificates backed by
pools containing "buydown" mortgage loans will be computed in the same manner as
payments derived from other Ginnie Mae Certificates and will include amounts to
be collected from both the borrower and the related escrow account. The
graduated payment mortgage loans will provide for graduated interest payments
that, during the early years of such mortgage loans, will be less than the
amount of stated interest on such mortgage loans. The interest not so paid will
be added to the principal of such graduated payment mortgage loans and, together
with interest thereon, will be paid in subsequent years. The obligations of
Ginnie Mae and of a Ginnie Mae Issuer will be the same irrespective of whether
the Ginnie Mae Certificates are backed by graduated payment mortgage loans or
"buydown" mortgage loans. No statistics comparable to the FHA's prepayment
experience on level payment, non-"buydown" mortgage loans are available in
respect of graduated payment or "buydown" mortgages. Ginnie Mae Certificates
related to a Series of Certificates may be held in book-entry form.

         If specified in a Prospectus Supplement, Ginnie Mae Certificates may be
backed by multifamily mortgage loans having the characteristics specified in
such Prospectus Supplement.

         Federal Home Loan Mortgage Corporation. The Federal Home Loan Mortgage
Corporation ("Freddie Mac") is a shareholder-owned, government sponsored
enterprise created pursuant to Title III of the Emergency Home Finance Act of
1970, as amended (the "FREDDIE MAC ACT"). Freddie Mac was established primarily
for the purpose of increasing the availability of mortgage credit for the
financing of urgently needed housing. It seeks to provide an enhanced degree of
liquidity for residential mortgage investments primarily by assisting in the
development of secondary markets for conventional mortgages. The principal
activity of Freddie Mac currently consists of the purchase of first lien
conventional mortgage loans or participation interests in such mortgage loans
and the sale of the mortgage loans or participations so purchased in the form of
mortgage securities, primarily Freddie Mac Certificates. Freddie Mac is confined
to purchasing, so far as practicable, mortgage loans that it deems to be of such
quality, type and class as to meet generally the purchase standards imposed by
private institutional mortgage investors.

         Freddie Mac Certificates. Each Freddie Mac Certificate represents an
undivided interest in a pool of mortgage loans that may consist of first lien
conventional loans, FHA Loans or VA Loans (a "FREDDIE MAC CERTIFICATE GROUP"),
Freddie Mac Certificates are sold under the terms of a Mortgage Participation
Certificate Agreement. A Freddie Mac Certificate may be issued under either
Freddie Mac's Cash Program or its Guarantor Program.

         Mortgage loans underlying the Freddie Mac Certificates held by a Trust
Fund will consist of mortgage loans with original terms to maturity of from ten
to 40 years. Each such mortgage

                                       22
<PAGE>



loan must meet the applicable standards set forth in the Freddie Mac Act. A
Freddie Mac Certificate Group may include whole loans, participation interests
in whole loans and undivided interests in whole loans and/or participations
comprising another Freddie Mac Certificate Group. Under the Guarantor Program,
any such Freddie Mac Certificate Group may include only whole loans or
participation interests in whole loans.

         Freddie Mac guarantees to each registered holder of a Freddie Mac
Certificate the timely payment of interest on the underlying mortgage loans to
the extent of the applicable Certificate rate on the registered holder's pro
rata share of the unpaid principal balance outstanding on the underlying
mortgage loans in the Freddie Mac Certificate Group represented by such Freddie
Mac Certificate, whether or not received. Freddie Mac also guarantees to each
registered holder of a Freddie Mac Certificate collection by such holder of all
principal on the underlying mortgage loans, without any offset or deduction, to
the extent of such holder's pro rata share thereof, but does not, except if and
to the extent specified in the related Prospectus Supplement for a Series of
Certificates, guarantee the timely payment of scheduled principal. Under Freddie
Mac's Gold PC Program, Freddie Mac guarantees the timely payment of principal
based on the difference between the pool factor, published in the month
preceding the month of distribution, and the pool factor published in such month
of distribution. Pursuant to its guarantees, Freddie Mac indemnifies holders of
Freddie Mac Certificates against any diminution in principal by reason of
charges for property repairs, maintenance and foreclosure. Freddie Mac may remit
the amount due on account of its guaranty of collection of principal at any time
after default on an underlying mortgage loan, but not later than (i) 30 days
following foreclosure sale, (ii) 30 days following payment of the claim by any
mortgage insurer or (iii) 30 days following the expiration of any right of
redemption, whichever occurs later, but in any event no later than one year
after demand has been made upon the mortgagor for accelerated payment of
principal. In taking actions regarding the collection of principal after default
on the mortgage loans underlying Freddie Mac Certificates, including the timing
of demand for acceleration, Freddie Mac reserves the right to exercise its
judgment with respect to the mortgage loans in the same manner as for mortgage
loans which it has purchased but not sold. The length of time necessary for
Freddie Mac to determine that a mortgage loan should be accelerated varies with
the particular circumstances of each mortgagor, and Freddie Mac has not adopted
standards which require that the demand be made within any specified period.

         Freddie Mac Certificates are not guaranteed by the United States or by
any Federal Home Loan Bank and do not constitute debts or obligations of the
United States or any Federal Home Loan Bank. The obligations of Freddie Mac
under its guarantee are obligations solely of Freddie Mac and are not backed by,
or entitled to, the full faith and credit of the United States. If Freddie Mac
were unable to satisfy such obligations, distributions to holders of Freddie Mac
Certificates would consist solely of payments and other recoveries on the
underlying mortgage loans and, accordingly, monthly distributions to holders of
Freddie Mac Certificates would be affected by delinquent payments and defaults
on such mortgage loans.

         Registered holders of Freddie Mac Certificates are entitled to receive
their monthly pro rata share of all principal payments on the underlying
mortgage loans received by Freddie Mac, including any scheduled principal
payments, full and partial repayments of principal and principal received by
Freddie Mac by virtue of condemnation, insurance, liquidation or foreclosure,
and repurchases of the mortgage loans by Freddie Mac or the seller thereof.
Freddie

                                       23
<PAGE>

Mac is required to remit each registered Freddie Mac Certificateholder's
pro rata share of principal payments on the underlying mortgage loans, interest
at the Freddie Mac pass-through rate and any other sums such as prepayment fees,
within 60 days of the date on which such payments are deemed to have been
received by Freddie Mac.

         Under Freddie Mac's Cash Program, there is no limitation on the amount
by which interest rates on the mortgage loans underlying a Freddie Mac
Certificate may exceed the pass-through rate on the Freddie Mac Certificate.
Under such program, Freddie Mac purchases groups of whole mortgage loans from
sellers at specified percentages of their unpaid principal balances, adjusted
for accrued or prepaid interest, which, when applied to the interest rate of the
mortgage loans and participations purchased, results in the yield (expressed as
a percentage) required by Freddie Mac. The required yield, which includes a
minimum servicing fee retained by the servicer, is calculated using the
outstanding principal balance. The range of interest rates on the mortgage loans
and participations in a Freddie Mac Certificate Group under the Cash Program
will vary since mortgage loans and participations are purchased and assigned to
a Freddie Mac Certificate Group based upon their yield to Freddie Mac rather
than on the interest rate on the underlying mortgage loans. Under Freddie Mac's
Guarantor Program, the pass-through rate on a Freddie Mac Certificate is
established based upon the lowest interest rate on the underlying mortgage
loans, minus a minimum servicing fee and the amount of Freddie Mac's management
and guaranty income as agreed upon between the seller and Freddie Mac.

         Freddie Mac Certificates duly presented for registration of ownership
on or before the last business day of a month are registered effective as of the
first day of the month. The first remittance to a registered holder of a Freddie
Mac Certificate will be distributed so as to be received normally by the 15th
day of the second month following the month in which the purchaser becomes a
registered holder of the Freddie Mac Certificates. Thereafter, such remittance
will be distributed monthly to the registered holder so as to be received
normally by the 15th day of each month. The Federal Reserve Bank of New York
maintains book-entry accounts with respect to Freddie Mac Certificates sold by
Freddie Mac on or after January 2, 1985, and makes payments of principal and
interest each month to the registered holders thereof in accordance with such
holders' instructions.

         Federal National Mortgage Association. The Federal National Mortgage
Association ("Fannie Mae") is a federally chartered and privately owned
corporation organized and existing under the Federal National Mortgage
Association Charter Act, as amended (the "CHARTER ACT"). Fannie Mae was
originally established in 1938 as a United States government agency to provide
supplemental liquidity to the mortgage market and was transformed into a
stockholder-owned and privately-managed corporation by legislation enacted in
1968.

         Fannie Mae provides funds to the mortgage market primarily by
purchasing mortgage loans from lenders, thereby replenishing their funds for
additional lending. Fannie Mae acquires funds to purchase mortgage loans from
many capital market investors that may not ordinarily invest in mortgages,
thereby expanding the total amount of funds available for housing. Operating
nationwide, Fannie Mae helps to redistribute mortgage funds from capital-surplus
to capital-short areas.

                                       24
<PAGE>

         Fannie Mae Certificates. Fannie Mae Certificates are Guaranteed
Mortgage Pass-Through Certificates representing fractional undivided interests
in a pool of mortgage loans formed by Fannie Mae. Each mortgage loan must meet
the applicable standards of the Fannie Mae purchase program. Mortgage loans
comprising a pool are either provided by Fannie Mae from its own portfolio or
purchased pursuant to the criteria of the Fannie Mae purchase program.

         Mortgage loans underlying Fannie Mae Certificates held by a Trust Fund
will consist of conventional mortgage loans, FHA Loans or VA Loans. Original
maturities of substantially all of the conventional, level payment mortgage
loans underlying a Fannie Mae Certificate are expected to be from eight to 15
years or from 20 to 40 years. The original maturities of substantially all of
the fixed rate level payment FHA Loans or VA Loans are expected to be 30 years.

         Mortgage loans underlying a Fannie Mae Certificate may have annual
interest rates that vary by as much as two percentage points from one another.
The rate of interest payable on a Fannie Mae Certificate is equal to the lowest
interest rate of any mortgage loan in the related pool, less a specified minimum
annual percentage representing servicing compensation and Fannie Mae's guaranty
fee. Under a regular servicing option (pursuant to which the mortgagee or each
other servicer assumes the entire risk of foreclosure losses), the annual
interest rates on the mortgage loans underlying a Fannie Mae Certificate will be
between 50 basis points and 250 basis points greater than is its annual
pass-through rate and under a special servicing option (pursuant to which Fannie
Mae assumes the entire risk for foreclosure losses), the annual interest rates
on the mortgage loans underlying a Fannie Mae Certificate will generally be
between 55 basis points and 255 basis points greater than the annual Fannie Mae
Certificate pass-through rate. If specified in the related Prospectus
Supplement, Fannie Mae Certificates may be backed by adjustable rate mortgages.

         Fannie Mae guarantees to each registered holder of a Fannie Mae
Certificate that it will distribute amounts representing such holder's
proportionate share of scheduled principal and interest payments at the
applicable pass-through rate provided for by such Fannie Mae Certificate on the
underlying mortgage loans, whether or not received, and such holder's
proportionate share of the full principal amount of any foreclosed or other
finally liquidated mortgage loan, whether or not such principal amount is
actually recovered. The obligations of Fannie Mae under its guarantees are
obligations solely of Fannie Mae and are not backed by, or entitled to, the full
faith and credit of the United States. Although the Secretary of the Treasury of
the United States has discretionary authority to lend Fannie Mae up to $2.25
billion outstanding at any time, neither the United States nor any agency
thereof is obligated to finance Fannie Mae's operations or to assist Fannie Mae
in any other manner. If Fannie Mae were unable to satisfy its obligations,
distributions to holders of Fannie Mae Certificates would consist solely of
payments and other recoveries on the underlying mortgage loans and, accordingly,
monthly distributions to holders of Fannie Mae Certificates would be affected by
delinquent payments and defaults on such mortgage loans.

         Fannie Mae Certificates evidencing interests in pools of mortgage loans
formed on or after May 1, 1985 (other than Fannie Mae Certificates backed by
pools containing graduated payment mortgage loans or mortgage loans secured by
multifamily projects) are available in book-entry form only. Distributions of
principal and interest on each Fannie Mae Certificate will

                                       25
<PAGE>


be made by Fannie Mae on the 25th day of each month to the persons in whose name
the Fannie Mae Certificate is entered in the books of the Federal Reserve Banks
(or registered on the Fannie Mae Certificate register in the case of fully
registered Fannie Mae Certificates) as of the close of business on the last day
of the preceding month. With respect to Fannie Mae Certificates issued in
book-entry form, distributions thereon will be made by wire and, with respect to
fully registered Fannie Mae Certificates, distributions thereon will be made by
check.

         Stripped Mortgage-Backed Securities. Agency Securities may consist of
one or more stripped mortgage-backed securities, each as described herein and in
the related Prospectus Supplement. Each such Agency Security will represent an
undivided interest in all or part of the principal distributions (but not the
interest distributions) or the interest distributions (but not the principal
distributions), or in some specified portion of the principal and interest
distributions (but not all of such distributions) on certain Freddie Mac, Fannie
Mae or Ginnie Mae Certificates. The underlying securities will be held under a
trust agreement by Freddie Mac, Fannie Mae or Ginnie Mae, each as trustee, or by
another trustee named in the related Prospectus Supplement. Freddie Mac, Fannie
Mae or Ginnie Mae will guaranty each stripped Agency Security to the same extent
as such entity guarantees the underlying securities backing such stripped Agency
Security, unless otherwise specified in the related Prospectus Supplement.

         Other Agency Securities. If specified in the related Prospectus
Supplement, a Trust Fund may include other mortgage pass-through certificates
issued or guaranteed by Freddie Mac, Fannie Mae or Ginnie Mae. The
characteristics of any such mortgage pass-through certificates will be described
in such Prospectus Supplement. If so specified, a combination of different types
of Agency Securities may be held in a Trust Fund.

PRIVATE MORTGAGE-BACKED SECURITIES

         General. Private Mortgage-Backed Securities may consist of (a) mortgage
pass-through certificates or participation certificates evidencing an undivided
interest in a pool of Mortgage Loans or (b) collateralized mortgage obligations
secured by Mortgage Loans. Private Mortgage-Backed Securities may include
stripped mortgage-backed securities representing an undivided interest in all or
a part of the principal distributions (but not the interest distributions) or
the interest distributions (but not the principal distributions) or in some
specified portion of the principal and interest distributions (but not all of
such distributions) on certain Mortgage Loans. Private Mortgage-Backed
Securities will have been issued pursuant to a pooling and servicing agreement,
an indenture or similar agreement (a "PMBS AGREEMENT"). Unless otherwise
specified in the related Prospectus Supplement, the seller/servicer of the
underlying Mortgage Loans will have entered into the PMBS Agreement with the
trustee under such PMBS Agreement (the "PMBS TRUSTEE"). The PMBS Trustee or its
agent, or a custodian, will possess the Mortgage Loans underlying such Private
Mortgage-Backed Security. Mortgage Loans underlying a Private Mortgage-Backed
Security will be serviced by a servicer (the "PMBS SERVICER") directly or by one
or more subservicers which may be subject to the supervision of the PMBS
Servicer. Unless otherwise specified in the related Prospectus Supplement, the
PMBS Servicer will be a Fannie Mae- or Freddie Mac-approved servicer and, if FHA
Loans underlie the Private Mortgage-Backed Securities, approved by HUD as an FHA
mortgagee.

                                       26
<PAGE>

         The issuer of the Private Mortgage-Backed Securities (the "PMBS
ISSUER") will be a financial institution or other entity engaged generally in
the business of mortgage lending, a public agency or instrumentality of a state,
local or federal government, or a limited purpose corporation organized for the
purpose of, among other things, establishing trusts and acquiring and selling
housing loans to such trusts and selling beneficial interests in such trusts. If
so specified in the related Prospectus Supplement, the PMBS Issuer may be an
affiliate of the Depositor. The obligations of the PMBS Issuer will generally be
limited to certain representations and warranties with respect to the assets
conveyed by it to the related trust. Unless otherwise specified in the related
Prospectus Supplement, the PMBS Issuer will not have guaranteed any of the
assets conveyed to the related trust or any of the Private Mortgage-Backed
Securities issued under the PMBS Agreement. Additionally, although the Mortgage
Loans underlying the Private Mortgage-Backed Securities may be guaranteed by an
agency or instrumentality of the United States, the Private Mortgage-Backed
Securities themselves will not be so guaranteed.

         Distributions of principal and interest will be made on the Private
Mortgage-Backed Securities on the dates specified in the related Prospectus
Supplement. The Private Mortgage-Backed Securities may be entitled to receive
nominal or no principal distributions or nominal or no interest distributions.
Principal and interest distributions will be made on the Private Mortgage-Backed
Securities by the PMBS Trustee or the PMBS Servicer. The PMBS Issuer or the PMBS
Servicer may have the right to repurchase assets underlying the Private
Mortgage-Backed Securities after a certain date or under other circumstances
specified in the related Prospectus Supplement.

         Underlying Loans. The Mortgage Loans underlying the Private
Mortgage-Backed Securities may consist of fixed rate, level payment, fully
amortizing loans or graduated payment mortgage loans, buydown loans, adjustable
rate mortgage loans, or loans having balloon or other special payment features.
Such Mortgage Loans may be secured by single family property, multifamily
property, Manufactured Homes or by an assignment of the proprietary lease or
occupancy agreement relating to a specific dwelling within a Cooperative and the
related shares issued by such Cooperative. Except as otherwise specified in the
related Prospectus Supplement, (i) no Mortgage Loan will have had a
Loan-to-Value Ratio at origination in excess of 95%, (ii) each Single Family
Loan secured by a Mortgaged Property having a Loan-to-Value Ratio in excess of
80% at origination will be covered by a primary mortgage insurance policy, (iii)
each Mortgage Loan will have had an original term to stated maturity of not less
than 5 years and not more than 40 years, (iv) no Mortgage Loan that was more
than 30 days delinquent as to the payment of principal or interest will have
been eligible for inclusion in the assets under the related PMBS Agreement, (v)
each Mortgage Loan (other than a Cooperative Loan) will be required to be
covered by a standard hazard insurance policy (which may be a blanket policy),
and (vi) each Mortgage Loan (other than a Cooperative Loan or a Contract secured
by a Manufactured Home) will be covered by a title insurance policy.

         Credit Support Relating to Private Mortgage-Backed Securities. Credit
support in the form of reserve funds, subordination of other private mortgage
certificates issued under the PMBS Agreement, letters of credit, surety bonds,
insurance policies or other types of credit support may be provided with respect
to the Mortgage Loans underlying the Private Mortgage-Backed Securities or with
respect to the Private Mortgage-Backed Securities themselves.

                                       27
<PAGE>

         Additional Information. The Prospectus Supplement for a Series for
which the Trust Fund includes Private Mortgage-Backed Securities will specify
(i) the aggregate approximate principal amount and type of the Private
Mortgage-Backed Securities to be included in the Trust Fund, (ii) certain
characteristics of the Mortgage Loans which comprise the underlying assets for
the Private Mortgage-Backed Securities including (A) the payment features of
such Mortgage Loans, (B) the approximate aggregate principal balance, if known,
of underlying Mortgage Loans insured or guaranteed by a governmental entity, (C)
the servicing fee or range of servicing fees with respect to the Mortgage Loans,
and (D) the minimum and maximum stated maturities of the underlying Mortgage
Loans at origination, (iii) the maximum original term-to-stated maturity of the
Private Mortgage-Backed Securities, (iv) the weighted average term-to-stated
maturity of the Private Mortgage-Backed Securities, (v) the pass-through or
certificate rate of the Private Mortgage-Backed Securities, (vi) the weighted
average pass-through or certificate rate of the Private Mortgage-Backed
Securities, (vii) the PMBS Issuer, the PMBS Servicer (if other than the PMBS
Issuer) and the PMBS Trustee for such Private Mortgage-Backed Securities, (viii)
certain characteristics of credit support, if any, such as reserve funds,
insurance policies, surety bonds, letters of credit or guaranties relating to
the Mortgage Loans underlying the Private Mortgage-Backed Securities or to such
Private Mortgage-Backed Securities themselves, (ix) the term on which the
underlying Mortgage Loans for such Private Mortgage-Backed Securities may, or
are required to, be purchased prior to their stated maturity or the stated
maturity of the Private Mortgage-Backed Securities and (x) the terms on which
Mortgage Loans may be substituted for those originally underlying the Private
Mortgage-Backed Securities.

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

         There are incorporated herein by reference all documents and reports
filed or caused to be filed by Greenwich Capital Acceptance, Inc. ("GCA") with
respect to a Trust Fund pursuant to Section 13(a), 14 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), prior to the termination
of the offering of Certificates evidencing interests therein. Upon request by
any person to whom this Prospectus is delivered in connection with the offering
of one or more classes of Certificates, GCA will provide or cause to be provided
without charge a copy of any such documents and/or reports incorporated herein
by reference, in each case to the extent such documents or reports relate to
such classes of Certificates, other than the exhibits to such documents (unless
such exhibits are specifically incorporated by reference in such documents).
Requests to GCA should be directed in writing to: Paul D. Stevelman, Greenwich
Capital Acceptance, Inc., 600 Steamboat Road, Greenwich, Connecticut 06830,
telephone number (203) 625-2700. GCA has determined that its financial
statements are not material to the offering of any Certificates.

         Investors may read and copy the documents and/or reports incorporated
herein by reference at the Public Reference Room of the Securities and Exchange
Commission (the "SEC") at 450 Fifth Street, N.W., Washington, DC 20549.
Investors may obtain information on the operation of the Public Reference Room
by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains a website
at http:\\www.sec.gov containing reports, proxy and information statements and
other information regarding issuers, including each Trust Fund, that file
electronically with the SEC.

                                       28
<PAGE>

                                 USE OF PROCEEDS

         The net proceeds to be received from the sale of the Certificates will
be applied by the Depositor to the purchase of Mortgage Assets or will be used
by the Depositor for general corporate purposes. The Depositor expects to sell
Certificates in Series from time to time, but the timing and amount of offerings
of Certificates will depend on a number of factors, including the volume of
Mortgage Assets acquired by the Depositor, prevailing interest rates,
availability of funds and general market conditions.

                                  THE DEPOSITOR

         Greenwich Capital Acceptance, Inc., the Depositor, is a Delaware
corporation organized on April 23, 1987 for the limited purpose of acquiring,
owning and transferring Mortgage Assets and selling interests therein or bonds
secured thereby. It is an indirect, limited purpose finance subsidiary of
National Westminster Bank Plc and an affiliate of Greenwich Capital Markets,
Inc. Greenwich Capital Markets, Inc. is a registered broker-dealer engaged in
the U.S. government securities and related capital markets business. The
Depositor maintains its principal office at 600 Steamboat Road, Greenwich,
Connecticut 06830. Its telephone number is (203) 625-2700.

         Neither the Depositor nor any of the Depositor's affiliates will ensure
or guarantee distributions on the Certificates of any Series.

                              MORTGAGE LOAN PROGRAM

         The Mortgage Loans will have been purchased by the Depositor, either
directly or through affiliates, from Sellers. Unless otherwise specified in the
related Prospectus Supplement, the Mortgage Loans so acquired by the Depositor
will have been originated in accordance with the underwriting criteria specified
below under "Underwriting Standards".

UNDERWRITING STANDARDS

         Unless otherwise specified in the related Prospectus Supplement, each
Seller will represent and warrant that all Mortgage Loans originated and/or sold
by it to the Depositor or one of its affiliates will have been underwritten in
accordance with standards consistent with those utilized by mortgage lenders or
manufactured home lenders generally during the period of origination for similar
types of loans. As to any Mortgage Loan insured by the FHA or partially
guaranteed by the VA, the Seller will represent that it has complied with the
underwriting policies of the FHA or the VA, as the case may be.

         Underwriting standards are applied by or on behalf of a lender to
evaluate a prospective borrower's credit standing and repayment ability, and the
value and adequacy of the Mortgaged Property as collateral. In general, a
prospective borrower applying for a Single Family Loan or for financing secured
by a Manufactured Home is required to fill out a detailed application designed
to provide to the underwriting officer pertinent credit information. As part of
the description of the borrower's financial condition, the borrower generally is
required to provide a current list of assets and liabilities and a statement of
income and expenses, as well as an authorization to apply for a credit report
which summarizes the borrower's credit history with local merchants and lenders
and any record of bankruptcy. In most cases, an employment


                                       29
<PAGE>

verification is obtained from an independent source (typically the borrower's
employer) which verification reports the borrower's length of employment with
that organization, his current salary, and whether it is expected that the
borrower will continue such employment in the future. If a prospective borrower
is self-employed, the borrower may be required to submit copies of signed tax
returns. The borrower may also be required to authorize verification of deposits
at financial institutions where the borrower has demand or savings accounts.
Underwriting standards which pertain to the creditworthiness of borrowers
seeking Multifamily Loans will be described in the related Prospectus
Supplement.

         In determining the adequacy of the Mortgaged Property as collateral, an
appraisal is made of each property considered for financing. The appraiser is
required to inspect the property and verify that it is in good repair and that
construction, if new, has been completed. In connection with a Single Family
Loan, the appraisal is based on the market value of comparable homes, the
estimated rental income (if considered applicable by the appraiser) and the cost
of replacing the subject home. In connection with a Contract, the appraisal is
based on recent sales of comparable Manufactured Homes and, when deemed
applicable, a replacement cost analysis based on the cost of a comparable
Manufactured Home. In connection with a Multifamily Loan, the appraisal must
specify whether an income analysis, a market analysis or a cost analysis was
used. An appraisal employing the income approach to value analyzes a multifamily
project's cashflow, expenses, capitalization and other operational information
in determining the property's value. The market approach to value focuses its
analysis on the prices paid for the purchase of similar properties in the
multifamily project's area, with adjustments made for variations between these
other properties and the multifamily project being appraised. The cost approach
calls for the appraiser to make an estimate of land value and then determine the
current cost of reproducing the building less any accrued depreciation. In any
case, the value of the property being financed, as indicated by the appraisal,
must be such that it currently supports, and is anticipated to support in the
future, the outstanding loan balance.

         In the case of Single Family Loans and Contracts, once all applicable
employment, credit and property information is received, a determination
generally is made as to whether the prospective borrower has sufficient monthly
income available (i) to meet the borrower's monthly obligations on the proposed
mortgage loan (generally determined on the basis of the monthly payments due in
the year of origination) and other expenses related to the Mortgaged Property
(such as property taxes and hazard insurance) and (ii) to meet monthly housing
expenses and other financial obligations and monthly living expenses. The
underwriting standards applied by Sellers, particularly with respect to the
level of loan documentation and the mortgagor's income and credit history, may
be varied in appropriate cases where factors such as low Loan-to-Value Ratios or
other favorable credit exist.

         In the case of a Single Family or Multifamily Loan secured by a
leasehold interest in real property, the title to which is held by a third-party
lessor, the Seller will represent and warrant, among other things, that the
remaining term of the lease and any sublease is at least five years longer than
the remaining term of the Mortgage Note.

         Certain of the types of Mortgage Loans which may be included in the
Mortgage Pools are recently developed and may involve additional uncertainties
not present in traditional types of loans. For example, certain of such Mortgage
Loans may provide for escalating or variable

                                       30
<PAGE>


payments by the mortgagor or obligor. These types of Mortgage Loans are
generally underwritten on the basis of a judgment that mortgagors or obligors
will have the ability to make the monthly payments required initially; in some
instances, however, their incomes may not be sufficient to permit continued loan
payments as such payments increase. These types of Mortgage Loans may also be
underwritten primarily upon the basis of Loan-to-Value Ratios or other favorable
credit factors.

QUALIFICATIONS OF SELLERS

         Unless otherwise specified in the related Prospectus Supplement, each
Seller will be required to satisfy the qualifications set forth herein. Each
Seller must be an institution experienced in originating and servicing Mortgage
Loans of the type contained in the related Mortgage Pool in accordance with
accepted practices and prudent guidelines and must maintain satisfactory
facilities to originate and service those Mortgage Loans. Each Seller must be a
seller/servicer approved by either Fannie Mae or Freddie Mac. Each Seller must
be a mortgagee approved by the FHA or an institution the deposit accounts in
which are insured by the Federal Deposit Insurance Corporation (the "FDIC").

REPRESENTATIONS BY SELLERS; REPURCHASES

         Each Seller will have made representations and warranties in respect of
the Mortgage Loans sold by such Seller and evidenced by a Series of
Certificates. Such representations and warranties, unless otherwise provided in
the related Prospectus Supplement, generally include, among other things: (i)
that title insurance (or in the case of Mortgaged Properties located in areas
where such policies are generally not available, an attorney's certificate of
title) in the case of Single Family Loans and Multifamily Loans (other than a
Cooperative Loan or a contract secured by a Manufactured Home) and any required
hazard insurance policy and Primary Mortgage Insurance Policy were effective at
the origination of each Mortgage Loan (other than Cooperative Loans), and that
each policy (or certificate of title as applicable) remained in effect on the
date of purchase of the Mortgage Loan from the Seller by or on behalf of the
Depositor; (ii) that the Seller had good title to each such Mortgage Loan and
such Mortgage Loan was subject to no offsets, defenses, counterclaims or rights
of rescission except to the extent that any buydown agreement described herein
may forgive certain indebtedness of a Mortgagor; (iii) that each Mortgage Loan
constituted a valid first lien on, or a first perfected security interest with
respect to, the related Mortgaged Property (subject only to permissible title
insurance exceptions, if applicable, and certain other exceptions described in
the Agreement) and that the Mortgaged Property was free from damage and was in
good repair; (iv) that there were no delinquent tax or assessment liens against
the Mortgaged Property; (v) that no required payment on a Mortgage Loan was
delinquent more than 30 days; and (vi) that each Mortgage Loan was made in
compliance with, and is enforceable under, all applicable local, state and
federal laws and regulations in all material respects.

         If so specified in the related Prospectus Supplement, the
representations and warranties of a Seller in respect of a Mortgage Loan will be
made not as of the Cut-off Date but as of the date on which such Seller sold the
Mortgage Loan to the Depositor or one of its affiliates. Under such
circumstances, a substantial period of time may have elapsed between such date
and the date of initial issuance of the Series of Certificates evidencing an
interest in such Mortgage Loan. Since

                                       31
<PAGE>

the representations and warranties of a Seller do not address events that may
occur following the sale of a Mortgage Loan by such Seller, its repurchase
obligation described below will not arise if the relevant event that would
otherwise have given rise to such an obligation with respect to a Mortgage Loan
occurs after the date of sale of such Mortgage Loan by such Seller to the
Depositor or its affiliates. However, the Depositor will not include any
Mortgage Loan in the Trust Fund for any Series of Certificates if anything has
come to the Depositor's attention that would cause it to believe that the
representations and warranties of the related Seller will not be accurate and
complete in all material respects in respect of such Mortgage Loan as of the
date of initial issuance of the related Series of Certificates. If the Master
Servicer is also a Seller of Mortgage Loans with respect to a particular Series,
such representations will be in addition to the representations and warranties
made by the Master Servicer in its capacity as a Master Servicer.

         The Master Servicer, or the Trustee if the Master Servicer is the
Seller, will promptly notify the relevant Seller of any breach of any
representation or warranty made by such Seller in respect of a Mortgage Loan
which materially and adversely affects the interests of the Certificateholders
in such Mortgage Loan. Unless otherwise specified in the related Prospectus
Supplement, if such Seller cannot cure such breach within 90 days after notice
from the Master Servicer or the Trustee, as the case may be, then such Seller
will be obligated to repurchase such Mortgage Loan from the Trust Fund at a
price (the "PURCHASE PRICE") equal to 100% of the unpaid principal balance
thereof as of the date of the repurchase plus accrued interest thereon to the
first day of the month following the month of repurchase at the Mortgage Rate
(less any Advances or amount payable as related servicing compensation if the
Seller is the Master Servicer). If a REMIC election is to be made with respect
to a Trust Fund, unless otherwise provided in the related Prospectus Supplement,
the Master Servicer or a holder of the related residual certificate will be
obligated to pay any prohibited transaction tax which may arise in connection
with any such repurchase. The Master Servicer, unless otherwise specified in the
related Prospectus Supplement, will be entitled to reimbursement for any such
payment from the assets of the related Trust Fund or from any holder of the
related residual certificate. See "Description of the Certificates--General".
Except in those cases in which the Master Servicer is the Seller, the Master
Servicer will be required under the applicable Agreement to enforce this
obligation for the benefit of the Trustee and the holders of the Certificates,
following the practices it would employ in its good faith business judgment were
it the owner of such Mortgage Loan. This repurchase obligation will constitute
the sole remedy available to holders of Certificates or the Trustee for a breach
of representation by a Seller.

         Neither the Depositor nor the Master Servicer (unless the Master
Servicer is the Seller) will be obligated to purchase a Mortgage Loan if a
Seller defaults on its obligation to do so, and no assurance can be given that
Sellers will carry out their respective repurchase obligations with respect to
Mortgage Loans. However, to the extent that a breach of a representation and
warranty of a Seller may also constitute a breach of a representation made by
the Master Servicer, the Master Servicer may have a repurchase obligation as
described under "The Pooling and Servicing Agreement--Assignment of Mortgage
Assets".

                         DESCRIPTION OF THE CERTIFICATES

         Each Series of Certificates will be issued pursuant to an Agreement,
dated as of the related Cut-off Date, among the Depositor, the Master Servicer
and the Trustee for the benefit of

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<PAGE>

the holders of the Certificates of such Series. The provisions of each Agreement
will vary depending upon the nature of the Certificates to be issued thereunder
and the nature of the related Trust Fund. A form of such Agreement is an exhibit
to the Registration Statement of which this Prospectus is a part. The following
summaries describe certain provisions which may appear in each Agreement. The
Prospectus Supplement for a Series of Certificates will describe any provision
of the Agreement relating to such Series that materially differs from the
description thereof contained in this Prospectus. 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 Agreement for each Series of
Certificates and the applicable Prospectus Supplement. The Depositor will
provide a copy of the Agreement (without exhibits) relating to any Series
without charge upon written request of a holder of record of a Certificate of
such Series addressed to Greenwich Capital Acceptance, Inc., 600 Steamboat Road,
Greenwich, Connecticut 06830, Attention: Asset Backed Finance Group.

GENERAL

         Unless otherwise specified in the Prospectus Supplement, the
Certificates of each Series will be issued in fully registered form only, in the
authorized denominations specified in the related Prospectus Supplement, will
evidence specified beneficial ownership interests in the related Trust Fund
created pursuant to each Agreement and will not be entitled to payments in
respect of the assets included in any other Trust Fund established by the
Depositor. The Certificates will not represent obligations of the Depositor or
any affiliate of the Depositor. The Mortgage Loans will not be insured or
guaranteed by any governmental entity or other person, unless otherwise
specified in the related Prospectus Supplement. To the extent provided in the
Agreement, each Trust Fund will consist of (i) the Mortgage Assets, as from time
to time are subject to the related Agreement (exclusive of any amounts specified
in the related Prospectus Supplement (the "RETAINED INTEREST")); (ii) such
assets as from time to time are required to be deposited in the related
Certificate Account as defined under "The Pooling and Servicing
Agreement--Payments on Mortgage Loans; Deposits to the Certificate Account";
(iii) property which secured a Mortgage Loan and which is acquired on behalf of
the Certificateholders by foreclosure or deed in lieu of foreclosure and (iv)
Primary Mortgage Insurance Policies, FHA Insurance and VA Guarantees, if any,
and any other insurance policies or other forms of credit enhancement required
to be maintained pursuant to the Agreement. If so specified in the related
Prospectus Supplement, a Trust Fund may also include one or more of the
following: reinvestment income on payments received on the Mortgage Assets, a
reserve fund, a mortgage pool insurance policy, a special hazard insurance
policy, a bankruptcy bond, one or more letters of credit, a surety bond,
guaranties or similar instruments or other agreements.

         Each Series of Certificates will be issued in one or more classes. Each
class of Certificates of a Series will evidence beneficial ownership of a
specified portion or percentage (which may be 0%) of future interest payments
and a specified portion or percentage (which may be 0%) of future principal
payments on the Mortgage Assets in the related Trust Fund. A Series of
Certificates may include one or more classes that are senior in right to payment
to one or more other classes of Certificates of such Series. Certain Series or
classes of Certificates may be covered by insurance policies, surety bonds or
other forms of credit enhancement, in each case as described herein and in the
related Prospectus Supplement. One or more classes of Certificates of a Series
may be entitled to receive distributions of principal, interest or any
combination thereof.

                                       33
<PAGE>

Distributions on one or more classes of a Series of Certificates may be made
prior to being made on one or more other classes, after the occurrence of
specified events, in accordance with a schedule or formula, on the basis of
collections from designated portions of the Mortgage Assets in the related Trust
Fund or on a different basis, in each case as specified in the related
Prospectus Supplement. The timing and amounts of such distributions may vary
among classes or over time as specified in the related Prospectus Supplement.

         Unless otherwise specified in the related Prospectus Supplement,
distributions of principal and interest (or, where applicable, of principal only
or interest only) on the related Certificates will be made by the Trustee on
each Distribution Date (i.e., monthly, quarterly, semi-annually or at such other
intervals and on the dates as are specified in the Prospectus Supplement) in
proportion to the percentages specified in the related Prospectus Supplement.
Distributions will be made to the persons in whose names the Certificates are
registered at the close of business on the dates specified in the related
Prospectus Supplement (each, a "RECORD DATE"). Distributions will be made by
check or money order mailed to the persons entitled thereto at the address
appearing in the register maintained for holders of Certificates (the
"CERTIFICATE REGISTER") or, if specified in the related Prospectus Supplement,
in the case of Certificates that are of a certain minimum denomination, upon
written request by the Certificateholder, by wire transfer or by such other
means as are described therein; provided, however, that the final distribution
in retirement of the Certificates will be made only upon presentation and
surrender of the Certificates at the office or agency of the Trustee or other
person specified in the notice to Certificateholders of such final distribution.

         The Certificates will be freely transferable and exchangeable at the
Corporate Trust Office of the Trustee as set forth in the related Prospectus
Supplement. No service charge will be made for any registration of exchange or
transfer of Certificates of any Series but the Trustee may require payment of a
sum sufficient to cover any related tax or other governmental charge.

         Under current law, in the case of a class of Certificates entitled only
to a specified percentage of payments of interest or principal or a notional
amount of either interest or principal on the related Mortgage Loans or a class
of Certificates entitled to receive payments of interest and principal on the
Mortgage Loans only after payments to other classes or after the occurrence of
certain specified events, the purchase and holding of such a class of
Certificates by or on behalf of any employee benefit plan or other retirement
arrangement (including individual retirement accounts and annuities, Keogh plans
and collective investment funds in which such plans, accounts or arrangements
are invested) subject to provisions of ERISA or the Code may result in
"prohibited transactions" within the meaning of ERISA and the Code. See "ERlSA
Considerations". Unless otherwise specified in the related Prospectus
Supplement, transfer of Certificates of such a class will not be registered
unless the transferee (i) represents that it is not, and is not purchasing on
behalf of, any such plan, account or arrangement or (ii) provides an opinion of
counsel satisfactory to the Trustee and the Depositor that the purchase of
Certificates of such a class by or on behalf of such plan, account or
arrangement is permissible under applicable law and will not subject the
Trustee, the Master Servicer or the Depositor to any obligation or liability in
addition to those undertaken in the Agreement.

         As to each Series, an election may be made to treat the related Trust
Fund or designated portions thereof as a "real estate mortgage investment
conduit" ( each, a "REMIC") as defined

                                       34
<PAGE>

in the Code. The related Prospectus Supplement will specify whether a REMIC
election is to be made. Alternatively, the Agreement for a Series may provide
that a REMIC election may be made at the discretion of the Depositor or the
Master Servicer and may only be made if certain conditions are satisfied. As to
any such Series, the terms and provisions applicable to the making of a REMIC
election, as well as any material federal income tax consequences to
Certificateholders not otherwise described herein, will be set forth in the
related Prospectus Supplement. If such an election is made with respect to a
Series, one of the classes will be designated as evidencing the sole class of
"residual interests" in the related REMIC, as defined in the Code. All other
classes of Certificates in such a Series will constitute "regular interests" in
the related REMIC, as defined in the Code. As to each Series with respect to
which a REMIC election is to be made, the Master Servicer or a holder of the
related residual certificate will be obligated to take all actions required in
order to comply with applicable laws and regulations and will be obligated to
pay any prohibited transaction taxes. The Master Servicer, unless otherwise
specified in the related Prospectus Supplement, will be entitled to
reimbursement for any such payment from the assets of the Trust Fund or from any
holder of the related residual certificate.

DISTRIBUTIONS ON CERTIFICATES

         General. In general, the method of determining the amount of
distributions on a particular Series of Certificates will depend on the type of
credit support, if any, that is used with respect to such Series. See "Credit
Enhancement". Set forth below are descriptions of various methods that may be
used to determine the amount of distributions on the Certificates of a
particular Series. The Prospectus Supplement for each Series of Certificates
will describe the method to be used in determining the amount of distributions
on the Certificates of such Series.

         Distributions allocable to principal and interest on the Certificates
will be made by the Trustee out of, and only to the extent of, funds in the
related Certificate Account, including any funds transferred from any reserve
account (a "RESERVE ACCOUNT"). As between Certificates of different classes and
as between distributions of principal (and, if applicable, between distributions
of Principal Prepayments, as defined below, and scheduled payments of principal)
and interest, distributions made on any Distribution Date will be applied as
specified in the related Prospectus Supplement. Unless otherwise specified in
the related Prospectus Supplement, distributions to any class of Certificates
will be made pro rata to all Certificateholders of that class.

         Available Funds. All distributions on the Certificates of each Series
on each Distribution Date will be made from the Available Funds described below
in accordance with the terms described in the related Prospectus Supplement and
specified in the Agreement. Unless otherwise provided in the related Prospectus
Supplement, the "AVAILABLE FUNDS" for each Distribution Date will equal the sum
of the following amounts:

     (i) the aggregate of all previously undistributed payments on account of
principal (including Principal Prepayments, if any, and prepayment penalties, if
so provided in the related Prospectus Supplement) and interest on the Mortgage
Loans in the related Trust Fund (including Liquidation Proceeds and Insurance
Proceeds and amounts drawn under letters of credit or other credit enhancement
instruments as permitted thereunder and as specified in the related Agreement)
received by the Master Servicer after the Cut-off Date and on or prior to the
day of


                                       35
<PAGE>


the month of the related Distribution Date specified in the related Prospectus
Supplement (the "DETERMINATION DATE") except:

                (a) all payments which were due on or before the Cut-off Date;

                (b) all Liquidation Proceeds and all Insurance Proceeds, all
          Principal Prepayments and all other proceeds of any Mortgage Loan
          purchased by the Depositor, the Master Servicer, any Sub-Servicer or
          any Seller pursuant to the Agreement that were received after the
          prepayment period specified in the related Prospectus Supplement and
          all related payments of interest representing interest for any period
          after such prepayment period;

                (c) all scheduled payments of principal and interest due on a
          date or dates subsequent to the first day of the month of
          distribution;

                (d) amounts received on particular Mortgage Loans as late
          payments of principal or interest or other amounts required to be paid
          by Mortgagors, but only to the extent of any unreimbursed advance in
          respect thereof made by the Master Servicer (including the related
          Sub-Servicers, Support Servicers or the Trustee);

                (e) amounts representing reimbursement, to the extent permitted
          by the Agreement and as described under "--Advances" below, for
          advances made by the Master Servicer, Sub-Servicers, Support Servicers
          or the Trustee that were deposited into the Certificate Account, and
          amounts representing reimbursement for certain other losses and
          expenses incurred by the Master Servicer or the Depositor and
          described below;

                (f) that portion of each collection of interest on a particular
          Mortgage Loan in such Trust Fund which represents servicing
          compensation payable to the Master Servicer or Retained Interest which
          is to be retained from such collection or is permitted to be retained
          from related Insurance Proceeds, Liquidation Proceeds or proceeds of
          Mortgage Loans purchased pursuant to the Agreement;

     (ii) the amount of any advance made by the Master Servicer, any
Sub-Servicer, Support Servicer or the Trustee as described under "--Advances"
below and deposited by it in the Certificate Account;

     (iii) if applicable, amounts withdrawn from a Reserve Account; and

     (iv) if applicable, the amount of prepayment interest shortfall.

         Distributions of Interest. Unless otherwise specified in the related
Prospectus Supplement, interest will accrue on the aggregate principal balance
of each class of Certificates (with respect to each class, the "CERTIFICATE
PRINCIPAL BALANCE") (or, in the case of Certificates entitled only to
distributions allocable to interest, the aggregate notional principal balance)
entitled to interest from the date, at the Pass-Through Rate (which may be a
fixed rate or an adjustable rate adjustable as specified in such Prospectus
Supplement) and for the periods specified in such Prospectus Supplement. To the
extent funds are available therefor, interest accrued during each such specified
period on each class of Certificates entitled to interest (other

                                       36
<PAGE>

than a class of Certificates that provides for interest that accrues, but is not
currently payable, referred to hereafter as "ACCRUAL CERTIFICATES") will be
distributable on the Distribution Dates specified in the related Prospectus
Supplement until the aggregate Certificate principal balance of the Certificates
of such class has been distributed in full or, in the case of Certificates
entitled only to distributions allocable to interest, until the aggregate
notional principal balance of such Certificates is reduced to zero or for the
period of time designated in the related Prospectus Supplement. The original
Certificate Principal Balance of each Certificate will equal the aggregate
distributions allocable to principal to which such Certificate is entitled.
Unless otherwise specified in the related Prospectus Supplement, distributions
allocable to interest on each Certificate that is not entitled to distributions
allocable to principal will be calculated based on the notional principal
balance of such Certificate. The notional principal balance of a Certificate
will not evidence an interest in or entitlement to distributions allocable to
principal but will be used solely for convenience in expressing the calculation
of interest and for certain other purposes.

         With respect to any class of Accrual Certificates, if specified in the
related Prospectus Supplement, any interest that has accrued but is not paid on
any Distribution Date will be added to the aggregate Certificate Principal
Balance of such class of Certificates on such Distribution Date. Unless
otherwise specified in the related Prospectus Supplement, distributions of
interest on each class of Accrual Certificates will commence only after the
occurrence of the events specified in such Prospectus Supplement. Unless
otherwise specified in the related Prospectus Supplement, prior to such time the
beneficial ownership interest of such class of Accrual Certificates in the Trust
Fund, as reflected in the aggregate Certificate Principal Balance of such class
of Accrual Certificates, will increase on each Distribution Date by the amount
of interest that accrued on such class of Accrual Certificates during the
preceding interest accrual period but that was not required to be distributed to
such class on such Distribution Date. Any such class of Accrual Certificates
will thereafter accrue interest on its outstanding Certificate Principal Balance
as so adjusted.

         Distributions of Principal. Unless otherwise specified in the related
Prospectus Supplement, the aggregate Certificate Principal Balance of any class
of Certificates entitled to distributions of principal will be the aggregate
original Certificate Principal Balance of such class of Certificates specified
in such Prospectus Supplement, reduced by all distributions reported to the
holders of such Certificates as allocable to principal and, (i) in the case of
Accrual Certificates, unless otherwise specified in the related Prospectus
Supplement, increased by all interest accrued but not then distributable on such
Accrual Certificates and (ii) in the case of adjustable rate Certificates,
unless otherwise specified in the related Prospectus Supplement, subject to the
effect of negative amortization. The related Prospectus Supplement will specify
the method by which the amount of principal to be distributed on the
Certificates on each Distribution Date will be calculated and the manner in
which such amount will be allocated among the classes of Certificates entitled
to distributions of principal.

         If so provided in the related Prospectus Supplement, one or more
classes of Senior Certificates will be entitled to receive all or a
disproportionate percentage of the payments of principal which are received from
borrowers in advance of their scheduled due dates and are not accompanied by
amounts representing scheduled interest due after the month of such payments
("PRINCIPAL Prepayments") in the percentages and under the circumstances or for
the periods

                                       37
<PAGE>

specified in such Prospectus Supplement. Any such allocation of Principal
Prepayments to such class or classes of Certificates will have the effect of
accelerating the amortization of such Senior Certificates while increasing the
interests evidenced by the Subordinated Certificates in the Trust Fund.
Increasing the interests 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. See "Credit
Enhancement--Subordination" herein.

         Unscheduled Distributions. If specified in the related Prospectus
Supplement, the Certificates will be subject to receipt of distributions before
the next scheduled Distribution Date under the circumstances and in the manner
described below and in such Prospectus Supplement. If applicable, the Trustee
will be required to make such unscheduled distributions on the day and in the
amount specified in the related Prospectus Supplement if, due to substantial
payments of principal (including Principal Prepayments) on the Mortgage Assets,
the Trustee or the Master Servicer determines that the funds available or
anticipated to be available from the Certificate Account and, if applicable,
from any Reserve Account may be insufficient to make required distributions on
the Certificates on such Distribution Date. Unless otherwise specified in the
related Prospectus Supplement, the amount of any such unscheduled distribution
that is allocable to principal will not exceed the amount that would otherwise
have been required to be distributed as principal on the Certificates on the
next Distribution Date. Unless otherwise specified in the related Prospectus
Supplement, all unscheduled distributions will include interest at the
applicable Pass-Through Rate (if any) on the amount of the unscheduled
distribution allocable to principal for the period and to the date specified in
such Prospectus Supplement.

         Unless otherwise specified in the related Prospectus Supplement, all
distributions allocable to principal in any unscheduled distribution will be
made in the same priority and manner as distributions of principal on the
Certificates would have been made on the next Distribution Date, and with
respect to Certificates of the same class, unscheduled distributions of
principal will be made on a pro rata basis. Notice of any unscheduled
distribution will be given by the Trustee prior to the date of such
distribution.

ADVANCES

         Unless otherwise provided in the related Prospectus Supplement, the
Master Servicer will be required to advance on or before each Distribution Date
(from its own funds, funds advanced by Sub-Servicers or Support Servicers or
funds held in the Certificate Account for future distributions to the holders of
such Certificates) an amount equal to the aggregate of payments of principal and
interest that were delinquent on the related Determination Date and were not
advanced by any Sub-Servicer, subject to the Master Servicer's determination
that such Advances will be recoverable out of late payments by Mortgagors,
Liquidation Proceeds, Insurance Proceeds or otherwise. In the case of
Cooperative Loans, the Master Servicer also will be required to advance any
unpaid maintenance fees and other charges under the related proprietary leases
as specified in the related Prospectus Supplement.

         In making Advances, the Master Servicer will endeavor to maintain a
regular flow of scheduled interest and principal payments to holders of the
Certificates rather than to guarantee or insure against losses. If Advances are
made by the Master Servicer from cash being held for future distribution to
Certificateholders, the Master Servicer will replace such funds on or before

                                       38
<PAGE>


any future Distribution Date to the extent that funds in the applicable
Certificate Account on such Distribution Date would be less than the amount
required to be available for distributions to Certificateholders on such date.
Any Master Servicer funds advanced will be reimbursable to the Master Servicer
out of recoveries on the specific Mortgage Loans with respect to which such
Advances were made (e.g., late payments made by the related Mortgagor, any
related Insurance Proceeds, Liquidation Proceeds or proceeds of any Mortgage
Loan purchased by a Sub-Servicer or a Seller under the circumstances described
hereinabove). Advances by the Master Servicer (and any advances by a
Sub-Servicer or a Support Servicer) also will be reimbursable to the Master
Servicer (or Sub-Servicer or Support Servicer, as applicable) from cash
otherwise distributable to Certificateholders (including the holders of Senior
Certificates) to the extent that the Master Servicer determines that any such
Advances previously made are not ultimately recoverable as described above. The
Master Servicer also will be obligated to make Advances, to the extent
recoverable out of Insurance Proceeds, Liquidation Proceeds or otherwise, in
respect of certain taxes and insurance premiums not paid by Mortgagors on a
timely basis. Funds so advanced are reimbursable to the Master Servicer to the
extent permitted by the Agreement. If specified in the related Prospectus
Supplement, the obligations of the Master Servicer to make advances may be
supported by a cash advance reserve fund, a surety bond or other arrangement, in
each case as described in such Prospectus Supplement.

         The Master Servicer or Sub-Servicer may enter into an agreement (a
"SUPPORT AGREEMENT") with a support servicer (each, a "SUPPORT SERVICER")
pursuant to which the Support Servicer agrees to provide funds on behalf of the
Master Servicer or Sub-Servicer in connection with the obligation of the Master
Servicer or Sub-Servicer, as the case may be, to make Advances. The Support
Agreement will be delivered to the Trustee and the Trustee will be authorized to
accept a substitute Support Agreement in exchange for an original Support
Agreement, provided that such substitution of the Support Agreement will not
adversely affect the rating or ratings assigned to the Certificates by such
Rating Agency or Agencies.

         Unless otherwise provided in the Prospectus Supplement, in the event
the Master Servicer, a Sub-Servicer or a Support Servicer fails to make an
Advance, the Trustee will be obligated to make such Advance in its capacity as
successor servicer. If the Trustee makes such an Advance, it will be entitled to
be reimbursed for such Advance to the same extent and degree as the Master
Servicer, a Sub-Servicer or a Support Servicer is entitled to be reimbursed for
Advances. See "--Distribution on Certificates" above.

REPORTS TO CERTIFICATEHOLDERS

         Prior to or concurrently with each distribution on a Distribution Date
and except as otherwise set forth in an applicable Prospectus Supplement, the
Master Servicer or the Trustee will furnish to each Certificateholder of record
of the related Series a statement setting forth, to the extent applicable to
such Series of Certificates, among other things:

     (i) the amount of such distribution allocable to principal, separately
identifying the aggregate amount of any Principal Prepayments and, if so
specified in the related Prospectus Supplement, prepayment penalties included
therein;

     (ii) the amount of such distribution allocable to interest;


                                       39
<PAGE>


     (iii) the amount of any Advance;

     (iv) the aggregate amount (a) otherwise allocable to the Subordinated
Certificateholders on such Distribution Date and (b) withdrawn from the Reserve
Fund, if any, that is included in the amounts distributed to the Senior
Certificateholders;

     (v) the outstanding Certificate Principal Balance or notional principal
balance of such class after giving effect to the distribution of principal on
such Distribution Date;

     (vi) the percentage of principal payments on the Mortgage Loans (excluding
prepayments), if any, which such class will be entitled to receive on the
following Distribution Date;

     (vii) the percentage of Principal Prepayments on the Mortgage Loans, if
any, which such class will be entitled to receive on the following Distribution
Date;

     (viii) the related amount of the servicing compensation retained or
withdrawn from the Certificate Account by the Master Servicer and the amount of
additional servicing compensation received by the Master Servicer attributable
to penalties, fees, excess Liquidation Proceeds and other similar charges and
items;

     (ix) the number and aggregate principal balances of Mortgage Loans (A)
delinquent (exclusive of Mortgage Loans in foreclosure) (1) from one to 30 days,
(2) from 31 to 60 days, (3) from 61 to 90 days and (4) 91 days or more and (B)
in foreclosure, as of the close of business on the last day of the calendar
month preceding such Distribution Date;

     (x) the book value of any real estate acquired through foreclosure or grant
of a deed in lieu of foreclosure and, if such real estate secured a Multifamily
Loan, such additional information as may be specified in the related Prospectus
Supplement;

     (xi) if a class is entitled only to a specified portion of payments of
interest on the Mortgage Loans in the related Mortgage Pool, the Pass-Through
Rate, if adjusted from the date of the last statement, of the Mortgage Loans
expected to be applicable to the next distribution to such class;

     (xii) if applicable, the amount remaining in any Reserve Account at the
close of business on the Distribution Date;

     (xiii) the Pass-Through Rate as of the day prior to the immediately
preceding Distribution Date; and

     (xiv) any amounts remaining under letters of credit, pool policies or other
forms of credit enhancement.

         Where applicable, any amount set forth above may be expressed as a
dollar amount per single Certificate of the relevant class having the percentage
interest specified in the related Prospectus Supplement. The report to
Certificateholders for any Series of Certificates may include additional or
other information of a similar nature to that specified above.

                                       40
<PAGE>

         In addition, within a reasonable period of time after the end of each
calendar year, the Master Servicer or the Trustee will mail to each
Certificateholder of record at any time during such calendar year a report (a)
as to the aggregate of amounts reported pursuant to (i) and (ii) above for such
calendar year or, in the event such person was a Certificateholder of record
during a portion of such calendar year, for the applicable portion of such year
and (b) such other customary information as may be deemed necessary or desirable
for Certificateholders to prepare their tax returns.

                               CREDIT ENHANCEMENT

GENERAL

         Credit enhancement may be provided with respect to one or more classes
of a Series of Certificates or with respect to the Mortgage Assets in the
related Trust Fund. Credit enhancement may be in the form of a limited financial
guaranty policy issued by an entity named in the related Prospectus Supplement,
the subordination of one or more classes of the Certificates of such Series, the
establishment of one or more reserve accounts, the use of a cross-support
feature, use of a mortgage pool insurance policy, bankruptcy bond, special
hazard insurance policy, surety bond, letter of credit, guaranteed investment
contract or another method of credit enhancement described in the related
Prospectus Supplement or any combination of the foregoing. Unless otherwise
specified in the related Prospectus Supplement, any credit enhancement will not
provide protection against all risks of loss and will not guarantee repayment of
the entire principal balance of the Certificates and interest thereon. If losses
occur which exceed the amount covered by credit enhancement or which are not
covered by the credit enhancement, Certificateholders will bear their allocable
share of deficiencies.

SUBORDINATION

         If so specified in the related Prospectus Supplement, protection
afforded to holders of one or more classes of Certificates of a Series by means
of the subordination feature will be accomplished by the preferential right of
holders of one or more other classes of such Series (the "SENIOR CERTIFICATES")
to distributions in respect of scheduled principal, Principal Prepayments,
interest or any combination thereof that otherwise would have been payable to
holders of one or more other classes of Certificates (the "SUBORDINATED
CERTIFICATES") under the circumstances and to the extent specified in the
related Prospectus Supplement. If so specified in the related Prospectus
Supplement, protection may also be afforded to the holders of the Senior
Certificates of a Series by: (i) reducing the ownership interest of the holders
of the related Subordinated Certificates; (ii) a combination of the immediately
preceding sentence and clause (i) above; or (iii) as otherwise described in the
related Prospectus Supplement. If specified in the related Prospectus
Supplement, delays in receipt of scheduled payments on the Mortgage Loans and
losses on defaulted Mortgage Loans will be borne first by the various classes of
Subordinated Certificates and thereafter by the various classes of Senior
Certificates, in each case under the circumstances and subject to the
limitations specified in such related Prospectus Supplement. The aggregate
distributions in respect of delinquent payments on the Mortgage Loans over the
lives of the Certificates or at any time, the aggregate losses in respect of
defaulted Mortgage Loans which must be borne by the Subordinated Certificates by
virtue of subordination and the


                                       41
<PAGE>

amount of the distributions otherwise distributable to the Subordinated
Certificateholders that will be distributable to Senior Certificateholders on
any Distribution Date may be limited as specified in the related Prospectus
Supplement. If aggregate distributions in respect of delinquent payments on the
Mortgage Loans or aggregate losses in respect of such Mortgage Loans were to
exceed an amount specified in the related Prospectus Supplement, holders of the
Senior Certificates would experience losses on such Certificates.

         In addition to or in lieu of the foregoing, if so specified in the
related Prospectus Supplement, all or any portion of distributions otherwise
payable to holders of the Subordinated Certificates on any Distribution Date may
instead be deposited into one or more Reserve Accounts established with the
Trustee. If so specified in the related Prospectus Supplement, such deposits may
be made on each Distribution Date, for specified periods or until the balance in
the Reserve Account has reached a specified amount and, following payments from
the Reserve Account to holders of the Senior Certificates or otherwise,
thereafter to the extent necessary to restore the balance in the Reserve Account
to required levels, in each case as specified in the related Prospectus
Supplement. If so specified in the related Prospectus Supplement, amounts on
deposit in the Reserve Account may be released to the holders of the class or
classes of Certificates specified in such Prospectus Supplement at the times and
under the circumstances specified in such Prospectus Supplement.

         If specified in the related Prospectus Supplement, various classes of
Senior Certificates and Subordinated Certificates may themselves be subordinate
in their right to receive certain distributions to other classes of Senior and
Subordinated Certificates, respectively, through a cross support mechanism or
otherwise.

         As among classes of Senior Certificates and as among classes of
Subordinated Certificates, distributions may be allocated among such classes (i)
in the order of their scheduled final distribution dates, (ii) in accordance
with a schedule or formula, (iii) in relation to the occurrence of events or
(iv) otherwise, in each case as specified in the related Prospectus Supplement.
As among classes of Subordinated Certificates, payments to holders of the
related Senior Certificates on account of delinquencies or losses and payments
to any Reserve Account will be allocated as specified in the related Prospectus
Supplement.

MORTGAGE POOL INSURANCE POLICIES

         If specified in the related Prospectus Supplement related to a Mortgage
Pool of Single Family Loans, a separate mortgage pool insurance policy (a
"MORTGAGE POOL INSURANCE POLICY") will be obtained for the Mortgage Pool and
issued by the insurer (the "POOL INSURER") named in such Prospectus Supplement.
Each Mortgage Pool Insurance Policy will, subject to the limitations described
below, cover loss by reason of default in payment on Single Family Loans in the
related Mortgage Pool in an amount equal to a percentage (specified in such
Prospectus Supplement) of the aggregate principal balances of such Mortgage
Loans on the Cut-off Date which are not covered as to their entire outstanding
principal balances by Primary Mortgage Insurance Policies. As more fully
described below, the Master Servicer will present claims thereunder to the Pool
Insurer on behalf of itself, the Trustee and the holders of the Certificates.
The Mortgage Pool Insurance Policies, however, are not blanket policies against
loss, since claims thereunder may only be made respecting particular defaulted
Mortgage Loans and only

                                       42
<PAGE>

upon satisfaction of certain conditions precedent described below. Unless
otherwise specified in the related Prospectus Supplement, no Mortgage Pool
Insurance Policy will cover losses due to a failure to pay or denial of a claim
under a Primary Mortgage Insurance Policy.

         Unless otherwise specified in the related Prospectus Supplement, the
Mortgage Pool Insurance Policy will provide that no claims may be validly
presented unless (i) any required Primary Mortgage Insurance Policy is in effect
for the defaulted Mortgage Loan and a claim thereunder has been submitted and
settled; (ii) hazard insurance on the related Mortgaged Property has been kept
in force and real estate taxes and other protection and preservation expenses
have been paid; (iii) if there has been physical loss or damage to the Mortgaged
Property, it has been restored to its physical condition (reasonable wear and
tear excepted) at the time of issuance of the policy; and (iv) the insured has
acquired good and merchantable title to the Mortgaged Property free and clear of
liens except certain permitted encumbrances. Upon satisfaction of these
conditions, the Pool Insurer will have the option either (a) to purchase the
property securing the defaulted Mortgage Loan at a price equal to the principal
balance thereof plus accrued and unpaid interest at the Mortgage Rate to the
date of purchase and certain expenses incurred by the Master Servicer on behalf
of the Trustee and Certificateholders or (b) to pay the amount by which the sum
of the principal balance of the defaulted Mortgage Loan plus accrued and unpaid
interest at the Mortgage Rate to the date of payment of the claim and the
aforementioned expenses exceeds the proceeds received from an approved sale of
the Mortgaged Property, in either case net of certain amounts paid or assumed to
have been paid under the related Primary Mortgage Insurance Policy. If any
property securing a defaulted Mortgage Loan is damaged and proceeds, if any,
from the related hazard insurance policy or any applicable Special Hazard
Insurance Policy are insufficient to restore the damaged property to a condition
sufficient to permit recovery under the Mortgage Pool Insurance Policy, the
Master Servicer will not be required to expend its own funds to restore the
damaged property unless it determines that (i) such restoration will increase
the proceeds to Certificateholders on liquidation of the Mortgage Loan after
reimbursement of the Master Servicer for its expenses and (ii) such expenses
will be recoverable by it through proceeds of the sale of the property or
proceeds of such related Mortgage Pool Insurance Policy or any related Primary
Mortgage Insurance Policy.

         Unless otherwise specified in the related Prospectus Supplement, no
Mortgage Pool Insurance Policy will insure (and many Primary Mortgage Insurance
Policies do not insure) against loss sustained by reason of a default arising
from, among other things, (i) fraud or negligence in the origination or
servicing of a Mortgage Loan, including misrepresentation by the mortgagor, the
originator or persons involved in the origination thereof or (ii) failure to
construct a Mortgaged Property in accordance with plans and specifications. A
failure of coverage attributable to one of the foregoing events might result in
a breach of the related Seller's representations described above and, in such
event, might give rise to an obligation on the part of such Seller to purchase
the defaulted Mortgage Loan if the breach cannot be cured by such Seller. No
Mortgage Pool Insurance Policy will cover (and many Primary Mortgage Insurance
Policies do not cover) a claim in respect of a defaulted Mortgage Loan occurring
when the servicer of such Mortgage Loan, at the time of default or thereafter,
was not approved by the applicable insurer.

         Unless otherwise specified in the related Prospectus Supplement, the
original amount of coverage under the Mortgage Pool Insurance Policy will be
reduced over the life of the related

                                       43
<PAGE>

Certificates by the aggregate dollar amount of claims paid less the aggregate of
the net amounts realized by the Pool Insurer upon disposition of all foreclosed
properties. The amount of claims paid will include certain expenses incurred by
the Master Servicer as well as accrued interest on delinquent Mortgage Loans to
the date of payment of the claim, unless otherwise specified in the related
Prospectus Supplement. Accordingly, if aggregate net claims paid under any
Mortgage Pool Insurance Policy reach the original policy limit, coverage under
that Mortgage Pool Insurance Policy will be exhausted and any further losses
will be borne by the Certificateholders.

         The terms of any pool insurance policy relating to a pool of Contracts
will be described in the related Prospectus Supplement.

FHA INSURANCE; VA GUARANTEES

         Single Family Loans designated in the related Prospectus Supplement as
insured by the FHA will be insured by the FHA as authorized under the United
States Housing Act of 1937, as amended. Such Mortgage Loans will be insured
under various FHA programs including the standard FHA 203(b) program to finance
the acquisition of one- to four-family housing units and the FHA 245 graduated
payment mortgage program. These programs generally limit the principal amount
and interest rates of the mortgage loans insured. Single Family Loans insured by
the FHA generally require a minimum down payment of approximately 5% of the
original principal amount of the loan. No FHA-insured Single Family Loan
relating to a Series may have an interest rate or original principal amount
exceeding the applicable FHA limits at the time of origination of such loan.

         The insurance premiums for Single Family Loans insured by the FHA are
collected by lenders approved by the Department of Housing and Urban Development
("HUD") or by the Master Servicer or any Sub-Servicers and are paid to the FHA.
The regulations governing FHA single-family mortgage insurance programs provide
that insurance benefits are payable either upon foreclosure (or other
acquisition of possession) and conveyance of the mortgaged premises to HUD or
upon assignment of the defaulted Mortgage Loan to HUD. With respect to a
defaulted FHA-insured Single Family Loan, the Master Servicer or any
Sub-Servicer is limited in its ability to initiate foreclosure proceedings. When
it is determined by the Master Servicer or any applicable Sub-Servicer or HUD
that the default was caused by circumstances beyond the mortgagor's control, the
Master Servicer or such Sub-Servicer is expected to make an effort to avoid
foreclosure by entering, if feasible, into one of a number of available forms of
forbearance plans with the mortgagor. Such plans may involve the reduction or
suspension of regular mortgage payments for a specified period, with such
payments to be made up on or before the maturity date of the mortgage, or the
recasting of payments due under the mortgage up to or beyond the maturity date.
In addition, when a default caused by such circumstances is accompanied by
certain other criteria, HUD may provide relief by making payments to the Master
Servicer or such Sub-Servicer in partial or full satisfaction of amounts due
under the Mortgage Loan (which payments are to be repaid by the mortgagor to
HUD) or by accepting assignment of the loan from the Master Servicer or such
Sub-Servicer. With certain exceptions, at least three full monthly installments
must be due and unpaid under the Mortgage Loan, and HUD must have rejected any
request for relief from the mortgagor, before the Master Servicer or such
Sub-Servicer may initiate foreclosure proceedings.

                                       44
<PAGE>

         HUD has the option, in most cases, to pay insurance claims in cash or
in debentures issued by HUD. Currently, claims are being paid in cash and claims
have not been paid in debentures since 1965. HUD debentures issued in
satisfaction of FHA insurance claims bear interest at the applicable HUD
debentures' interest rate. The Master Servicer or any Sub-Servicer of each
FHA-insured Single Family Loan will be obligated to purchase any such debenture
issued in satisfaction of such Mortgage Loan upon default for an amount equal to
the principal amount of any such debenture.

         The amount of insurance benefits generally paid by the FHA is equal to
the entire unpaid principal amount of the defaulted Mortgage Loan adjusted to
reimburse the Master Servicer or Sub-Servicer for certain costs and expenses and
to deduct certain amounts received or retained by the Master Servicer or
Sub-Servicer after default. When entitlement to insurance benefits results from
foreclosure (or other acquisition of possession) and conveyance to HUD, the
Master Servicer or Sub-Servicer is compensated for no more than two-thirds of
its foreclosure costs, and is compensated for interest accrued and unpaid prior
to such date generally only to the extent allowed pursuant to the related
forbearance plan approved by HUD. When entitlement to insurance benefits results
from assignment of the Mortgage Loan to HUD, the insurance payment includes full
compensation for interest accrued and unpaid to the assignment date. The
insurance payment itself, upon foreclosure of an FHA-insured Single Family Loan,
bears interest from the date which is 30 days after the mortgagor's first
uncorrected failure to perform any obligation to make any payment due under the
Mortgage and, upon assignment, from the date of assignment to the date of
payment of the claim, in each case at the same interest rate as the applicable
HUD debenture interest rate described above.

         Single Family Loans designated in the related Prospectus Supplement as
guaranteed by the VA will be partially guaranteed by the VA under the
Serviceman's Readjustment Act of 1944, as amended (a "VA GUARANTY POLICY"),
which permits a veteran (or in certain instances the spouse of a veteran) to
obtain a mortgage loan guaranteed by the VA covering mortgage financing of the
purchase of a one- to four-family dwelling unit at interest rates permitted by
the VA. The program has no mortgage loan limits, requires no down payment from
the purchaser and permits the guarantee of mortgage loans of up to 30 years'
duration. However, no Single Family Loan guaranteed by the VA will have an
original principal amount greater than five times the partial VA guarantee for
such Mortgage Loan.

         The maximum guarantee that may be issued by the VA under a VA
guaranteed mortgage loan depends upon the original principal amount of the
mortgage loan, as further described in 38 United States Code Section 1803(a), as
amended. As of November 1, 1998 the maximum guarantee that may be issued by the
VA under a VA guaranteed mortgage loan of more than $144,000 is the lesser of
25% of the original principal amount of the mortgage loan and $50,570. The
liability on the guarantee is reduced or increased pro rata with any reduction
or increase in the amount of indebtedness, but in no event will the amount
payable on the guarantee exceed the amount of the original guarantee. The VA
may, at its option and without regard to the guarantee, make full payment to a
mortgage holder of unsatisfied indebtedness on a mortgage upon its assignment to
the VA.

         With respect to a defaulted VA guaranteed Single Family Loan, the
Master Servicer or Sub-Servicer is, absent exceptional circumstances, authorized
to announce its intention to

                                       45
<PAGE>

foreclose only when the default has continued for three months. Generally, a
claim for the guarantee is submitted after liquidation of the Mortgaged
Property.

         The amount payable under the guarantee will be the percentage of the
VA-insured Single Family Loan originally guaranteed applied to indebtedness
outstanding as of the applicable date of computation specified in the VA
regulations. Payments under the guarantee will be equal to the unpaid principal
amount of the loan, interest accrued on the unpaid balance of the loan to the
appropriate date of computation and limited expenses of the mortgagee, but in
each case only to the extent that such amounts have not been recovered through
liquidation of the Mortgaged Property. The amount payable under the guarantee
may in no event exceed the amount of the original guarantee.

SPECIAL HAZARD INSURANCE POLICIES

         If specified in the related Prospectus Supplement, a separate special
hazard insurance policy (a "SPECIAL HAZARD INSURANCE POLICY") will be obtained
for the Mortgage Pool and will be issued by the insurer (a "SPECIAL HAZARD
INSURER") named in such Prospectus Supplement. Each Special Hazard Insurance
Policy will, subject to limitations described below, protect holders of the
related Certificates from (i) loss by reason of damage to Mortgaged Properties
caused by certain hazards (including earthquakes and, to a limited extent, tidal
waves and related water damage or as otherwise specified in the related
Prospectus Supplement) not insured against under the standard form of hazard
insurance policy for the respective states in which the Mortgaged Properties are
located or under a flood insurance policy if the Mortgaged Property is located
in a federally designated flood area, and (ii) loss caused by reason of the
application of the coinsurance clause contained in hazard insurance policies.
See "The Pooling and Servicing Agreement--Hazard Insurance". No Special Hazard
Insurance Policy will cover losses occasioned by fraud or conversion by the
Trustee or Master Servicer, war, insurrection, civil war, certain governmental
action, errors in design, faulty workmanship or materials (except under certain
circumstances), nuclear or chemical reaction, flood (if the Mortgaged Property
is located in a federally designated flood area), nuclear or chemical
contamination and certain other risks. The amount of coverage under any Special
Hazard Insurance Policy will be specified in the related Prospectus Supplement.
Each Special Hazard Insurance Policy will provide that no claim may be paid
unless hazard insurance and, if applicable, flood insurance on the related
Mortgaged Property have been kept in force and other protection and preservation
expenses have been paid.

         Subject to the foregoing limitations, and unless otherwise specified in
the related Prospectus Supplement, each Special Hazard Insurance Policy will
provide that where there has been damage to property securing a foreclosed
Mortgage Loan (title to which has been acquired by the insured) and to the
extent such damage is not covered by the hazard insurance policy or flood
insurance policy, if any, maintained by the mortgagor or the Master Servicer,
the Special Hazard Insurer will pay the lesser of (i) the cost of repair or
replacement of such property or (ii) upon transfer of the property to the
Special Hazard Insurer, the unpaid principal balance of such Mortgage Loan at
the time of acquisition of such property by foreclosure or deed in lieu of
foreclosure plus accrued interest to the date of claim settlement and certain
expenses incurred by the Master Servicer with respect to such property. If the
unpaid principal balance of a Mortgage Loan plus accrued interest and certain
expenses is paid by the Special Hazard Insurer, the amount of further coverage
under the related Special Hazard Insurance Policy will be reduced by

                                       46
<PAGE>

such amount less any net proceeds from the sale of the property. Any amount paid
as the cost of repairing such property of the property will further reduce
coverage by such amount. So long as a Mortgage Pool Insurance Policy remains in
effect, the payment by the Special Hazard Insurer of the cost of repair or of
the unpaid principal balance of the related Mortgage Loan plus accrued interest
and certain expenses will not affect the total insurance proceeds paid to
Certificateholders, but will affect the relative amounts of coverage remaining
under the related Special Hazard Insurance Policy and such Mortgage Pool
Insurance Policy.

         Since each Special Hazard Insurance Policy will be designed to permit
full recovery under the Mortgage Pool Insurance Policy in circumstances in which
such recoveries would otherwise be unavailable because property has been damaged
by a cause not insured against by a standard hazard policy and thus would not be
restored, each Agreement will provide that, if the related Mortgage Pool
Insurance Policy shall have been terminated or been exhausted through payment of
claims, unless otherwise specified in the related Prospectus Supplement, the
Master Servicer will be under no further obligation to maintain such Special
Hazard Insurance Policy.

         To the extent specified in an applicable Prospectus Supplement, the
Master Servicer may deposit cash, an irrevocable letter of credit or any other
instrument acceptable to each nationally recognized rating agency rating the
Certificates of the related Series in a special trust account to provide
protection in lieu of or in addition to that provided by a Special Hazard
Insurance Policy. The amount of any Special Hazard Insurance Policy or of the
deposit to the special trust account relating to such Certificates in lieu
thereof may be reduced so long as any such reduction will not result in a
downgrading of the rating of such Certificates by any such rating agency.

         The terms of any Special Hazard Insurance Policy relating to a pool of
Contracts will be described in the related Prospectus Supplement.

BANKRUPTCY BONDS

         If specified in the related Prospectus Supplement, a bankruptcy bond
("BANKRUPTCY BOND") for proceedings under the Bankruptcy Code will be issued by
an insurer named in such Prospectus Supplement. Each Bankruptcy Bond will cover
certain losses resulting from a reduction by a bankruptcy court of scheduled
payments of principal and interest on a Mortgage Loan or a reduction by such
court of the principal amount of a Mortgage Loan and will cover certain unpaid
interest on the amount of such a principal reduction from the date of the filing
of a bankruptcy petition. The required amount of coverage under a Bankruptcy
Bond will be set forth in the related Prospectus Supplement. Coverage under a
Bankruptcy Bond may be cancelled or reduced by the Master Servicer if such
cancellation or reduction would not adversely affect the then current rating or
ratings of the related Certificates. See "Certain Legal Aspects of the Mortgage
Loans--Anti-Deficiency Legislation and Other Limitations on Lenders" herein.

         To the extent specified in the related Prospectus Supplement, the
Master Servicer may deposit cash, an irrevocable letter of credit or any other
instrument acceptable to each nationally recognized rating agency rating the
Certificates of the related Series in a special trust account to provide
protection in lieu of or in addition to that provided by a Bankruptcy Bond. The
amount of any Bankruptcy Bond or of the deposit to the special trust account
relating to such Certificates

                                       47
<PAGE>

in lieu thereof may be reduced so long as any such reduction would not result in
a downgrading of the then current rating or ratings of such Certificates by any
such rating agency.

         The terms of any Bankruptcy Bond relating to a pool of Contracts will
be described in the related Prospectus Supplement.

FHA INSURANCE ON MULTIFAMILY LOANS

         There are two primary FHA insurance programs that are available for
Multifamily Loans. Sections 221(d)(3) and (d)(4) of the Housing Act allow HUD to
insure mortgage loans that are secured by newly constructed and substantially
rehabilitated multifamily rental projects. Section 244 of the Housing Act
provides for co-insurance of such mortgage loans made under Sections 221(d)(3)
and (d)(4) by HUD/FHA and a HUD-approved co-insurer. Generally the term of such
a mortgage loan may be up to 40 years and the ratio of loan amount to property
replacement cost can be up to 90%.

         Section 223(f) of the Housing Act allows HUD to insure mortgage loans
made for the purchase or refinancing of existing apartment projects which are at
least three years old. Section 244 also provides for co-insurance of mortgage
loans made under Section 223(f). Under Section 223(f), the loan proceeds cannot
be used for substantial rehabilitation work but repairs may be made for up to,
in general, the greater of 15% of the value of the project or a dollar amount
per apartment unit established from time to time by HUD. In general the loan
term may not exceed 35 years and a loan-to-value ratio of no more than 85% is
required for the purchase of a project and 70% for the refinancing of a project.

         FHA insurance is generally payable in cash or, at the option of the
mortgagee, in debentures. Such insurance does not cover 100% of the mortgage
loan but is instead subject to certain deductions and certain losses of interest
from the date of the default.

RESERVE ACCOUNTS

         If so specified in the related Prospectus Supplement, credit support
with respect to a Series of Certificates may be provided by the establishment
and maintenance of one or more Reserve Accounts for such Series, in trust, with
the Trustee for such Series of Certificates. The related Prospectus Supplement
will specify whether or not such Reserve Accounts will be included in the Trust
Fund for such Series.

         The Reserve Account for a Series will be funded (i) by the deposit
therein of cash, U.S. Treasury securities, instruments evidencing ownership of
principal or interest payments thereon, letters of credit, demand notes,
certificates of deposit or a combination thereof in the aggregate amount
specified in the related Prospectus Supplement, (ii) by the deposit therein from
time to time of certain amounts, as specified in the related Prospectus
Supplement to which the Subordinate Certificateholders, if any, would otherwise
be entitled or (iii) in such other manner as may be specified in the related
Prospectus Supplement.

         Any amounts on deposit in the Reserve Account and the proceeds of any
other instrument upon maturity will be held in cash or will be invested in
Permitted Investments which, unless otherwise specified in the related
Prospectus Supplement, will include obligations of the United

                                       48
<PAGE>

States and certain agencies thereof, certificates of deposit, certain commercial
paper, time deposits and bankers acceptances sold by eligible commercial banks
and certain repurchase agreements of United States government securities with
eligible commercial banks. If a letter of credit is deposited with the Trustee,
such letter of credit will be irrevocable. Unless otherwise specified in the
related Prospectus Supplement, any instrument deposited therein will name the
Trustee, in its capacity as trustee for the holders of the Certificates, as
beneficiary and will be issued by an entity acceptable to each rating agency
that rates the Certificates. Additional information with respect to such
instruments deposited in the Reserve Account will be set forth in the related
Prospectus Supplement.

         Any amounts so deposited and payments on instruments so deposited will
be available for withdrawal from the Reserve Account for distribution to the
holders of Certificates for the purposes, in the manner and at the times
specified in the related Prospectus Supplement.

CROSS SUPPORT

         If specified in the related Prospectus Supplement, the beneficial
ownership of separate groups of assets included in a Trust Fund may be evidenced
by separate classes of the related Series of Certificates. In such case, credit
support may be provided by a cross support feature which requires that
distributions be made with respect to Certificates evidencing a beneficial
ownership interest in other asset groups within the same Trust Fund. The related
Prospectus Supplement for a Series which includes a cross support feature will
describe the manner and conditions for applying such cross support feature.

         If specified in the related Prospectus Supplement, the coverage
provided by one or more forms of credit support may apply concurrently to two or
more related Trust Funds. If applicable, the related Prospectus Supplement will
identify the Trust Funds to which such credit support relates and the manner of
determining the amount of the coverage provided thereby and of the application
of such coverage to the identified Trust Funds.

OTHER INSURANCE, SURETY BONDS, GUARANTIES, LETTERS OF CREDIT AND SIMILAR
INSTRUMENTS OR AGREEMENTS

         If specified in the related Prospectus Supplement, a Trust Fund may
also include insurance, guaranties, surety bonds, letters of credit or similar
arrangements for the purpose of (i) maintaining timely payments or providing
additional protection against losses on the assets included in such Trust Fund,
(ii) paying administrative expenses or (iii) establishing a minimum reinvestment
rate on the payments made in respect of such assets or principal payment rate on
such assets. Such arrangements may include agreements under which
Certificateholders are entitled to receive amounts deposited in various accounts
held by the Trustee upon the terms specified in such Prospectus Supplement.

FINANCIAL INSTRUMENTS

         If specified in the related Prospectus Supplement, the Trust Fund may
include one or more financial instruments that are intended to meet the
following goals: (i) to convert the payments on some or all of the related
Mortgage Assets from fixed to floating payments, or from floating to fixed, or
from floating based on a particular index to floating based on another index;

                                       49
<PAGE>

(ii) to provide payments if any index rises above or falls below specified
levels; or (iii) to provide protection against interest rate changes, certain
types of losses or other payment shortfalls to one or more Classes of the
related Series.

         If a Trust Fund includes financial instruments of this type, the
instruments may be structured to be exempt from the registration requirements of
the Securities Act of 1933, as amended.

         The related Prospectus Supplement will include, or incorporate by
reference, material financial and other information about the provider of the
financial instruments.

                       YIELD AND PREPAYMENT CONSIDERATIONS

         The yields to maturity and weighted average lives of the Certificates
will be affected primarily by the amount and timing of principal payments
received on or in respect of the Mortgage Assets included in the related Trust
Fund. The original terms to maturity of the Mortgage Loans in a given Mortgage
Pool will vary depending upon the types of Mortgage Loans included therein. Each
Prospectus Supplement will contain information with respect to the types and
maturities of the Mortgage Loans in the related Mortgage Pool. Unless otherwise
specified in the related Prospectus Supplement, Single Family Loans and
Contracts may be prepaid without penalty in full or in part at any time.
Multifamily Loans may prohibit prepayment for a specified period after
origination, may prohibit partial prepayments entirely, and may require the
payment of a prepayment penalty upon prepayment in full or in part. The
prepayment experience on the Mortgage Loans in a Mortgage Pool will affect the
life of the related Series of Certificates.

         A number of factors, including homeowner mobility, economic conditions,
the presence and enforceability of due-on-sale clauses, mortgage market interest
rates and the availability of mortgage funds may affect the prepayment
experience of Single Family Loans and Contracts. Some of these factors, as well
as other factors including limitations on prepayment and the relative tax
benefits associated with the ownership of income-producing real property, may
affect the prepayment of Multifamily Loans.

         Unless otherwise provided in the related Prospectus Supplement, all
conventional Single Family Loans and Contracts will contain due-on-sale
provisions permitting the mortgagee or holder of the Contract to accelerate the
maturity of the loan or Contract upon sale or certain transfers by the mortgagor
or obligor of the underlying Mortgaged Property. As described in the related
Prospectus Supplement, conventional Multifamily Loans may contain due-on-sale
provisions, due-on-encumbrance provisions or both. Mortgage Loans insured by the
FHA, and Single Family Loans and Contracts partially guaranteed by the VA, are
assumable with the consent of the FHA and the VA, respectively. Thus, the rate
of prepayments of such Mortgage Loans may be lower than that of conventional
Mortgage Loans bearing comparable interest rates. Unless otherwise provided in
the related Prospectus Supplement, the Master Servicer generally will enforce
any due-on-sale or due-on-encumbrance clause, to the extent it has knowledge of
the conveyance or further encumbrance or the proposed conveyance or proposed
further encumbrance of the Mortgaged Property and reasonably believes that it is
entitled to do so under applicable law; provided, however, that the Master
Servicer will not take any enforcement action

                                       50
<PAGE>

that would impair or threaten to impair any recovery under any related insurance
policy. See "The Pooling and Servicing Agreement--Collection Procedures" and
"Certain Legal Aspects of the Mortgage Loans" herein for a description of
certain provisions of each Agreement and certain legal developments that may
affect the prepayment experience of the Mortgage Loans.

         The rate of prepayments of conventional mortgage loans has fluctuated
significantly in recent years. In general, if prevailing rates fall
significantly below the Mortgage Rates borne by the Mortgage Loans, such
Mortgage Loans are likely to be subject to higher prepayment rates than if
prevailing interest rates remain at or above such Mortgage Rates. Conversely, if
prevailing interest rates rise appreciably above the Mortgage Rates borne by the
Mortgage Loans, such Mortgage Loans are likely to experience a lower prepayment
rate than if prevailing rates remain at or below such Mortgage Rates. However,
there can be no assurance that such will be the case. The rate of prepayment of
Multifamily Loans may also be affected by other factors including Mortgage Loan
terms (e.g., the existence of lockout periods, due-on-sale and
due-on-encumbrance clauses and prepayment penalties), relative economic
conditions in the area where the Mortgaged Properties are located, the quality
of management of the Mortgaged Properties and possible changes in tax laws.

         When a prepayment in full is made with respect to a Single Family Loan,
the mortgagor is charged interest on the principal amount of the Loan so prepaid
only for the number of days in the month actually elapsed up to the date of the
prepayment rather than for a full month. Unless otherwise specified in the
related Prospectus Supplement, the effect of prepayments in full will be to
reduce the amount of interest passed through in the following month to holders
of Certificates because interest on the principal amount of any Mortgage Loan so
prepaid will be paid only to the date of prepayment. Partial prepayments in a
given month may be applied to the outstanding principal balances of the Mortgage
Loans so prepaid on the first day of the month of receipt or of the month
following receipt. In the latter case, partial prepayments will not reduce the
amount of interest passed through in such month. Unless otherwise specified in
the related Prospectus Supplement, neither prepayments in full nor partial
prepayments will be passed through until the month following receipt. Prepayment
penalties collected with respect to Multifamily Loans will be distributed to the
holders of Certificates, or to other persons entitled thereto, as described in
the related Prospectus Supplement.

         If the rate at which interest is passed through to the holders of
Certificates of a Series is calculated on a Mortgage Loan by Mortgage Loan
basis, disproportionate principal prepayments with respect to Mortgage Loans
bearing different Mortgage Rates will affect the yield on such Certificates. In
all cases, the effective yield to Certificateholders will be slightly lower than
the yield otherwise produced by the applicable Pass-Through Rate and purchase
price because, while interest will accrue on each Mortgage Loan from the first
day of the month (unless otherwise provided in the related Prospectus
Supplement), the distribution of such interest will not be made earlier than the
month following the month of accrual.

         Under certain circumstances, the Master Servicer or the holders of the
residual interests in a REMIC may have the option to purchase the assets of a
Trust Fund thereby effecting earlier retirement of the related Series of
Certificates. See "The Pooling and Servicing Agreement--Termination; Optional
Termination".

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<PAGE>

         Factors other than those identified herein and in the related
Prospectus Supplement could significantly affect principal prepayments at any
time and over the lives of the Certificates. The relative contribution of the
various factors affecting prepayment may also vary from time to time. There can
be no assurance as to the rate of payment of principal of the Mortgage Assets at
any time or over the lives of the Certificates.

         The Prospectus Supplement relating to a Series of Certificates will
discuss in greater detail the effect of the rate and timing of principal
payments (including prepayments), delinquencies and losses on the yield,
weighted average lives and maturities of such Certificates.

         In the event that a receiver, bankruptcy trustee, debtor in possession
or similar entity (each, an "INSOLVENCY TRUSTEE") is appointed with respect to a
Seller due to its insolvency or a Seller becomes a debtor under Title 11 of the
United States Code (the "BANKRUPTCY CODE") or any similar insolvency law, such
Insolvency Trustee may attempt to characterize the transfer of the related
Mortgage Loans from such Seller to the Depositor as a pledge to secure a
financing rather than as a sale. In the event that such attempt were successful,
such Insolvency Trustee might elect, among other remedies, to accelerate payment
of the related Certificates and liquidate such Mortgage Loans, with each related
Certificateholder being entitled to receive its allocable share of the principal
balance thereof, together with such Certificateholder's allocable share of
interest thereon at the applicable Pass-Through Rate or weighted average Strip
Rate (as defined in the related Prospectus Supplement), as the case may be, to
the date of payment. In any such event, the related Certificateholders might
incur reinvestment losses with respect to principal received and investment
losses attendant to the liquidation of the Mortgage Loans (and the resulting
early retirement of the related Certificates). In addition, certain delays in
distributions might be experienced by such Certificateholders in connection with
any such insolvency proceedings.

                       THE POOLING AND SERVICING AGREEMENT

         Set forth below is a summary of certain provisions of each Agreement
which are not described elsewhere in this Prospectus. This summary does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, the provisions of such Agreement. Where particular provisions or
terms used in the Agreements are referred to, such provisions or terms are as
specified in the Agreements.

ASSIGNMENT OF MORTGAGE ASSETS

         Assignment of the Mortgage Loans. At the time of issuance of the
Certificates of a Series, the Depositor will cause the Mortgage Loans comprising
the related Trust Fund to be assigned to the Trustee, together with all
principal and interest received by or on behalf of the Depositor with respect to
such Mortgage Loans after the Cut-off Date, other than principal and interest
due on or before the Cut-off Date and other than any Retained Interest specified
in the related Prospectus Supplement. The Trustee will, concurrently with such
assignment, deliver the Certificates to the Depositor in exchange for the
Mortgage Loans. Each Mortgage Loan will be identified in a schedule appearing as
an exhibit to the related Agreement. Such schedule will include information as
to the outstanding principal balance of each Mortgage Loan after application of
payments due on the Cut-off Date, as well as information regarding the Mortgage

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<PAGE>

Rate or APR, the current scheduled monthly payment of principal and interest,
the maturity of the loan, the Loan-to-Value Ratio at origination and certain
other information.

         In addition, the Depositor will deliver or cause to be delivered to the
Trustee (or to the custodian hereinafter referred to) as to each Mortgage Loan,
among other things, (i) the mortgage note or Contract endorsed without recourse
in blank or to the order of the Trustee, (ii) in the case of Single Family Loans
or Multifamily Loans, the mortgage, deed of trust or similar instrument (each, a
"MORTGAGE") with evidence of recording indicated thereon (except for any
Mortgage not returned from the public recording office, in which case the
Depositor will deliver or cause to be delivered a copy of such Mortgage together
with a certificate stating that the original of such Mortgage was delivered to
such recording office), (iii) an assignment of the Mortgage or Contract to the
Trustee, which assignment will be in recordable form in the case of a Mortgage
assignment and (iv) such other security documents as may be specified in the
related Prospectus Supplement. Unless otherwise specified in the related
Prospectus Supplement, (i) in the case of Single Family Loans or Multifamily
Loans, the Depositor will promptly cause the assignments of the related loans to
be recorded in the appropriate public office for real property records, except
in states in which, in the opinion of counsel acceptable to the Trustee, such
recording is not required to protect the Trustee's interest in such loans
against the claim of any subsequent transferee or any successor to or creditor
of the Depositor or the originator of such loans, and (ii) in the case of
Contracts, the Depositor will promptly make or cause to be made an appropriate
filing of a UCC-1 financing statement in the appropriate states to give notice
of the Trustee's ownership of the Contracts.

         With respect to any Mortgage Loans which are Cooperative Loans, the
Depositor will cause to be delivered to the Trustee, the related original
cooperative note endorsed without recourse in blank or to the order of the
Trustee, the original security agreement, the proprietary lease or occupancy
agreement, the recognition agreement, an executed financing agreement and the
relevant stock certificate, related blank stock powers and any other document
specified in the related Prospectus Supplement. The Depositor will cause to be
filed in the appropriate office an assignment and a financing statement
evidencing the Trustee's security interest in each Cooperative Loan.

         The Trustee (or the custodian hereinafter referred to) will review such
Mortgage Loan documents within the time period specified in the related
Prospectus Supplement after receipt thereof and the Trustee will hold such
documents in trust for the benefit of the Certificateholders. Unless otherwise
specified in the related Prospectus Supplement, if any such document is found to
be missing or defective in any material respect, the Trustee (or such custodian)
will notify the Master Servicer and the Depositor, and the Master Servicer will
notify the related Seller. If the Seller cannot cure the omission or defect
within 45 days after receipt of such notice, the Seller will be obligated to
purchase the related Mortgage Loan from the Trustee at the Purchase Price. There
can be no assurance that a Seller will fulfill this purchase obligation.
Although the Master Servicer may be obligated to enforce such obligation to the
extent described under "Mortgage Loan Program--Representations by Sellers;
Repurchases" herein, neither the Master Servicer nor the Depositor will be
obligated to purchase such Mortgage Loan if the Seller defaults on its purchase
obligation, unless such breach also constitutes a breach of the representations
or warranties of the Master Servicer or the Depositor, as the case may be.
Unless otherwise specified in the related Prospectus Supplement, this purchase
obligation constitutes the sole

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<PAGE>

remedy available to the Certificateholders or the Trustee for the omission of,
or a material defect in, a constituent document.

         The Trustee will be authorized to appoint a custodian pursuant to a
custodial agreement to maintain possession of and, if applicable, to review the
documents relating to the Mortgage Loans as agent of the Trustee.

         The Master Servicer will make certain representations and warranties
regarding its authority to enter into, and its ability to perform its
obligations under, the Agreement. Upon a breach of any such representation of
the Master Servicer which materially and adversely affects the interests of the
Certificateholders in a Mortgage Loan, the Master Servicer will be obligated
either to cure the breach in all material respects or to purchase the Mortgage
Loan at the Purchase Price. Unless otherwise specified in the related Prospectus
Supplement, this obligation to cure or purchase constitutes the sole remedy
available to the Certificateholders or the Trustee for such a breach of
representation by the Master Servicer.

         Notwithstanding the foregoing provisions, with respect to a Trust Fund
for which a REMIC election is to be made, unless the related Prospectus
Supplement otherwise provides, no purchase of a Mortgage Loan will be made if
such purchase would result in a prohibited transaction tax under the Code.

         Assignment of Agency Securities. The Depositor will cause the Agency
Securities to be registered in the name of the Trustee or its nominee, and the
Trustee concurrently will execute, countersign and deliver the Certificates.
Each Agency Security will be identified in a schedule appearing as an exhibit to
the Agreement, which will specify as to each Agency Security the original
principal amount, the outstanding principal balance as of the Cut-off Date, the
annual pass-through rate (if any) and the maturity date.

         Assignment of Private Mortgage-Backed Securities. The Depositor will
cause Private Mortgage-Backed Securities to be registered in the name of the
Trustee. The Trustee (or the custodian) will have possession of any certificated
Private Mortgage-Backed Securities. Unless otherwise specified in the related
Prospectus Supplement, the Trustee will not be in possession of or be assignee
of record of any underlying assets for a Private Mortgage-Backed Security. See
"The Trust Fund--Private Mortgage-Backed Securities". Each Private
Mortgage-Backed Security will be identified in a schedule appearing as an
exhibit to the related Agreement which will specify the original principal
amount, the outstanding principal balance as of the Cut-off Date, the annual
pass-through rate or interest rate, the maturity date and certain other
pertinent information for each Private Mortgage-Backed Security conveyed to the
Trustee.

PAYMENTS ON MORTGAGE LOANS; DEPOSITS TO CERTIFICATE ACCOUNT

         Each Sub-Servicer servicing a Mortgage Loan pursuant to a Sub-Servicing
Agreement (as defined under "--Sub-Servicing by Sellers" below) will establish
and maintain an account (the "SUB-SERVICING ACCOUNT") which meets the following
requirements and is otherwise acceptable to the Master Servicer. A Sub-Servicing
Account must be established with a Federal Home Loan Bank or with a depository
institution (including the Sub-Servicer itself) whose accounts are insured by
either the Bank Insurance Fund (the "BIF") of the FDIC or the Savings

                                       54
<PAGE>

Association Insurance Fund ("SAIF") of the FDIC. If a Sub-Servicing Account is
maintained at an institution that is a Federal Home Loan Bank or an FDIC-insured
institution and, in either case, the amount on deposit in the Sub-Servicing
Account exceeds the FDIC insurance coverage amount, then such excess amount must
be remitted to the Master Servicer within one business day after receipt. In
addition, the Sub-Servicer must maintain a separate account for escrow and
impound funds relating to the Mortgage Loans. Each Sub-Servicer is required to
deposit into its Sub-Servicing Account on a daily basis all amounts described
below under "--Sub-Servicing by Sellers" that are received by it in respect of
the Mortgage Loans, less its servicing or other compensation. On or before the
date specified in the Sub-Servicing Agreement, the Sub-Servicer will remit or
cause to be remitted to the Master Servicer or the Trustee all funds held in the
Sub-Servicing Account with respect to the Mortgage Loans that are required to be
so remitted. The Sub-Servicer is also required to advance on the scheduled date
of remittance an amount corresponding to any monthly installment of principal
and interest, less its servicing or other compensation, on any Mortgage Loan for
which payment was not received from the mortgagor. Unless otherwise specified in
the related Prospectus Supplement, this obligation of the Sub-Servicer to
advance continues up to and including the first of the month following the date
on which the related Mortgaged Property is sold at a foreclosure sale or is
acquired on behalf of the Certificateholders by deed in lieu of foreclosure, or
until the related Mortgage Loan is liquidated.

         The Master Servicer will establish and maintain or cause to be
established and maintained with respect to the related Trust Fund a separate
account or accounts for the collection of payments on the related Mortgage
Assets in the Trust Fund (collectively, with respect to such Trust Fund, the
"CERTIFICATE ACCOUNT") which, unless otherwise specified in the related
Prospectus Supplement, must be (i) maintained with a depository institution the
debt obligations of which (or in the case of a depository institution that is
the principal subsidiary of a holding company, the obligations of which) are
rated in one of the two highest rating categories by the nationally recognized
statistical rating organization(s) that rated one or more classes of the related
Series of Certificates (each, a "RATING AGENCY"), (ii) an account or accounts
the deposits in which are fully insured by either BIF or SAIF, (iii) an account
or accounts the deposits in which are insured by BIF or SAIF (to the limits
established by the FDIC) and the uninsured deposits in which are otherwise
secured such that, as evidenced by an opinion of counsel, the Certificateholders
have a claim with respect to the funds in the Certificate Account or a perfected
first priority security interest against any collateral securing such funds that
is superior to the claims of any other depositors or general creditors of the
depository institution with which the Certificate Account is maintained, or (iv)
an account or accounts otherwise acceptable to each Rating Agency. The
collateral eligible to secure amounts in the Certificate Account is limited to
United States government securities and other high-quality investments
("PERMITTED INVESTMENTS"). A Certificate Account may be maintained as an
interest bearing account or the funds held therein may be invested pending each
succeeding Distribution Date in Permitted Investments. Unless otherwise
specified in the related Prospectus Supplement, the Master Servicer or its
designee will be entitled to receive any such interest or other income earned on
funds in the Certificate Account as additional compensation and will be
obligated to deposit in the Certificate Account the amount of any loss
immediately as realized. The Certificate Account may be maintained with the
Master Servicer or with a depository institution that is an affiliate of the
Master Servicer, provided that the Master Servicer or such affiliate, as
applicable, meets the standards set forth above.

                                       55
<PAGE>

         The Master Servicer will deposit or cause to be deposited in the
Certificate Account for each Trust Fund on a daily basis, to the extent
applicable and unless otherwise specified in the related Prospectus Supplement
and provided in the Agreement, the following payments and collections received
or Advances made by or on behalf of it subsequent to the Cut-off Date (other
than payments due on or before the Cut-off Date and exclusive of any amounts
representing Retained Interest):

     (i) all payments on account of principal, including Principal Prepayments
and, if specified in the related Prospectus Supplement, prepayment penalties, on
the Mortgage Loans;

     (ii) all payments on account of interest on the Mortgage Loans, net of
applicable servicing compensation;

     (iii) all proceeds (net of unreimbursed payments of property taxes,
insurance premiums and similar items ("INSURED EXPENSES") incurred, and
unreimbursed Advances made, by the related Sub-Servicer, if any) of the hazard
insurance policies and any Primary Mortgage Insurance Policies, to the extent
such proceeds are not applied to the restoration of property or released to
mortgagors in accordance with the Master Servicer's normal servicing procedures
(collectively, "INSURANCE PROCEEDS") and all other cash amounts (net of
unreimbursed expenses in connection with liquidation or foreclosure
("LIQUIDATION EXPENSES") incurred, and unreimbursed advances made, by the
related Sub-Servicer, if any) received and retained in connection with the
liquidation of defaulted Mortgage Loans, by foreclosure or otherwise
("LIQUIDATION PROCEEDS"), together with any net proceeds received on a monthly
basis with respect to any properties acquired on behalf of the
Certificateholders by foreclosure or deed in lieu of foreclosure;

     (iv) all proceeds of any Mortgage Loan or property in respect thereof
purchased by the Master Servicer, the Depositor, any Sub-Servicer or any Seller
as described under "Mortgage Loan Program--Representations by Sellers;
Repurchases" or "--Assignment of Mortgage Assets" above and all proceeds of any
Mortgage Loan repurchased as described under "--Termination; Optional
Termination" below;

     (v) all payments required to be deposited in the Certificate Account with
respect to any deductible clause in any blanket insurance policy described below
under "--Hazard Insurance";

     (vi) any amount required to be deposited by the Master Servicer in
connection with losses realized on investments for the benefit of the Master
Servicer of funds held in the Certificate Account; and

     (vii) all other amounts required to be deposited in the Certificate Account
pursuant to the Agreement.

SUB-SERVICING BY SELLERS

         Each Seller of a Mortgage Loan or any other servicing entity may act as
the Sub-Servicer for such Mortgage Loan pursuant to an agreement (each, a
"SUB-SERVICING AGREEMENT"), which will not contain any terms inconsistent with
the related Agreement. While each Sub-Servicing Agreement will be a contract
solely between the Master Servicer and the related Sub-Servicer,

                                       56
<PAGE>

the Agreement pursuant to which a Series of Certificates is issued will provide
that, if for any reason the Master Servicer for such Series of Certificates is
no longer the Master Servicer of the related Mortgage Loans, the Trustee or any
successor Master Servicer must recognize the Sub-Servicer's rights and
obligations under such Sub-Servicing Agreement.

         With the approval of the Master Servicer, a Sub-Servicer may delegate
its servicing obligations to third-party servicers, but such Sub-Servicer will
remain obligated under the related Sub-Servicing Agreement. Each Sub-Servicer
will be required to perform the customary functions of a servicer of mortgage
loans. Such functions generally include collecting payments from mortgagors or
obligors and remitting such collections to the Master Servicer; maintaining
hazard insurance policies as described herein and in any related Prospectus
Supplement, and filing and settling claims thereunder, subject in certain cases
to the right of the Master Servicer to approve in advance any such settlement;
maintaining escrow or impoundment accounts of mortgagors or obligors for payment
of taxes, insurance and other items required to be paid by the mortgagor or
obligor pursuant to the related Mortgage Loan; processing assumptions or
substitutions, although, unless otherwise specified in the related Prospectus
Supplement, the Master Servicer is generally required to exercise due-on-sale
clauses to the extent such exercise is permitted by law and would not adversely
affect insurance coverage; attempting to cure delinquencies; supervising
foreclosures; inspecting and managing Mortgaged Properties under certain
circumstances; maintaining accounting records relating to the Mortgage Loans;
and, to the extent specified in the related Prospectus Supplement, maintaining
additional insurance policies or credit support instruments and filing and
settling claims thereunder. A Sub-Servicer will also be obligated to make
advances in respect of delinquent installments of principal and interest on
Mortgage Loans, as described more fully above under "--Payments on Mortgage
Loans; Deposits to Certificate Account", and in respect of certain taxes and
insurance premiums not paid on a timely basis by mortgagors or obligors.

         As compensation for its servicing duties, each Sub-Servicer will be
entitled to a monthly servicing fee (to the extent the scheduled payment on the
related Mortgage Loan has been collected) in the amount set forth in the related
Prospectus Supplement. Each Sub-Servicer is also entitled to collect and retain,
as part of its servicing compensation, any prepayment or late charges provided
in the mortgage note or related instruments. Each Sub-Servicer will be
reimbursed by the Master Servicer for certain expenditures which it makes,
generally to the same extent the Master Servicer would be reimbursed under the
Agreement. The Master Servicer may purchase the servicing of Mortgage Loans if
the Sub-Servicer elects to release the servicing of such Mortgage Loans to the
Master Servicer. See "--Servicing and Other Compensation and Payment of
Expenses" below.

         Each Sub-Servicer may be required to agree to indemnify the Master
Servicer for any liability or obligation sustained by the Master Servicer in
connection with any act or failure to act by the Sub-Servicer in its servicing
capacity. Each Sub-Servicer will be required to maintain a fidelity bond and an
errors and omissions policy with respect to its officers, employees and other
persons acting on its behalf or on behalf of the Master Servicer.

         Each Sub-Servicer will be required to service each Mortgage Loan
pursuant to the terms of the Sub-Servicing Agreement for the entire term of such
Mortgage Loan, unless the Sub-Servicing Agreement is earlier terminated by the
Master Servicer or unless servicing is released

                                       57
<PAGE>

to the Master Servicer. The Master Servicer may terminate a Sub-Servicing
Agreement without cause, upon written notice to the Sub-Servicer in the manner
specified in such Sub-Servicing Agreement.

         The Master Servicer may agree with a Sub-Servicer to amend a
Sub-Servicing Agreement or, upon termination of the Sub-Servicing Agreement, the
Master Servicer may act as servicer of the related Mortgage Loans or enter into
new Sub-Servicing Agreements with other Sub-Servicers. If the Master Servicer
acts as servicer, it will not assume liability for the representations and
warranties of the Sub-Servicer which it replaces. Each Sub-Servicer must be a
Seller or meet the standards for becoming a Seller or have such servicing
experience as to be otherwise satisfactory to the Master Servicer and the
Depositor. The Master Servicer will make reasonable efforts to have the new
Sub-Servicer assume liability for the representations and warranties of the
terminated Sub-Servicer, but no assurance can be given that such an assumption
will occur. In the event of such an assumption, the Master Servicer may in the
exercise of its business judgment release the terminated Sub-Servicer from
liability in respect of such representations and warranties. Any amendments to a
Sub-Servicing Agreement or new Sub-Servicing Agreements may contain provisions
different from those which are in effect in the original Sub-Servicing
Agreement. However, each Agreement will provide that any such amendment or new
agreement may not be inconsistent with or violate such Agreement.

COLLECTION PROCEDURES

         The Master Servicer, directly or through one or more Sub-Servicers,
will make reasonable efforts to collect all payments called for under the
Mortgage Loans and will, consistent with each Agreement and any Mortgage Pool
Insurance Policy, Primary Mortgage Insurance Policy, FHA Insurance, VA Guaranty
Policy and Bankruptcy Bond or alternative arrangements, follow such collection
procedures as are customary with respect to mortgage loans that are comparable
to the Mortgage Loans. Consistent with the above, the Master Servicer may, in
its discretion, (i) waive any assumption fee, late payment or other charge in
connection with a Mortgage Loan and (ii) to the extent not inconsistent with the
coverage of such Mortgage Loan by a Mortgage Pool Insurance Policy, Primary
Mortgage Insurance Policy, FHA Insurance, VA Guaranty or Bankruptcy Bond or
alternative arrangements, if applicable, arrange with a mortgagor a schedule for
the liquidation of delinquencies running for no more than 125 days after the
applicable due date for each payment. Both the Sub-Servicer and the Master
Servicer remain obligated to make Advances during any period of such an
arrangement.

         Unless otherwise specified in the related Prospectus Supplement, in any
case in which property securing a conventional Mortgage Loan has been, or is
about to be, conveyed by the mortgagor or obligor, the Master Servicer will, to
the extent it has knowledge of such conveyance or proposed conveyance, exercise
or cause to be exercised its rights to accelerate the maturity of such Mortgage
Loan under any due-on-sale clause applicable thereto, but only if the exercise
of such rights is permitted by applicable law and will not impair or threaten to
impair any recovery under any related Primary Mortgage Insurance Policy. If
these conditions are not met or if the Master Servicer reasonably believes it is
unable under applicable law to enforce such due-on-sale clause, or if such
Mortgage Loan is insured by the FHA or partially guaranteed by the VA the Master
Servicer will enter into or cause to be entered into an assumption and
modification agreement with the person to whom such property has been or is
about to be

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<PAGE>

conveyed, pursuant to which such person becomes liable for repayment of the
Mortgage Loan and, to the extent permitted by applicable law, the mortgagor
remains liable thereon. Any fee collected by or on behalf of the Master Servicer
for entering into an assumption agreement will be retained by or on behalf of
the Master Servicer as additional servicing compensation. In the case of
Multifamily Loans and unless otherwise specified in the related Prospectus
Supplement, the Master Servicer will agree to exercise any right it may have to
accelerate the maturity of a Multifamily Loan to the extent it has knowledge of
any further encumbrance of the related Mortgaged Property effected in violation
of any due-on-encumbrance clause applicable thereto. See "Certain Legal Aspects
of the Mortgage Loans--Due-on-Sale Clauses" herein. In connection with any such
assumption, the terms of the related Mortgage Loan may not be changed.

         With respect to Cooperative Loans, any prospective purchaser will
generally have to obtain the approval of the board of directors of the relevant
Cooperative before purchasing the shares and acquiring rights under the related
proprietary lease or occupancy agreement. See "Certain Legal Aspects of the
Mortgage Loans" herein. This approval is usually based on the purchaser's income
and net worth and numerous other factors. Although the Cooperative's approval is
unlikely to be unreasonably withheld or delayed, the necessity of acquiring such
approval could limit the number of potential purchasers for those shares and
otherwise limit the Trust Fund's ability to sell and realize the value of those
shares.

         In general, a "tenant-stockholder" (as defined in section 216(b)(2) of
the Internal Revenue Code of 1986, as amended (the "CODE")), of a corporation
that qualifies as a "cooperative housing corporation" within the meaning of
section 216(b)(1) of the Code is allowed a deduction for amounts paid or accrued
within his taxable year to the corporation representing his proportionate share
of certain interest expenses and certain real estate taxes allowable as a
deduction under section 216(a) of the Code to the corporation under sections 163
and 164 of the Code. In order for a corporation to qualify under Section
216(b)(1) of the Code for the taxable year in which such items are allowable as
a deduction to the corporation, such Section requires, among other things, that
at least 80% of the gross income of the corporation be derived from its
tenant-stockholders (as defined in section 216(b)(2) of the Code). By virtue of
this requirement, the status of a corporation for purposes of section 216(b)(1)
of the Code must be determined on a year-to-year basis. Consequently, there can
be no assurance that Cooperatives relating to the Cooperative Loans will qualify
under such section for any particular year. In the event that such a Cooperative
fails to qualify for one or more years, the value of the collateral securing any
related Cooperative Loans could be significantly impaired because no deduction
would be allowable to tenant-stockholders under section 216(a) of the Code with
respect to those years. In view of the significance of the tax benefits accorded
tenant-stockholders of a corporation that qualifies under section 216(b)(1) of
the Code, the likelihood that such a failure would be permitted to continue over
a period of years appears remote.

HAZARD INSURANCE

         The Master Servicer will require the mortgagor or obligor on each
Single Family Loan, Multifamily Loan or Contract to maintain a hazard insurance
policy providing for no less than the coverage of the standard form of fire
insurance policy with extended coverage customary for the type of Mortgaged
Property in the state in which such Mortgaged Property is located. Such coverage
will be in an amount not less than the replacement value of the improvements or

                                       59
<PAGE>

Manufactured Home securing such Mortgage Loan or the principal balance owing on
such Mortgage Loan, whichever is less. All amounts collected by the Master
Servicer under any hazard policy (except for amounts to be applied to the
restoration or repair of the Mortgaged Property or released to the mortgagor or
obligor in accordance with the Master Servicer's normal servicing procedures)
will be deposited in the related Certificate Account. In the event that the
Master Servicer maintains a blanket policy insuring against hazard losses on all
the Mortgage Loans comprising part of a Trust Fund, it will conclusively be
deemed to have satisfied its obligation relating to the maintenance of hazard
insurance. Such blanket policy may contain a deductible clause, in which case
the Master Servicer will be required to deposit from its own funds into the
related Certificate Account the amounts which would have been deposited therein
but for such clause. Any additional insurance coverage for Mortgaged Properties
in a Mortgage Pool of Multifamily Loans will be specified in the related
Prospectus Supplement.

         In general, the standard form of fire and extended coverage policy
covers physical damage to or destruction of the improvements or Manufactured
Home securing a Mortgage Loan by fire, lightning, explosion, smoke, windstorm
and hail, riot, strike and civil commotion, subject to the conditions and
exclusions particularized in each policy. Although the policies relating to the
Mortgage Loans may have been underwritten by different insurers under different
state laws in accordance with different applicable forms and therefore may not
contain identical terms and conditions, the basic terms thereof are dictated by
respective state laws, and most such policies typically do not cover any
physical damage resulting from the following: war, revolution, governmental
actions, floods and other water-related causes, earth movement (including
earthquakes, landslides and mud flows), nuclear reactions, wet or dry rot,
vermin, rodents, insects or domestic animals, theft and, in certain cases,
vandalism. The foregoing list is merely indicative of certain kinds of uninsured
risks and is not intended to be all inclusive. If the Mortgaged Property
securing a Mortgage Loan is located in a federally designated special flood area
at the time of origination, the Master Servicer will require the mortgagor or
obligor to obtain and maintain flood insurance.

         The hazard insurance policies covering properties securing the Mortgage
Loans typically contain a clause which in effect requires the insured at all
times to carry insurance of a specified percentage (generally 80% to 90%) of the
full replacement value of the insured property in order to recover the full
amount of any partial loss. If the insured's coverage falls below this specified
percentage, then the insurer's liability in the event of partial loss will not
exceed the larger of (i) the actual cash value (generally defined as replacement
cost at the time and place of loss, less physical depreciation) of the
improvements damaged or destroyed or (ii) such proportion of the loss as the
amount of insurance carried bears to the specified percentage of the full
replacement cost of such improvements. Since the amount of hazard insurance the
Master Servicer may cause to be maintained on the improvements securing the
Mortgage Loans declines as the principal balances owing thereon decrease, and
since improved real estate generally has appreciated in value over time in the
past, the effect of this requirement in the event of partial loss may be that
hazard insurance proceeds will be insufficient to restore fully the damaged
property. If specified in the related Prospectus Supplement, a special hazard
insurance policy will be obtained to insure against certain of the uninsured
risks described above. See "Credit Enhancement--Special Hazard Insurance
Policies" herein.

                                       60
<PAGE>

         The Master Servicer will not require that a standard hazard or flood
insurance policy be maintained on the cooperative dwelling relating to any
Cooperative Loan. Generally, the Cooperative itself is responsible for
maintenance of hazard insurance for the property owned by the Cooperative and
the tenant-stockholders of that Cooperative do not maintain individual hazard
insurance policies. To the extent, however, that a Cooperative and the related
borrower on a Cooperative Loan do not maintain such insurance or do not maintain
adequate coverage or any insurance proceeds are not applied to the restoration
of damaged property, any damage to such borrower's cooperative dwelling or such
Cooperative's building could significantly reduce the value of the collateral
securing such Cooperative Loan to the extent not covered by other credit
support.

REALIZATION UPON DEFAULTED MORTGAGE LOANS

         Primary Mortgage Insurance Policies. The Master Servicer will maintain
or cause each Sub-Servicer to maintain, as the case may be, in full force and
effect, to the extent specified in the related Prospectus Supplement, a Primary
Mortgage Insurance Policy with regard to each Single Family Loan for which such
coverage is required. The Master Servicer will not cancel or refuse to renew any
such Primary Mortgage Insurance Policy in effect at the time of the initial
issuance of a Series of Certificates that is required to be kept in force under
the applicable Agreement unless the replacement Primary Mortgage Insurance
Policy for such cancelled or nonrenewed policy is maintained with an insurer
whose claims-paying ability is sufficient to maintain the current rating of the
classes of Certificates of such Series that have been rated.

         Although the terms and conditions of primary mortgage insurance vary,
the amount of a claim for benefits under a Primary Mortgage Insurance Policy
covering a Mortgage Loan will consist of the insured percentage of the unpaid
principal amount of the covered Mortgage Loan and accrued and unpaid interest
thereon and reimbursement of certain expenses, less (i) all rents or other
payments collected or received by the insured (other than the proceeds of hazard
insurance) that are derived from or in any way related to the Mortgaged
Property, (ii) hazard insurance proceeds in excess of the amount required to
restore the Mortgaged Property and which have not been applied to the payment of
the Mortgage Loan, (iii) amounts expended but not approved by the issuer of the
related Primary Mortgage Insurance Policy (the "PRIMARY INSURER"), (iv) claim
payments previously made by the Primary Insurer and (v) unpaid premiums.

         Primary Mortgage Insurance Policies reimburse certain losses sustained
by reason of defaults in payments by borrowers. Primary Mortgage Insurance
Policies will not insure against, and exclude from coverage, a loss sustained by
reason of a default arising from or involving certain matters, including (i)
fraud or negligence in origination or servicing of the Mortgage Loan, including
misrepresentation by the originator, borrower or other persons involved in the
origination of the Mortgage Loan, (ii) failure to construct the Mortgaged
Property subject to the Mortgage Loan in accordance with specified plans, (iii)
physical damage to the Mortgaged Property and (iv) lack of approval by the
Primary Insurer of the related Servicer as a servicer.

         Recoveries Under a Primary Mortgage Insurance Policy. As conditions
precedent to the filing of or payment of a claim under a Primary Mortgage
Insurance Policy covering a Mortgage Loan, the insured will be required to (i)
advance or discharge (a) all hazard insurance policy

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premiums and (b) as necessary and approved in advance by the Primary Insurer,
(1) real estate property taxes, (2) all expenses required to maintain the
related Mortgaged Property in at least as good a condition as existed at the
effective date of such Primary Mortgage Insurance Policy, ordinary wear and tear
excepted, (3) Mortgaged Property sales expenses, (4) any outstanding liens (as
defined in such Primary Mortgage Insurance Policy) on the Mortgaged Property and
(5) foreclosure costs, including court costs and reasonable attorneys' fees;
(ii) in the event of any physical loss or damage to the Mortgaged Property, to
have the Mortgaged Property restored and repaired to at least as good a
condition as existed at the effective date of such Primary Mortgage Insurance
Policy, ordinary wear and tear excepted; and (iii) tender to the Primary Insurer
good and merchantable title to and possession of the Mortgaged Property.

         In those cases in which a Single Family Loan is serviced by a
Sub-Servicer, the Sub-Servicer, on behalf of itself, the Trustee and
Certificateholders, will present claims to the Primary Insurer, and all
collections thereunder will be deposited in the Sub-Servicing Account. In all
other cases, the Master Servicer, on behalf of itself, the Trustee and the
Certificateholders, will present claims to the insurer under each Primary
Mortgage Insurance Policy and will take such reasonable steps as are necessary
to receive payment or to permit recovery thereunder with respect to defaulted
Mortgage Loans. As set forth above, all collections by or on behalf of the
Master Servicer under any Primary Mortgage Insurance Policy and, when the
Mortgaged Property has not been restored, the hazard insurance policy are to be
deposited in the Certificate Account, subject to withdrawal as heretofore
described.

         If the Mortgaged Property securing a defaulted Mortgage Loan is damaged
and proceeds, if any, from the related hazard insurance policy are insufficient
to restore the damaged Mortgaged Property to a condition sufficient to permit
recovery under the related Primary Mortgage Insurance Policy, if any, the Master
Servicer is not required to expend its own funds to restore the damaged
Mortgaged Property unless it determines (i) that such restoration will increase
the proceeds to Certificateholders on liquidation of the Mortgage Loan after
reimbursement of the Master Servicer for its expenses and (ii) that such
expenses will be recoverable by it from related Insurance Proceeds or
Liquidation Proceeds.

         If recovery on a defaulted Mortgage Loan under any related Primary
Mortgage Insurance Policy is not available for the reasons set forth in the
preceding paragraph, or if the defaulted Mortgage Loan is not covered by a
Primary Mortgage Insurance Policy, the Master Servicer will be obligated to
follow or cause to be followed such normal practices and procedures as it deems
necessary or advisable to realize upon the defaulted Mortgage Loan. If the
proceeds of any liquidation of the Mortgaged Property securing the defaulted
Mortgage Loan are less than the principal balance of such Mortgage Loan plus
interest accrued thereon that is payable to Certificateholders, the Trust Fund
will realize a loss in the amount of such difference plus the aggregate of
expenses incurred by the Master Servicer in connection with such proceedings
which are reimbursable under the Agreement. In the unlikely event that any such
proceedings result in a total recovery which is, after reimbursement to the
Master Servicer of its expenses, in excess of the principal balance of such
Mortgage Loan plus interest accrued thereon that is payable to
Certificateholders, the Master Servicer will be entitled to withdraw or retain
from the Certificate Account amounts representing its normal servicing
compensation with respect to such Mortgage Loan and, unless otherwise specified
in the related Prospectus Supplement, amounts

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representing the balance of such excess, exclusive of any amount required by law
to be forwarded to the related mortgagor, as additional servicing compensation.

         If the Master Servicer or its designee recovers Insurance Proceeds
which, when added to any related Liquidation Proceeds and after deduction of
certain expenses reimbursable to the Master Servicer, exceed the principal
balance of such Mortgage Loan plus interest accrued thereon that is payable to
Certificateholders, the Master Servicer will be entitled to withdraw or retain
from the Certificate Account amounts representing its normal servicing
compensation with respect to such Mortgage Loan. In the event that the Master
Servicer has expended its own funds to restore the damaged Mortgaged Property
and such funds have not been reimbursed under the related hazard insurance
policy, it will be entitled to withdraw from the Certificate Account out of
related Liquidation Proceeds or Insurance Proceeds an amount equal to such
expenses incurred by it, in which event the Trust Fund may realize a loss up to
the amount so charged. Since Insurance Proceeds cannot exceed deficiency claims
and certain expenses incurred by the Master Servicer, no such payment or
recovery will result in a recovery to the Trust Fund which exceeds the principal
balance of the defaulted Mortgage Loan together with accrued interest thereon.
See "Credit Enhancement" herein.

SERVICING AND OTHER COMPENSATION AND PAYMENT OF EXPENSES

         The Master Servicer's primary servicing compensation with respect to a
Series of Certificates will come from the monthly payment to it, out of each
interest payment on a Mortgage Loan, of an amount equal to the percentage per
annum specified in the related Prospectus Supplement of the outstanding
principal balance thereof. Since the Master Servicer's primary compensation is a
percentage of the outstanding principal balance of each Mortgage Loan, such
amounts will decrease as the Mortgage Loans amortize. In addition to primary
compensation, the Master Servicer or the Sub-Servicers will be entitled to
retain all assumption fees and late payment charges, to the extent collected
from Mortgagors, and, if so provided in the related Prospectus Supplement, any
prepayment penalties and any interest or other income which may be earned on
funds held in the Certificate Account or any Sub-Servicing Account. Unless
otherwise specified in the related Prospectus Supplement, any Sub-Servicer will
receive a portion of the Master Servicer's primary compensation as its
sub-servicing compensation.

         In addition to amounts payable to any Sub-Servicer, the Master Servicer
will, unless otherwise specified in the related Prospectus Supplement, pay from
its servicing compensation certain expenses incurred in connection with its
servicing of the Mortgage Loans, including, without limitation, payment of any
premium for any insurance policy, guaranty, surety or other form of credit
enhancement as specified in the related Prospectus Supplement, payment of the
fees and disbursements of the Trustee and independent accountants, payment of
expenses incurred in connection with distributions and reports to
Certificateholders and payment of any other expenses described in the related
Prospectus Supplement.

EVIDENCE AS TO COMPLIANCE

         Each Agreement will provide that, on or before a specified date in each
year, a firm of independent public accountants will furnish a statement to the
Trustee to the effect that, on the basis of the examination by such firm
conducted substantially in compliance with the Uniform

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Single Audit Program for Mortgage Bankers or the Audit Program for Mortgages
serviced for Freddie Mac, the servicing by or on behalf of the Master Servicer
of mortgage loans, private mortgage-backed securities or agency securities,
under pooling and servicing agreements substantially similar to each other
(including the related Agreement), was conducted in compliance with such
agreements except for any significant exceptions or errors in records that, in
the opinion of the firm, the Audit Program for Mortgages serviced for Freddie
Mac or the Uniform Single Audit Program for Mortgage Bankers requires it to
report. In rendering its statement such firm may rely, as to matters relating to
the direct servicing of mortgage loans, private mortgage-backed securities or
agency securities by Sub-Servicers, upon comparable statements for examinations
conducted substantially in compliance with the Uniform Single Audit Program for
Mortgage Bankers or the Audit Program for Mortgages serviced for Freddie Mac
(rendered within one year of such statement) of firms of independent public
accountants with respect to the Sub-Servicers.

         Each Agreement will also provide for delivery to the Trustee, on or
before a specified date in each year, of an annual statement signed by two
officers of the Master Servicer to the effect that the Master Servicer has
fulfilled its obligations under the Agreement throughout the preceding year.

         Copies of the annual accountants' statement and the statement of
officers of the Master Servicer may be obtained by Certificateholders of the
related Series without charge upon written request to the Master Servicer at the
address set forth in the related Prospectus Supplement.

CERTAIN MATTERS REGARDING THE MASTER SERVICER AND THE DEPOSITOR

         The Master Servicer under each Agreement will be named in the related
Prospectus Supplement. The entity serving as Master Servicer may have normal
business relationships with the Depositor or the Depositor's affiliates.

         Each Agreement will provide that the Master Servicer may not resign
from its obligations and duties under the Agreement except upon a determination
that its duties thereunder are no longer permissible under applicable law. No
such resignation will become effective until the Trustee or a successor servicer
has assumed the Master Servicer's obligations and duties under the Agreement.

         Each Agreement will further provide that none of the Master Servicer,
the Depositor or any director, officer, employee or agent of the Master Servicer
or of the Depositor will be under any liability to the related Trust Fund or the
Certificateholders for any action taken or for refraining from the taking of any
action in good faith pursuant to the Agreement, or for errors in judgment;
provided, however, that none of the Master Servicer, the Depositor any such
person will be protected against any liability which would otherwise be imposed
by reason of willful misfeasance, bad faith or negligence in the performance of
duties thereunder or by reason of reckless disregard of obligations and duties
thereunder. Each Agreement will further provide that the Master Servicer, the
Depositor and any director, officer, employee or agent of the Master Servicer or
of the Depositor will be entitled to indemnification by the related Trust Fund
and will be held harmless against any loss, liability or expense incurred in
connection with any legal action relating to the Agreement or the Certificates,
other than any loss, liability or expense

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related to any specific Mortgage Loan or the Mortgage Loans (except any such
loss, liability or expense otherwise reimbursable pursuant to the Agreement) and
any loss, liability or expense incurred by reason of willful misfeasance, bad
faith or negligence in the performance of duties thereunder or by reason of
reckless disregard of obligations and duties thereunder. In addition, each
Agreement will provide that neither the Master Servicer nor the Depositor will
be under any obligation to appear in, prosecute or defend any legal action which
is not incidental to its respective responsibilities under the Agreement and
which in its opinion may involve it in any expense or liability. The Master
Servicer or the Depositor may, however, in its discretion undertake any such
action which it may deem necessary or desirable with respect to the Agreement
and the rights and duties of the parties thereto and the interests of the
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 Fund and the Master Servicer or the Depositor, as the
case may be, will be entitled to be reimbursed therefor out of funds otherwise
distributable to Certificateholders.

         Any person into which the Master Servicer may be merged or
consolidated, or any person resulting from any merger or consolidation to which
the Master Servicer is a party, or any person succeeding to the business of the
Master Servicer, will be the successor of the Master Servicer under each
Agreement, provided that such person is qualified to sell mortgage loans to, and
service mortgage loans on behalf of, Fannie Mae or Freddie Mac and further
provided that such merger, consolidation or succession does not adversely affect
the then current rating or ratings of the class or classes of Certificates of
such Series that have been rated.

EVENTS OF DEFAULT

         Unless otherwise specified in the related Prospectus Supplement, Events
of Default (each, an "EVENT OF DEFAULT") under each Agreement will consist of
(i) any failure by the Master Servicer to distribute or cause to be distributed
to Certificateholders of any class any required payment (other than an Advance)
which continues unremedied for five business days after the giving of written
notice of such failure to the Master Servicer by the Trustee or the Depositor,
or to the Master Servicer, the Depositor and the Trustee by the holders of
Certificates of such class evidencing not less than 25% of the aggregate
percentage interests evidenced by such class; (ii) any failure by the Master
Servicer to make an Advance as required under the Agreement, unless cured as
specified therein; (iii) any failure by the Master Servicer duly to observe or
perform in any material respect any of its other covenants or agreements in the
Agreement which continues unremedied for 30 days after the giving of written
notice of such failure to the Master Servicer by the Trustee or the Depositor,
or to the Master Servicer, the Depositor and the Trustee by the holders of
Certificates of any class evidencing not less than 25% of the aggregate
percentage interests constituting such class; and (iv) certain events of
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceeding and certain actions by or on behalf of the Master Servicer
indicating its insolvency, reorganization or inability to pay its obligations.

         If specified in the related Prospectus Supplement, the Agreement will
permit the Trustee to sell the Mortgage Assets and the other assets of the Trust
Fund in the event that payments in respect thereto are insufficient to make
payments required in the Agreement. The assets of the Trust Fund will be sold
only under the circumstances and in the manner specified in the related
Prospectus Supplement.

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RIGHTS UPON EVENT OF DEFAULT

         So long as an Event of Default under an Agreement remains unremedied,
the Depositor or the Trustee may, and, at the direction of holders of
Certificates of any class evidencing not less than 51% of the aggregate
percentage interests constituting such class and under such other circumstances
as may be specified in such Agreement, the Trustee shall, terminate all of the
rights and obligations of the Master Servicer under the Agreement relating to
such Trust Fund and in and to the Mortgage Loans, whereupon the Trustee will
succeed to all of the responsibilities, duties and liabilities of the Master
Servicer under the Agreement, including, if specified in the related Prospectus
Supplement, the obligation to make advances, and will be entitled to similar
compensation arrangements. In the event that the Trustee is unwilling or unable
so to act, it may appoint, or petition a court of competent jurisdiction for the
appointment of, a mortgage loan servicing institution with a net worth of at
least $10,000,000 to act as successor to the Master Servicer under the
Agreement. Pending such appointment, the Trustee is obligated to act in such
capacity. The Trustee and any such successor may agree upon the servicing
compensation to be paid, which in no event may be greater than the compensation
payable to the Master Servicer under the Agreement.

         No Certificateholder, solely by virtue of such holder's status as a
Certificateholder, will have any right under any Agreement to institute any
proceeding with respect to such Agreement, unless (i) such holder previously has
given to the Trustee written notice of default, (ii) the holders of Certificates
of any class of such Series evidencing not less than 25% of the aggregate
percentage interests constituting such class have made written request upon the
Trustee to institute such proceeding in its own name as Trustee thereunder and
have offered to the Trustee reasonable indemnity, and (iii) the Trustee for 60
days has neglected or refused to institute any such proceeding.

AMENDMENT

         Unless otherwise specified in the related Prospectus Supplement, each
Agreement may be amended by the Depositor, the Master Servicer and the Trustee,
without the consent of any of the Certificateholders, (i) to cure any ambiguity,
(ii) to correct or supplement any provision therein which may be defective or
inconsistent with any other provision therein or (iii) to make any other
revisions with respect to matters or questions arising under the Agreement which
are not inconsistent with the provisions thereof; provided, however, that such
action will not adversely affect in any material respect the interests of any
Certificateholder. In addition, to the extent provided in the related Agreement,
an Agreement may be amended without the consent of any of the Certificateholders
to change the manner in which the Certificate Account is maintained, provided,
however, that any such change does not adversely affect the then current rating
on the class or classes of Certificates of such Series that have been rated. In
addition, if a REMIC election is made with respect to a Trust Fund, the related
Agreement may be amended to modify, eliminate or add to any of its provisions to
such extent as may be necessary to maintain the qualification of the related
Trust Fund as a REMIC, provided, however, that the Trustee has received an
opinion of counsel to the effect that such action is necessary or helpful to
maintain such qualification. Unless otherwise specified in the related
Prospectus Supplement, each Agreement may also be amended by the Depositor, the
Master Servicer and the Trustee with consent of holders of Certificates of such
Series evidencing not less than 66% of the aggregate

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percentage interests of each class affected thereby for the purpose of adding
any provisions to, or changing in any manner or eliminating any of the
provisions of the Agreement or of modifying in any manner the rights of the
holders of the related Certificates; provided, however, that no such amendment
may (i) reduce in any manner the amount of, or delay the timing of, payments
received on Mortgage Loans which are required to be distributed on any
Certificate without the consent of the holder of such Certificate or (ii) reduce
the aforesaid percentage of Certificates of any class the holders of which are
required to consent to any such amendment without the consent of the holders of
all Certificates of such class covered by such Agreement then outstanding. If a
REMIC election is made with respect to a Trust Fund, the Trustee will not be
entitled to consent to an amendment to the related Agreement without having
first received an opinion of counsel to the effect that such amendment will not
cause such Trust Fund to fail to qualify as a REMIC.

TERMINATION; OPTIONAL TERMINATION

         Unless otherwise specified in the related Agreement, the obligations
created by each Agreement for each Series of Certificates will terminate upon
the payment to the related Certificateholders of all amounts held in the
Certificate Account or by the Master Servicer and required to be paid to them
pursuant to such Agreement following the later of (i) the final payment or other
liquidation of the last of the Mortgage Assets subject thereto or the
disposition of all property acquired upon foreclosure of any such Mortgage
Assets remaining in the Trust Fund and (ii) the purchase from the related Trust
Fund by the Master Servicer or, if REMIC treatment has been elected and if
specified in the related Prospectus Supplement, by the holder of the residual
interest in the REMIC (see "Certain Material Federal Income Tax Consequences"),
of all of the remaining Mortgage Assets and all property acquired in respect of
such Mortgage Assets.

         Unless otherwise specified in the related Prospectus Supplement, any
such purchase of Mortgage Assets and property acquired in respect of Mortgage
Assets evidenced by a Series of Certificates will be made at the option of the
Master Servicer or, if applicable, such holder of the REMIC residual interest,
at a price, and in accordance with the procedures, specified in the related
Prospectus Supplement. The exercise of such right will effect early retirement
of the Certificates of that Series, but the right of the Master Servicer or, if
applicable, such holder of the REMIC residual interest, to so purchase is
subject to the aggregate principal balance of the related Mortgage Assets as of
such date being less than the percentage specified in the related Prospectus
Supplement of the aggregate principal balances of the Mortgage Assets as of the
Cut-off Date for the Series; provided, however, that, if a REMIC election is
made with respect to a Trust Fund, any repurchase pursuant to clause (ii) above
will be made only in connection with a "qualified liquidation" of the REMIC
within the meaning of Section 860F(g)(4) of the Code.

THE TRUSTEE

         The Trustee under each Agreement will be named in the applicable
Prospectus Supplement. The commercial bank or trust company serving as Trustee
may have normal banking relationships with the Depositor, the Master Servicer
and any of their respective affiliates.

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                   CERTAIN LEGAL ASPECTS OF THE MORTGAGE LOANS

         The following discussion contains summaries, which are general in
nature, of certain legal matters relating to the Mortgage Loans. Because such
legal aspects are governed primarily 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 or to encompass the laws of all states in which
security for the Mortgage Loans may be situated. The summaries are qualified in
their entirety by reference to the appropriate laws of the states in which
Mortgage Loans may be originated.

GENERAL

         Single Family Loans and Multifamily Loans. The Single Family Loans and
Multifamily Loans will be secured by deeds of trust, mortgages, security deeds
or deeds to secure debt, depending upon the prevailing practice in the state in
which the property subject to the loan is located. A mortgage creates a lien
upon the real property encumbered by the mortgage, which lien is generally not
prior to the lien for real estate taxes and assessments. Priority between
mortgages depends on their terms and generally on the order of recording with a
state or county office. There are two parties to a mortgage: the mortgagor, who
is the borrower and owner of the mortgaged property, and the mortgagee, who is
the lender. Under the mortgage instrument, the mortgagor delivers to the
mortgagee a note or bond and the mortgage. Although a deed of trust is similar
to a mortgage, a deed of trust formally has three parties: the borrower-property
owner called the trustor (similar to a mortgagor), a lender (similar to a
mortgagee) called the beneficiary, and a third-party grantee called the trustee.
Under a deed of trust, the borrower grants the property, irrevocably until the
debt is paid, in trust, generally with a power of sale, to the trustee to secure
payment of the obligation. A security deed and a deed to secure debt are special
types of deeds which indicate on their face that they are granted to secure an
underlying debt. By executing a security deed or deed to secure debt, the
grantor conveys to the grantee title to, as opposed to merely creating a lien
upon, the subject property until such time as the underlying debt is repaid. The
trustee's authority under a deed of trust, the mortgagee's authority under a
mortgage and the grantee's authority under a security deed or deed to secure
debt are governed by law and, with respect to some deeds of trust, the
directions of the beneficiary.

         Cooperatives. Certain of the Mortgage Loans may be Cooperative Loans.
The Cooperative owns all the real property that comprises the related project,
including the land, separate dwelling units and all common areas. The
Cooperative is directly responsible for project management and, in most cases,
payment of real estate taxes and hazard and liability insurance. If, as is
generally the case, there is a blanket mortgage on the Cooperative and/or
underlying land, the Cooperative, as project mortgagor, is also responsible for
meeting these mortgage obligations. A blanket mortgage is ordinarily incurred by
the Cooperative in connection with the construction or purchase of the
Cooperative's apartment building. The interest of the occupant under proprietary
leases or occupancy agreements to which the Cooperative is a party are generally
subordinate to the interest of the holder of the blanket mortgage in that
building. If the Cooperative is unable to meet the payment obligations arising
under its blanket mortgage, the mortgagee holding the blanket mortgage could
foreclose on that mortgage and terminate all subordinate proprietary leases and
occupancy agreements. In addition, the blanket mortgage on a Cooperative may
provide financing in the form of a mortgage that does not fully amortize with a

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significant portion of principal being due in one lump sum at final maturity.
The inability of the Cooperative to refinance this mortgage and its consequent
inability to make such final payment could lead to foreclosure by the mortgagee
providing the financing. A foreclosure in either event by the holder of the
blanket mortgage could eliminate or significantly diminish the value of any
collateral held by the lender who financed the purchase by an individual
tenant-stockholder of Cooperative shares or, in the case of a Trust Fund
including Cooperative Loans, the collateral securing the Cooperative Loans.

         A Cooperative is owned by tenant-stockholders who, through ownership of
stock, shares or membership certificates in the corporation, receive proprietary
leases or occupancy agreements which confer exclusive rights to occupy specific
units. Generally, a tenant-stockholder of a Cooperative must make a monthly
payment to the Cooperative representing such tenant-stockholder's pro rata share
of the Cooperative's payments for its blanket mortgage, real property taxes,
maintenance expenses and other capital or ordinary expenses. An ownership
interest in a Cooperative and the accompanying rights are financed through a
Cooperative share loan evidenced by a promissory note and secured by a security
interest in the occupancy agreement or proprietary lease and in the related
Cooperative shares. The lender takes possession of the share certificate and a
counterpart of the proprietary lease or occupancy agreement and a financing
statement covering the proprietary lease or occupancy agreement and the
Cooperative shares is filed in the appropriate state and local offices to
perfect the lender's interest in its collateral. Subject to the limitations
discussed below, upon default of the tenant-stockholder, the lender may sue for
judgment on the promissory note, dispose of the collateral at a public or
private sale or otherwise proceed against the collateral or against the
tenant-stockholder as an individual as provided in the security agreement
covering the assignment of the proprietary lease or occupancy agreement and the
pledge of Cooperative shares.

         Contracts. Each Contract evidences both (a) the obligation of the
obligor to repay the loan evidenced thereby and (b) the grant of a security
interest in the Manufactured Home to secure repayment of such loan. The
Contracts generally are "chattel paper" as defined in the Uniform Commercial
Code (the "UCC") in effect in the states in which the Manufactured Homes
initially were registered. Pursuant to the UCC, the rules governing the sale of
chattel paper are similar to those governing the perfection of a security
interest in chattel paper. Under the Agreement, the Depositor will transfer or
cause the transfer of physical possession of the Contracts to the Trustee or its
custodian. In addition the Depositor will make or cause to be made an
appropriate filing of UCC-1 financing statements in the appropriate states to
give notice of the Trustee's ownership of the Contracts. Under the laws of most
states, manufactured housing constitutes personal property and is subject to the
motor vehicle registration laws of the state or other jurisdiction in which the
unit is located. In a few states, where certificates of title are not required
for Manufactured Homes, security interests are perfected by the filing of a
financing statement under Article 9 of the UCC which has been adopted by all
states except Louisiana. Such financing statements are effective for five years
and must be renewed at the end of each five years. The certificate of title laws
adopted by the majority of states provide that ownership of motor vehicles and
manufactured housing shall be evidenced by a certificate of title issued by the
motor vehicles department (or a similar entity) of such state. In the states
which have enacted certificate of title laws, a security interest in a unit of
manufactured housing, so long as it is not attached to land in so permanent a
fashion as to become a fixture, is generally perfected by the recording of such
interest on the certificate of title to the unit in the appropriate motor
vehicle

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<PAGE>

registration office or by delivery of the required documents and payment
of a fee to such office, depending on state law.

         Unless otherwise specified in the related Prospectus Supplement, the
Master Servicer will be required to effect such notation or delivery of the
required documents and fees and to obtain possession of the certificate of
title, as appropriate under the laws of the state in which any Manufactured Home
is registered. If the Master Servicer fails to effect such notation or delivery,
due to clerical errors or otherwise, or files the security interest under the
wrong law (for example, under a motor vehicle title statute rather than under
the UCC, in a few states), the Trustee may not have a first priority security
interest in the Manufactured Home securing the affected Contract. As
Manufactured Homes have become larger and have often been attached to their
sites without any apparent intention to move them, courts in many states have
held that Manufactured Homes may, under certain circumstances, become subject to
real estate title and recording laws. As a result, a security interest in a
Manufactured Home could be rendered subordinate to the interests of other
parties claiming an interest in the home under applicable state real estate law.
In order to perfect a security interest in a Manufactured Home under real estate
laws, the holder of the security interest must file either a "fixture filing"
under the provisions of the UCC or a real estate mortgage under the real estate
laws of the state where the Manufactured Home is located. These filings must be
made in the real estate records office of the county where the Manufactured Home
is located. Generally, Contracts will contain provisions prohibiting the obligor
from permanently attaching the Manufactured Home to its site. So long as the
obligor does not violate this agreement, a security interest in the Manufactured
Home will be governed by the certificate of title laws or the UCC, and the
notation of the security interest on the certificate of title or the filing of a
UCC financing statement will be effective to maintain the priority of the
security interest in the Manufactured Home. If, however, a Manufactured Home is
permanently attached to its site, other parties could obtain an interest in the
Manufactured Home which is prior to the security interest originally retained by
the Seller and transferred to the Depositor.

         The Depositor will assign or cause to be assigned to the Trustee, on
behalf of the Certificateholders, a security interest in the Manufactured Homes.
Unless otherwise specified in the related Prospectus Supplement, none of the
Depositor, the Master Servicer or the Trustee will amend the certificates of
title to identify the Trustee, on behalf of the Certificateholders, as the new
secured party and, accordingly, the Depositor or the Seller will continue to be
named as the secured party on the certificates of title relating to the
Manufactured Homes. In most states, such assignment is an effective conveyance
of such security interest without amendment of any lien noted on the related
certificate of title and the new secured party succeeds to the Depositor's
rights as the secured party. However, in some states there exists a risk that,
in the absence of an amendment to the certificate of title, such assignment of
the security interest might not be held effective against creditors of the
Depositor or Seller.

         In the absence of fraud, forgery or permanent affixation of the
Manufactured Home to its site by the Manufactured Home owner, or administrative
error by state recording officials, the notation of the lien of the Trustee on
the certificate of title or delivery of the required documents and fees will be
sufficient to protect the Trustee against the rights of subsequent purchasers of
a Manufactured Home or subsequent lenders who take a security interest in the
Manufactured Home. In the case of any Manufactured Home as to which the security
interest assigned to the

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Depositor and the Trustee is not perfected, such security interest would be
subordinate to, among others, subsequent purchasers for value of Manufactured
Home and holders of perfected security interests therein. There also exists a
risk that, in not identifying the Trustee, on behalf of the Certificateholders,
as the new secured party on the certificate of title, the security interest of
the Trustee could be released through fraud or negligence.

         If the owner of a Manufactured Home moves it to a state other than the
state in which such Manufactured Home initially is registered, under the laws of
most states the perfected security interest in the Manufactured Home would
continue for four months after such relocation and thereafter until the owner
re-registers the Manufactured Home in such state. If the owner were to relocate
a Manufactured Home to another state and re-register the Manufactured Home in
such state, and if steps are not taken to re-perfect the Trustee's security
interest in such state, the security interest in the Manufactured Home would
cease to be perfected. A majority of states generally require surrender of a
certificate of title to re-register a Manufactured Home; accordingly, the
Trustee must surrender possession if it holds the certificate of title to such
Manufactured Home or, in the case of Manufactured Homes registered in states
which provide for notation of lien, the Master Servicer would receive notice of
surrender if the security interest in the Manufactured Home is noted on the
certificate of title. Accordingly, the Trustee would have the opportunity to
re-perfect its security interest in the Manufactured Home in the state of
relocation. In states which do not require a certificate of title for
registration of a Manufactured Home, re-registration could defeat perfection.
Similarly, when an obligor under Contract sells a Manufactured Home, the obligee
must surrender possession of the certificate of title or it will receive notice
as a result of its lien noted thereon and accordingly will have an opportunity
to require satisfaction of the related Contract before release of the lien. The
Master Servicer will be obligated to take such steps, at the Master Servicer's
expense, as are necessary to maintain perfection of security interests in the
Manufactured Homes.

         Under the laws of most states, liens for repairs performed on a
Manufactured Home take priority even over a perfected security interest. The
Depositor will obtain the representation of the Seller that it has no knowledge
of any such liens with respect to any Manufactured Home securing a Contract.
However, such liens could arise at any time during the term of a Contract. No
notice will be given to the Trustee or Certificateholders in the event such a
lien arises.

FORECLOSURE/REPOSSESSION

         Single Family Loans and Multifamily Loans. Foreclosure of a deed of
trust is generally accomplished by a non-judicial sale under a specific
provision in the deed of trust which authorizes the trustee to sell the property
at public auction upon any default by the borrower under the terms of the note
or deed of trust. In some states, such as California, the trustee must record a
notice of default and send a copy to the borrower-trustor, to any person who has
recorded a request for a copy of any notice of default and notice of sale, to
any successor in interest to the borrower-trustor, to the beneficiary of any
junior deed of trust and to certain other persons. Before such non-judicial sale
takes place, typically a notice of sale must be posted in a public place and
published during a specific period of time in one or more newspapers, posted on
the property and sent to parties having an interest of record in the property.

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         Foreclosure of a mortgage is generally accomplished by judicial action.
The action is initiated by the service of legal pleadings upon all parties
having an interest in the real property. Delays in completion of the foreclosure
may occasionally result from difficulties in locating necessary parties.
Judicial foreclosure proceedings are often not contested by any of the parties.
When the mortgagee's right to foreclosure is contested, the legal proceedings
necessary to resolve the issue can be time consuming. After the completion of a
judicial foreclosure proceeding, the court generally issues a judgment of
foreclosure and appoints a referee or other court officer to conduct the sale of
the property. In general, the borrower, or any other person having a junior
encumbrance on the real estate, may, during a statutorily prescribed
reinstatement period, cure a monetary default by paying the entire amount in
arrears plus other designated costs and expenses incurred in enforcing the
obligation. Generally, state law controls the amount of foreclosure expenses and
costs, including attorneys' fees, which may be recovered by a lender. After the
reinstatement period has expired without the default having been cured, the
borrower or junior lienholder no longer has the right to reinstate the loan and
must pay the loan in full to prevent the scheduled foreclosure sale. If the deed
of trust is not reinstated, a notice of sale must be posted in a public place
and, in most states, published for a specific period of time in one or more
newspapers. In addition, 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 in the
real property.

         Although foreclosure sales are typically public sales, frequently no
third-party purchaser bids in excess of the lender's lien because of the
difficulty of determining the exact status of title to the property, the
possible deterioration of the property during the foreclosure proceedings and a
requirement that the purchaser pay for the property in cash or by cashier's
check. Thus the foreclosing lender often purchases the property from the trustee
or referee for an amount equal to the principal amount outstanding under the
loan plus accrued and unpaid interest and the expenses of foreclosure.
Thereafter, the lender will assume the burden of ownership, including obtaining
hazard insurance and making such repairs at its own expense as are necessary to
render the property suitable for sale. The lender will commonly obtain the
services of a real estate broker and pay the broker's commission in connection
with the sale of the property. Depending upon market conditions, the ultimate
proceeds of the sale of the property may not equal the lender's investment in
the property.

         Courts have imposed general equitable principles upon foreclosure,
which are generally designed to mitigate the legal consequences to the borrower
of the borrower's defaults under the loan documents. Some courts have been faced
with the issue of whether federal or state constitutional provisions reflecting
due process concerns for fair notice require that borrowers under deeds of trust
receive notice longer than that prescribed by statute. For the most part, these
cases have upheld the notice provisions as being reasonable or have found that
the sale by a trustee under a deed of trust does not involve sufficient state
action to afford constitutional protection to the borrower.

         Cooperative Loans. The Cooperative shares owned by the
tenant-stockholder and pledged to the lender are, in almost all cases, subject
to restrictions on transfer as set forth in the Cooperative's articles of
incorporation and by-laws, as well as in the proprietary lease or occupancy
agreement, and may be cancelled by the Cooperative if the tenant-stockholder
fails to pay rent or other obligations or charges owed, including mechanics'
liens against the cooperative apartment building incurred by such
tenant-stockholder. The proprietary lease or occupancy

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agreement generally permits the Cooperative to terminate such lease or agreement
in the event an obligor fails to make payments or defaults in the performance of
covenants required thereunder. Typically, the lender and the Cooperative enter
into a recognition agreement which establishes the rights and obligations of
both parties in the event of a default by the tenant-stockholder on its
obligations under the proprietary lease or occupancy agreement. A default by the
tenant-stockholder under the proprietary lease or occupancy agreement will
usually constitute a default under the security agreement between the lender and
the tenant-stockholder.

         The recognition agreement generally provides that, in the event that
the tenant-stockholder has defaulted under the proprietary lease or occupancy
agreement, the Cooperative will take no action to terminate such lease or
agreement until the lender has been provided with an opportunity to cure the
default. The recognition agreement typically provides, that if the proprietary
lease or occupancy agreement is terminated, the Cooperative will recognize the
lender's lien against proceeds from the sale of the Cooperative apartment,
subject, however, to the Cooperative's right to sums due under such proprietary
lease or occupancy agreement. The total amount owed to the Cooperative by the
tenant-stockholder, which the lender generally cannot restrict and does not
monitor, could reduce the value of the collateral below the outstanding
principal balance of the Cooperative Loan and accrued and unpaid interest
thereon.

         Recognition agreements also provide that, in the event of a foreclosure
on a Cooperative Loan, the lender must obtain the approval or consent of the
Cooperative as required by the proprietary lease before transferring the
Cooperative shares or assigning the proprietary lease. Generally, lenders are
not limited in any rights they may have to dispossess tenant-stockholders.

         In some states, foreclosure on the Cooperative shares is accomplished
by a sale in accordance with the provisions of Article 9 of the 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 to receive sums due under the
proprietary lease or occupancy agreement. If there are proceeds remaining, the
lender must account to the tenant-stockholder for the surplus. Conversely, if a
portion of the indebtedness remains unpaid, the tenant-stockholder is generally
responsible for the deficiency. See "--Anti-Deficiency Legislation and Other
Limitations on Lenders" below.

         In the case of foreclosure on a building which was converted from a
rental building to a building owned by a Cooperative under a non-eviction plan,
some states require that a purchaser at a foreclosure sale take the property
subject to rent control and rent stabilization laws which apply to certain
tenants who elected to remain in the building but who did not purchase shares in
the Cooperative when the building was so converted.

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         Contracts. The Master Servicer, on behalf of the Trustee, to the extent
required by the related agreement, may take action to enforce the Trustee's
security interest with respect to Contracts in default by repossession and
resale of the Manufactured Homes securing such Contracts in default. So long as
a Manufactured Home has not become subject to the real estate law, a creditor
can repossess the Manufactured Home securing a Contract by voluntary surrender,
by "self-help" repossession that is "peaceful" (i.e., without breach of the
peace) or, in the absence of voluntary surrender and the ability to repossess
without breach of the peace, by judicial process. The holder of a Contract must
give the debtor a number of days' notice, which varies from ten to 30 days
depending on the state, prior to commencement of any repossession. The UCC and
consumer protection laws in most states place restrictions on repossession
sales, including requiring prior notice to the debtor and commercial
reasonableness in effecting such a sale. The law in most states also requires
that the debtor be given notice of any sale prior to resale of the unit so that
the debtor may redeem at or before such resale. In the event of such
repossession and resale of a Manufactured Home, the Trustee would be entitled to
be paid out of the sale proceeds before such proceeds could be applied to the
payment of the claims of unsecured creditors or the holders of subsequently
perfected security interests or, thereafter, to the debtor.

         Under the laws applicable in most states, a creditor is entitled to
obtain a deficiency judgment from a debtor for any deficiency on repossession
and resale of the Manufactured Home securing such a debtor's loan. However, some
states impose prohibitions or limitations on deficiency judgments.

         Certain other statutory provisions, including federal and state
bankruptcy and insolvency laws and general equitable principles, may limit or
delay the ability of a lender to repossess and resell collateral or enforce a
deficiency judgment.

ENVIRONMENTAL RISKS

         Real property pledged as security to a lender may be subject to
unforeseen environmental risks. Under the laws of certain states, contamination
of a property may give rise to a lien on the property to assure the payment of
the costs of clean-up. In several states such a lien has priority over the lien
of an existing mortgage against such property. In addition, under the federal
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), the United States Environmental Protection Agency ("EPA") may impose
a lien on property where EPA has incurred clean-up costs. However, a CERCLA lien
is subordinate to pre-existing, perfected security interests.

         Under the laws of some states, and under CERCLA, there is a possibility
that a lender may be held liable as an "owner" or "operator" for costs of
addressing releases or threatened releases of hazardous substances at a
property, regardless of whether or not the environmental damage or threat was
caused by a current or prior owner or operator. CERCLA imposes liability for
such costs on any and all "responsible parties," including owners or operators.
However, CERCLA excludes from the definition of "owner or operator" a secured
creditor who holds indicia of ownership primarily to protect its security
interest but does not "participate in the management" of the property (the
"secured creditor exclusion"). Thus, if a lender's activities begin to encroach
on the actual management of a contaminated facility or property, the lender

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may incur liability as an "owner or operator" under CERCLA. Similarly, if a
lender forecloses and takes title to a contaminated facility or property, the
lender may incur CERCLA liability in various circumstances, including, but not
limited to, when it holds the facility or property as an investment (including
leasing the facility or property to a third party), or fails to market the
property in a timely fashion.

        Whether actions taken by a lender would constitute such participation in
the management of a property, so that the lender would lose the protection of
the secured creditor exclusion, has been a matter of judicial interpretation of
the statutory language, and court decisions have historically been inconsistent.
In 1990, the United States Court of Appeals for the Eleventh Circuit suggested,
in United States v. Fleet Factors Corp., that the mere capacity of the lender to
influence a borrower's decisions regarding disposal of hazardous substances was
sufficient participation in the management of the borrower's business to deny
the protection of the secured creditor exclusion to the lender, regardless of
whether the lender actually exercised such influence. Other judicial decisions
did not interpret the secured creditor exclusion as narrowly as did the Eleventh
Circuit.

         This ambiguity appears to have been resolved by the enactment of the
Asset Conservation, Lender Liability and Deposit Insurance Protection Act of
1996 (the "ASSET CONSERVATION ACT"), which took effect on September 30, 1996.
The Asset Conservation Act provides that in order to be deemed to have
participated in the management of a secured property, a lender must actually
participate in the operational affairs of the property or of the borrower. The
Asset Conservation Act also provides that participation in the management of the
property does not include "merely having the capacity to influence, or
unexercised right to control" operations. Rather, a lender will lose the
protection of the secured creditor exclusion only if it exercises
decision-making control over the borrower's environmental compliance and
hazardous substance handling and disposal practices, or assumes day-to-day
management of all operational functions of the secured property.

         If a lender is or becomes liable, it can bring an action for
contribution against any other "responsible parties," including a previous owner
or operator, who crated the environmental hazard, but those persons or entities
may be bankrupt or otherwise judgment proof. The costs associated with
environmental cleanup may be substantial. It is conceivable that such costs
arising from the circumstances set forth above would result in a loss to
Certificateholders.

         CERCLA does not apply to petroleum products, and the secured creditor
exclusion does not govern liability for cleanup costs under federal laws other
than CERCLA, in particular Subtitle I of the federal Resource Conservation and
Recovery Act ("RCRA"), which regulates underground petroleum storage tanks
(except heating oil tanks). The EPA has adopted a lender liability rule for
underground storage tanks under Subtitle I of RCRA. Under such rule, a holder of
a security interest in an underground storage tank or real property containing
an underground storage tank is not considered an operator of the underground
storage tank as long as petroleum is not added to, stored in or dispensed from
the tank. Moreover, under the Asset Conservation Act, the protections accorded
to lenders under CERCLA are also accorded to holders of security interests in
underground petroleum storage tanks. It should be noted, however, that liability
for cleanup of petroleum contamination may be governed by state law, which may
not provide for any specific protection for secured creditors.

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         Except as otherwise specified in the applicable Prospectus Supplement,
at the time the Mortgage Loans were originated, no environmental assessment or a
very limited environment assessment of the Mortgage Properties was conducted.

         The Agreement will provide that the Master Servicer, acting on behalf
of the Trust Fund, may not acquire title to a multifamily residential property
or mixed residential/commercial property underlying a Mortgage Loan or take over
its operation unless the Master Servicer has previously determined, based upon a
report prepared by a person who regularly conducts environmental audits, that
the Mortgaged Property is in compliance with applicable environmental laws and
regulations or that such acquisition would not be more detrimental than
beneficial to the value of the Mortgaged Properties and the interests therein of
the Certificateholders.

RIGHTS OF REDEMPTION

         Single Family Loans and Multifamily Loans. In some states, after sale
pursuant to a deed of trust or foreclosure of a mortgage, the borrower and
foreclosed junior lienors are given a statutory period in which to redeem the
property from the foreclosure sale. In some states, redemption may occur only
upon payment of the entire principal balance of the loan plus accrued interest
and expenses of foreclosure. In other states, redemption may be authorized if
the former borrower pays only a portion of the sums due. The effect of a
statutory right of redemption would defeat the title of any purchaser from the
lender subsequent to foreclosure or sale under a deed of trust. Consequently,
the practical effect of the redemption right is to force the lender to retain
the property and pay the expenses of ownership until the redemption period has
run.

         Contracts. While state laws do not usually require notice to be given
debtors prior to repossession, many states do require delivery of a notice of
default and of the debtor's right to cure defaults before repossession. The law
in most states also requires that the debtor be given notice of sale prior to
the resale of a Manufacture Home so that the owner may redeem at or before
resale. In addition, the sale must comply with the requirements of the UCC.
Manufactured Homes are most often resold through private sale.

ANTI-DEFICIENCY LEGISLATION AND OTHER LIMITATIONS ON LENDERS

         Certain states, including California, have adopted statutory
prohibitions restricting the right of the beneficiary or mortgagee to obtain a
deficiency judgment against borrowers financing the purchase of their residence
or following sale under a deed of trust or certain other foreclosure
proceedings. A deficiency judgment is a personal judgment against the borrower
equal in most cases to the difference between the amount due to the lender and
the fair market value of the real property sold at the foreclosure sale. As a
result of these prohibitions, it is anticipated that in many instances the
Master Servicer will not seek deficiency judgments against defaulting
mortgagors. Under the laws applicable in most states, a creditor is entitled to
obtain a deficiency judgment for any deficiency following possession and resale
of a Manufactured Home. However, some states impose prohibitions or limitations
on deficiency judgments in such cases.

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         In addition to anti-deficiency and related legislation, numerous other
federal and state statutory provisions, including the Bankruptcy Code, the
federal Soldiers' and Sailors' Civil Relief Act of 1940 and state laws affording
relief to debtors, may interfere with or affect the ability of the secured
mortgage lender to realize upon its security. For example, in a proceeding under
the Bankruptcy Code, a lender may not foreclose on the Mortgaged Property
without the permission of the bankruptcy court. If the Mortgaged Property is not
the debtor's principal residence and the bankruptcy court determines that the
value of the Mortgaged Property is less than the principal balance of the
mortgage loan, the rehabilitation plan proposed by the debtor may reduce the
secured indebtedness to the value of the Mortgaged Property as of the date of
the commencement of the bankruptcy (rendering the lender a general unsecured
creditor for the difference), reduce the monthly payments due under such
mortgage loan, change the rate of interest and alter the mortgage loan repayment
schedule. The effect of any such proceedings under the Bankruptcy Code,
including but not limited to any automatic stay, could result in delays in
receiving payments on the Mortgage Loans underlying a Series of Certificates and
possible reductions in the aggregate amount of such payments.

         The federal tax laws provide priority to certain tax liens over the
lien of a mortgage or secured party. Numerous federal and state consumer
protection laws impose substantive requirements upon mortgage lenders and
manufactured housing lenders in connection with the origination, servicing and
enforcement of Single Family Loans and Contracts. 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 and state laws impose specific statutory
liabilities upon lenders who fail to comply with the provisions of the law. In
some cases, this liability may affect assignees of the loans or contracts.

         The so-called "Holder-in-Due-Course" Rule of the Federal Trade
Commission (the "FTC RULE") has the effect of subjecting a seller (and certain
related creditors and their assignees) in a consumer credit transaction and any
assignee of the creditor to all claims and defenses which the debtor in the
transaction could assert against the seller of the goods. Liability under the
FTC Rule is limited to the amounts paid by a debtor on the Contract, and the
holder of the Contract may also be unable to collect amounts still due
thereunder.

         Most of the Contracts in a Mortgage Pool will be subject to the
requirements of the FTC Rule. Accordingly, the Trustee, as holder of the
Contracts, will be subject to any claims or defenses that the purchaser of the
related Manufactured Home may assert against the seller of the Manufactured
Home, subject to a maximum liability equal to the amounts paid by the obligor on
the Contract. If an obligor is successful in asserting any such claim or
defense, and if the Seller had or should have had knowledge of such claim or
defense, the Master Servicer will have the right to require the Seller to
repurchase the Contract because of a breach of its representation and warranty
that no claims or defenses exist which would affect the obligor's obligation to
make the required payments under the Contract.

         Generally, Article 9 of the UCC governs foreclosure on Cooperative
shares and the related proprietary lease or occupancy agreement. Some courts
have interpreted Section 9-504 of the UCC to prohibit a deficiency award unless
the creditor establishes that the sale of the collateral (which, in the case of
a Cooperative Loan, would be the shares of the Cooperative and

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the related proprietary lease or occupancy agreement) was conducted in a
commercially reasonable manner.

DUE-ON-SALE CLAUSES

         Unless otherwise provided in the related Prospectus Supplement, each
conventional Mortgage Loan will contain a due-on-sale clause which will
generally provide that, if the mortgagor or obligor sells, transfers or conveys
the Mortgaged Property, the loan or contract may be accelerated by the mortgagee
or secured party. The Garn-St Germain Depository Institutions Act of 1982 (the
"GARN-ST GERMAIN ACT"), subject to certain exceptions, pre-empts state
constitutional, statutory and case law prohibiting the enforcement of
due-on-sale clauses. With respect to loans secured by an owner-occupied
residence (which would include a Manufactured Home), the Garn-St Germain Act
sets forth nine specific instances in which a mortgagee covered by the Act may
not exercise its rights under a due-on-sale clause, notwithstanding the fact
that a transfer of the property may have occurred. The inability to enforce a
due-on-sale clause may result in transfer of the related Mortgaged Property to
an uncreditworthy person, which could increase the likelihood of default or may
result in a mortgage bearing an interest rate below the current market rate
being assumed by a new home buyer, which may affect the average life of the
Mortgage Loans and the number of Mortgage Loans which may extend to maturity.

PREPAYMENT CHARGES

         Under certain state laws, prepayment charges with respect to
prepayments on loans secured by liens encumbering owner-occupied residential
properties may not be imposed after a certain period of time following the
origination of Single Family Loans or Contracts. Since many of the Mortgaged
Properties will be owner-occupied, it is anticipated that prepayment charges may
not be imposed with respect to many of the Single Family Loans and Contracts.
The absence of such a restraint on prepayment, particularly with respect to
fixed rate Single Family Loans or Contracts having higher Mortgage Rates or
APRs, may increase the likelihood of refinancing or other early retirement of
such Loans or Contracts. Legal restrictions, if any, on prepayment of
Multifamily Loans will be described in the related Prospectus Supplement.

APPLICABILITY OF USURY LAWS

         Title V of the Depository Institutions Deregulation and Monetary
Control Act of 1980 ("TITLE V") provides that state usury limitations shall not
apply to certain types of residential first mortgage loans originated by certain
lenders after March 31, 1980. The Office of Thrift Supervision, as successor to
the Federal Home Loan Bank Board, is authorized to issue rules and regulations
and to publish interpretations governing implementation of Title V. The statute
authorized any state to reimpose limitations on interest rates and finance
charges by adopting before April 1, 1983 a law or constitutional provision which
expressly rejects application of the federal law. Fifteen states adopted such a
law prior to the April 1, 1983 deadline. In addition, even where Title V was not
so rejected, any state is authorized to adopt a provision limiting discount
points or other charges on loans covered by Title V. No Contract secured by a
Manufactured Home located in any state in which application of Title V was
expressly rejected or a provision limiting discount points or other charges has
been adopted will be included in any

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Trust File if such Contract imposes finance charges or provides for discount
points or charges in excess of permitted levels.

         Title V also provides that, subject to the following conditions, state
usury limitations will not apply to any loan which is secured by a first lien on
certain kinds of manufactured housing. The Contracts would be covered if they
satisfy certain conditions governing, among other things, the terms of any
prepayment, balloon payment, late charges and deferral fees and requiring a
30-day notice period prior to instituting any action leading to repossession of
or foreclosure with respect to the related unit.

SOLDIERS' AND SAILORS' CIVIL RELIEF ACT

         Generally, under the terms of the Soldiers' and Sailors' Civil Relief
Act of 1940, as amended (the "RELIEF ACT"), a borrower who enters military
service after the origination of such borrower's Mortgage Loan (including a
borrower who is a member of the National Guard or is in reserve status at the
time of the origination of the 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 interest rate limitation could have an
effect, for an indeterminate period of time, on the ability of the Master
Servicer to collect full amounts of interest on affected Mortgage Loans. Unless
otherwise provided in the related Prospectus Supplement, any shortfall in
interest collections resulting from the application of the Relief Act could
result in losses to the holders of the Certificates. In addition, the Relief Act
imposes limitations which would impair the ability of the Master 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 lender's inability to realize
upon the mortgaged property in a timely fashion.

                CERTAIN MATERIAL FEDERAL INCOME TAX CONSEQUENCES

         The following summary of the anticipated material federal income tax
consequences of the purchase, ownership and disposition of Certificates is based
on the advice of Brown & Wood LLP, counsel to the Depositor. This summary is
based on laws, regulations, including the REMIC regulations promulgated by the
Treasury Department on December 23, 1992 and generally effective for REMICs with
start-up dates on or after November 12, 1991 (the "REMIC REGULATIONS"), rulings
and decisions now in effect or (with respect to regulations) proposed, all of
which are subject to change either prospectively or retroactively. This summary
does not address the federal income tax consequences of an investment in
Certificates applicable to all categories of investors, some of which (for
example, banks and insurance companies) may be subject to special rules.
Prospective investors should consult their tax advisors regarding the federal,
state, local and any other tax consequences to them of the purchase, ownership
and disposition of Certificates.

GENERAL

         The federal income tax consequences to Certificateholders will vary
depending on whether an election is made to treat the Trust Fund relating to a
particular Series of Certificates


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as a REMIC under the Code. The Prospectus Supplement for each Series of
Certificates will specify whether a REMIC election will be made. In the
discussion that follows, all references to a "Section" or "Sections" shall be
understood to refer, unless otherwise specifically indicated, to a Section or
Sections of the Code.

NON-REMIC CERTIFICATES

         If a REMIC election is not made, Brown & Wood LLP will deliver its
opinion that the Trust Fund will not be classified as an association taxable as
a corporation and that each such Trust Fund will be classified as a grantor
trust under subpart E, part I of subchapter J of the Code. In this case, owners
of Certificates will be treated for federal income tax purposes as owners of a
portion of the Trust Fund's assets as described below.

SINGLE CLASS OF SENIOR CERTIFICATES

         Characterization. The Trust Fund may be created with one class of
Senior Certificates and one class of Subordinated Certificates. In this case,
each Senior Certificateholder will be treated as the owner of a pro rata
undivided interest in the interest and principal portions of the Trust Fund
represented by that Senior Certificate and will be considered the equitable
owner of a pro rata undivided interest in each of the Mortgage Loans in the
Pool. Any amounts received by a Senior Certificateholder in lieu of amounts due
with respect to any Mortgage Loan because of a default or delinquency in payment
will be treated for federal income tax purposes as having the same character as
the payments they replace.

         Each holder of a Senior Certificate will be required to report on its
federal income tax return its pro rata share of the entire income from the
Mortgage Loans in the Trust Fund represented by that Senior Certificate,
including interest, original issue discount, if any, prepayment fees, assumption
fees, any gain recognized upon an assumption and late payment charges received
by the Master Servicer in accordance with such Senior Certificateholder's method
of accounting. Under section 162 or 212 of the Code, each Senior
Certificateholder will be entitled to deduct its pro rata share of servicing
fees, prepayment fees, assumption fees, any loss recognized upon an assumption
and late payment charges retained by the Master Servicer, provided that such
amounts are reasonable compensation for services rendered to the Trust Fund. A
Senior Certificateholder that is an individual, estate or trust will be entitled
to deduct its share of expenses only to the extent such expenses, plus all other
section 212 expenses, exceed 2% of such Senior Certificateholder's adjusted
gross income. A Senior Certificateholder using the cash method of accounting
must take into account its pro rata share of income and deductions as and when
collected by or paid to the Master Servicer. A Senior Certificateholder using an
accrual method of accounting must take into account its pro rata share of income
and deductions as they become due or are paid to the Master Servicer, whichever
is earlier. If the servicing fees paid to the Master Servicer were deemed to
exceed reasonable servicing compensation, the amount of such excess could be
considered as a retained ownership interest by the Master Servicer (or any
person to whom the Master Servicer assigned for value all or a portion of the
servicing fees) in a portion of the interest payments on the Mortgage Loans. The
Mortgage Loans might then be subject to the "coupon stripping" rules of the Code
discussed below.

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         Unless otherwise specified in the related Prospectus Supplement, Brown
& Wood LLP will have advised the Depositor with respect to each Series of
Certificates that:

     (i) a Senior Certificate owned by a "domestic building and loan
association" within the meaning of section 7701(a)(19) of the Code representing
principal and interest payments on Mortgage Loans will be considered to
represent "loans . . . secured by an interest in real property which is . . .
residential property" within the meaning of section 7701(a)(19)(C)(v) of the
Code to the extent that the Mortgage Loans represented by that Senior
Certificate are of a type described in such section;

     (ii) a Senior Certificate owned by a real estate investment trust
representing an interest in Mortgage Loans will be considered to represent "real
estate assets" within the meaning of section 856(c)(4)(A) of the Code and
interest income on the Mortgage Loans will be considered "interest on
obligations secured by mortgages on real property" within the meaning of section
856(c)(3)(B) of the Code to the extent that the Mortgage Loans represented by
that Senior Certificate are of a type described in such section; and

     (iii) a Senior Certificate owned by a REMIC will be an "obligation . . .
which is principally secured by an interest in real property" within the meaning
of section 860G(a)(3)(A) of the Code.

         The Small Business Job Protection Act of 1996, as part of the repeal of
the bad debt reserve method for thrift institutions, repealed the application of
section 593(d) of the Code to any taxable year beginning after December 31,
1995.

         The assets constituting certain Trust Funds may include "buydown"
Mortgage Loans. The characterization of any investment in "buydown" Mortgage
Loans will depend upon the precise terms of the related buydown agreement, but
to the extent that such "buydown" Mortgage Loans are secured in part by a bank
account or other personal property, they may not be treated in their entirety as
assets described in the foregoing sections of the Code. There are no directly
applicable precedents with respect to the federal income tax treatment or the
characterization of investments in "buydown" Mortgage Loans. Accordingly,
holders of Senior Certificates should consult their own tax advisors with
respect to characterization of investments in Senior Certificates representing
an interest in a Trust Fund that includes "buydown" Mortgage Loans.

         Premium. The price paid for a Senior Certificate by a holder will be
allocated to such holder's undivided interest in each Mortgage Loan based on
each Mortgage Loan's relative fair market value, so that such holder's undivided
interest in each Mortgage Loan will have its own tax basis. A Senior
Certificateholder that acquires an interest in Mortgage Loans at a premium may
elect to amortize such premium under a constant interest method, provided that
such Mortgage Loan was originated after September 27, 1985. Premium allocable to
a Mortgage Loan originated on or before September 27, 1985 should be allocated
among the principal payments on the Mortgage Loan and allowed as an ordinary
deduction as principal payments are made. Amortizable bond premium will be
treated as an offset to interest income on such Senior Certificate. The basis
for such Senior Certificate will be reduced to the extent that amortizable
premium is applied to offset interest payments.

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         It is not clear whether a reasonable prepayment assumption should be
used in computing amortization of premium allowable under section 171 of the
Code. A Certificateholder that makes this election for a Certificate that is
acquired at a premium will be deemed to have made an election to amortize bond
premium with respect to all debt instruments having amortizable bond premium
that such Certificateholder acquires during the year of the election or
thereafter.

         If a premium is not subject to amortization using a reasonable
prepayment assumption, the holder of a Senior Certificate acquired at a premium
should recognize a loss, if a Mortgage Loan prepays in full, equal to the
difference between the portion of the prepaid principal amount of the Mortgage
Loan that is allocable to the Senior Certificate and the portion of the adjusted
basis of the Senior Certificate that is allocable to the Mortgage Loan. If a
reasonable prepayment assumption is used to amortize such premium, it appears
that such a loss would be available, if at all, only if prepayments have
occurred at a rate faster than the reasonable assumed prepayment rate. It is not
clear whether any other adjustments would be required to reflect differences
between an assumed prepayment rate and the actual rate of prepayments.

         On December 30, 1997, the Internal Revenue Service (the "IRS") issued
final regulations (the "AMORTIZABLE BOND PREMIUM REGULATIONS") dealing with
amortizable bond premium. These regulations, which generally are effective for
bonds issued or acquired on or after March 2, 1998 (or, for holders making an
election for the taxable year that included March 2, 1998 or any subsequent
taxable year, shall apply to bonds held on or after the first day of the taxable
year of the election). The Amortizable Bond Premium Regulations specifically do
not apply to prepayable debt instruments or any pool of debt instruments, such
as the Trust Fund, the yield on which may be affected by prepayments which are
subject to section 1272(a)(6) of the Code. Absent further guidance from the IRS
and unless otherwise specified in the related Prospectus Supplement, the Trustee
will account for amortizable bond premium in the manner described above.
Prospective purchasers should consult their tax advisors regarding amortizable
bond premium and the Amortizable Bond Premium Regulations.

         Original Issue Discount. The IRS has stated in published rulings that,
in circumstances similar to those described herein, the special rules of the
Code relating to "original issue discount" (currently sections 1271 through 1273
and section 1275) will be applicable to a Senior Certificateholder's interest in
those Mortgage Loans meeting the conditions necessary for these sections to
apply. Accordingly, the following discussion is based in part on Treasury
regulations issued on February 2, 1994 under sections 1271 through 1273 and
section 1275 of the Code (the "OID REGULATIONS"). Certificateholders should be
aware, however, that the OID Regulations do not adequately address certain
issues relevant to prepayable securities, such as the Certificates. 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. Such original issue
discount could arise by the financing of points or other charges by the
originator of the mortgages in an amount greater than a statutory de minimis
exception to the extent that the points are not currently deductible under
applicable provisions of the Code or are not for services provided by the
lender. Original issue discount generally must be reported as ordinary gross
income as it accrues under a constant interest method. See "--Multiple Classes
of Senior Certificates--B. Senior Certificates Representing Interests in Loans
Other than ARM Loans--Accrual of Original Issue Discount" below.

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         Market Discount. A Senior Certificateholder that acquires an undivided
interest in Mortgage Loans may be subject to the market discount rules of
sections 1276 through 1278 to the extent an undivided interest in a Mortgage
Loan is considered to have been purchased at a "market discount". Generally, the
excess of the portion of the principal amount of such Mortgage Loan allocable to
such holder's undivided interest over such holder's tax basis in such interest.
Market discount with respect to a Senior Certificate will be considered to be
zero if the amount allocable to the Senior Certificate is less than 0.25% of the
Senior Certificate's stated redemption price at maturity multiplied by the
weighted average maturity remaining after the date of purchase. Treasury
regulations implementing the market discount rules have not yet been issued;
therefore, investors should consult their own tax advisors regarding the
application of these rules and the advisability of making any of the elections
allowed under sections 1276 through 1278 of the Code.

         The Code provides that any principal payment (whether a scheduled
payment or a prepayment) or any gain on disposition of a market discount bond
acquired by the taxpayer after October 22, 1986 shall be treated as ordinary
income to the extent that it does not exceed the accrued market discount at the
time of such payment. The amount of accrued market discount for purposes of
determining the tax treatment of subsequent principal payments or dispositions
of the market discount bond is to be reduced by the amount so treated as
ordinary income.

         The Code also grants to the Department of the Treasury (the "TREASURY")
authority to issue regulations providing for the computation of accrued market
discount on debt instruments, the principal of which is payable in more than one
installment. Although the Treasury has not yet issued regulations, rules
described in the relevant legislative history will apply. Under those rules, the
holder of a market discount bond may elect to accrue market discount either on
the basis of a constant interest rate or according to one of the following
methods. If a Senior Certificate is issued with original issue discount, the
amount of market discount that accrues during any accrual period is equal to the
product of (i) the total remaining market discount and (ii) a fraction, the
numerator of which is the original issue discount accruing during the period and
the denominator of which is the total remaining original issue discount at the
beginning of the accrual period. For Senior Certificates issued without original
issue discount, the amount of market discount that accrues during a period is
equal to the product of (i) the total remaining market discount and (ii) a
fraction, the numerator of which is the amount of stated interest paid during
the accrual period and the denominator of which is the total amount of stated
interest remaining to be paid at the beginning of the accrual period. For
purposes of calculating market discount under any of the above methods in the
case of instruments (such as the Senior Certificates) which provide for payments
which may be accelerated by reason of prepayments of other obligations securing
such instruments, the same prepayment assumption applicable to calculating the
accrual of original issue discount will apply. Because the regulations described
above have not been issued, it is impossible to predict what effect those
regulations might have on the tax treatment of a Senior Certificate purchased at
a discount or premium in the secondary market.

         A holder who acquires a Senior Certificate at a market discount also
may be required to defer, until the maturity date of such Senior Certificate or
its earlier disposition in a taxable transaction, the deduction of a portion of
the amount of interest that the holder paid or accrued during the taxable year
on indebtedness incurred or maintained to purchase or carry the Senior

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Certificate in excess of the aggregate amount of interest (including original
issue discount) includible in such holder's gross income for the taxable year
with respect to such Senior Certificate. The amount of such net interest expense
deferred in a taxable year may not exceed the amount of market discount accrued
on the Senior Certificate for the days during the taxable year on which the
holder held the Senior Certificate and, in general, would be deductible when
such market discount is includible in income. The amount of any remaining
deferred deduction is to be taken into account in the taxable year in which the
Senior Certificate matures or is disposed of in a taxable transaction. In the
case of a disposition in which gain or loss is not recognized in whole or in
part, any remaining deferred deduction will be allowed to the extent of gain
recognized on the disposition. This deferral rule does not apply if the Senior
Certificateholder elects to include such market discount in income currently as
it accrues on all market discount obligations acquired by such Senior
Certificateholder in that taxable year or thereafter.

         Election to Treat All Interest as Original Issue Discount. The OID
Regulations permit a Certificateholder to elect to accrue all interest, discount
(including de minimis market or original issue discount) and premium in income
as interest, based on a constant yield method for Certificates acquired on or
after April 4, 1994. If such an election is made with respect to a Mortgage Loan
with market discount, the Certificateholder will be deemed to have made an
election to include in income currently market discount with respect to all
other debt instruments having market discount that such Certificateholder
acquires during the year of the election or thereafter. Similarly, a
Certificateholder that makes this election for a Certificate that is acquired at
a premium will be deemed to have made an election to amortize bond premium with
respect to all debt instruments having amortizable bond premium that such
Certificateholder owns or acquires. See "--Regular Certificates--Original Issue
Discount and Premium" below. The election to accrue interest, discount and
premium on a constant yield method with respect to a Certificate is irrevocable.

         Anti-abuse Rule. The IRS is permitted to apply or depart from the rules
contained in the OID Regulations as necessary or appropriate to achieve a
reasonable result where a principal purpose in structuring a Mortgage Asset,
Mortgage Loan or Senior Certificate, or the effect of applying the otherwise
applicable rules, is to achieve a result that is unreasonable in light of the
purposes of the applicable statutes (which generally are intended to achieve the
clear reflection of income for both issuers and holders of debt instruments).

MULTIPLE CLASSES OF SENIOR CERTIFICATES

A.  Stripped Bonds and Stripped Coupons

         Pursuant to section 1286 of the Code, the separation of ownership of
the right to receive some or all of the interest payments on an obligation from
ownership of the right to receive some or all of the principal payments results
in the creation of "stripped bonds" with respect to principal payments and
"stripped coupons" with respect to interest payments. For purposes of sections
1271 through 1288 of the Code, section 1286 treats a stripped bond or a stripped
coupon as an obligation issued on the date that such stripped interest is
created. If a Trust Fund is created with two classes of Senior Certificates, one
class of Senior Certificates will represent the right to principal and interest,
or principal only, on all or a portion of the Mortgage Loans (the "STRIPPED

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BOND CERTIFICATES"), while the second class of Senior Certificates will
represent the right to some or all of the interest on such portion (the
"STRIPPED COUPON CERTIFICATES").

         Servicing fees in excess of reasonable servicing fees ("excess
servicing") will be treated under the stripped bond rules. If the excess
servicing fee is less than 100 basis points (i.e., 1% interest on the Mortgage
Loan principal balance) or the Certificates are initially sold with a de minimis
discount (assuming no prepayment assumption is required), any non-de minimis
discount arising from a subsequent transfer of the Certificates should be
treated as market discount. The IRS appears to require that reasonable servicing
fees be calculated on a Mortgage Loan by Mortgage Loan basis, which could result
in some Mortgage Loans being treated as having more than 100 basis points of
interest stripped off.

         Although not entirely clear, a Stripped Bond Certificate generally
should be treated as a single debt instrument issued on the day it is purchased
for purposes of calculating any original issue discount. Generally, if the
discount on a Stripped Bond Certificate is larger than a de minimis amount (as
calculated for purposes of the original issue discount rules), a purchaser of
such a certificate will be required to accrue the discount under the original
issue discount rules of the Code. See "--Single Class of Senior
Certificates--Original Issue Discount" above. However, a purchaser of a Stripped
Bond Certificate will be required to account for any discount on the certificate
as market discount rather than original issue discount if either (i) the amount
of original issue discount with respect to the certificate was treated as zero
under the original issue discount de minimis rule when the certificate was
stripped or (ii) no more than 100 basis points (including any amount of
servicing in excess of reasonable servicing) are stripped off the Trust Fund's
Mortgage Loans. Pursuant to Revenue Procedure 91-49 issued on August 8, 1991,
purchasers of Stripped Bond Certificates using an inconsistent method of
accounting must change their method of accounting and request the consent of the
IRS to the change in their accounting method on a statement attached to their
first timely tax return filed after August 8, 1991.

         The precise tax treatment of Stripped Coupon Certificates is
substantially uncertain. The Code could be read literally to require that
original issue discount computations be made on a Mortgage Loan by Mortgagee
Loan basis. However, based on recent IRS guidance, it appears that a Stripped
Coupon Certificate should be treated as a single installment obligation subject
to the original issue discount rules of the Code. As a result, all payments on a
Stripped Coupon Certificate would be included in the certificate's stated
redemption price at maturity for purposes of calculating income on such
certificate under the original issue discount rules of the Code.

         It is unclear under what circumstances, if any, the prepayment of
Mortgage Loans will give rise to a loss to the holder of a Stripped Bond
Certificate purchased at a premium or a Stripped Coupon Certificate. If such
Certificate is treated as a single instrument (rather than an interest in
discrete mortgage loans) and the effect of prepayments is taken into account in
computing yield with respect to such Senior Certificate, it appears that no loss
may be available as a result of any particular prepayment unless prepayments
occur at a rate faster than the assumed prepayment rate. However, if such
Certificate is treated as an interest in discrete Mortgage Loans or if no
prepayment assumption is used, then, when a Mortgage Loan is prepaid, the holder
of such Certificate should be able to recognize a loss equal to the portion of
the adjusted issue price of such Certificate that is allocable to such Mortgage
Loan.

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<PAGE>

         Holders of Stripped Bond Certificates and Stripped Coupon Certificates
are urged to consult with their own tax advisors regarding the proper treatment
of these Certificates for federal income tax purposes.

         Treatment of Certain Owners. Several sections of the Code provide
beneficial treatment to certain taxpayers that invest in mortgage loans of the
type that make up the Trust Fund. With respect to these sections, no specific
legal authority exists regarding whether the character of the Senior
Certificates, for federal income tax purposes, will be the same as that of the
underlying Mortgage Loans. While section 1286 treats a stripped obligation as a
separate obligation for purposes of the provisions of the Code addressing
original issue discount, it is not clear whether such characterization would
apply with regard to these other sections. Although the issue is not free from
doubt, based on policy considerations, each class of Senior Certificates should
be considered to represent "real estate assets" within the meaning of section
856(c)(4)(A) of the Code and "loans . . . secured by, an interest in real
property which is . . . residential real property" within the meaning of section
7701(a)(19)(C)(v) of the Code, and interest income attributable to Senior
Certificates should be considered to represent "interest on obligations secured
by mortgages on real property" within the meaning of section 856(c)(3)(B) of the
Code, provided that in each case the underlying Mortgage Loans and interest on
such Mortgage Loans qualify for such treatment. Prospective purchasers to which
such characterization of an investment in Senior Certificates is material should
consult their own tax advisors regarding the characterization of the Senior
Certificates and the income therefrom. Senior Certificates will be "obligations
(including any participation or certificate of beneficial ownership therein)
which are principally secured by an interest in real property" within the
meaning of section 860G(a)(3)(A) of the Code.

B.  Senior Certificates Representing Interests in Loans Other than ARM Loans

         The original issue discount rules of sections 1271 through 1275 of the
Code will be applicable to a Senior 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 in 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 OID Regulations, such original issue discount could arise by the charging of
points by the originator of the mortgage in an amount greater than the statutory
de minimis exception, including a payment of points that is currently deductible
by the borrower under applicable provisions of the Code, or, under certain
circumstances, by the presence of "teaser" rates on the Mortgage Loans. Original
issue discount on each Senior Certificate must be included in the owner's
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
amount of original issue discount required to be included in an owner's income
in any taxable year with respect to a Senior Certificate representing an
interest in Mortgage Loans other than Mortgage Loans with interest rates that
adjust periodically ("ARM LOANS") likely will be computed as described under
"--Accrual of Original Issue Discount" below. The following discussion is based
in part on the OID Regulations and in part on the provisions of the Tax Reform
Act of 1986, as amended (the "1986 ACT"). The OID Regulations generally are
effective for debt instruments issued on or after April 4, 1994, but may be
relied

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upon as authority with respect to debt instruments such as the Senior
Certificates issued after December 21, 1992. Alternatively, proposed Treasury
regulations issued December 21, 1992 may be treated as authority for debt
instruments issued after December 21, 1992 and prior to April 4, 1994, and
proposed Treasury regulations issued in 1986 and 1991 may be treated as
authority for instruments issued before December 21, 1992. In applying these
dates, the issue date of the Mortgage Loans should be used or, in the case of
Stripped Bond Certificates or Stripped Coupon Certificates, the date such
Certificates are acquired. The holder of a Senior Certificate should be aware,
however, that neither the proposed OID Regulations nor the OID Regulations
adequately address certain issues relevant to prepayable securities.

         Under the Code, the Mortgage Loans underlying each Senior Certificate
will be treated as having been issued on the date they were originated with an
amount of original issue discount equal to the excess of such Mortgage Loan's
stated redemption price at maturity over its issue price. The issue price of a
Mortgage Loan is generally the amount lent to the mortgagee, which may be
adjusted to take into account certain loan origination fees. The stated
redemption price at maturity of a Mortgage Loan is the sum of all payments to be
made on such Mortgage Loan other than payments that are treated as qualified
stated interest payments. The accrual of this original issue discount, as
described under "--Accrual of Original Issue Discount" below, will, unless
otherwise specified in the related Prospectus Supplement, utilize the original
yield to maturity of the Senior Certificate calculated based on a reasonable
assumed prepayment rate for the Mortgage Loans underlying the Senior
Certificates (the "PREPAYMENT ASSUMPTION") and will take into account events
that occur during the calculation period. The Prepayment Assumption will be
determined in the manner prescribed by regulations that have not yet been
issued. The legislative history of the 1986 Act (the "LEGISLATIVE HISTORY")
provides, however, that the regulations will require that the Prepayment
Assumption be the prepayment assumption that is used in determining the offering
price of such Certificate. No representation is made that any Certificate will
prepay at the Prepayment Assumption or at any other rate. The prepayment
assumption contained in the Code literally only applies to debt instruments
collateralized by other debt instruments that are subject to prepayment rather
than direct ownership interests in such debt instruments, such as the
Certificates represent. However, no other legal authority provides guidance with
regard to the proper method for accruing original issue discount on obligations
that are subject to prepayment, and, until further guidance is issued, the
Master Servicer intends to calculate and report original issue discount under
the method described below.

         Accrual of Original Issue Discount. Generally, the owner of a Senior
Certificate must include in gross income the sum of the "daily portions", as
defined below, of the original issue discount on such Senior Certificate for
each day on which it owns a Senior Certificate, including the date of purchase
but excluding the date of disposition. In the case of an original owner, the
daily portions of original issue discount with respect to each component
generally will be determined as follows under the Amendments. A calculation will
be made by the Master Servicer or such other entity specified in the related
Prospectus Supplement of the portion of original issue discount that accrues
during each successive monthly accrual period (or shorter period from the date
of original issue) that ends on the day in the calendar year corresponding to
each of the Distribution Dates on the Senior Certificate (or the day prior to
each such date). This will be done, in the case of each full month accrual
period, by adding (i) the present value at the end of the accrual period
(determined by using as a discount factor the original yield to maturity

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of the respective component, under the Prepayment Assumption) of all remaining
payments to be received under the Prepayment Assumption on the respective
component, and (ii) any payments received during such accrual period (other than
a payment of qualified stated interest), and subtracting from that total the
"adjusted issue price" of the respective component at the beginning of such
accrual period. The "adjusted issue price" of a Senior Certificate at the
beginning of the first accrual period is its issue price; the "adjusted issue
price" of a Senior Certificate at the beginning of a subsequent accrual period
is the "adjusted issue price" at the beginning of the immediately preceding
accrual period plus the amount of original issue discount allocable to that
accrual period reduced by the amount of any payment (other than a payment of
qualified stated interest) made at the end of or during that accrual period. The
original issue discount accruing during such accrual period 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 monthly accrual period, the daily portions of
original issue discount must be determined according to an appropriate
allocation under any reasonable method.

         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 as it accrues rather than when received. However,
the amount of original issue discount includible in the income of a holder of an
obligation is reduced when the obligation is acquired 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 Certificateholder are purchased at a price
equal to the then unpaid principal amount of such Mortgage Loan, no original
issue discount attributable to the difference between the issue price and the
original principal amount of such Mortgage Loan (i.e., points) will be
includible by such holder. Other original issue discount on the Mortgage Loans
(e.g., that arising from a "teaser" rate) would still need to be accrued.

C. Senior Certificates Representing Interests in ARM Loans

         The OID Regulations do not address the treatment of instruments, such
as the Senior Certificates (if the related Trust Fund includes ARM Loans), which
represent interests in ARM Loans. Additionally, the IRS has not issued guidance
under the coupon stripping rules of the Code with respect to such instruments.
In the absence of any authority, the Master Servicer will report original issue
discount on Senior Certificates attributable to ARM Loans ("STRIPPED ARM
OBLIGATIONS") to holders in a manner it believes to be consistent with the rules
described under the heading "--B. Senior Certificates Representing Interests in
Loans Other than ARM Loans" above and with the OID Regulations. In general,
application of these rules may require inclusion of income on a Stripped ARM
Obligation in advance of the receipt of cash attributable to such income.
Further, the addition of interest deferred by reason of negative amortization
("DEFERRED INTEREST") to the principal balance of an ARM Loan may require the
inclusion of such amount in the income of the Senior Certificateholder when such
amount accrues. Furthermore, the addition of Deferred Interest to the Senior
Certificate's principal balance will result in additional income (including
possibly original issue discount income) to the Senior Certificateholder over
the remaining life of such Senior Certificates.

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         Because the treatment of Stripped ARM Obligations is uncertain,
investors are urged to consult their tax advisors regarding how income will be
includible with respect to such Certificates.

POSSIBLE APPLICATION OF CONTINGENT PAYMENT REGULATIONS TO CERTAIN
NON-REMIC CERTIFICATES

         Final regulations issued on June 11, 1996 with respect to original
issue discount under section 1275 include rules for obligations that provide for
one or more contingent payments (the "CONTINGENT PAYMENT REGULATIONS"). Rights
to interest payments on a mortgage loan might be considered to be contingent
within the meaning of the Contingent Payment Regulations if such interest would
not be paid if the borrower exercised its right to prepay the mortgage loan.
However, in the case of an investor having a right to shares of the interest and
principal payments on such a mortgage loan when the share of interest is not
substantially greater than the share of principal, the possibility of prepayment
should not be considered to characterize otherwise noncontingent interest
payments as contingent payments. The absence of interest payments following a
prepayment would be the normal consequence of the return of such investor's
capital in the form of a principal payment. On the other hand, a right to
interest on such a mortgage loan is more likely to be regarded as contingent if
held by an investor that does not also hold a right to the related principal.
Such an investor would not recover its capital through receipt of a principal
payment at the time of the prepayment of the mortgage loan.

         Applying these principles to the Senior Certificates, because the
Mortgage Loans are subject to prepayment at any time, payments on a class of
Senior Certificates representing a right to interest on the Mortgage Loans could
be considered to be contingent within the meaning of the Contingent Payment
Regulations, at least if such Senior Certificate was issued at a premium. The
likelihood that such payments will be considered contingent increases the
greater the amount of such premium.

         In the event that payments on a Senior Certificate in respect of
interest on the Mortgage Loans are considered contingent, then the holder would
generally report income or loss as described above under the heading "--A.
Stripped Bonds and Stripped Coupons"; provided, however, that the yield that
would be used in calculating interest income would not be the actual yield but
would instead equal the "applicable Federal rate" (the "AFR", generally, an
average of current yields of Treasury securities computed and published monthly
by the IRS), in effect at the time of purchase of such Senior Certificate by
such holder. In addition, once such Holder's adjusted basis in such Senior
Certificate has been reduced (by prior distributions or losses) to an amount
equal to the aggregate amount of the remaining noncontingent payments of the
Mortgage Loans that are allocable to such Senior Certificate (or to zero if such
Senior Certificate does not share in principal payments), then such holder would
recognize income in each subsequent month equal to the full amount of interest
on the Mortgage Loans that accrues in that month and is allocable to such Senior
Certificate. It is uncertain whether, under the Contingent Payment regulations,
any other adjustments would be made to take account of prepayments of the
Mortgage Loans.

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SALE OR EXCHANGE OF A SENIOR CERTIFICATE

         Sale or exchange of a Senior Certificate prior to its maturity will
result in gain or loss equal to the difference, if any, between the amount
received and the seller's adjusted basis in the Senior Certificate. Such
adjusted basis generally will equal the seller's purchase price for the Senior
Certificate, increased by the original issue discount included in the seller's
gross income with respect to the Senior Certificate, and reduced by principal
payments on the Senior Certificate previously received by the seller. Such gain
or loss will be capital gain or loss to a seller for which a Senior Certificate
is a "capital asset" within the meaning of section 1221 of the Code, and will be
long-term or short-term depending on whether the Senior Certificate has been
owned for the long-term capital gain holding period (currently more than one
year).

         Non-corporate taxpayers are subject to reduced maximum rates on
long-term capital gains and are generally subject to tax at ordinary income
rates on short-term capital gains. The deductibility of capital losses is
subject to certain limitations. Prospective investors should consult their own
tax advisors concerning these tax law provisions.

         It is possible that capital gain realized by holders of the Senior
Certificates could be considered gain realized upon the disposition of property
that was part of a "conversion transaction". A sale of a Senior Certificate will
be part of a conversion transaction if substantially all of the holder's
expected return is attributable to the time value of the holder's net
investment, and (i) the holder entered the contract to sell the Senior
Certificate substantially contemporaneously with acquiring the Senior
Certificate, (ii) the Senior Certificate is part of a straddle, (iii) the Senior
Certificate is marketed or sold as producing capital gain or (iv) other
transactions to be specified in Treasury regulations that have not yet been
issued. If the sale or other disposition of a Senior Certificate is part of a
conversion transaction, all or any portion of the gain realized upon the sale or
other disposition would be treated as ordinary income instead of capital gain.

         Senior Certificates will be "evidences of indebtedness" within the
meaning of section 582(c)(1) of the Code, so that gain or loss recognized from
the sale of a Senior Certificate by a bank or a thrift institution to which such
section applies will be ordinary income or loss.

NON-U.S. PERSONS

         Generally, to the extent that a Senior 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
section 1441 or 1442 to (i) an owner that is not a U.S. Person (as defined
below) or (ii) a Senior Certificateholder holding on behalf of an owner that is
not a U.S. Person, will be subject to federal income tax, collected by
withholding, at a rate of 30% or such lower rate as may be provided for interest
by an applicable tax treaty. Accrued original issue discount recognized by the
owner on the sale or exchange of such a Senior Certificate also will be subject
to federal income tax at the same rate. Generally, such payments would not be
subject to withholding to the extent that a Senior Certificate evidences
ownership in Mortgage Loans issued after July 18, 1984, if (i) such Senior
Certificateholder does not actually or constructively own 10% or more of the
combined voting power of all classes of equity in the issuer (which for purposes
of this discussion may be defined as the Trust Fund (the "issuer")); (ii) such
Senior

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Certificateholder is not a controlled foreign corporation (within the meaning of
section 957 of the Code) related to the issuer; and (iii) such Senior
Certificateholder complies with certain identification requirements (including
delivery of a statement, signed by the Senior Certificateholder under penalties
of perjury, certifying that such Senior Certificateholder is not a U.S. Person
and providing the name and address of such Senior Certificateholder).

         For purposes of this discussion, a "U.S. PERSON" means a citizen or
resident of the United States, a corporation or a partnership (including an
entity treated as a corporation or partnership for U.S. federal income tax
purposes) organized in or under the laws of the United States, or any State
thereof or the District of Columbia (unless in the case of a partnership
Treasury regulations are adopted that provide otherwise) or an estate whose
income from sources outside the United States is includible in gross income for
federal income tax purposes regardless of its connection with the conduct of a
trade or business within the United States, or a trust if a court within the
United States is able to exercise primary supervision of the administration of
the trust and one or more U.S. Persons have the authority to control all
substantial decisions of the trust. In addition, certain trusts that would not
qualify as U.S. Persons under the foregoing definition but that are eligible to
and make an election to be treated as U.S.
Persons will also be treated as U.S. Persons.

INFORMATION REPORTING AND BACKUP WITHHOLDING

         The Master Servicer will furnish or make available, within a reasonable
time after the end of each calendar year, to each Certificateholder at any time
during such year, such information as may be deemed necessary or desirable to
assist Certificateholders in preparing their federal income tax returns, or to
enable holders to make such information available to owners or other financial
intermediaries of holders that hold such Certificates as nominees. If a holder,
owner or other recipient of a payment on behalf of an owner fails to supply a
certified taxpayer identification number or if the Secretary of the Treasury
determines that such person has not reported all interest and dividend income
required to be shown on its federal income tax return, 31% backup withholding
may be required with respect to any payments. Any amounts deducted and withheld
from a distribution to a recipient would be allowed as a credit against such
recipient's federal income tax liability.

NEW WITHHOLDING REGULATIONS

         On October 6, 1997, the Treasury Department issued new regulations (the
"NEW REGULATIONS") which make certain modifications to the backup withholding
and information reporting rules described above. The New Regulations attempt to
unify certification requirements and modify reliance standards. Generally, the
New Regulations replace the IRS Form W-8, Form 1001 and Form 4224 with various
revised Forms W-8, and provide that the old Form W-8, Form 1001 and Form 4224
will not be effective after December 31, 2000. The New Regulations will
generally be effective for payments made after December 31, 2000, subject to
certain transition rules. Prospective investors are urged to consult their own
tax advisors regarding the New Regulations.

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                               REMIC CERTIFICATES

         The Trust Fund relating to a Series of Certificates may elect to be
treated as a REMIC. Qualification as a REMIC requires ongoing compliance with
certain conditions. Although a REMIC is not generally subject to federal income
tax (see, however, "--Prohibited Transactions and Other Taxes") below, if a
Trust Fund with respect to which a REMIC election is made fails to comply with
one or more of the ongoing requirements of the Code for REMIC status during any
taxable year (including the implementation of restrictions on the purchase and
transfer of the residual interest in a REMIC as described under "--Residual
Certificates" below), the Code provides that a Trust Fund will not be treated as
a REMIC for such year and thereafter. In that event, such entity may be taxable
as a separate corporation, and the related REMIC Certificates may not be
accorded the status or given the tax treatment described below. While the Code
authorizes the Treasury to issue regulations providing relief in the event of an
inadvertent termination of status as a REMIC, no such regulations have been
issued. Moreover, any such relief may be accompanied by sanctions such as the
imposition of a corporate tax on all or a portion of the REMIC's income for the
period in which the requirements for such status are not satisfied. With respect
to each such Trust Fund that elects REMIC status, Brown & Wood LLP will deliver
its opinion generally to the effect that, under then existing law and assuming
compliance with all provisions of the related Agreement, such Trust Fund will
qualify as a REMIC and the related Certificates will be considered to be regular
interests ("REGULAR CERTIFICATES") or residual interests ("RESIDUAL
CERTIFICATES") in the REMIC. The related Prospectus Supplement for each Series
of Certificates will indicate whether the Trust Fund will make a REMIC election
and whether a class of Certificates will be treated as a regular or residual
interest in the REMIC.

         In general, with respect to each Series of Certificates for which a
REMIC election is made, (i) Certificates held by a thrift institution taxed as a
"domestic building and loan association" will constitute assets described in
section 7701(a)(19)(C) of the Code; (ii) Certificates held by a real estate
investment trust will constitute "real estate assets" within the meaning of
section 856(c)(4)(A) of the Code; and (iii) interest on Certificates held by a
real estate investment trust will be considered "interest on obligations secured
by mortgages on real property" within the meaning of section 856(c)(3)(B) of the
Code. If less than 95% of the REMIC's assets are assets qualifying under any of
the foregoing sections, the Certificates will be qualifying assets only to the
extent that the REMIC's assets are qualifying assets. In addition, payments on
Mortgage Loans held pending distribution on the REMIC Certificates will be
considered to be qualifying assets under the foregoing sections.

         In some instances, the Mortgage Loans may not be treated entirely as
assets described in the foregoing sections. See, in this regard, the discussion
of "buydown" Mortgage Loans contained in "--NON-REMIC CERTIFICATES--Single Class
of Senior Certificates" above. REMIC Certificates held by a real estate
investment trust will not constitute "Government Securities" within the meaning
of section 856(c)(5)(A) of the Code and REMIC Certificates held by a regulated
investment company will not constitute "Government Securities" within the
meaning of section 851(b)(4)(A)(ii) of the Code. REMIC Certificates held by
certain financial institutions will constitute "evidences of indebtedness"
within the meaning of section 582(c)(1) of the Code.

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         A "qualified mortgage" for REMIC purposes is any obligation (including
certificates of participation in such an obligation) that is principally secured
by an interest in real property and that is transferred to the REMIC within a
prescribed time period in exchange for regular or residual interests in the
REMIC. The REMIC Regulations provide that manufactured housing or mobile homes
(not including recreational vehicles, campers or similar vehicles) which are
"single family residences" under section 25(e)(10) of the Code will qualify as
real property without regard to state law classifications. Under section
25(e)(10), a single family residence includes any manufactured home which has a
minimum of 400 square feet of living space and a minimum width in excess of 102
inches and which is of a kind customarily used at a fixed location.

TIERED REMIC STRUCTURES

         For certain Series of Certificates, two separate elections may be made
to treat designated portions of the related Trust Fund as REMICs (respectively,
the "SUBSIDIARY REMIC" and the "MASTER REMIC") for federal income tax purposes.
Upon the issuance of any such Series of Certificates, Brown & Wood LLP, counsel
to the Depositor, will deliver its opinion generally to the effect that,
assuming compliance with all provisions of the related Agreement, the Master
REMIC as well as any Subsidiary REMIC will each qualify as a REMIC and the REMIC
Certificates issued by the Master REMIC and the Subsidiary REMIC, respectively,
will be considered to evidence ownership of Regular Certificates or Residual
Certificates in the related REMIC within the meaning of the REMIC provisions.

         Only REMIC Certificates issued by the Master REMIC will be offered
hereunder. The Subsidiary REMIC and the Master REMIC will be treated as one
REMIC solely for purposes of determining (a) whether the REMIC Certificates will
be (i) "real estate assets" within the meaning of section 856(c)(4)(A) of the
Code or (ii) "loans secured by an interest in real property" under section
7701(a)(19)(C) of the Code; and (b) whether the income on such Certificates is
interest described in section 856(c)(3)(B) of the Code.

REGULAR CERTIFICATES

         General. Except as otherwise stated in this discussion, Regular
Certificates will be treated for federal income tax purposes as debt instruments
issued by the REMIC and not as ownership interests in the REMIC or its assets.
Moreover, holders of Regular Certificates that otherwise report income under a
cash method of accounting will be required to report income with respect to
Regular Certificates under an accrual method.

         Original Issue Discount and Premium. The Regular Certificates may be
issued with "original issue discount" within the meaning of section 1273(a) of
the Code. Generally, such original issue discount, if any, will equal the
difference between the "stated redemption price at maturity" of a Regular
Certificate and its "issue price". Holders of any class of Certificates issued
with original issue discount will be required to include such original issue
discount in gross income for federal income tax purposes as it accrues, in
accordance with a constant interest method based on the compounding of interest,
in advance of receipt of the cash attributable to such income. The following
discussion is based in part on the OID Regulations and in part on the provisions
of the 1986 Act. Holders of Regular Certificates (the "REGULAR
CERTIFICATEHOLDERS")

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should be aware, however, that the OID Regulations do not adequately address
certain issues relevant to prepayable securities such as the Regular
Certificates.

         Rules governing original issue discount are set forth in sections 1271
through 1273 and section 1275 of the Code. These rules require that the amount
and rate of accrual of original issue discount be calculated based on a
Prepayment Assumption and prescribe a method for adjusting the amount and rate
of accrual of such discount where the actual prepayment rate differs from the
Prepayment Assumption. Under the Code, the Prepayment Assumption must be
determined in the manner prescribed by regulations which have not yet been
issued. The Legislative History provides, however, that Congress intended the
regulations to require that the Prepayment Assumption be the prepayment
assumption that is used in determining the initial offering price of such
Regular Certificates. The Prospectus Supplement for each Series of Regular
Certificates will specify the Prepayment Assumption to be used for the purpose
of determining the amount and rate of accrual of original issue discount. No
representation is made that the Regular Certificates will prepay at the
Prepayment Assumption or at any other rate.

         In general, each Regular Certificate will be treated as a single
installment obligation issued with an amount of original issue discount equal to
the excess of its "stated redemption price at maturity" over its "issue price".
The issue price of a Regular Certificate is the first price at which a
substantial amount of Regular Certificates of that class are sold to the public
(excluding bond houses, brokers, underwriters or wholesalers). If less than a
substantial amount of a particular class of Regular Certificates is sold for
cash on or prior to the date of their initial issuance (the "CLOSING DATE"), the
issue price for such class will be treated as the fair market value of such
class on the Closing Date. The issue price of a Regular Certificate 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
includes the original principal amount of the Regular Certificate, but generally
will not include distributions of interest if such distributions constitute
"qualified stated interest". Qualified stated interest generally means interest
payable at a single fixed rate or qualified variable rate (as described below)
provided that such interest payments are unconditionally payable at intervals of
one year or less during the entire term of the Regular Certificate. Interest is
payable at a single fixed rate only if the rate appropriately takes into account
the length of the interval between payments. Distributions of interest on
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 longer than the interval between subsequent
Distribution Dates, the greater of any original issue discount (disregarding the
rate in the first period) and any interest foregone during the first period is
treated as the amount by which the stated redemption price at maturity of the
Certificate exceeds its issue price for purposes of the de minimis rule
described below. The OID Regulations suggest that all interest on a long first
period Regular Certificate that is issued with non-de minimis original issue
discount, as determined under the foregoing rule, will be treated as original
issue discount. Where the interval between the issue date and the first
Distribution Date on a Regular Certificate is shorter than the interval between
subsequent Distribution Dates, interest due on the first Distribution Date in
excess of the amount that accrued during the first

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period would be added to the Certificates stated redemption price at maturity.
Regular Certificateholders should consult their own tax advisors to determine
the issue price and stated redemption price at maturity of a Regular
Certificate.

         Under the 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 original issue discount pro rata as principal
payments are received and such income will be capital gain if the Regular
Certificate is held as a capital asset. However, accrual method holders may
elect to accrue all de minimis original issue discount as well as market
discount under a constant interest method.

         The Prospectus Supplement with respect to a Trust Fund may provide for
certain Regular Certificates to be issued at prices significantly exceeding
their principal amounts or based on notional principal balances (the
"SUPER-PREMIUM CERTIFICATES"). The income tax treatment of such Regular
Certificates is not entirely certain. For information reporting purposes, the
Trust Fund intends to take the position that the stated redemption price at
maturity of such Regular Certificates is the sum of all payments to be made on
such Regular Certificates determined under the Prepayment Assumption, with the
result that such Regular Certificates would be issued with original issue
discount. The calculation of income in this manner could result in negative
original issue discount (which delays future accruals of original issue discount
rather than being immediately deductible) when prepayments on the Mortgage Loans
exceed those estimated under the Prepayment Assumption. The IRS might contend,
however, that the Contingent Payment Regulations should apply to such
Certificates.

         Although the Contingent Payment Regulations are not applicable to
instruments governed by section 1272(a)(6) of the Code, they represent the only
guidance regarding the current view of the IRS with respect to contingent
payment instruments. In the alternative, the IRS could assert that the stated
redemption price at maturity of such Regular Certificates should be limited to
their principal amount (subject to the discussion under "--Accrued Interest
Certificates" below), so that such Regular Certificates would be considered for
U.S. federal income tax purposes to be issued at a premium. If such position
were to prevail, the rules described under "--Premium" below would apply. It is
unclear when a loss may be claimed for any unrecovered basis for a Super-Premium
Certificate. It is possible that a holder of a Super-Premium Certificate may
only claim a loss when its remaining basis exceeds the maximum amount of future
payments,

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assuming no further prepayments, or when the final payment is received with
respect to such Super-Premium Certificate.

         Under the REMIC Regulations, if the issue price of a Regular
Certificate (other than Regular Certificate based on a notional amount) does not
exceed 125% of its actual principal amount, the interest rate is not considered
disproportionately high. Accordingly, such Regular Certificate generally should
not be treated as a Super-Premium Certificate and the rules described below
under "--Premium" below should apply. However, it is possible that holders of
Regular Certificates issued at a premium, even if the premium is less than 25%
of such Certificate's actual principal balance, will be required to amortize the
premium under an original issue discount method or contingent interest method
even though no election under section 171 of the Code is made to amortize such
premium.

         Generally, a Regular Certificateholder must include in gross income the
"daily portions," as determined below, of the original issue discount that
accrues on a Regular Certificate for each day the Regular Certificateholder
holds the Regular Certificate, including the purchase date but excluding the
disposition date. In the case of an original holder of a Regular Certificate, a
calculation will be made of the portion of the original issue discount that
accrues during each successive period ("an accrual period") that ends on the day
in the calendar year corresponding to a Distribution Date (or if Distribution
Dates are on the first day or first business day of the immediately preceding
month, interest may be treated as payable on the last day of the immediately
preceding month) and begins on the day after the end of the immediately
preceding accrual period (or on the issue date in the case of the first accrual
period). This will be done, in the case of each full accrual period, by (i)
adding (a) the present value at the end of the accrual period (determined by
using as a discount factor the original yield to maturity of the Regular
Certificates as calculated under the Prepayment Assumption) of all remaining
payments to be received on the Regular Certificate under the Prepayment
Assumption, and (b) any payments included in the stated redemption price at
maturity received during such accrual period, and (ii) subtracting from that
total the "adjusted issue price" of the Regular Certificates at the beginning of
such accrual period. The "adjusted issue price" of a Regular Certificate at the
beginning of the first accrual period is its issue price; the "adjusted issue
price" of a Regular Certificate at the beginning of a subsequent accrual period
is the "adjusted issue price" at the beginning of the immediately preceding
accrual period plus the amount of original issue discount allocable to that
accrual period and reduced by the accrual period. The original issue discount
accrued during an accrual period 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 accrual period. The calculation of original issue discount under the
method described above will cause the accrual of original issue discount to
either increase or decrease (but never below zero) in a given accrual period to
reflect the fact that prepayments are occurring faster or slower than under the
Prepayment Assumption. With respect to an initial accrual period shorter than a
full accrual period, the daily portions of original issue discount may be
determined according to an appropriate allocation under any reasonable method.

         A subsequent purchaser of a Regular Certificate issued with original
issue discount who purchases the Regular Certificate at a cost less than the
remaining stated redemption price at maturity will also be required to include
in gross income the sum of the daily portions of original issue

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discount on that Regular Certificate. In computing the daily portions of
original issue discount for such a purchaser (as well as an initial purchaser
that purchases at a price higher than the adjusted issue price but less than the
stated redemption price at maturity), however, the daily portion is reduced by
the amount that would be the daily portion for such day (computed in accordance
with the rules set forth above) multiplied by a fraction, the numerator of which
is the amount, if any, by which the price paid by such holder for that Regular
Certificate exceeds the following amount: (a) the sum of the issue price plus
the aggregate amount of original issue discount that would have been includible
in the gross income of an original Regular Certificateholder (who purchased the
Regular Certificate at its issue price), less (b) any prior payments included in
the stated redemption price at maturity, and the denominator of which is the sum
of the daily portions for that Regular Certificate for all days beginning on the
date after the purchase date and ending on the maturity date computed under the
Prepayment Assumption. A holder who pays an acquisition premium instead may
elect to accrue original issue discount by treating the purchase as original
issue.

         Variable Rate Regular Certificate. Regular Certificates may provide for
interest based on a variable rate. Interest based on a variable rate will
constitute qualified stated interest and not contingent interest if, generally,
(i) such interest is unconditionally payable at least annually, (ii) the issue
price of the debt instrument does not exceed the total noncontingent principal
payments and (iii) interest is based on a "qualified floating rate", an
"objective rate", a combination of a single fixed rate and one or more
"qualified floating rates", one "qualified inverse floating rate", or a
combination of "qualified floating rates" that do not operate in a manner that
significantly accelerates or defers interest payments on such Regular
Certificate.

         The amount of original issue discount with respect to a Regular
Certificate bearing a variable rate of interest will accrue in the manner
described under "--Original Issue Discount and Premium" above by assuming
generally that the index used for the variable rate will remain fixed throughout
the term of the Certificate. Appropriate adjustments are made for the actual
variable rate.

         Although unclear at present, the Depositor intends to treat interest on
a Regular Certificate that is a weighted average of the net interest rates on
Mortgage Loans as qualified stated interest. In such case, the weighted average
rate used to compute the initial pass-through rate on the Regular Certificates
will be deemed to be the index in effect through the life of the Regular
Certificates. It is possible, however, that the IRS may treat some or all of the
interest on Regular Certificates with a weighted average rate as taxable under
the rules relating to obligations providing for contingent payments. Such
treatment may effect the timing of income accruals on such Regular Certificates.

         Market Discount. A purchaser of a Regular Certificate may be subject to
the market discount provisions of sections 1276 through 1278 of the Code. Under
these provisions and the OID Regulations, "market discount" equals the excess,
if any, of (i) the Regular Certificate's stated principal amount or, in the case
of a Regular Certificate with original issue discount, the adjusted issue price
(determined for this purpose as if the purchaser had purchased such Regular
Certificate from an original holder) over (ii) the price for such Regular
Certificate paid by the purchaser. A Certificateholder that purchases a Regular
Certificate at a market discount will recognize income upon receipt of each
distribution representing stated redemption price. In particular, under section
1276 of the Code such a holder generally will be required to allocate

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each such principal distribution first to accrued market discount not previously
included in income and to recognize ordinary income to that extent. A
Certificateholder may elect to include market discount in income currently as it
accrues rather than including it on a deferred basis in accordance with the
foregoing. If made, such election will apply to all market discount bonds
acquired by such Certificateholder on or after the first day of the first
taxable year to which such election applies. In addition, the OID Regulations
permit a Certificateholder using the accrual method of accounting to elect to
accrue all interest, discount (including de minimis market or original issue
discount) and premium in income as interest, based on a constant yield method.
If such an election is made with respect to a Regular Certificate with market
discount, the Certificateholder will be deemed to have made an election to
include in income currently market discount with respect to all other debt
instruments having market discount that such Certificateholder acquires during
the year of the election or thereafter. Similarly, a Certificateholder that
makes this election for a Certificate that is acquired at a premium will be
deemed to have made an election to amortize bond premium with respect to all
debt instruments having amortizable bond premium that such Certificateholder
owns or acquires. See "--Original Issues Discount and Premium" above. The
election to accrue interest, discount and premium on a constant yield method
with respect to a Certificate is irrevocable.

         Market discount with respect to a Regular Certificate will be
considered to be zero if the amount allocable to the Regular Certificate is less
than 0.25% of the Regular Certificate's stated redemption price at maturity
multiplied by the Regular Certificate's weighted average maturity remaining
after the date of purchase. If market discount on a Regular Certificate is
considered to be zero under this rule, the actual amount of market discount must
be allocated to the remaining principal payments on the Regular Certificate and
gain equal to such allocated amount will be recognized when the corresponding
principal payment is made. Treasury regulations implementing the market discount
rules have not yet been issued; therefore, investors should consult their own
tax advisors regarding the application of these rules and the advisability of
making any of the elections allowed under Code sections 1276 through 1278 of the
Code.

         The Code provides that any principal payment (whether a scheduled
payment or a prepayment) or any gain on disposition of a market discount bond
acquired by the taxpayer after October 22, 1986, shall be treated as ordinary
income to the extent that it does not exceed the accrued market discount at the
time of such payment. The amount of accrued market discount for purposes of
determining the tax treatment of subsequent principal payments or dispositions
of the market discount bond is to be reduced by the amount so treated as
ordinary income.

         The Code also grants authority to the Treasury to issue regulations
providing for the computation of accrued market discount on debt instruments,
the principal of which is payable in more than one installment. Until such time
as regulations are issued by the Treasury, rules described in the Legislative
History will apply. Under those rules, the holder of a market discount bond may
elect to accrue market discount either on the basis of a constant interest rate
or according to one of the following methods. For Regular Certificates issued
with original issue discount, the amount of market discount that accrues during
a period is equal to the product of (i) the total remaining market discount,
multiplied by (ii) a fraction, the numerator of which is the original issue
discount accruing during the period and the denominator of which is the total
remaining original issue discount at the beginning of the period. For Regular
Certificates issued without original issue discount, the amount of market
discount that accrues during a period is

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equal to the product of (a) the total remaining market discount and (b) a
fraction, the numerator of which is the amount of stated interest paid during
the accrual period and the denominator of which is the total amount of stated
interest remaining to be paid at the beginning of the period. For purposes of
calculating market discount under any of the above methods in the case of
instruments (such as the Regular Certificates) which provide for payments which
may be accelerated by reason of prepayments of other obligations securing such
instruments, the same Prepayment Assumption applicable to calculating the
accrual of original issue discount will apply.

         A holder of a Regular Certificate that acquires such Regular
Certificate at a market discount also may be required to defer, until the
maturity date of such Regular Certificate or its earlier disposition in a
taxable transaction, the deduction of a portion of the amount of interest that
the holder paid or accrued during the taxable year on indebtedness incurred or
maintained to purchase or carry the Regular Certificate in excess of the
aggregate amount of interest (including original issue discount) includible in
such holder's gross income for the taxable year with respect to such Regular
Certificate. The amount of such net interest expense deferred in a taxable year
may not exceed the amount of market discount accrued on the Regular Certificate
for the days during the taxable year on which the holder held the Regular
Certificate and, in general, would be deductible when such market discount is
includible in income. The amount of any remaining deferred deduction is to be
taken into account in the taxable year in which the Regular Certificate matures
or is disposed of in a taxable transaction. In the case of a disposition in
which gain or loss is not recognized in whole or in part, any remaining deferred
deduction will be allowed to the extent of gain recognized on the disposition.
This deferral rule does not apply if the Regular Certificateholder elects to
include such market discount in income currently as it accrues on all market
discount obligations acquired by such Regular Certificateholder in that taxable
year or thereafter.

         Premium. A purchaser of a Regular Certificate that purchases the
Regular Certificate at a cost (not including accrued qualified stated interest)
greater than its remaining stated redemption price at maturity will be
considered to have purchased the Regular Certificate at a premium and may elect
to amortize such premium under a constant yield method. A Certificateholder that
makes this election for a Certificate that is acquired at a premium will be
deemed to have made an election to amortize bond premium with respect to all
debt instruments having amortizable bond premium that such Certificateholder
acquires during the year of the election or thereafter. It is not clear whether
the Prepayment Assumption would be taken into account in determining the life of
the Regular Certificate for this purpose. However, the Legislative History
states that the same rules that apply to accrual of market discount (which rules
require use of a Prepayment Assumption in accruing market discount with respect
to Regular Certificates without regard to whether such Certificates have
original issue discount) will also apply in amortizing bond premium under
section 171 of the Code. The Code provides that amortizable bond premium will be
allocated among the interest payments on such Regular Certificates and will be
applied as an offset against such interest payment.

         On June 27, 1996, the IRS published in the Federal Register proposed
regulations on the amortization of bond premium. The foregoing discussion is
based in part on such proposed regulations. On December 30, 1997, the IRS issued
the Amortizable Bond Premium Regulations which generally are effective for bonds
acquired on or after March 2, 1998 or, for holders

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making an election to amortize bond premium as described above, the taxable year
that includes March 2, 1998 or any subsequent taxable year, will apply to bonds
held on or after the first day of taxable year in which such election is made.
Neither the proposed regulations nor the final regulations, by their express
terms, apply to prepayable securities described in section 1272(a)(6) of the
Code such as the Regular Certificates. Holders of Regular Certificates should
consult their tax advisors regarding the possibility of making an election to
amortize any such bond premium.

         Deferred Interest. Certain classes of Regular Certificates will provide
for the accrual of interest when one or more ARM Loans are adding interest to
their principal balance by reason of negative amortization ("DEFERRED
INTEREST"). Any Deferred Interest that accrues with respect to a class of
Regular Certificates will constitute income to the holders of such Certificates
prior to the time distributions of cash with respect to such Deferred Interest
are made. It is unclear, under the OID Regulations, whether any of the interest
on such Certificates will constitute qualified stated interest or whether all or
a portion of the interest payable on the Certificates must be included in the
stated redemption price at maturity of the Certificates and accounted for as
original issue discount (which could accelerate such inclusion). Interest on
Regular Certificates must in any event be accounted for under an accrual method
by the holders of such Certificates. Applying the latter analysis therefore may
result only in a slight difference in the timing of the inclusion in income of
interest on such Regular Certificates.

         Effects of Defaults and Delinquencies. Certain Series of Certificates
may contain one or more classes of Subordinate Certificates and, in the event
there are defaults or delinquencies on the Mortgage Loans, amounts that would
otherwise be distributed on the Subordinate Certificates may instead be
distributed on the Senior Certificates. Holders of Subordinate Certificates
nevertheless will be required to report income with respect to such Certificates
under an accrual method without giving effect to delays and reductions in
distributions on such Subordinate Certificates attributable to defaults and
delinquencies on the Mortgage Loans, except to the extent that it can be
established that such amounts are uncollectible. As a result, the amount of
income reported by a holder of a Subordinate Certificate in any period could
significantly exceed the amount of cash distributed to such holder in that
period. The holder will eventually be allowed a loss (or will be allowed to
report a lesser amount of income) to the extent that the aggregate amount of
distributions on the Subordinate Certificate is reduced as a result of defaults
and delinquencies on the Mortgage Loans. However, the timing and character of
such losses or reductions in income are uncertain. Accordingly, holders of
Subordinate Certificates should consult their own tax advisors on this point.

         Sale, Exchange or Redemption. If a Regular Certificate is sold,
exchanged, redeemed or retired, the seller will recognize gain or loss equal to
the difference between the amount realized on the sale, exchange, redemption, or
retirement and the seller's adjusted basis in the Regular Certificate. Such
adjusted basis generally will equal the cost of the Regular Certificate to the
seller, increased by any original issue discount and market discount included in
the seller's gross income with respect to the Regular Certificate, and reduced
(but not below zero) by payments included in the stated redemption price at
maturity previously received by the seller and by any amortized premium.
Similarly, a holder who receives a payment which is part of the stated
redemption price at maturity of a Regular Certificate will recognize gain equal
to the excess, if any, of the amount of the payment over the holder's adjusted
basis in the Regular Certificate. A holder of a Regular Certificate that
receives a final payment which is less than the holder's

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adjusted basis in the Regular Certificate will generally recognize a loss.
Except as provided in the following paragraph and as provided under "--Market
Discount" above, any such gain or loss will be capital gain or loss, provided
that the Regular Certificate is held as a "capital asset" (generally, property
held for investment) within the meaning of section 1221 of the Code.

         Non-corporate taxpayers are subject to reduced maximum rates on
long-term capital gains and are generally subject to tax at ordinary income
rates on short-term capital gains. The deductibility of capital losses is
subject to certain limitations. Prospective investors should consult their own
tax advisors concerning these tax law provisions.

         Gain from the sale or other disposition of a Regular Certificate that
might otherwise be capital 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 such holder's income with respect to the Regular
Certificate had income accrued thereon at a rate equal to 110% of the AFR as
defined in section 1274(d) of the Code determined as of the date of purchase of
such Regular Certificate, over (ii) the amount actually includible in such
holder's income.

         Gain from the sale or other disposition of a Regular Certificate that
might otherwise be capital gain will be treated as ordinary income, (i) if the
Regular Certificate is held as part of a "conversion transaction" as defined in
section 1258(c) of the Code, up to the amount of interest that would have
accrued at the applicable federal rate under section 1274(d) of the Code in
effect at the time the taxpayer entered into the transaction minus any amount
previously treated as ordinary income with respect to any prior disposition of
property that was held as part of such transaction, or (ii) if the Regular
Certificate is held as part of a straddle. Potential investors should consult
their tax advisors with respect to the tax consequences of ownership and
disposition of an investment in Regular Certificates in their particular
circumstances.

         Regular Certificates will be "evidences of indebtedness" within the
meaning of section 582(c)(1) of the Code so that gain or loss recognized from
the sale of a Regular Certificate by a bank or a thrift institution to which
such section applies will be ordinary income or loss.

         The Regular Certificate information reports will include a statement of
the adjusted issue price of the Regular Certificate at the beginning of each
accrual period. In addition, the reports will include information necessary to
compute the accrual of any market discount that may arise upon secondary trading
of Regular Certificates. Because exact computation of the accrual of market
discount on a constant yield method would require information relating to the
holder's purchase price which the REMIC may not have, it appears that the
information reports will only require information pertaining to the appropriate
proportionate method of accruing market discount.

         Accrued Interest Certificates. Certain of the Regular Certificates
("PAYMENT LAG CERTIFICATES") may provide for payments of interest based on a
period that corresponds to the interval between Distribution Dates but that ends
prior to each such Distribution Date. The period between the Closing Date for
Payment Lag Certificates and their first Distribution Date may or may not exceed
such interval. Purchasers of Payment Lag Certificates for which the period
between the Closing Date and the first Distribution Date does not exceed such
interval could pay upon purchase of the Regular Certificates accrued interest in
excess of the accrued

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interest that would be paid if the interest paid on the Distribution Date were
interest accrued from Distribution Date to Distribution Date. If a portion of
the initial purchase price of a Regular Certificate is allocable to interest
that has accrued prior to the issue date ("pre-issuance accrued interest"), and
the Regular Certificate provides for a payment of stated interest on the first
payment date (and the first payment date, is within one year of the issue date)
that equals or exceeds the amount of the pre-issuance accrued interest, then the
Regular Certificate's issue price may be computed by subtracting from the issue
price the amount of pre-issuance accrued interest, rather than as an amount
payable on the Regular Certificate. However, it is unclear under this method how
the Proposed OID Regulations treat interest on Payment Lag Certificates as
described above. Therefore, in the case of a Payment Lag Certificate, the REMIC
intends to include accrued interest in the issue price and report interest
payments made on the first Distribution Date as interest only to the extent such
payments represent interest for the number of days that the Certificateholder
has held such Payment Lag Certificate during the first accrual period.

         Investors should consult their own tax advisors concerning the
treatment for federal income tax purposes of Payment Lag Certificates.

         Non-Interest Expenses of the REMIC. Under temporary Treasury
regulations, if the REMIC is considered to be a "single-class REMIC", a portion
of the REMIC's servicing, administrative and other noninterest expenses will be
allocated as a separate item to those Regular Certificateholders that are
"pass-through interest holders". Generally, a single-class REMIC is defined as
(i) a REMIC that would be treated as a fixed investment trust under Treasury
regulations but for its qualification as a REMIC or (ii) a REMIC that is
substantially similar to an investment trust but is structured with the
principal purpose of avoiding this allocation requirement imposed by the
temporary regulations. Such a pass-through interest holder would be required to
add its allocable share, if any, of such expenses to its gross income and to
treat the same amount as an item of investment expense. An individual generally
would be allowed a deduction for such expenses only as a miscellaneous itemized
deduction subject to the limitations under section 67 of the Code. That section
allows such deductions only to the extent that in the aggregate such expenses
exceed 2% of the holder's adjusted gross income. In addition, section 68 of the
Code provides that the amount of itemized deductions otherwise allowable for an
individual whose adjusted gross income exceeds a certain amount (the "APPLICABLE
AMOUNT") will be reduced by the lesser of (i) 3% of the excess of the
individual's adjusted gross income over the Applicable Amount or (ii) 80% of the
amount of itemized deductions otherwise allowable for the taxable year. The
amount of additional taxable income recognized by Residual Certificateholders
who are subject to the limitations of either section 67 or section 68 may be
substantial. The REMIC is required to report to each pass-through interest
holder and to the IRS such holder's allocable share, if any, of the REMIC's
non-interest expenses. The term "pass-through interest holder" generally refers
to individuals, entities taxed as individuals and certain pass-through entities
including regulated investment companies, but does not include real estate
investment trusts. Certificateholders that are "pass-through interest holders"
should consult their own tax advisors about the impact of these rules on an
investment in the Regular Certificates.

         Treatment of Realized Losses. Although not entirely clear, it appears
that holders of REMIC Regular Certificates that are corporations should in
general be allowed to deduct as an

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ordinary loss any loss sustained during the taxable year on account of any such
Certificates becoming wholly or partially worthless and that, in general,
holders of Certificates that are not corporations should be allowed to deduct as
a short-term capital loss any loss sustained during the taxable year on account
of any such Certificates becoming wholly worthless. Although the matter is not
entirely clear, non-corporate holders of Certificates may be allowed a bad debt
deduction at such time that the principal balance of any such Certificate is
reduced to reflect realized losses resulting from any liquidated Mortgage Loans.
The IRS, however, could take the position that non-corporate holders will be
allowed a bad debt deduction to reflect realized losses only after all Mortgage
Loans remaining in the related Trust Fund have been liquidated or the
Certificates of the related Series have been otherwise retired. Prospective
investors in and holders of the Certificates are urged to consult their own tax
advisors regarding the appropriate timing, amount and character of any loss
sustained with respect to such Certificates, including any loss resulting from
the failure to recover previously accrued interest or discount income. Special
loss rules are applicable to banks and thrift institutions, including rules
regarding reserves for bad debts. Such taxpayers are advised to consult their
tax advisors regarding the treatment of losses on Certificates.

         Non-U.S. Persons. Generally, payments of interest (including any
payment with respect to accrued original issue discount) on the Regular
Certificates to a Regular Certificateholder who is a non-U.S. Person not engaged
in a trade or business within the United States will not be subject to federal
withholding tax if (i) such Regular Certificateholder does not actually or
constructively own 10% or more of the combined voting power of all classes of
equity in the issuer (which for purposes of this discussion may be defined as
the Trust Fund or the beneficial owners of the related Residual Certificates
(the "issuer")); (ii) such Regular Certificateholder is not a controlled foreign
corporation (within the meaning of section 957 of the Code) related to the
issuer; and (iii) such Regular Certificateholder complies with certain
identification requirements (including delivery of a statement, signed by the
Regular Certificateholder under penalties of perjury, certifying that such
Regular Certificateholder is a foreign person and providing the name and address
of such Regular Certificateholder). If a Regular Certificateholder is not exempt
from withholding, distributions of interest, including distributions in respect
of accrued original issue discount, such holder may be subject to a 30%
withholding tax, subject to reduction under any applicable tax treaty.

         Further, it appears that a REMIC Regular Certificate would not be
included in the estate of a nonresident alien individual and would not be
subject to United States estate taxes. However, Certificateholders who are
non-resident alien individuals should consult their tax advisors concerning this
question.

         Regular Certificateholders who are non-U.S. Persons and persons related
to such holders should not acquire any Residual Certificates, and Residual
Certificateholders and persons related to Residual Certificateholders should not
acquire any Regular Certificates without consulting their tax advisors as to the
possible adverse tax consequences of doing so.

         Information Reporting and Backup Withholding. The Master Servicer will
furnish or make available, within a reasonable time after the end of each
calendar year, to each Regular Certificateholder at any time during such year,
such information as may be deemed necessary or desirable to assist Regular
Certificateholders in preparing their federal income tax returns or to

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enable holders to make such information available to owners or other financial
intermediaries of holders that hold such Regular Certificates. If a holder,
owner or other recipient of a payment on behalf of an owner fails to supply a
certified taxpayer identification number or if the Secretary of the Treasury
determines that such person has not reported all interest and dividend income
required to be shown on its federal income tax return, 31 % backup withholding
may be required with respect to any payments. Any amounts deducted and withheld
from a distribution to a recipient would be allowed as a credit against such
recipient's federal income tax liability.

         New Withholding Regulations. On October 6, 1997, the Treasury
Department issued the New Regulations which make certain modifications to the
backup withholding and information reporting rules described above. The New
Regulations attempt to unify certification requirements and modify reliance
standards. The New Regulations will generally be effective for payments made
after December 31, 2000, subject to certain transition rules. Prospective
investors are urged to consult their own tax advisors regarding the New
Regulations.

RESIDUAL CERTIFICATES

         Allocation of the Income of the REMIC to the Residual Certificates. The
REMIC will not be subject to federal income tax except with respect to income
from prohibited transactions and certain other transactions. See "--Prohibited
Transactions and Other Taxes" below. Instead, each original holder of a Residual
Certificate will report on its federal income tax return, as ordinary income,
its share of the taxable income of the REMIC for each day during the taxable
year on which such holder owns any Residual Certificates. The taxable income of
the REMIC for each day will be determined by allocating the taxable income of
the REMIC for each calendar quarter ratably to each day in the quarter. Such
holder's share of the taxable income of the REMIC for each day will be based on
the portion of the outstanding Residual Certificates that such holder owns on
that day. The taxable income of the REMIC will be determined under an accrual
method and will be taxable to the Residual Certificateholders without regard to
the timing or amounts of cash distributions by the REMIC. Ordinary income
derived from Residual Certificates will be "portfolio income" for purposes of
the taxation of taxpayers subject to the limitations on the deductibility of
"passive losses". As residual interests, the Residual Certificates will be
subject to tax rules, described below, that differ from those that would apply
if the Residual Certificates were treated for federal income tax purposes as
direct ownership interests in the Certificates or as debt instruments issued by
the REMIC.

         A Residual Certificateholder may be required to include taxable income
from the Residual Certificate in excess of the cash distributed. For example, a
structure where principal distributions are made serially on regular interests
(i.e., a fast-pay, slow-pay structure) may generate such a mismatching of income
and cash distributions (i.e., "phantom income"). This mismatching may be caused
by the use of certain required tax accounting methods by the REMIC, variations
in the prepayment rate of the underlying Mortgage Loans and certain other
factors. Depending upon the structure of a particular transaction, the
aforementioned factors may significantly reduce the after-tax yield of a
Residual Certificate to a Residual Certificateholder. Investors should consult
their own tax advisors concerning the federal income tax treatment of a Residual
Certificate and the impact of such tax treatment on the after-tax yield of a
Residual Certificate.

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         A subsequent Residual Certificateholder also will report on its federal
income tax return amounts representing a daily share of the taxable income of
the REMIC for each day that such Residual Certificateholder owns such Residual
Certificate. Those daily amounts generally would equal the amounts that would
have been reported for the same days by an original Residual Certificateholder,
as described above. The Legislative History indicates that certain adjustments
may be appropriate to reduce (or increase) the income of a subsequent holder of
a Residual Certificate that purchased such Residual Certificate at a price
greater than (or less than) the adjusted basis such Residual Certificate would
have in the hands of an original Residual Certificateholder. See "--Sale or
Exchange of Residual Certificates" below. It is not clear, however, whether such
adjustments will in fact be permitted or required and, if so, how they would be
made. The REMIC Regulations do not provide for any such adjustments.

         Taxable Income of the REMIC Attributable to Residual Interests. The
taxable income of the REMIC will reflect a netting of (i) the income from the
Mortgage Loans and the REMIC's other assets and (ii) the deductions allowed to
the REMIC for interest and original issue discount on the Regular Certificates
and, except as described under "--Non-Interest Expenses of the REMIC" below,
other expenses.

         For purposes of determining its taxable income, the REMIC will have an
initial aggregate tax basis in its assets equal to the sum of the issue prices
of the Regular and Residual Certificates (or, if a class of Certificates is not
sold initially, their fair market values). Such aggregate basis will be
allocated among the Mortgage Loans and other assets of the REMIC in proportion
to their respective fair market values. A Mortgage Loan will be deemed to have
been acquired with discount or premium to the extent that the REMIC's basis
therein is less or greater, respectively than its principal balance. Any such
discount (whether market discount or original issue discount) will be includible
in the income of the REMIC as it accrues, in advance of receipt of the cash
attributable to such income, under a method similar to the method described
above for accruing original issue discount on the Regular Certificates. The
REMIC expects to elect under section 171 of the Code to amortize any premium on
the Mortgage Loans. Premium on any Mortgage Loan to which such election applies
would be amortized under a constant yield method. It is likely that the yield of
a Mortgage Loan would be calculated for this purpose taking account of the
Prepayment Assumption. However, such an election would not apply to any Mortgage
Loan originated on or before September 27, 1985. Instead, premium on such a
Mortgage Loan would be allocated among the principal payments thereon and would
be deductible by the REMIC as those payments become due.

         The REMIC will be allowed a deduction for interest and original issue
discount on the Regular Certificates. The amount and method of accrual of
original issue discount will be calculated for this purpose in the same manner
as described above with respect to Regular Certificates except that the 0.25%
per annum de minimis rule and adjustments for subsequent holders described
therein will not apply.

         A Residual Certificateholder will not be permitted to amortize the cost
of the Residual Certificate as an offset to its share of the REMIC's taxable
income. However, such taxable income will not include cash received by the REMIC
that represents a recovery of the REMIC's basis in its assets, and, as described
above, the issue price of the Residual Certificates will be added to the issue
price of the Regular Certificates in determining the REMIC's initial basis in
its

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<PAGE>

assets. See "--Sale or Exchange of Residual Certificates" below. For a
discussion of possible adjustments to income of a subsequent holder of a
Residual Certificate to reflect any difference between the actual cost of such
Residual Certificate to such holder and the adjusted basis such Residual
Certificate would have in the hands of an original Residual Certificateholder,
see "--Allocation of the Income of the REMIC to the Residual Certificates"
above.

         Additional Taxable Income of Residual Interests. Any payment received
by a holder of a Residual Certificate in connection with the acquisition of such
Residual Certificate will be taken into account in determining the income of
such holder for federal income tax purposes. Although it appears likely that any
such payment would be includible in income immediately upon its receipt or
accrual as ordinary income, the IRS might assert that such payment should be
included in income over time according to an amortization schedule or according
to some other method. Because of the uncertainty concerning the treatment of
such payments, holders of Residual Certificates should consult their tax
advisors concerning the treatment of such payments for income tax purposes.

         Net Losses of the REMIC. The REMIC will have a net loss for any
calendar quarter in which its deductions exceed its gross income. Such net loss
would be allocated among the Residual Certificateholders in the same manner as
the REMIC's taxable income. The net loss allocable to any Residual Certificate
will not be deductible by the holder to the extent that such net loss exceeds
such holder's adjusted basis in such Residual Certificate. Any net loss that is
not currently deductible by reason of this limitation may only be used by such
Residual Certificateholder to offset its share of the REMIC's taxable income in
future periods (but not otherwise). The ability of Residual Certificateholders
that are individuals or closely held corporations to deduct net losses may be
subject to additional limitations under the Code.

         Mark-to-Market Regulations. Prospective purchasers of a Residual
Certificate should be aware that the IRS finalized regulations (the
"MARK-TO-MARKET REGULATIONS") which provide that a Residual Certificate acquired
after January 3, 1995 cannot be marked to market. The Mark-to-Market Regulations
replaced the temporary regulations which allowed a Residual Certificate to be
marked to market provided that it was not a "negative value" residual interest.

         Non-Interest Expenses of the REMIC. The REMIC's taxable income will be
determined in the same manner as if the REMIC were an individual. However, all
or a portion of the REMIC's servicing, administrative and other non-interest
expenses will be allocated as a separate item to Residual Certificateholders
that are "pass-through interest holders". Such a holder would be required to add
an amount equal to its allocable share, if any, of such expenses to its gross
income and to treat the same amount as an item of investment expense.
Individuals are generally allowed a deduction for such an investment expense
only as a miscellaneous itemized deduction subject to the limitations under
section 67 of the Code which allows such deduction only to the extent that, in
the aggregate, all such expenses exceed 2% of an individual's adjusted gross
income. In addition, the personal exemptions and itemized deductions of
individuals with adjusted gross incomes above particular levels are subject to
certain limitations which reduce or eliminate the benefit of such items. The
REMIC is required to report to each pass-through interest holder and to the IRS
such holder's allocable share, if any, of the REMIC's non-interest expenses. The
term "pass-through interest holder" generally refers to individuals, entities
taxed as individuals and certain pass-through entities, but does not include

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<PAGE>

real estate investment trusts. Residual Certificateholders that are
"pass-through interest holders" should consult their own tax advisors about the
impact of these rules on an investment in the Residual Certificates. See
"--Regular Certificates--Non-Interest Expenses of the REMIC" above.

         Excess Inclusions. A portion of the income on a Residual Certificate
(referred to in the Code as an "excess inclusion") for any calendar quarter
will, with an exception discussed below for certain thrift institutions, be
subject to federal income tax in all events. Thus, for example, an excess
inclusion (i) may not, except as described below, be offset by any unrelated
losses, deductions or loss carryovers of a Residual Certificateholder; (ii) will
be treated as "unrelated business taxable income" within the meaning of section
512 of the Code if the Residual Certificateholder is a pension fund or any other
organization that is subject to tax only on its unrelated business taxable
income (see "Tax-Exempt Investors" below); and (iii) is not eligible for any
reduction in the rate of withholding tax in the case of a Residual
Certificateholder that is a foreign investor. See "--Non-U.S. Persons" below.
The exception for thrift institutions is available only to the institution
holding the Residual Certificate and not to any affiliate of the institution,
unless the affiliate is a subsidiary all the stock of which, and substantially
all the indebtedness of which, is held by the institution, and which is
organized and operated exclusively in connection with the organization and
operation of one or more REMICs.

         Except as discussed in the following paragraph, with respect to any
Residual Certificateholder, the excess inclusions for any calendar quarter is
the excess, if any, of (i) the income of such Residual Certificateholder for
that calendar quarter from its Residual Certificate over (ii) the sum of the
"daily accruals" (as defined below) for all days during the calendar quarter on
which the Residual Certificateholder holds such Residual Certificate. For this
purpose, the daily accruals with respect to a Residual Certificate are
determined by allocating to each day in the calendar quarter its ratable portion
of the product of the "adjusted issue price" (as defined below) of the Residual
Certificate at the beginning of the calendar quarter and 120% of the "Federal
long-term rate" in effect at the time the Residual Certificate is issued. For
this purpose, the "adjusted issue price" of a Residual Certificate at the
beginning of any calendar quarter equals the issue price of the Residual
Certificate, increased by the amount of daily accruals for all prior quarters,
and decreased (but not below zero) by the aggregate amount of payments made on
the Residual Certificate before the beginning of such quarter. The "Federal
long-term rate" is an average of current yields on Treasury securities with a
remaining term of greater than nine years, computed and published monthly by the
IRS.

         In the case of any Residual Certificates held by a real estate
investment trust, the aggregate excess inclusions with respect to such Residual
Certificates, reduced (but not below zero) by the real estate investment trust
taxable income (within the meaning of section 857(b)(2) of the Code, excluding
any net capital gain), will be allocated among the shareholders of such trust in
proportion to the dividends received by such shareholders from such trust, and
any amount so allocated will be treated as an excess inclusion with respect to a
Residual Certificate as if held directly by such shareholder. Regulated
investment companies, common trust funds and certain cooperatives are subject to
similar rules.

         The Small Business Job Protection Act of 1996 has eliminated the
special rule permitting section 593 institutions ("thrift institutions") to use
net operating losses and other allowable

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<PAGE>

deductions to offset their excess inclusion income from REMIC residual
certificates that have "significant value" within the meaning of the REMIC
Regulations, effective for taxable years beginning after December 31, 1995
except with respect to residual certificates continuously held by a thrift
institution since November 1, 1995.

         In addition, the Small Business Job Protection Act of 1996 provides
three rules for determining the effect of excess inclusions on the alternative
minimum taxable income of a Residual Certificateholder. First, the alternative
minimum taxable income for such Residual Certificateholder is determined without
regard to the special rule that taxable income cannot be less than excess
inclusion. Second, the amount of any alternative minimum tax net operating loss
deductions must be computed without regard to any excess inclusions. Third, the
Residual Certificateholder's alternative minimum taxable income for a tax year
cannot be less than excess inclusions for the year. The effect of this last
statutory amendment is to prevent the use of nonrefundable tax credits to reduce
a taxpayer's income tax below its tentative minimum tax computed only on excess
inclusions. These rules are effective for tax years beginning after December 31,
1996, unless a residual holder elects to have such rules apply only to tax years
beginning after August 20, 1996.

         Payments. Any distribution made on a Residual Certificate to a Residual
Certificateholder will be treated as a non-taxable return of capital to the
extent it does not exceed the Residual Certificateholder's adjusted basis in
such Residual Certificate. To the extent a distribution exceeds such adjusted
basis, it will be treated as gain from the sale of the Residual Certificate.

         Pass-Through of Miscellaneous Itemized Deductions . As a general rule,
all of the fees and expenses of a REMIC will be taken into account by holders of
the Residual Interests. In the case of a "single class REMIC", however, the
expenses and a matching amount of additional income will be allocated, under
temporary Treasury regulations, among the holders of the Regular Certificates
and the holders of the Residual Certificates on a daily basis in proportion to
the relative amounts of income accruing to each Certificateholder on that day.
In the case of individuals (or trusts, estates or other persons who compute
their income in the same manner as individuals) who own an interest in a Regular
Certificate directly or through a pass-through entity which is required to pass
miscellaneous itemized deductions through to its owners or beneficiaries (e.g.,
a partnership, an S corporation or a grantor trust), such expenses will be
deductible only to the extent that such expenses, plus other "miscellaneous
itemized deductions" of the individual, exceed 2% of such individual's adjusted
gross income. The reduction or disallowance of this deduction coupled with the
allocation of additional income may have a significant impact on the yield of
the Regular Certificate to such a holder. Further, holders (other than
corporations) subject to the alternative minimum tax may not deduct
miscellaneous itemized deductions in determining such holders' alternative
minimum taxable income. In general terms, a single class REMIC is one that
either (i) would qualify, under existing Treasury regulations, as a grantor
trust if it were not a REMIC (treating all interests as ownership interests,
even if they would be classified as debt for federal income tax purposes) or
(ii) is similar to such a trust and is structured with the principal purpose of
avoiding the single class REMIC rules. Unless otherwise stated in the applicable
Prospectus Supplement, the expenses of the REMIC will be allocated to holders of
the related Residual Certificates in their entirety and not to holders of the
related Regular Certificates.

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         Sale or Exchange of Residual Certificates. If a Residual Certificate is
sold or exchanged, the seller will generally recognize gain or loss equal to the
difference between the amount realized on the sale or exchange and its adjusted
basis in the Residual Certificate (except that the recognition of loss may be
limited under the "wash sale" rules described below). A holder's adjusted basis
in a Residual Certificate generally equals the cost of such Residual Certificate
to such Residual Certificateholder, increased by the taxable income of the REMIC
that was included in the income of such Residual Certificateholder with respect
to such Residual Certificate, and decreased (but not below zero) by the net
losses that have been allowed as deductions to such Residual Certificateholder
with respect to such Residual Certificate and by the distributions received
thereon by such Residual Certificateholder. In general, any such gain or loss
will be capital gain or loss provided the Residual Certificate is held as a
capital asset. However, Residual Certificates will be "evidences of
indebtedness" within the meaning of section 582(c)(1) of the Code, so that gain
or loss recognized from sale of a Residual Certificate by a bank or thrift
institution to which such section applies would be ordinary income or loss.

         Except as provided in Treasury regulations yet to be issued, if the
seller of a Residual Certificate reacquires such Residual Certificate or
acquires any other Residual Certificate, any residual interest in another REMIC
or similar interest in a "taxable mortgage pool" (as defined in section 7701(i))
of the Code during the period beginning six months before, and ending six months
after, the date of such sale, such sale will be subject to the "wash sale" rules
of section 1091 of the Code. In that event, any loss realized by the Residual
Certificateholder on the sale will not be deductible, but instead will increase
such Residual Certificateholder's adjusted basis in the newly acquired asset.

         Non-corporate taxpayers are subject to reduced maximum rates on
long-term capital gains and are generally subject to tax at ordinary income
rates on short-term capital gains. The deductibility of capital losses is
subject to certain limitations. Prospective investors should consult their own
tax advisors concerning these tax law provisions.

PROHIBITED TRANSACTIONS AND OTHER TAXES

         The REMIC is subject to a tax at a rate equal to 100% of the net income
derived from "prohibited transactions". In general, a prohibited transaction
means the disposition of a Mortgage Loan other than pursuant to certain
specified exceptions, the receipt of investment income from a source other than
a Mortgage Loan or certain other permitted investments or the disposition of an
asset representing a temporary investment of payments on the Mortgage Loans
pending payment on the Residual Certificates or Regular Certificates. In
addition, the assumption of a Mortgage Loan by a subsequent purchaser could
cause the REMIC to recognize gain which would also be subject to the 100% tax on
prohibited transactions.

         In addition, certain contributions to a REMIC made after the Closing
Date could result in the imposition of a tax on the REMIC equal to 100% of the
value of the contributed property.

         It is not anticipated that the REMIC will engage in any prohibited
transactions or receive any contributions subject to the contributions tax.
However, in the event that the REMIC is subject to any such tax, unless
otherwise disclosed in the related Prospectus Supplement, such

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tax would be borne first by the Residual Certificateholders, to the extent of
amounts distributable to them, and then by the Master Servicer.

LIQUIDATION AND TERMINATION

         If the REMIC adopts a plan of complete liquidation, within the meaning
of section 860F(a)(4)(A)(i) of the Code, which may be accomplished by
designating in the REMIC's final tax return a date 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 will not be subject to any prohibited
transaction tax, provided that the REMIC credits or distributes in liquidation
all of the sale proceeds plus its cash (other than the amounts retained to meet
claims) to holders of Regular and Residual Certificates within the 90-day
period.

         The REMIC will terminate shortly following the retirement of the
Regular Certificates. If a Residual Certificateholder's adjusted basis in the
Residual Certificate exceeds the amount of cash distributed to such Residual
Certificateholder in final liquidation of its interest, it would appear that the
Residual Certificateholder would be entitled to a loss equal to the amount of
such excess. It is unclear whether such a loss, if allowed, will be a capital
loss or an ordinary loss.

ADMINISTRATIVE MATTERS

         Solely for the purpose of the administrative provisions of the Code,
the REMIC will be treated as a partnership and the Residual Certificateholders
will be treated as the partners. Under Temporary Regulations, however, if there
is at no time during the taxable year more than one Residual Certificateholder,
a REMIC shall not be subject to the rules of subchapter C of chapter 63 of the
Code relating to the treatment of partnership items for a taxable year.
Accordingly, the REMIC will file an annual tax return on Form 1066, U.S. Real
Estate Mortgage Investment Conduit Income Tax Return. In addition, certain other
information will be furnished quarterly to each Residual Certificateholder who
held such Residual Certificate on any day in the previous calendar quarter.

         Each Residual Certificateholder is required to treat items on its
return consistently with their treatment on the REMIC's return, unless the
Residual Certificateholder either files a statement identifying the
inconsistency or establishes that the inconsistency resulted from incorrect
information received from the REMIC. The IRS may assert a deficiency resulting
from a failure to comply with the consistency requirement without instituting an
administrative proceeding at the REMIC level. The REMIC does not intend to
register as a tax shelter pursuant to section 6111 of the Code because it is not
anticipated that the REMIC will have a net loss for any of the first five
taxable years of its existence. Any person that holds a Residual Certificate as
a nominee for another person may be required to furnish the REMIC, in a manner
to be provided in Treasury regulations, with the name and address of such person
and other information.

TAX-EXEMPT INVESTORS

         Any Residual Certificateholder that is a pension fund or other entity
that is subject to federal income taxation only on its "unrelated business
taxable income" within the meaning of section 512 of the Code will be subject to
such tax on that portion of the distributions received on

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a Residual Certificate that is considered an "excess inclusion." See "--Residual
Certificates--Excess Inclusions" above.

NON-U.S. PERSONS

         Amounts paid to Residual Certificateholders who are not U.S. Persons
(see "--Regular Certificates--Non-U.S. Persons" above) are treated as interest
for purposes of the 30% (or lower treaty rate) United States withholding tax.
Amounts distributed to Residual Certificateholders should qualify as "portfolio
interest", subject to the conditions described in "--Regular Certificates"
above, but only to the extent that the Mortgage Loans were originated after July
18, 1984. Furthermore, the rate of withholding on any income on a Residual
Certificate that is excess inclusion income will not be subject to reduction
under any applicable tax treaties. See "--Residual Certificates--Excess
Inclusions" above. If the portfolio interest exemption is unavailable, such
amount will be subject to United States withholding tax when paid or otherwise
distributed (or when the Residual Certificate is disposed of) under rules
similar to those for withholding upon disposition of debt instruments that have
original issue discount. The Code, however, grants the Treasury authority to
issue regulations requiring that those amounts be taken into account earlier
than otherwise provided where necessary to prevent avoidance of tax (e.g., where
the Residual Certificates do not have significant value). See "--Residual
Certificates--Excess Inclusions" above. If the amounts paid to Residual
Certificateholders that are not U.S. Persons are effectively connected with
their conduct of a trade or business within the United States, the 30% (or lower
treaty rate) withholding tax will not apply. Instead, the amounts paid to such
non-U.S. Person will be subject to U. S. federal income taxation at regular
graduated rates. For special restrictions on the transfer of Residual
Certificates, see "--Tax-Related Restrictions on Transfers of Residual
Certificates" below.

         Regular Certificateholders and persons related to such holders should
not acquire any Residual Certificates, and Residual Certificateholders and
persons related to Residual Certificateholders should not acquire any Regular
Certificates without consulting their tax advisors as to the possible adverse
tax consequences of such acquisition.

TAX-RELATED RESTRICTIONS ON TRANSFERS OF RESIDUAL CERTIFICATES

         Disqualified Organizations. An entity may not qualify as a REMIC unless
there are reasonable arrangements designed to ensure that residual interests in
such entity are not held by "disqualified organizations" (as defined below).
Further, a tax is imposed on the transfer of a residual interest in a REMIC to a
"disqualified organization". The amount of the tax equals the product of (A) an
amount (as determined under the REMIC Regulations) equal to the present value of
the total anticipated "excess inclusions" with respect to such interest for
periods after the transfer and (B) the highest marginal federal income tax rate
applicable to corporations. The tax is imposed on the transferor unless the
transfer is through an agent (including a broker or other middlemen) for a
disqualified organization, in which event the tax is imposed on the agent. The
person otherwise liable for the tax shall be relieved of liability for the tax
if the transferee furnished to such person an affidavit that the transferee is
not a disqualified organization and, at the time of the transfer, such person
does not have actual knowledge that the affidavit is false. A "disqualified
organization" means (A) the United States, any state, possession, or political
subdivision thereof, any foreign government, any international organization, or
any agency or

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instrumentality of any of the foregoing (provided that such term does not
include an instrumentality if all its activities are subject to tax and, except
for Freddie Mac, a majority of its board of directors is not selected by any
such governmental agency), (B) any organization (other than certain farmers'
cooperatives) generally exempt from federal income taxes unless such
organization is subject to the tax on "unrelated business taxable income" and
(C) a rural electric or telephone cooperative.

         A tax is imposed on a "pass-through entity" (as defined below) holding
a residual interest in a REMIC if at any time during the taxable year of the
pass-through entity a disqualified organization is the record holder of an
interest in such entity. The amount of the tax is equal to the product of (A)
the amount of excess inclusions for the taxable year allocable to the interest
held by the disqualified organization and (B) the highest marginal federal
income tax rate applicable to corporations. The pass-through entity otherwise
liable for the tax, for any period during which the disqualified organization is
the record holder of an interest in such entity, will be relieved of liability
for the tax if such record holder furnishes to such entity an affidavit that
such record holder is not a disqualified organization and, for such period, the
pass-through entity does not have actual knowledge that the affidavit is false.
For this purpose, a "pass-through entity" means (i) a regulated investment
company, real estate investment trust or common trust fund, (ii) a partnership,
trust or estate and (iii) certain cooperatives. Except as may be provided in
Treasury regulations not yet issued, 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 tax on pass-through entities
is generally effective for periods after March 31, 1988, except that in the case
of regulated investment companies, real estate investment trusts, common trust
funds and publicly-traded partnerships the tax shall apply only to taxable years
of such entities beginning after December 31, 1988. Under proposed legislation,
large partnerships (generally with 250 or more partners) will be taxable on
excess inclusion income as if all partners were disqualified organizations.

         In order to comply with these rules, the Agreement will provide that no
record or beneficial ownership interest in a Residual Certificate may be,
directly or indirectly, purchased, transferred or sold without the express
written consent of the Master Servicer. The Master Servicer will grant such
consent to a proposed transfer only if it receives the following: (i) an
affidavit from the proposed transferee to the effect that it is not a
disqualified organization and is not acquiring the Residual Certificate as a
nominee or agent for a disqualified organization and (ii) a covenant by the
proposed transferee to the effect that the proposed transferee agrees to be
bound by and to abide by the transfer restrictions applicable to the Residual
Certificate.

         Non-economic Residual Certificates. The REMIC Regulations disregard,
for federal income tax purposes, any transfer of a Non-economic Residual
Certificate to a "U.S. Person", as defined in the following section of this
discussion, unless no significant purpose of the transfer is to enable the
transferor to impede the assessment or collection of tax. A "NON-ECONOMIC
RESIDUAL CERTIFICATE" is any Residual Certificate (including a Residual
Certificate with a positive value at issuance) unless at the time of transfer,
taking into account the Prepayment Assumption and any required or permitted
clean up calls or required liquidation provided for in the REMIC's
organizational documents, (i) the present value of the expected future
distributions on the Residual Certificate 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

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<PAGE>

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. 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 transferor is presumed
not to have such knowledge if (i) the transferor conducted a reasonable
investigation of the transferee and (ii) the transferee acknowledges to the
transferor that the residual interest may generate tax liabilities in excess of
the cash flow and the transferee represents that it intends to pay such taxes
associated with the residual interest as they become due.

         The IRS has issued proposed Treasury regulations that would add to the
conditions necessary to ensure that a transfer of a noneconomic residual
interest would be respected. The proposed additional condition provides that the
transfer of a noneconomic residual interest will not qualify under this safe
harbor unless the present value of the anticipated tax liabilities associated
with holding the residual interest does not exceed the present value of the sum
of

     o    any consideration given to the transferee to acquire the interest (the
          inducement payment),

     o    future distributions on the interest, and

     o    any anticipated tax savings associated with holding the interest as
          the REMIC generates losses.

          For purposes of this calculation, the present value is calculated
using a discount rate equal to the lesser of the applicable federal rate and the
transferee's cost of borrowing. The proposed effective date for the changes is
February 4, 2000.

         If a transfer of a Non-economic Residual Certificate is disregarded,
the transferor would continue to be treated as the owner of the Residual
Certificate and would continue to be subject to tax on its allocable portion of
the net income of the REMIC.

         Foreign Investors. The REMIC Regulations provide that the transfer of a
Residual Certificate that has a "tax avoidance potential" to a "foreign person"
will be disregarded for federal income tax purposes. This rule appears to apply
to a transferee who is not a "U.S. Person", as defined below, unless such
transferee's income in respect of the Residual Certificate is effectively
connected with the conduct of a United States trade or business. A Residual
Certificate is deemed to have a tax avoidance potential unless, at the time of
transfer, the transferor reasonably expects that the REMIC will distribute to
the transferee amounts that will equal at least 30% of each excess inclusion and
that such amounts will be distributed at or after the time the excess inclusion
accrues and not later than the end of the calendar year following the year of
accrual. If the non-U.S. Person transfers the Residual Certificate to a U.S.
Person, the transfer will be disregarded and the foreign transferor will
continue to be treated as the owner, if the transfer has the effect of allowing
the transferor to avoid tax on accrued excess inclusions. The provisions in the
REMIC Regulations regarding transfers to foreign persons of Residual
Certificates that have tax avoidance potential are effective for all transfers
after June 30, 1992.

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<PAGE>

The Agreement will provide that no record or beneficial ownership interest in a
Residual Certificate may be, directly or indirectly, transferred to a non-U.S.
Person unless such person provides the Trustee with a duly completed IRS Form
4224 or IRS Form W-8ECI and the Trustee consents to such transfer in writing.
IRS Form 4224 will not be valid after December 31, 2000.

         Any attempted transfer or pledge in violation of the transfer
restrictions shall be absolutely null and void and shall vest no rights in any
purported transferee. Investors in Residual Certificates are advised to consult
their own tax advisors with respect to transfers of the Residual Certificates
and, in addition, passthrough entities are advised to consult their own tax
advisors with respect to any tax which may be imposed on a pass-through entity.

                            STATE TAX CONSIDERATIONS

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

                              ERISA CONSIDERATIONS

         The following describes certain considerations under the Employment
Retirement Income Security Act of 1974, as amended ("ERISA"), and the Code,
which apply only to Certificates of a Series that are not divided into
subclasses. If Certificates are divided into subclasses the related Prospectus
Supplement will contain information concerning considerations relating to ERISA
and the Code that are applicable to such Certificates.

         ERISA and the Code impose requirements on certain employee benefit
plans (and on certain other retirement plans and arrangements, including
individual retirement accounts and annuities, Keogh plans and collective
investment funds and separate accounts in which such plans, accounts or
arrangements are invested) (collectively, "PLANS") and on persons who are
fiduciaries with respect to such Plans. Generally, ERISA applies to investments
made by Plans. Among other things, ERISA requires that the assets of Plans be
held in trust and that the trustee, or other duly authorized fiduciary, have
exclusive authority and discretion to manage and control the assets of such
Plans. ERISA also imposes certain duties on persons who are fiduciaries of
Plans. Under ERISA, any person who exercises any authority or control respecting
the management or disposition of the assets of a Plan is considered to be a
fiduciary of such Plan (subject to certain exceptions not here relevant).
Certain employee benefit plans, such as governmental plans (as defined in
section 3(32) of ERISA) and, if no election has been made under section 410(d)
of the Code, church plans (as defined in section 3(33) of ERISA), are not
subject to ERISA requirements. Accordingly, assets of such plans may be invested
in Certificates without regard to the ERISA considerations described above and
below, subject to the provisions of applicable state law. Any such plan which is
qualified and exempt from taxation under

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<PAGE>

sections 401(a) and 501(a) of the Code, however, is subject to the prohibited
transaction rules set forth in section 503 of the Code.

         On November 13, 1986, the United States Department of Labor (the "DOL")
issued final regulations concerning the definition of what constitutes the
assets of a Plan. (Labor Reg. Section 2510.3-101) Under this regulation, the
underlying assets and properties of corporations, partnerships and certain other
entities in which a Plan makes an "equity" investment could be deemed for
purposes of ERISA to be assets of the investing Plan in certain circumstances.
However, the regulation provides that, generally, the assets of a corporation or
partnership in which a Plan invests will not be deemed for purposes of ERISA to
be assets of such Plan if the equity interest acquired by the investing Plan is
a publicly-offered security. A publicly-offered security, as defined in Labor
Reg. Section 2510.3-101, is a security that is widely held, freely transferable
and registered under the Exchange Act.

         In addition to the imposition of general fiduciary standards of
investment prudence and diversification, ERISA and the Code prohibit a broad
range of transactions involving Plan assets and persons ("PARTIES IN INTEREST")
having certain specified relationships to a Plan and impose additional
prohibitions where Parties in Interest are fiduciaries with respect to such
Plan. Because the Mortgage Loans may be deemed Plan assets of each Plan that
purchases Certificates, an investment in the Certificates by a Plan might be, or
give rise to, a transaction prohibited under sections 406 and 407 of ERISA and
subject to an excise tax under section 4975 of the Code unless a statutory,
regulatory or administrative exemption applies.

         In Prohibited Transaction Exemption 83-1 ("PTE 83-1"), the DOL exempted
from ERISA's prohibited transaction rules certain transactions relating to the
operation of residential mortgage pool investment trusts and the purchase, sale
and holding of "mortgage pool pass-through certificates" in the initial issuance
of such certificates. PTE 83-1 permits, subject to certain conditions,
transactions which might otherwise be prohibited between Plans and Parties in
Interest with respect to those Plans related to the origination, maintenance and
termination of mortgage pools consisting of mortgage loans secured by first or
second mortgages or deeds of trust on single-family residential property, and
the acquisition and holding of certain mortgage pool pass-through certificates
representing an interest in such mortgage pools by Plans. If the general
conditions (discussed below) of PTE 83-1 are satisfied, investments by a Plan in
Certificates that represent interests in a Mortgage Pool consisting of Single
Family Loans ("SINGLE FAMILY CERTIFICATES") will be exempt from the prohibitions
of sections 406(a) and 407 of ERISA (relating generally to transactions with
Parties in Interest who are not fiduciaries) if the Plan purchases the Single
Family Certificates at no more than fair market value and will be exempt from
the prohibitions of sections 406(b)(1) and (2) of ERISA (relating generally to
transactions with fiduciaries) if, in addition, the purchase is approved by an
independent fiduciary, no sales commission is paid to the pool sponsor, the Plan
does not purchase more than 25% of all Single Family Certificates, and at least
50% of all Single Family Certificates are purchased by persons independent of
the pool sponsor or pool trustee. PTE 83-1 does not provide an exemption for
transactions involving Subordinate Certificates or for Certificates representing
an interest in a Mortgage Pool containing Multifamily Loans or Contracts or
Cooperative Loans. Accordingly, unless the related Prospectus Supplement
indicates that an exemption other than PTE 83-1 is available, no transfer of a
Subordinate Certificate or a Certificate which is not a Single Family
Certificate may be made to a Plan.

                                      115
<PAGE>

         The discussion in this and the next succeeding paragraph applies only
to Single Family Certificates. The Depositor believes that, for purposes of PTE
83-1, the term "mortgage pass-through certificate" would include: (i)
Certificates issued in a Series consisting of only a single class of
Certificates; and (ii) Senior Certificates issued in a Series in which there is
only one class of Senior Certificates; provided that the Certificates in the
case of clause (i), or the Senior Certificates in the case of clause (ii),
evidence the beneficial ownership of both a specified percentage (greater than
0%) of future interest payments and a specified percentage (greater than 0%) of
future principal payments on the Mortgage Loans. It is not clear whether a class
of Certificates that evidences the beneficial ownership of a specified
percentage of interest payments only or principal payments only, or a notional
amount of either principal or interest payments would be a "mortgage
pass-through certificate" for purposes of PTE 83-1.

         PTE 83-1 sets forth three general conditions which must be satisfied
for any transaction to be eligible for exemption: (i) the maintenance of a
system of insurance or other protection for the pooled mortgage loans and
property securing such loans, and for indemnifying Certificateholders against
reductions in pass-through payments due to property damage or defaults in loan
payments in an amount not less than the greater of one percent of the aggregate
principal balance of all covered pooled mortgage loans or the principal balance
of the largest covered pooled mortgage loan; (ii) the existence of a pool
trustee who is not an affiliate of the pool sponsor; and (iii) a limitation on
the amount of the payment retained by the pool sponsor, together with other
funds inuring to its benefit, to not more than adequate consideration for
selling the mortgage loans plus reasonable compensation for services provided by
the pool sponsor to the Mortgage Pool. The Depositor believes that the first
general condition referred to above will be satisfied with respect to the
Certificates in a Series issued without a subordination feature, or the Senior
Certificates only in a Series issued with a subordination feature, provided that
the subordination and Reserve Fund, subordination by shifting of interests, the
pool insurance or other form of credit enhancement described herein (such
subordination, pool insurance or other form of credit enhancement being the
system of insurance or other protection referred to above) with respect to a
Series of Certificates is maintained in an amount not less than the greater of
one percent of the aggregate principal balance of the Mortgage Loans or the
principal balance of the largest Mortgage Loan. See "Description of the
Certificates". In the absence of a ruling that the system of insurance or other
protection with respect to a Series of Certificates satisfies the first general
condition referred to above, there can be no assurance that these features will
be so viewed by the DOL. The Trustee will not be affiliated with the Depositor.

         Each Plan fiduciary who is responsible for making the investment
decisions whether to purchase or commit to purchase and to hold Single Family
Certificates must make its own determination as to whether the first and third
general conditions, and the specific conditions described briefly in the
preceding paragraph, of PTE 83-1 have been satisfied, or as to the availability
of any other prohibited transaction exemptions. Each Plan fiduciary should also
determine whether, under the general fiduciary standards of investment prudence
and diversification, an investment in the Certificates is appropriate for the
Plan, taking into account the overall investment policy of the Plan and the
composition of the Plan's investment portfolio.

         On September 6, 1990 the DOL issued to Greenwich Capital Markets, Inc.
an individual exemption (Prohibited Transaction Exemption 90-59, as amended;
Exemption Application No.

                                      116
<PAGE>

D-8374, 55 Fed. Reg. 36724 (1990)) (the "UNDERWRITER EXEMPTION") from certain of
the prohibited transaction rules of ERISA and the related excise tax provisions
of Section 4975 of the Code with respect to the initial purchase, the holdings
and the subsequent resale by Plans of "securities" that are obligations of an
issuer containing certain receivables, loans and other obligations, with respect
to which Greenwich Capital Markets, Inc. is the underwriter, manager or
co-manager of an underwriting syndicate. The Underwriter Exemption provides
relief which is generally similar to that provided by PTE 83-1, but is broader
in several respects.

         The Underwriter Exemption contains a number of requirements. The
Underwriter Exemption does not apply to any investment pool unless, among other
things, (i) the investment pool consists only of assets of a type which have
been included in other investment pools, (ii) securities evidencing interests in
such other investment pools have been purchased by investors other than Plans
for at least one year prior to the Plan's acquisition of securities pursuant to
the Underwriter Exemption, and (iii) securities in such other investment pools
have been rated in one of the three (or four, if the trust holds certain types
of assets) highest generic rating categories by one of the credit rating
agencies noted below. Generally, the Underwriter Exemption holds that the
acquisition of the securities by a Plan must be on terms (including the price
for the securities) that are at least as favorable to the Plan as they would be
in an arm's length transaction with an unrelated party. The Underwriter
Exemption requires that the rights and interests evidenced by the securities not
be "subordinated" to the rights and interests evidenced by other securities of
the same trust, except when the trust holds certain types of assets. The
Underwriter Exemption requires that securities acquired by a Plan have received
a rating at the time of their acquisition that is in one of the three (or four,
if the trust holds certain types of assets) highest generic rating categories of
Standard & Poor's Ratings Services, Moody's Investors Service, Inc. or Fitch,
Inc. The Underwriter Exemption specifies that the pool trustee must not be an
affiliate of any other member of the Restricted Group (as defined below). The
Underwriter Exemption stipulates that any Plan investing in the securities must
be an "accredited investor" as defined in Rule 501(a)(1) of Regulation D of the
Securities and Exchange Commission under the Securities Act of 1933, as amended.
Finally, the Underwriter Exemption requires that the documents establishing the
issuer and governing the transaction contain certain provisions to protect the
assets of the issuer, and that the issuer receive certain legal opinions.

         Moreover, the Underwriter Exemption generally provides relief from
certain self-dealing and conflict of interest prohibited transactions that may
occur when the Plan fiduciary causes a Plan to acquire securities in a trust
holding receivables as to which the fiduciary (or its affiliate) is an obligor,
provided that, among other requirements: (i) in the case of an acquisition in
connection with the initial issuance of securities, at least fifty percent of
each class of securities in which Plans have invested is acquired by persons
independent of the Restricted Group; (ii) the fiduciary (or its affiliate) is an
obligor with respect to five percent or less of the fair market value of the
obligations contained in the trust; (iii) the Plans' investment in securities of
any class does not exceed twenty-five percent of all of the securities 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 any Plan with
respect to which the person is a fiduciary is invested in securities
representing an interest in one or more trusts containing assets sold or
serviced by the same entity.

                                      117
<PAGE>

         The Underwriter Exemption generally does not apply to Plans sponsored
by the seller, the underwriter, the trustee, the master servicer, any servicer
or any insurer with respect to the mortgage loans, any obligor with respect to
mortgage loans included in the Trust Fund constituting more than five percent of
the aggregate principal balance of the assets in the trust fund, or any
affiliate of those parties (the "RESTRICTED GROUP").

         The Underwriter Exemption generally allows mortgage loans or other
secured receivables supporting payments to securitiesholders, and having a value
equal to no more than twenty-five percent of the total principal amount of the
securities being offered by the trust, to be transferred to the trust within a
90-day or three-month period following the closing date, instead of requiring
that all obligations be either identified or transferred on or before the
closing date. This relief is available when certain conditions are met.

         The prospectus supplement for each series of certificates will indicate
the classes of certificates, if any, offered thereby as to which it is expected
that the Underwriter Exemption will apply.

         Any Plan fiduciary which proposes to cause a Plan to purchase
Certificates should consult with their counsel concerning the impact of ERISA
and the Code, the applicability of PTE 83-1 and the Underwriter Exemption, and
the potential consequences in their specific circumstances, prior to making such
investment. Moreover, each Plan fiduciary should determine whether under the
general fiduciary standards of investment procedure and diversification an
investment in the Certificates is appropriate for the Plan, taking into account
the overall investment policy of the Plan and the composition of the Plan's
investment portfolio.

                                LEGAL INVESTMENT

         The Prospectus Supplement for each series of Certificates will specify
which, if any, of the Classes of Certificates offered thereby constitute
"mortgage related securities" for purposes of the Secondary Mortgage Market
Enhancement Act of 1984, as amended ("SMMEA"). Classes of Certificates that
qualify as "mortgage related securities" will be legal investments for persons,
trusts, corporations, partnerships, associations, business trusts and business
entities (including depository institutions, life insurance companies and
pension funds) created pursuant to or existing under the laws of the United
States or of any state (including the District of Columbia and Puerto Rico)
whose authorized investments are subject to state regulation to the same extent
as, under applicable law, obligations issued by or guaranteed as to principal
and interest by the United States or any such entities. Under SMMEA, if a state
enacts legislation prior to October 4, 1991 specifically limiting the legal
investment authority of any such entities with respect to "mortgage related
securities," Certificates will constitute legal investments for entities subject
to such legislation only to the extent provided therein. Approximately
twenty-one states adopted such legislation prior to the October 4, 1991
deadline. SMMEA provides, however, that in no event will the enactment of any
such legislation affect the validity of any contractual commitment to purchase,
hold or invest in Certificates, or require the sale or other disposition of
Certificates, so long as such contractual commitment was made or such
Certificates were acquired prior to the enactment of such legislation.

                                      118
<PAGE>

         SMMEA also amended the legal investment authority of
federally-chartered depository institutions as follows: federal savings and loan
associations and federal savings banks may invest in, sell or otherwise deal in
Certificates without limitations as to the percentage of their assets
represented thereby, federal credit unions may invest in mortgage related
securities, and national banks may purchase Certificates for their own account
without regard to the limitations generally applicable to investment securities
set forth in 12 U.S.C. 24 (Seventh), subject in each case to such regulations as
the applicable federal authority may prescribe. In this connection, federal
credit unions should review the National Credit Union Administration ("NCUA")
Letter to Credit Unions No. 96, as modified by Letter to Credit Unions No. 108,
which includes guidelines to assist federal credit unions in making investment
decisions for mortgage related securities, and the NCUA's regulation "Investment
and Deposit Activities" (12 C.F.R. Part 703), which sets forth certain
restrictions on investment by federal credit unions in mortgage related
securities.

         All depository institutions considering an investment in the
Certificates (whether or not the Class of Certificates under consideration for
purchase constitutes a "mortgage related security") should review the Federal
Financial Institutions Examination Council's Supervisory Policy Statement on the
Securities Activities (to the extent adopted by their respective regulators)
(the "POLICY STATEMENT"), setting forth, in relevant part, certain securities
trading and sales practices deemed unsuitable for an institution's investment
portfolio, and guidelines for (and restrictions on) investing in mortgage
derivative products, including "mortgage related securities", which are
"high-risk mortgage securities" as defined in the Policy Statement. According to
the Policy Statement, such "high-risk mortgage securities" include securities
such as Certificates not entitled to distributions allocated to principal or
interest, or Subordinated Certificates. Under the Policy Statement, it is the
responsibility of each depository institution to determine, prior to purchase
(and at stated intervals thereafter), whether a particular mortgage derivative
product is a "high-risk mortgage security", and whether the purchase (or
retention) of such a product would be consistent with the Policy Statement.

         The foregoing does not take into consideration the applicability of
statutes, rules, regulations, orders, guidelines or agreements generally
governing investments made by a particular investor, including, but not limited
to, "prudent investor" provisions, percentage-of-assets limits and provisions
which may restrict or prohibit investment in securities which are not "interest
bearing" or "income paying."

         There may be other restrictions on the ability of certain investors,
including depository institutions, either to purchase Certificates or to
purchase Certificates representing more than a specified percentage of the
investor's assets. Investors should consult their own legal advisors in
determining whether and to what extent the Certificates constitute legal
investments for such investors.

                             METHOD OF DISTRIBUTION

         The Certificates offered hereby and by the Prospectus Supplement will
be offered in Series. The distribution of the Certificates may be effected from
time to time in one or more transactions, including negotiated transactions, at
a fixed public offering price or at varying prices to be determined at the time
of sale or at the time of commitment therefor. If so specified

                                      119
<PAGE>

in the related Prospectus Supplement and subject to the receipt of any required
approvals from the Board of Governors of the Federal Reserve System, the
Certificates will be distributed in a firm commitment underwriting, subject to
the terms and conditions of the underwriting agreement, by Greenwich Capital
Markets, Inc. ("GCM") acting as underwriter with other underwriters, if any,
named therein. In such event, the related Prospectus Supplement may also specify
that the underwriters will not be obligated to pay for any Certificates agreed
to be purchased by purchasers pursuant to purchase agreements acceptable to the
Depositor. In connection with the sale of the Certificates, underwriters may
receive compensation from the Depositor or from purchasers of the Certificates
in the form of discounts, concessions or commissions. The related Prospectus
Supplement will describe any such compensation paid by the Depositor.

         Alternatively, the related Prospectus Supplement may specify that the
Certificates will be distributed by GCM acting as agent or in some cases as
principal with respect to Certificates that it has previously purchased or
agreed to purchase. If GCM acts as agent in the sale of Certificates, GCM will
receive a selling commission with respect to each Series of Certificates,
depending on market conditions, expressed as a percentage of the aggregate
principal balance of the related Mortgage Assets as of the Cut-off Date. The
exact percentage for each Series of Certificates will be disclosed in the
related Prospectus Supplement. To the extent that GCM elects to purchase
Certificates as principal, GCM may realize losses or profits based upon the
difference between its purchase price and the sales price. The Prospectus
Supplement with respect to any Series offered other than through underwriters
will contain information regarding the nature of such offering and any
agreements to be entered into between the Depositor and purchasers of
Certificates of such Series.

         The Depositor will indemnify GCM and any underwriters against certain
civil liabilities, including liabilities under the Securities Act of 1933, as
amended, or will contribute to payments GCM and any underwriters may be required
to make in respect thereof.

         In the ordinary course of business, GCM and the Depositor may engage in
various securities and financing transactions, including repurchase agreements
to provide interim financing of the Depositor's mortgage loans pending the sale
of such mortgage loans or interests therein, including the Certificates.

         The Depositor anticipates that the Certificates will be sold primarily
to institutional investors. 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 Securities Act of 1933, as amended, in
connection with reoffers and sales of Certificates by them. Holders of
Certificates should consult with their legal advisors in this regard prior to
any such reoffer or sale.

                                  LEGAL MATTERS

         The legality of the Certificates of each Series, including certain
material federal income tax consequences with respect thereto, will be passed
upon for the Depositor by Brown & Wood LLP, One World Trade Center, New York,
New York 10048.

                                      120
<PAGE>

                              FINANCIAL INFORMATION

         A new Trust Fund will be formed with respect to each Series of
Certificates and no Trust Fund will engage in any business activities or have
any assets or obligations prior to the issuance of the related Series of
Certificates. Accordingly, no financial statements with respect to any Trust
Fund will be included in this Prospectus or in the related Prospectus
Supplement.

                              AVAILABLE INFORMATION

         The Depositor has filed with the SEC (the ("SEC") a Registration
Statement under the Securities Act of 1933, as amended, with respect to the
Certificates. This Prospectus, which forms a part of the Registration Statement,
and the Prospectus Supplement relating to each Series of Certificates contain
summaries of the material terms of the documents referred to herein and therein,
but do not contain all of the information set forth in the Registration
Statement pursuant to the Rules and Regulations of the SEC. For further
information, reference is made to such Registration Statement and the exhibits
thereto. Such Registration Statement and exhibits can be inspected and copied at
prescribed rates at the public reference facilities maintained by the SEC at its
Public Reference Section, 450 Fifth Street, N. W., Washington, D.C. 20549, and
at its Regional Offices located as follows: Midwest Regional Office, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and New York Regional
Office, 7 World Trade Center, New York, New York 10048. In addition, the SEC
maintains a website at http://www.sec.gov containing reports, proxy and
information statements and other information regarding registrants, including
the Depositor, that file electronically with the SEC.

                                     RATINGS

         It is a condition to the issuance of the Certificates of each Series
offered hereby and by the Prospectus Supplement that they shall have been rated
in one of the four highest rating categories by the nationally recognized
statistical rating agency or agencies specified in the related Prospectus
Supplement.

         Ratings on mortgage pass-through certificates address the likelihood of
receipt by certificateholders of all distributions on the underlying mortgage
loans. These ratings address the structural, legal and issuer-related aspects
associated with such certificates, the nature of the underlying mortgage loans
and the credit quality of the credit enhancer or guarantor, if any. Ratings on
mortgage pass-through certificates do not represent any assessment of the
likelihood of principal prepayments by mortgagors or of the degree by which such
prepayments might differ from those originally anticipated. As a result,
certificateholders might suffer a lower than anticipated yield, and, in
addition, holders of stripped pass-through certificates in certain cases might
fail to recoup their underlying investments.

         A security rating is not a recommendation to buy, sell or hold
securities and may be subject to revision or withdrawal at any time by the
assigning rating organization. Each security rating should be evaluated
independently of any other security rating.


                                      121
<PAGE>


                             INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>

                                                                                                               PAGE
                                                                                                               ----
<S>                                                                                                           <C>
1986 Act.........................................................................................................86
Accrual Certificates.............................................................................................37
AFR..............................................................................................................89
Agency Securities................................................................................................14
Agreement........................................................................................................17
Amortizable Bond Premium Regulations.............................................................................82
Applicable Amount...............................................................................................102
APR..............................................................................................................19
ARM Loans........................................................................................................86
Asset Conservation Act...........................................................................................75
Available Funds..................................................................................................35
Bankruptcy Bond..................................................................................................47
Bankruptcy Code..................................................................................................52
BIF..............................................................................................................54
CERCLA...........................................................................................................74
Certificate Account..............................................................................................55
Certificate Principal Balance....................................................................................36
Certificate Register.............................................................................................34
Certificates.....................................................................................................14
Charter Act......................................................................................................24
Closing Date.....................................................................................................94
Code.............................................................................................................59
Collateral Value.................................................................................................17
Contingent Payment Regulations...................................................................................89
Contracts........................................................................................................14
Cooperative Loans................................................................................................18
Cooperatives.....................................................................................................18
Deferred Interest................................................................................................88
Detailed Description.............................................................................................15
Determination Date...............................................................................................36
DOL.............................................................................................................115
EPA..............................................................................................................74
ERISA...........................................................................................................114
Events of Default................................................................................................65
Exchange Act.....................................................................................................28
Fannie Mae.......................................................................................................14
FDIC.............................................................................................................31
FHA..............................................................................................................18
FHA Loans........................................................................................................20
Freddie Mac......................................................................................................14
Freddie Mac Act..................................................................................................22
Freddie Mac Certificate Group....................................................................................22
FTC Rule.........................................................................................................77
Garn-St Germain Act..............................................................................................78
GCA..............................................................................................................28
GCM.............................................................................................................120
Ginnie Mae.......................................................................................................14
Ginnie Mae Certificate...........................................................................................20
Ginnie Mae I Certificates........................................................................................20
Ginnie Mae II Certificates.......................................................................................20

                                      122
<PAGE>



Ginnie Mae Issuer................................................................................................20
Guaranty Agreement...............................................................................................20
Housing Act......................................................................................................20
HUD..............................................................................................................44
Insolvency Trustee...............................................................................................52
Insurance Proceeds...............................................................................................56
Insured Expenses.................................................................................................56
IRS..............................................................................................................82
Legislative History..............................................................................................87
Liquidation Expenses.............................................................................................56
Liquidation Proceeds.............................................................................................56
Loan-to-Value Ratio..............................................................................................16
Manufactured Homes...............................................................................................19
Manufacturer Invoice Price.......................................................................................17
Mark-to-Market Regulations......................................................................................106
Master REMIC.....................................................................................................93
Mortgage.........................................................................................................53
Mortgage Assets..................................................................................................14
Mortgage Loans...................................................................................................15
Mortgage Pool....................................................................................................14
Mortgage Pool Insurance Policy...................................................................................42
Mortgage Rate....................................................................................................15
Mortgaged Properties.............................................................................................15
Multifamily Loans................................................................................................14
NCUA............................................................................................................119
New Regulations..................................................................................................91
Non-economic Residual Certificate...............................................................................112
OID Regulations..................................................................................................82
Parties in Interest.............................................................................................115
Payment Lag Certificates........................................................................................101
Permitted Investments............................................................................................55
Plans...........................................................................................................114
PMBS Agreement...................................................................................................26
PMBS Issuer......................................................................................................27
PMBS Servicer....................................................................................................26
PMBS Trustee.....................................................................................................26
Policy Statement................................................................................................119
Pool Insurer.....................................................................................................42
Prepayment Assumption............................................................................................87
Primary Insurer..................................................................................................61
Primary Mortgage Insurance Policy................................................................................15
Principal Prepayments............................................................................................37
PTE 83-1........................................................................................................115
Purchase Price...................................................................................................32
Rating Agency....................................................................................................55
RCRA.............................................................................................................75
Record Date......................................................................................................34
Refinance Loans..................................................................................................17
Regular Certificateholders.......................................................................................93
Regular Certificates.............................................................................................92
Relief Act.......................................................................................................79
REMIC............................................................................................................34
REMIC Regulations................................................................................................79
Reserve Account..................................................................................................35
Residual Certificates............................................................................................92
Restricted Group................................................................................................118

                                      123
<PAGE>

Retained Interest................................................................................................33
SAIF.............................................................................................................55
SEC..............................................................................................................28
Sellers..........................................................................................................14
Senior Certificates..............................................................................................41
Series...........................................................................................................14
Single Family Certificates......................................................................................115
Single Family Loans..............................................................................................14
SMMEA...........................................................................................................118
Special Hazard Insurance Policy..................................................................................46
Special Hazard Insurer...........................................................................................46
Stripped ARM Obligations.........................................................................................88
Stripped Bond Certificates.......................................................................................84
Stripped Coupon Certificates.....................................................................................85
Subordinated Certificates........................................................................................41
Sub-Servicer.....................................................................................................17
Sub-Servicing Account............................................................................................54
Sub-Servicing Agreement..........................................................................................56
Subsidiary REMIC.................................................................................................93
Super-Premium Certificates.......................................................................................95
Support Agreement................................................................................................39
Support Servicer.................................................................................................39
Title V..........................................................................................................78
Treasury.........................................................................................................83
Trust Fund.......................................................................................................14
U.S. Person......................................................................................................91
UCC..............................................................................................................69
Underwriter Exemption...........................................................................................117
VA ..............................................................................................................18
VA Guaranty Policy...............................................................................................45
VA Loans.........................................................................................................20
</TABLE>


                                      124

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<PAGE>



     UNTIL 90 DAYS AFTER THE DATE OF THIS PROSPECTUS SUPPLEMENT, ALL DEALERS
EFFECTING TRANSACTIONS IN THE SECURITIES OFFERED BY THIS PROSPECTUS SUPPLEMENT,
WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. THIS IS IN ADDITION TO THE
OBLIGATION OF DEALERS TO DELIVER THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.



                                  $386,235,100
                                  (APPROXIMATE)

                       HSBC MORTGAGE LOAN TRUST 2000-HSBC1

              MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2000-HSBC1



                                   [HSBC LOGO]



             $137,000,000 CLASS A-1 FIXED INITIAL PASS-THROUGH RATE
              $99,000,000 CLASS A-2 FIXED INITIAL PASS-THROUGH RATE
             $137,493,000 CLASS A-3 FIXED INITIAL PASS-THROUGH RATE
               NOTIONAL BALANCE CLASS X VARIABLE PASS-THROUGH RATE
                 $100 CLASS A-R FIXED INITIAL PASS-THROUGH RATE
              $5,881,000 CLASS B-1 FIXED INITIAL PASS-THROUGH RATE
              $3,921,000 CLASS B-2 FIXED INITIAL PASS-THROUGH RATE
              $2,940,000 CLASS B-3 FIXED INITIAL PASS-THROUGH RATE




                       GREENWICH CAPITAL ACCEPTANCE, INC.

                                    Depositor



                         HSBC MORTGAGE CORPORATION (USA)

                               Seller and Servicer



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

                              PROSPECTUS SUPPLEMENT

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



[GREENWICH CAPITAL LOGO]

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


You should rely only on the information contained or incorporated by reference
in this prospectus supplement and the accompanying prospectus. We have not
authorized anyone to provide you with different information.

We are not offering the certificates in any state where the offer is not
permitted.

We do not claim that the information in this prospectus supplement and the
accompanying prospectus is accurate as of any date other than the dates stated
on their respective covers.


                               November 13, 2000







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