PRUDENTIAL SECURITIES SECURED FINANCING CORP, S-3/A, 1999-06-10

PRUDENTIAL SECURITIES SECURED FINANCING CORP
S-3/A, 1999-06-10
ASSET-BACKED SECURITIES

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 10, 1999
REGISTRATION STATEMENT NO. 333-75489
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
________________

PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION
(Exact name of registrant as specified in Its Charter)

Delaware One New York Plaza 13-3526694
(Jurisdiction) New York, New York 10292 (I.R.S. Employer
(212) 778-1000 Identification No.)

(Address of registrant's principal executive offices)
___________________
Joe Donovan
Prudential Securities Secured
Financing Corporation
One New York Plaza
New York, New York 10292
(Name and address of agent for service)
___________________
Copies to:
Christopher J. DiAngelo, Esq.
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 426(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
==================================== ============== ================= ==================== ==================
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM
BEING OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
TITLE OF SECURITIES BEING REGISTERED REGISTERED PER UNIT(1) PRICE(1) REGISTRATION FEE
- ------------------------------------ -------------- ----------------- -------------------- ------------------
<S> <C> <C> <C> <C>
Mortgage Backed Securities . . . . . $1,500,000,000 100% $ 1,500,000,000 $ 417,000(2)
==================================== ============== ================= ==================== ==================

(1) Estimated solely for purposes of calculating the registration fee.
(2) $416,722 is paid pursuant to this Amendment. $278 was previously paid.
</TABLE>

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

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

<PAGE>

FORM OF PROSPECTUS
SUPPLEMENT - NOTES
S DO NOT REMOVE THIS CODE - IT'S NECESSARY FOR CORRECT PAGE #S IN TOC
Prospectus supplement to prospectus dated ____________
$___________
______________________
MORTGAGE-BACKED NOTES, SERIES _______
$______ _____% CLASS A-1 NOTES $________ ______% CLASS A-2 NOTES

_____________ PRUDENTIAL SECURITIES SECURED
Depositor FINANCING CORPORATION
Sponsor
-------

YOU SHOULD READ THE SECTION ENTITLED "RISK FACTORS" STARTING ON PAGE S-__ OF
THIS PROSPECTUS SUPPLEMENT AND PAGE __ OF THE ACCOMPANYING PROSPECTUS AND
CONSIDER THESE FACTORS BEFORE MAKING A DECISION TO INVEST IN THE NOTES.

The notes represent non-recourse obligations of the trust only and are not
interests in or obligations of any other person.

Neither the notes nor the underlying mortgage loans will be insured or
guaranteed by any governmental agency or instrumentality.

THE TRUST FUND -

- - The trust fund consists primarily of two pools of fixed-rate business and
consumer purpose home equity loans secured by first- or second-lien
mortgages on residential or commercial real properties.

THE NOTES -

- - Each class of notes will be backed primarily by a pledge of one of the two
pools of mortgage loans.

CREDIT ENHANCEMENT -

- - The notes will have the benefit of a financial guaranty insurance policy to
be issued by

[note insurer]

- - The notes will be cross-collateralized to a limited extent.

- - The notes have the benefit of initial over-collateralization.

- - Excess interest will be used in the early years of the transaction to
increase this over-collateralization.

<TABLE>
<CAPTION>
ORIGINAL NOTE PRICE TO THE UNDERWRITING PROCEEDS TO THE RATINGS FINAL STATED
CLASS PRINCIPAL BALANCE PUBLIC DISCOUNT DEPOSITOR [ } MATURITY DATE
- ----- ------------------ -------------- -------------- ---------------- ------- -------------
<S> <C> <C> <C> <C> <C> <C>
A-1 $ _____________ ____% ____% $ _____________
A-2 $ _____________ ____% ____% $ _____________
- ----- ------------------ -------------- --------------
Total $ _____________ $ ____________ $ ______ $ ____________
</TABLE>

You will also be required to pay the interest that accrued on your note since
____________. The proceeds to the depositor are calculated without taking into
effect the expenses of this offering, which are expected to be $______________.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

_____________________
The date of this prospectus supplement is ________

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

We provide information to you about the notes in two separate documents
that progressively provide more detail: (1) the accompanying prospectus, which
provides general information, some of which may not apply to your series of
notes, and (2) this prospectus supplement, which describes the specific terms of
your series of notes.

This prospectus supplement does not contain complete information about the
offering of the notes. Additional information is contained in the accompanying
prospectus. You are urged to read both this prospectus supplement and the
accompanying prospectus in full. We cannot sell the notes to you unless you have
received both this prospectus supplement and the accompanying prospectus.

We include cross-references in this prospectus supplement and the
accompanying prospectus to captions in these materials where you can find
further information concerning a particular topic. The following table of
contents provides the pages on which these captions are located.

<TABLE>
<CAPTION>
TABLE OF CONTENTS

<S> <C>
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RISK FACTORS. . . . . . . . . . . . . . . . . . . . . . . . . . 3
TRANSACTION OVERVIEW. . . . . . . . . . . . . . . . . . . . . . 8
Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
The Transaction . . . . . . . . . . . . . . . . . . . . . . . 9
THE MORTGAGE LOAN POOLS . . . . . . . . . . . . . . . . . . . . 9
The Pool I Mortgage Loans . . . . . . . . . . . . . . . . . . 10
The Pool II Mortgage Loans. . . . . . . . . . . . . . . . . . 14
Conveyance of subsequent mortgage loans . . . . . . . . . . . 17
THE ORIGINATORS, THE DEPOSITOR AND THE SERVICER . . . . . . . . 18
Underwriting Guidelines . . . . . . . . . . . . . . . . . . . 18
The Servicer. . . . . . . . . . . . . . . . . . . . . . . . . 18
Delinquency and Loan Loss Experience. . . . . . . . . . . . . 18
THE OWNER TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . 20
THE INDENTURE TRUSTEE . . . . . . . . . . . . . . . . . . . . . 20
THE COLLATERAL AGENT. . . . . . . . . . . . . . . . . . . . . . 20
DESCRIPTION OF THE NOTES AND THE TRUST CERTIFICATES . . . . . . 20
Book-Entry Registration . . . . . . . . . . . . . . . . . . . 21
Definitive Notes. . . . . . . . . . . . . . . . . . . . . . . 25
Assignment and Pledge of Initial Mortgage Loans . . . . . . . 25
Assignment and Pledge of Subsequent Mortgage Loans. . . . . . 25
Delivery of Mortgage Loan Documents . . . . . . . . . . . . . 26
Representations and Warranties of the Depositor . . . . . . . 27
Payments on the Mortgage Loans. . . . . . . . . . . . . . . . 29
Over-collateralization Provisions . . . . . . . . . . . . . . 31
Cross-collateralization Provisions. . . . . . . . . . . . . . 32
Flow of Funds . . . . . . . . . . . . . . . . . . . . . . . . 33
Events of Default . . . . . . . . . . . . . . . . . . . . . . 33
Reports to Noteholders. . . . . . . . . . . . . . . . . . . . 34
Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SERVICING OF THE MORTGAGE LOANS . . . . . . . . . . . . . . . . 35
The Servicer. . . . . . . . . . . . . . . . . . . . . . . . . 35
Servicing Fees and Other Compensation and Payment of Expenses 35
Periodic Advances and Servicer Advances . . . . . . . . . . . 36
Prepayment Interest Shortfalls. . . . . . . . . . . . . . . . 37

S-ii
<PAGE>
Civil Relief Act Interest Shortfalls. . . . . . . . . . . . . 37
Optional Purchase of Defaulted Mortgage Loans . . . . . . . . 37
Servicer Reports. . . . . . . . . . . . . . . . . . . . . . . 37
Collection and Other Servicing Procedures . . . . . . . . . . 38
Hazard Insurance. . . . . . . . . . . . . . . . . . . . . . . 38
Realization Upon Defaulted Mortgage Loans . . . . . . . . . . 39
Removal and Resignation of the Servicer . . . . . . . . . . . 39
Optional Clean-up Call on the Notes . . . . . . . . . . . . . 41
Termination; Purchase of Mortgage Loans . . . . . . . . . . . 41
THE NOTE INSURANCE POLICY . . . . . . . . . . . . . . . . . . . 42
THE NOTE INSURER. . . . . . . . . . . . . . . . . . . . . . . . 45
The Note Insurer. . . . . . . . . . . . . . . . . . . . . . . 45
Reinsurance . . . . . . . . . . . . . . . . . . . . . . . . . 46
Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Capitalization. . . . . . . . . . . . . . . . . . . . . . . . 46
Insurance Regulation. . . . . . . . . . . . . . . . . . . . . 46
PREPAYMENT AND YIELD CONSIDERATIONS . . . . . . . . . . . . . . 47
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS . . . . . . . . . . . 50
Treatment of the Notes. . . . . . . . . . . . . . . . . . . . 50
Treatment of the Trust. . . . . . . . . . . . . . . . . . . . 52
ERISA CONSIDERATIONS. . . . . . . . . . . . . . . . . . . . . . 52
LEGAL INVESTMENT. . . . . . . . . . . . . . . . . . . . . . . . 53
PLAN OF DISTRIBUTION. . . . . . . . . . . . . . . . . . . . . . 53
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE . . . . . . . 54
ADDITIONAL INFORMATION. . . . . . . . . . . . . . . . . . . . . 54
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . 54
RATINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
GLOSSARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
</TABLE>

S-iii
<PAGE>
SUMMARY

This summary highlights selected information from this prospectus supplement 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
notes, carefully read this entire prospectus supplement and the accompanying
prospectus.

_______________________________

THE NOTES AND THE TRUST CERTIFICATES

The __________________ will issue the class A-1 notes and the class A-2 notes.
The notes are being offered to you by this prospectus supplement.
Each class of notes will accrue interest at the interest rate, have the original
principal balance and have the final stated maturity date indicated on the cover
of this prospectus supplement.

The trust will also issue two classes of trust certificates which are not
offered by this prospectus supplement.

DISTRIBUTIONS

Distributions on the notes will be made on the ____ day of each month, or,
if the ____ day is not a business day, on the next succeeding business day,
beginning on _________.

DISTRIBUTIONS OF INTEREST

On each distribution date, each class of notes is entitled to receive its
current interest.

- - Current Interest. The current interest for a distribution date is the
interest which accrues on a class of notes at that class's note rate on the
outstanding principal balance of the class during the accrual period.

- - Accrual Period. The accrual period for the notes is the calendar month
preceding the distribution date.

All computations of interest accrued on the notes will be made on the basis of a
360-day year consisting of twelve 30-day months.

DISTRIBUTIONS OF PRINCIPAL

The holders of each class of notes are entitled to receive distributions of
principal on each distribution date which generally reflect collections of
principal during the preceding calendar month on the mortgage loans in the pool
relating to their class.

In addition, in accordance with the over-collateralization features of the
transaction, holders may also receive extra distributions of principal from
excess interest on a distribution date

THE MORTGAGE LOANS

The mortgage loans to be included in the trust estate will be primarily
fixed-rate, closed-end, monthly pay, business and consumer purpose home equity
loans secured by first, second or multiple mortgages or deeds of trust on
residential or commercial real properties.

On the closing date, the trust will purchase the mortgage loans. The aggregate
principal balance of the pool I mortgage loans will be approximately
$_____________ and the aggregate principal balance of the pool II mortgage loans
will be approximately $_____________.

The aggregate principal balance of the mortgage loans purchased by the trust on
the closing date will be less than the amount required to be held by the trust.
The amount of the difference will be taken from the proceeds of the sale of the
notes, placed in the pre-funding accounts and used for the purchase of mortgage
loans by the trust after the closing date.

S-1
<PAGE>

SERVICING OF THE MORTGAGE LOANS

__________________ will act as servicer and will be obligated to service and
administer the mortgage loans

OPTION OF THE SERVICER TO CALL EITHER CLASS OF NOTES

The servicer may, at its option, call the class A-1 notes or the class A-2 notes
on any distribution date on which the aggregate outstanding principal balance of
the class is equal to or less than 10% of the aggregate original principal
balance of the class.

OPTION OF THE SERVICER TO TERMINATE THE TRUST

The servicer may, at its option, terminate the trust on the distribution date on
which the aggregate outstanding principal balance of all mortgage loans is less
than 10% of the sum of the aggregate original principal balance of the mortgage
loans purchased on the closing date and the amount on deposit in the pre-funding
accounts on the closing date.

ERISA CONSIDERATIONS

Subject to the conditions described under "ERISA Considerations" in this
prospectus supplement, the notes may be purchased by any employee benefit plan
or other retirement arrangement subject to ERISA or the Internal Revenue Code.

FEDERAL INCOME TAX STATUS

It is the opinion of ____________, special federal tax counsel to the trust,
that for federal income tax purposes

- - the notes will be characterized as indebtedness and

- - the trust will not be characterized as an association, or a publicly traded
partnership, taxable as a corporation or as a taxable mortgage pool.

Each noteholder, by the acceptance of a note, will agree to treat the notes as
indebtedness.

RATINGS

In order to be issued, the notes must be rated [ ] by ________________ and [ ]
by ____________, taking into account the note insurance policy issued for the
notes.

S-2
<PAGE>

RISK FACTORS

Investors should consider, among other things, the following factors - as
well as the factors enumerated under "Risk Factors" in the accompanying
prospectus - before deciding to invest in the notes.

IF THE FUNDS ON DEPOSIT IN THE PRE-FUNDING ACCOUNTS ARE NOT USED TO PURCHASE
ADDITIONAL MORTGAGE LOANS, THOSE FUNDS WILL BE DISTRIBUTED AS A PREPAYMENT OF
PRINCIPAL, WHICH MAY ADVERSELY AFFECT THE YIELD ON YOUR NOTE.

If the principal balance of the eligible mortgage loans available for
purchase by the trust on _____________ is less than the amount on deposit
in either pre-funding account on that date, the remaining amount will be
applied as a prepayment of principal on the following distribution date to
the holders of the class of notes relating to that pre-funding account. You
will bear the risk of reinvesting these unscheduled distributions and there
can be no assurance that you will be able to reinvest them at a yield
equaling or exceeding the yield or your note.

Any purchase of additional mortgage loans by the trust using funds on
deposit in the pre-funding accounts is subject to the following conditions,
among others:

- each additional mortgage loan must satisfy specified statistical
criteria and representations and warranties;

- additional mortgage loans will not be selected in a manner that is
believed to be adverse to the interests of the holders of the notes
and the note insurer; and

- opinions of counsel will be delivered with concerning the validity of
the conveyance of additional mortgage loans.

If the originators do not have additional mortgage loans which satisfy
these conditions with an aggregate principal balance equal to the amount on
deposit in the pre-funding accounts, such a prepayment will occur.

BECAUSE MANY OF THE MORTGAGE LOANS BACKING YOUR NOTE WERE MADE TO BORROWERS WITH
IMPAIRED OR UNSUBSTANTIATED CREDIT HISTORIES, THERE IS A GREATER RISK OF
DELINQUENT PAYMENTS ON THESE MORTGAGE LOANS, WHICH COULD LEAD TO GREATER RISK OF
LOSSES ON YOUR NOTE.

The mortgage loans were made, in part, to borrowers who, for one reason or
another, are not able, or do not wish, to obtain financing from traditional
sources such as commercial banks. These mortgage loans may be considered to
be of a riskier nature than mortgage loans made by traditional sources of
financing, so that the holders of the notes may be deemed to be at greater
risk than if the mortgage loans were made to other types of borrowers.

The underwriting standards used in the origination of the mortgage loans
held by the trust are generally less stringent than those of Fannie Mae or
Freddie Mac concerning a borrower's credit history and in certain other
respects. Borrowers on the mortgage loans may have an impaired or
unsubstantiated credit history. As a result of this less stringent approach
to underwriting, the mortgage loans purchased by the trust may experience
higher rates of delinquencies, defaults and foreclosures than mortgage
loans underwritten in a manner which is more similar to the Fannie Mae and
Freddie Mac guidelines.

S-3
<PAGE>
GEOGRAPHIC CONCENTRATION OF THE MORTGAGE LOANS IN PARTICULAR JURISDICTIONS MAY
RESULT IN GREATER LOSSES IF THOSE JURISDICTIONS EXPERIENCE ECONOMIC DOWNTURNS.

Some geographic regions of the United States from time to time will
experience weaker regional economic conditions and housing markets, and,
consequently, will experience higher rates of loss and delinquency on
mortgage loans generally. Any concentration of the mortgage loans in such a
region may present risk considerations in addition to those generally
present for similar mortgage-backed securities without this concentration.
The mortgaged properties underlying the mortgage loans are located
primarily on the eastern seaboard of the United States. This may subject
the mortgage loans held by the trust to the risk that a downturn in the
economy in this area of the country would more greatly affect the pool than
if the pool were more diversified.

In particular, the states listed below had the following percentages of
mortgage loans in pool I and pool II, measured as of _______, ______, which
are secured by mortgaged properties located in the their states:

POOL I % % % % %
POOL II % % % % %

Because of the relative geographic concentration of the mortgage loans
within the states of _____________, _____________, _____________,
_____________ and _____________, losses on the mortgage loans may be higher
than would be the case if the mortgage loans were more geographically
diversified. For example, some of the mortgaged properties may be more
susceptible to particular types of special hazards, such as earthquakes and
other natural disasters and major civil disturbances, than residential or
commercial properties located in other parts of the country. In addition,
the economies of _____________, _____________, _____________, _____________
and _____________ may be adversely affected to a greater degree than the
economies of other areas of the country by regional developments. If the
_____________, _____________, _____________, _____________ and
_____________ residential or commercial real estate markets experience an
overall decline in property values after the dates of origination of the
respective mortgage loans, then the rates of delinquencies, foreclosures
and losses on the mortgage loans may be expected to increase and this
increase may be substantial.

A PORTION OF THE MORTGAGE LOANS REQUIRE LARGE BALLOON PAYMENTS AT MATURITY;
THESE BALLOON LOANS MAY INVOLVE A GREATER RISK OF DEFAULT DUE TO THESE LARGE
PAYMENTS, WHICH COULD LEAD TO LOSSES ON YOUR SECURITIES.

Approximately ____% of the mortgage loans in pool I, measured as of _____,
____, and ____% of the mortgage loans in pool II, measured as of ____,
____, are not fully amortized over their terms and instead require
substantial balloon payments on their maturity dates. Because the principal
balances of these balloon loans do not fully amortize over their term,
these balloon loans may involve greater risks of default than mortgage
loans whose principal balance is fully amortized over the term of the
mortgage loan. The borrower's ability to pay the balloon amount due at
maturity of his or her balloon loan will depend on the borrower's ability
to obtain adequate refinancing or funds from other sources to repay the
balloon loan. The originators have only limited historical default data
concerning their balloon loans and they do not believe that their data is
sufficient to predict the default experience of the balloon loans.

S-4
<PAGE>
A PORTION OF THE MORTGAGE LOANS ARE SECURED BY SUBORDINATE MORTGAGES; IN THE
EVENT OF A DEFAULT, THESE MORTGAGE LOANS ARE MORE LIKELY TO EXPERIENCE LOSSES.

Approximately _____% of the mortgage loans in pool I, measured as of ____,
_____, and ____% of the mortgage loans in pool II, measured as of ____,
____, are secured by subordinate or junior mortgages which are subordinate
to the rights of the holder of the senior mortgages. As a result, the
proceeds from any liquidation, insurance or condemnation proceedings will
be available to satisfy the principal balance of such a mortgage loan only
to the extent that the claims, if any, of each senior mortgagee are
satisfied in full, including any foreclosure costs. In addition, a holder
of a junior mortgage may not foreclose on the mortgaged property securing
the mortgage unless it forecloses subject to the related senior mortgages,
in which case it must either pay the entire amount of the senior mortgages
to the mortgagees at or prior to the foreclosure sale or undertake the
obligation to make payments on each senior mortgage in the event of default
thereunder. In servicing business and consumer purpose home equity loans in
its portfolio, it is the servicer's practice to satisfy or reinstate each
such first mortgage at or prior to the foreclosure sale only to the extent
that it determines any amount so paid will be recoverable from future
payments and collections on the mortgage loans or otherwise. The trust will
have no source of funds to satisfy any senior mortgage or make payments due
to any senior mortgagee.

An overall decline in the residential or commercial real estate markets
could adversely affect the values of the mortgaged properties such that the
outstanding principal balances of the mortgage loans, together with the
primary senior financing thereon, equals or exceeds the value of the
mortgaged properties. Such a decline would adversely affect the position of
a second mortgagee before having such an effect on that of the first
mortgagee. A rise in interest rates over a period of time and the general
condition of the mortgaged property as well as other factors may have the
effect of reducing the value of the mortgaged property from the appraised
value at the time the mortgage loan was originated. If there is a reduction
in value of the mortgaged property, the ratio of the amount of the mortgage
loan to the value of the mortgaged property may increase over what it was
at the time the mortgage loan was originated. Such an increase may reduce
the likelihood of liquidation or other proceeds being sufficient to satisfy
the mortgage loan after satisfaction of any first liens.

A PORTION OF THE MORTGAGE LOANS ARE HIGH LTV RATIOS WHICH MAY NOT HAVE ADEQUATE
SECURITY IN THE EVENT OF A DEFAULT, WHICH COULD LEAD TO LOSSES ON YOUR NOTE.

Even though all of the mortgage loans are secured be residential real
estate, approximately _____% of the mortgage loans in pool I, measured as
of ____, _____, and ____% of the mortgage loans in pool II, measured as of
____, ____, are secured by real estate which has a value that may be close
to, or even less than, the amount of the loan. As a result, the mortgaged
properties may not provide adequate security for these high LTV loans.
Underwriting analysis with respect to high LTV loans relies more heavily on
the mortgagor's creditworthiness than on the protection afforded by the
security interest in the underlying mortgaged property.

S-5
<PAGE>
Additionally, there is also the risk that if the borrower moves, he or she
will be unable to pay the loan in full from the proceeds of the sale of the
property. The costs incurred by the servicer in the collection and
liquidation of high LTV loans may be higher than with respect to other
loans, because the servicer may be required to pursue collection solely
against the borrower. Consequently, the losses on defaulted high LTV loans
may be more severe as there is no assurance that any proceeds will be
recovered, which could lead to losses on your note.

SECURITY INTERESTS IN THE MANUFACTURED HOMES MAY NOT BE PERFECTED AND THE ISSUER
MAY NOT REALIZE UPON THE FULL AMOUNT DUE UNDER THE LOAN.

Approximately _____% of the mortgage loans in pool I, measured as of ____,
_____, and ____% of the mortgage loans in pool II, measured as of ____,
____, are secured by manufactured homes and, in some cases, the real estate
on which the manufactured home is located. Some federal and state laws,
which do not apply to other types of mortgage loans, limit the issuer's
ability to foreclose on manufactured homes or may limit the amount realized
to less than the amount due under the loan. These limitations could cause
losses on your note.

PREPAYMENTS ON THE MORTGAGE LOANS COULD LEAD TO SHORTFALLS IN THE PAYMENT OF
INTEREST ON YOUR NOTE.

The scheduled monthly payment dates for the mortgage loans occur throughout
a month. When a principal prepayment in full is made on a mortgage loan,
the mortgagor is charged interest only up to the date of the prepayment,
instead of for a full month. However, the principal receipts will only be
passed through to the holders of the notes once a month, on the
distribution date which follows the calendar month in which the prepayment
was received by the servicer. The servicer is obligated to pay, without any
right of reimbursement, those shortfalls in interest collections payable on
the notes that are attributable to the difference between the interest paid
by a mortgagor in connection with a prepayment in full and thirty days'
interest on the mortgage loan, but only to the extent of the servicing fee
for that calendar month.

If the servicer fails to make these payments or the shortfall exceeds the
servicing fee, there will be less funds available for the payment of
interest on the related class of notes. These shortfalls of interest, if
they result in the inability of the trust to pay the full amount of the
current interest on the related class of notes, are not covered by the note
insurance policy.

YEAR 2000 ISSUES COULD LEAD TO DELAYS IN PAYMENT OR LOSSES ON YOUR NOTE.

There is a significant uncertainty regarding the effect of the year 2000
problem because computer systems that do not properly recognize date
sensitive information when the year changes to 2000 could generate
erroneous data or altogether fail. The servicer and the originators, as
well as third parties that have relationships with them, including vendors
and borrowers, may experience significant year 2000 issues. These issues
may have a serious adverse effect on the operations of the originator, the
servicer, or these third parties, including a shut-down of operations for a
period of time, which may, in turn, have a material adverse effect on their
business, financial condition and results of operations.

S-6
<PAGE>
IF DTC EXPERIENCES YEAR 2000 PROBLEMS, YOU COULD EXPERIENCE DELAYS IN PAYMENT OR
LOSSES ON YOUR NOTE.

If problems associated with the year 2000 issue were to occur with respect
to DTC, its systems - as the same relate to the timely payment of
distributions, including principal and interest payments, to
securityholders, book-entry deliveries, and settlement of trades within DTC
- or third, parties, including, but not limited to, issuers, their agents
and its participating organizations as well as third party vendors on whom
DTC relies for information or the provision of services, including
telecommunication and electrical utility service providers among others,
distributions to the beneficial owners of notes could be delayed or
otherwise adversely affected.

S-7
<PAGE>
Some of the terms used in this prospectus supplement are capitalized. These
capitalized terms have specified definitions, which are included at the end of
this prospectus supplement under the heading "Glossary."

TRANSACTION OVERVIEW
PARTIES

The Trust. ___________________, a Delaware business trust. The principal
executive office of the trust is in Wilmington, Delaware, in care of the owner
trustee, at the address of the owner trustee specified below.

The Sponsor. Prudential Securities Secured Financing Corporation, a
Delaware corporation. The principal executive office of the sponsor is located
at One New York Plaza, 14th Floor, New York, New York 10292, and its telephone
number is (212) 778-1000.

The Depositor. ________________, a __________ corporation, which is owned
by the originators. The principal executive office of the depositor is at
___________________________, and its telephone number is _____________.

The Originators. _____________, a _____________ corporation, and
_____________, a _____________ corporation, originated or purchased the mortgage
loans. For a description of the business of the originators, see "The
Originators, the Depositor and the Servicer" in this prospectus supplement.

The Servicer and the Subservicers. _____________ will act as servicer of
the mortgage loans, and _____________ and _____________ will act as subservicers
for different portions of the mortgage loans. For a description of the business
of the servicer, see "The Originators, the Depositor and the Servicer" in this
prospectus supplement.

The Indenture Trustee. _____________, a _____________ banking corporation.
The corporate trust office of the indenture trustee is located at _____________,
and its telephone number is _____________. For a description of the indenture
trustee and its responsibilities with respect to the notes, see "The Indenture
Trustee" in this prospectus supplement.

The Owner Trustee. ___________________________, a national banking
association. The corporate trust office of the owner trustee is located at
_______________________, and its telephone number is _____________. For a
description of the owner trustee and its responsibilities with respect to the
notes and the mortgage loans, see "The Owner Trustee" in this prospectus
supplement.

The Collateral Agent. _________________________, a national banking
association. The corporate trust office of the collateral agent is located at
________________________, and its telephone number is _____________.

The Note Insurer. ___________________________, a _____________ financial
guaranty insurance company. The note insurer will issue a financial guaranty
insurance policy for the benefit of the holders of the notes. For a description
of the business and selected financial information of the note insurer, see "The
Note Insurance Policy" and "The Note Insurer" in this prospectus supplement.

The Rating Agencies. ________________________________ and
__________________ will issue ratings for each class of notes.

S-8
<PAGE>
THE TRANSACTION

Formation of the Trust and Issuance of the Trust Certificates. The trust
will be formed pursuant to the terms of a Trust Agreement, dated as of
_____________, between the owner trustee and the depositor. Under the Trust
Agreement, the trust will also issue the trust certificates to the depositor,
each evidencing the entire beneficial ownership interest in the sub-trust of the
trust consisting of a pool of mortgage loans.

Sale and Servicing of the Mortgage Loans. The mortgage loans have been
originated or purchased by the originators pursuant to their respective
underwriting guidelines, as described under "The Originators, the Depositor and
the Servicer." The originators will sell the mortgage loans to the depositor,
pursuant to Loan Sale Agreement, dated as of _____________, among the
originators and the depositor. The depositor will sell the mortgage loans to the
trust pursuant to a Sale and Servicing Agreement, dated as of _____________,
among the depositor, the trust, the servicer, the collateral agent and the
indenture trustee. The servicer will service the mortgage loans pursuant to the
terms of the Sale and Servicing Agreement.

Issuance of the Notes. Pursuant to the terms of an Indenture, dated as of
_____________, between the trust and the indenture trustee, the trust will
pledge the trust estate to the indenture trustee, for the benefit of the holders
of the notes and the note insurer, and issue the notes.

Issuance of the Note Insurance Policy. The note insurer will issue the note
insurance policy pursuant to the terms of an Insurance and Indemnity Agreement,
dated as of _____________, among the note insurer, the trust, the depositor, the
originators and the servicer.

THE MORTGAGE LOAN POOLS

Difference between Statistical Calculation Date and Closing Date Pools.
The statistical information presented in this prospectus supplement concerning
the mortgage loans is based on the pools of mortgage loans that existed on a
statistical calculation date, in this case _______, ____. Pool I aggregated
$_____________ as of the statistical calculation date and pool II aggregated
$_____________ as of the statistical calculation date. The depositor expects
that the actual pools on the closing date will represent approximately
$_____________ in aggregate principal balance of mortgage loans in pool I, as of
a cut-off date of ______________, ___________, and approximately $_____________
in aggregate principal balance of mortgage loans in pool II, as of the cut-off
date. The additional mortgage loans will represent mortgage loans acquired or
to be acquired by the trust on or prior to the closing date. In addition, with
respect to the pools as of the statistical calculation date as to which
statistical information is presented in this prospectus supplement, some
amortization will occur prior to the closing date. Moreover, some mortgage
loans included in the pools as of the statistical calculation date may prepay in
full, or may be determined not to meet the eligibility requirements for the
final pools, and may not be included in the final pools. As a result of the
foregoing, the statistical distribution of characteristics as of the closing
date for the final mortgage loan pools will vary somewhat from the statistical
distribution of the characteristics as of the statistical calculation date as
presented in this prospectus supplement, although this variance should not be
material. In the event that the depositor does not, as of the closing date,
have the full amount of mortgage loans which the depositor expects to sell to
the trust on this date, the depositor will increase the size of the pre-funding
accounts and the capitalized interest accounts, as applicable.

Additional mortgage loans are intended to be purchased by the trust from
time to time on or before _____________ from funds on deposit in the pre-funding
accounts. These subsequent mortgage loans to be purchased by the trust, if
available, will be originated or purchased by the originators, sold by the
originators to the depositor and then sold by the depositor to the trust. The
Indenture will provide that the mortgage loans, following the conveyance of the
subsequent mortgage loans, must in the aggregate conform to specified
characteristics described below under " - Conveyance of subsequent mortgage
loans."

S-9
<PAGE>
Unless otherwise noted, all statistical percentages in this prospectus
supplement are approximate and are measured by the aggregate principal balance
of the applicable mortgage loans in relation to the aggregate principal balance
of the mortgage loans in the applicable pool, in each case, as of the
statistical calculation date.

The mortgage loans will be predominantly business or consumer purpose
residential home equity loans used to refinance an existing mortgage loan, to
consolidate debt, or to obtain cash proceeds by borrowing against the
mortgagor's equity in the mortgaged property in order to provide funds for,
working capital for business, business expansion, equipment acquisition, or
personal acquisitions. The mortgaged properties securing the mortgage loans
consist primarily of single-family residences - which may be detached, part of a
multi-family dwelling, a condominium unit, a townhouse, a mobile home or a unit
in a planned unit development - and commercial or mixed use property. The
mortgaged properties may be owner-occupied properties, which includes second and
vacation homes, non-owner occupied investment properties or business purpose
properties.

The majority of the mortgage loans have a prepayment fee clause. These
prepayment fee clauses generally provide that the mortgagor pay, upon
prepayment, one or more of the following:

- a fee equal to a percentage, negotiated at origination, of the
outstanding principal balance of the mortgage loan,

- a fee which is designed to allow the holder of the mortgage note to
earn interest on the mortgage loan as if the mortgage loan remained
outstanding until a designated point in time, or

- a fee equal to the amount of interest on the outstanding principal
balance of the mortgage loan calculated pursuant to a rule of 78's
calculation, which has the effect of requiring the mortgagor to pay a
greater amount of interest than would be required to be paid if the
actuarial method of calculating interest was utilized.

THE POOL I MORTGAGE LOANS

As of the statistical calculation date, each of the mortgage loans in pool
I had a remaining term to maturity of no greater than 360 months and had a
mortgage interest rate of at least ____% per annum.

The combined loan-to-value ratios or CLTV's described in this prospectus
supplement were calculated based upon the appraised values of the mortgaged
properties at the time of origination. No assurance can be given that the
appraised values of the mortgaged properties have remained or will remain at the
levels that existed on the dates of origination of the mortgage loans. If
property values decline such that the outstanding principal balances of the
mortgage loans, together with the outstanding principal balances of any first
liens, 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 historically experienced by the servicer, as described below under "The
Originators, the Depositor and the Servicer - Delinquency and Loan Loss
Experience," and in the mortgage lending industry generally.

As of the statistical calculation date, the mortgage loans in pool I had
the following characteristics:

S-10
<PAGE>

- there were ___ mortgage loans under which the mortgaged properties are
located in __ states,

- the aggregate principal balance, after application of all payments due
on or before the statistical calculation date, was $_____________,

- the minimum principal balance was $_____________, the maximum
principal balance was $_____________, and the average principal
balance was $_____________,

- the mortgage interest rates ranged from _____% to ____% per annum, and
the weighted average mortgage interest rate was approximately ____%
per annum,

- the original term to stated maturity ranged from ___ months to 360
months,

- the remaining term to stated maturity ranged from __ months to ____
months, the weighted average original term to stated maturity was
approximately ___ months and the weighted average remaining term to
stated maturity was approximately ____ months,

- no mortgage loan had a maturity later than _________,

- approximately _______% of the aggregate principal balance of the
mortgage loans require monthly payments of principal that will fully
amortize these mortgage loans by their respective maturity dates, and
approximately ____% of the aggregate principal balance of the mortgage
loans are balloon loans,

- the weighted average CLTV was approximately _____%,

- approximately _____% of mortgage loans are secured by first liens, and
approximately _____% of mortgage loans are secured by second liens,
and

- approximately _____%, _____%, ____%, _____% and ____% of the mortgage
loans are secured by mortgaged properties located in the States of
_____________, _____________, _____________, _____________ and
_____________, respectively.

On or prior to _____________, the trust is expected to purchase, subject to
availability, subsequent mortgage loans to be added to pool I. The maximum
aggregate principal balance of subsequent mortgage loans that may be purchased
is expected to be approximately $_____________.

S-11
<PAGE>
The following tables present statistical information on the mortgage loans
in pool I. Due to rounding, the percentages shown may not precisely total
100.00%.

<TABLE>
<CAPTION>
GEOGRAPHICAL DISTRIBUTION OF MORTGAGED PROPERTIES
POOL I

NUMBER OF AGGREGATE UNPAID % OF STATISTICAL CALCULATION DATE
STATE MORTGAGE LOANS PRINCIPAL BALANCE AGGREGATE PRINCIPAL BALANCE
- ----- -------------- ----------------- ---------------------------------
<S> <C> <C> <C>
Total
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION OF CLTV RATIOS
POOL I

ORIGINAL NUMBER OF AGGREGATE UNPAID % OF STATISTICAL CALCULATION DATE
CLTV RANGE MORTGAGE LOANS PRINCIPAL BALANCE AGGREGATE PRINCIPAL BALANCE
- ---------- -------------- ----------------- ---------------------------------
<S> <C> <C> <C>
Total
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION OF GROSS MORTGAGE INTEREST RATES
POOL I

GROSS MORTGAGE NUMBER OF AGGREGATE UNPAID % OF STATISTICAL CALCULATION DATE
INTEREST RATE RANGE MORTGAGE LOANS PRINCIPAL BALANCE AGGREGATE PRINCIPAL BALANCE
- ------------------- -------------- ----------------- ---------------------------------
<S> <C> <C> <C>
Total
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION OF ORIGINAL TERMS TO MATURITY
(in months)
POOL I

RANGE OF ORIGINAL TERMS NUMBER OF AGGREGATE UNPAID % OF STATISTICAL CALCULATION DATE
(IN MONTHS) MORTGAGE LOANS PRINCIPAL BALANCE AGGREGATE PRINCIPAL BALANCE
- ------------------------ -------------- ----------------- ---------------------------------
<S> <C> <C> <C>
Total
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION OF REMAINING TERMS TO MATURITY
(in months)
POOL I

RANGE OF REMAINING TERMS NUMBER OF AGGREGATE UNPAID % OF STATISTICAL CALCULATION DATE
(IN MONTHS) MORTGAGE LOANS PRINCIPAL BALANCE AGGREGATE PRINCIPAL BALANCE
- ------------------------- -------------- ----------------- ---------------------------------
<S> <C> <C> <C>
Total
</TABLE>

S-12
<PAGE>
<TABLE>
<CAPTION>
DISTRIBUTION OF ORIGINAL PRINCIPAL BALANCES
POOL I

RANGE OF ORIGINAL MORTGAGE LOAN NUMBER OF AGGREGATE UNPAID % OF STATISTICAL CALCULATION DATE
PRINCIPAL BALANCES MORTGAGE LOANS PRINCIPAL BALANCE AGGREGATE PRINCIPAL BALANCE
- ------------------------------- -------------- ----------------- ---------------------------------
<S> <C> <C> <C>
Total
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION OF CURRENT PRINCIPAL BALANCES
POOL I

RANGE OF CURRENT MORTGAGE LOAN NUMBER OF AGGREGATE UNPAID % OF STATISTICAL CALCULATION DATE
PRINCIPAL BALANCES MORTGAGE LOANS PRINCIPAL BALANCE AGGREGATE PRINCIPAL BALANCE
- ------------------------------ -------------- ----------------- ---------------------------------
<S> <C> <C> <C>
Total
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION BY LIEN STATUS
POOL I

NUMBER OF AGGREGATE UNPAID % OF STATISTICAL CALCULATION DATE
LIEN STATUS MORTGAGE LOANS PRINCIPAL BALANCE AGGREGATE PRINCIPAL BALANCE
- ----------- -------------- ----------------- ---------------------------------
<S> <C> <C> <C>
Total
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION BY AMORTIZATION TYPE
POOL I

NUMBER OF AGGREGATE UNPAID % OF STATISTICAL CALCULATION DATE
AMORTIZATION TYPE MORTGAGE LOANS PRINCIPAL BALANCE AGGREGATE PRINCIPAL BALANCE
- ----------------- -------------- ----------------- ---------------------------------
<S> <C> <C> <C>
Total
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION BY OCCUPANCY STATUS
POOL I

NUMBER OF AGGREGATE UNPAID % OF STATISTICAL CALCULATION DATE
OCCUPANCY STATUS MORTGAGE LOANS PRINCIPAL BALANCE AGGREGATE PRINCIPAL BALANCE
- ---------------- -------------- ----------------- ---------------------------------
<S> <C> <C> <C>
Total
</TABLE>

S-13
<PAGE>
<TABLE>
<CAPTION>
DISTRIBUTION BY PROPERTY TYPE
POOL I

NUMBER OF AGGREGATE UNPAID % OF STATISTICAL CALCULATION DATE
PROPERTY TYPE MORTGAGE LOANS PRINCIPAL BALANCE AGGREGATE PRINCIPAL BALANCE
- ------------- -------------- ----------------- ---------------------------------
<S> <C> <C> <C>
Total
</TABLE>

THE POOL II MORTGAGE LOANS

As of the statistical calculation date, each of the mortgage loans in pool
II had a remaining term to maturity of no greater than 360 months and had a
mortgage interest rate of at least _____% per annum.

The CLTVs described in this prospectus supplement were calculated based
upon the appraised values of the mortgaged properties at the time of
origination. No assurance can be given that the appraised values of the
mortgaged properties have remained or will remain at the levels that existed on
the dates of origination of the mortgage loans. If property values decline such
that the outstanding principal balances of the mortgage loans, together with the
outstanding principal balances of any first liens, 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 historically experienced by
the servicer, as described below under "The Originators, the Depositor and the
Servicer - Delinquency and Loan Loss Experience," and in the mortgage lending
industry.

As of the statistical calculation date, the mortgage loans in pool II had
the following characteristics:

- there were ___ mortgage loans under which the mortgaged properties are
located in ___ states,

- the aggregate principal balance, after application of all payments due
on or before the statistical calculation date, was $_____________,

- the minimum principal balance was $_____________, the maximum
principal balance was $_____________, and the average principal
balance was $_____________,

- the mortgage interest rates ranged from ____% to ___% per annum, and
the weighted average mortgage interest rate was approximately ___% per
annum,

- the original term to stated maturity ranged from __ months to 360
months,

- the remaining term to stated maturity ranged from __ months to ___
months, the weighted average original term to stated maturity was
approximately ___ months and the weighted average remaining term to
stated maturity was approximately ___ months,

- no mortgage loan had a maturity later than _____________,

- approximately ____% of the aggregate principal balance of the mortgage
loans require monthly payments of principal that will fully amortize
these mortgage loans by their respective maturity dates, and
approximately ____% of the aggregate principal balance of the mortgage
loans are balloon loans,

- the weighted average CLTV was approximately ____%,

S-14
<PAGE>

- approximately ____% of mortgage loans are secured by first liens, and
approximately ____% of mortgage loans are secured by second liens, and

- approximately ___%, ___%, ____%, ____% and ____% of the mortgage loans
are secured by mortgaged properties located in the States of
_____________, _____________, _____________, _____________ and
_____________, respectively.

On or prior to _____________, the trust is expected to purchase, subject to
availability, subsequent mortgage loans to be added to pool II. The maximum
aggregate principal balance of subsequent mortgage loans that may be purchased
is expected to be approximately $_____________.

The following tables present statistical information on the mortgage loans
in pool II. Due to rounding, the percentages shown may not precisely total
100.00%.

<TABLE>
<CAPTION>
GEOGRAPHICAL DISTRIBUTION OF MORTGAGED PROPERTIES
POOL II

NUMBER OF AGGREGATE UNPAID % OF STATISTICAL CALCULATION DATE
ORIGINAL CLTV RATIO MORTGAGE LOANS PRINCIPAL BALANCE AGGREGATE PRINCIPAL BALANCE
- ------------------- -------------- ----------------- ---------------------------------
<S> <C> <C> <C>
Total
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION OF GROSS MORTGAGE INTEREST RATES
POOL II

S-15
<PAGE>
<TABLE>
<CAPTION>
DISTRIBUTION OF REMAINING TERMS TO MATURITY
(in months)
POOL II

RANGE OF ORIGINAL MORTGAGE NUMBER OF AGGREGATE UNPAID % OF STATISTICAL CALCULATION DATE
LOAN PRINCIPAL BALANCES MORTGAGE LOANS PRINCIPAL BALANCE AGGREGATE PRINCIPAL BALANCE
- -------------------------- -------------- ----------------- ---------------------------------
<S> <C> <C> <C>
Total
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION OF CURRENT PRINCIPAL BALANCES
POOL II

S-16
<PAGE>
<TABLE>
<CAPTION>
DISTRIBUTION BY OCCUPANCY STATUS
POOL II

CONVEYANCE OF SUBSEQUENT MORTGAGE LOANS

- The Indenture permits the trust to acquire subsequent mortgage loans
with the funds on deposit in the pre-funding accounts. It is expected
that the amount on deposit in the pre-funding accounts on the closing
date will be approximately $_____________ for pool I and
$_____________ for pool II. Accordingly, the statistical
characteristics of the mortgage loans in pool I and pool II will vary
as of any subsequent cut-off date upon the acquisition of subsequent
mortgage loans.

The obligation of the trust to purchase the subsequent mortgage loans on
any subsequent transfer date during the Pre-Funding Period is subject
to the following requirements:

- the subsequent mortgage loan may not be 30 or more days contractually
delinquent as of a subsequent cut-off date which is the close of
business on the last day of the calendar month preceding the month in
which the subsequent mortgage loan was purchased by the trust;

- the original term to maturity of the subsequent mortgage loan may not
exceed 360 months for pool I and 360 months for pool II;

- the subsequent mortgage loan must have a mortgage interest rate of at
least ____% for pool I and ____% for pool II;

- the purchase of the subsequent mortgage loans is consented to by the
note insurer and the rating agencies, notwithstanding the fact that
the subsequent mortgage loans meet the parameters stated in this
prospectus supplement;

- the principal balance of any subsequent mortgage loan may not exceed
$_____________ for pool I and $_____________ for pool II;

- no more than _____% for pool I and ____% for pool II of the aggregate
principal balance of the subsequent mortgage loans may be second
liens;

- no such subsequent mortgage loan shall have a CLTV of more than (a)
for consumer purpose loans, ___% for pool I and ____% for pool II, and
(b) for business purpose loans, ___% for pool I and ___% for pool II;

S-17
<PAGE>

- no more than ____% for pool I and ___% for pool II of the subsequent
mortgage loans may be balloon loans;

- no more than ____% for pool I and ____% for pool II of the subsequent
mortgage loans may be secured by mixed-use properties, commercial
properties, or five or more unit multifamily properties; and

- following the purchase of the subsequent mortgage loans by the trust,
the mortgage loans, including the subsequent mortgage loans, (a) will
have a weighted average mortgage interest rate, (I) for consumer
purpose loans, of at least ____% for pool I and ____% for pool II and
(II) for business purpose loans, of at least ____% for pool I and
____% for pool II; and (b) will have a weighted average CLTV of not
more than (I) for consumer purpose loans, ____% for pool I and ____%
for pool II, and (II) for business purpose loans, ____% for pool I and
____% for pool II.

The Indenture will provide that any of these requirements may be waived or
modified in any respect upon prior written consent of the note insurer, with the
exception of the requirements concerning maximum principal balance.
THE ORIGINATORS, THE DEPOSITOR AND THE SERVICER

[Corporate description]
[To be supplied by originators, depositor and servicer]

UNDERWRITING GUIDELINES

[To be supplied by originators]

THE SERVICER

[To be supplied by servicer]

DELINQUENCY AND LOAN LOSS EXPERIENCE

The following tables present information relating to the delinquency and
loan loss experience on the mortgage loans included in originators servicing
portfolio for the periods shown. The delinquency and loan loss experience
represents the historical experience of the originators, and there can be no
assurance that the future experience on the mortgage loans in the trust will be
the same as, or more favorable than, that of the mortgage loans in the
originators' overall servicing portfolio.

S-18
<PAGE>
<TABLE>
<CAPTION>
DELINQUENCY AND FORECLOSURE EXPERIENCE
(DOLLARS IN THOUSANDS)

At At At
% of % of % of
Amount Amount Amount Amount Amount Amount
Serviced Serviced Serviced Serviced Serviced Serviced
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Servicing portfolio

Past due loans:
60-89 days
90 days or more
-------- -------- -------- -------- -------- --------
Total past due loans

REO Properties
-------- -------- -------- -------- -------- --------
Total past due loans, foreclosures
pending and REO Properties(3)
</TABLE>

The foregoing table was prepared assuming that:

- - the past due period is based on the actual number of days that a payment is
contractually past due; a loan as to which a monthly payment was due 60-89
days prior to the reporting period is considered 60-89 days past due, etc.;

- - total past due loans includes pending foreclosures; and

- - an "REO property" is a property acquired and held as a result of
foreclosure or deed in lieu of foreclosure.

<TABLE>
<CAPTION>
LOAN CHARGE-OFF EXPERIENCE
(DOLLARS IN THOUSANDS)

AT AT AT
--- --- ---
<S> <C> <C> <C>
Servicing portfolio at period end
Average outstanding
Gross losses
Loan recoveries

Net loan charge-offs

Net loan charge-offs as a percentage
of servicing portfolio at period end
Net loan charge-offs as a percentage
of average outstanding
</TABLE>

The foregoing table was prepared assuming that:

S-19
<PAGE>

- "average outstanding" is the arithmetic average of the principal
balances of the loans in the originators' servicing portfolio
outstanding at the opening and closing of business for this period;
and

- "gross losses" means the outstanding principal balance plus accrued
but unpaid interest on liquidated mortgage loans.

While the above delinquency and foreclosure and loan charge-off experiences
are typical of the originators' experiences at the dates for the periods
indicated, there can be no assurance that the delinquency and foreclosure and
loan charge-off experiences on the mortgage loans will be similar. Accordingly,
the information should not be considered to reflect the credit quality of the
mortgage loans included in the trust, or as a basis of assessing the likelihood,
amount or severity of losses on the mortgage loans. The statistical data in the
tables is based on all of the mortgage loans in the originators' servicing
portfolio. The mortgage loans, in general, may have characteristics which
distinguish them from the majority of the loans in the originators' servicing
portfolio.

THE OWNER TRUSTEE

________________________, a national banking association, has its corporate
trust offices located at ________________________. The owner trustee will
perform limited administrative functions on behalf of the trust pursuant to the
Trust Agreement. The owner trustee's duties in connection with the issuance and
sale of the notes are limited solely to its express obligations under the Trust
Agreement.

THE INDENTURE TRUSTEE

________________________, a ____________ banking corporation, has an office
at ________________________. The indenture trustee will act as initial
authenticating agent, paying agent and note registrar pursuant to the terms of
the Indenture.

THE COLLATERAL AGENT

________________________, a national banking association, has its corporate
trust office at ________________________. The collateral agent's duties are
limited solely to its express obligations under the Sale and Servicing
Agreement.

DESCRIPTION OF THE NOTES AND THE TRUST CERTIFICATES

On the closing date, the trust will issue the class A-1 notes and the class
A-2 notes pursuant to the Indenture. Each class A-1 note represents a debt
obligation of the trust secured by a pledge of the portion of the trust estate
consisting of the pool I mortgage loans and, to the extent provided in this
prospectus supplement, the pool II mortgage loans. Each class A-2 note
represents a debt obligation of the trust secured by a pledge of the portion of
the trust estate consisting of the pool II mortgage loans and, to the extent
provided in this prospectus supplement, the pool I mortgage loans. Pursuant to
the Trust Agreement, the trust will also issue two classes of trust
certificates, together representing the entire beneficial ownership interest in
the trust. Each class of trust certificate will represent the entire beneficial
ownership interest in one pool of mortgage loans. None of the trust
certificates may be transferred without the consent of the note insurer and
compliance with the transfer provisions of the Trust Agreement.

The trust estate consists of

S-20
<PAGE>

- the mortgage loans, together with the mortgage files relating thereto
and all collections thereon and proceeds thereof collected after the
cut-off date,

- the assets as from time to time are identified as REO property and
collections thereon and proceeds thereof,

- assets that are deposited in the accounts relating to the trust,
including amounts on deposit in the Accounts and invested in
accordance with the Indenture and the Sale and Servicing Agreement,

- the indenture trustee's rights with respect to the mortgage loans
under all insurance policies required to be maintained pursuant to the
Sale and Servicing Agreement and any insurance proceeds,

- Liquidation Proceeds and

- released mortgaged property proceeds. In addition, the depositor will
cause the note insurer to issue the note insurance policy under which
it will guarantee payments to the holders of the notes as described in
this prospectus supplement.

The notes will be issued only in book-entry form, in denominations of
$1,000 initial principal balance and integral multiples of $1,000 in excess
thereof, except that one note of each class may be issued in a different amount.

BOOK-ENTRY REGISTRATION

The notes are sometimes referred to in this prospectus supplement as
"book-entry notes." No person acquiring an interest in the book-entry notes
will be entitled to receive a definitive note representing an obligation of the
trust, except under the limited circumstances described in this prospectus
supplement. beneficial owners may elect to hold their interests through DTC, in
the United States, or Cedelbank or the Euroclear System, in Europe. Transfers
within DTC, Cedelbank or Euroclear, as the case may be, will be in accordance
with the usual rules and operating procedures of the relevant system. So long
as the notes are book-entry notes, these notes will be evidenced by one or more
notes registered in the name of Cede & Co., which will be the "holder" of these
notes, as the nominee of DTC or one of the relevant depositaries. Cross-market
transfers between persons holding directly or indirectly through DTC, on the one
hand, and counterparties holding directly or indirectly through Cedelbank or
Euroclear, on the other, will be effected in DTC through The Chase Manhattan
Bank, the relevant depositories of Cedelbank or Euroclear, respectively, and
each a participating member of DTC. The notes will initially be registered in
the name of Cede & CoThe interests of the holders of these notes will be
represented by book-entries on the records of DTC and participating members
thereof. All references in this prospectus supplement to any notes reflect the
rights of beneficial owners only as these rights may be exercised through DTC
and its participating organizations for so long as these notes are held by DTC.

The beneficial owners of notes may elect to hold their notes through DTC in
the United States, or Cedelbank or Euroclear if they are participants in these
systems, or indirectly through organizations which are participants in these
systems. The book-entry notes will be issued in one or more notes per class of
notes which in the aggregate equal the outstanding principal balance of the
related class of notes and will initially be registered in the name of Cede &
Co., the nominee of DTC. Cedelbank and Euroclear will hold omnibus positions on
behalf of their participants through customers' securities accounts in
Cedelbank'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. Chase will act as depositary for
Cedelbank and Morgan Guaranty Trust Company of New York will act as depositary
for Euroclear. Investors may hold their beneficial interests in the book-entry
notes in minimum denominations representing principal amounts of $1,000. Except
as described below, no beneficial owner will be entitled to receive a physical
or definitive note representing this note. Unless and until definitive notes are
issued, it is anticipated that the only "holder" of these notes will be Cede &
Co., as nominee of DTC. beneficial owners will not be "holders" or "noteholders"
as those terms are used in the Indenture and the Sale and Servicing Agreement.
Beneficial owners are only permitted to exercise their rights indirectly through
participants and DTC.

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

DTC is a limited purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York UCC and a "clearing agency"
registered pursuant to Section 17A of the Exchange Act. DTC was created to hold
securities for its participants and to facilitate the clearance and settlement
of securities transactions between participants through electronic book-entries,
thereby eliminating the need for physical movement of notes. participants
include securities brokers and dealers, including the underwriter, banks, trust
companies and clearing corporations. Indirect access to the DTC system also is
available to others such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a participant, either
directly or indirectly through "indirect participants".

Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC is required to make book-entry transfers of book-entry
notes, such as the notes, among participants on whose behalf it acts for the
book-entry notes and to receive and transmit distributions of principal of and
interest on the book-entry notes. Participants and indirect participants with
which beneficial owners have accounts with respect to the book-entry notes
similarly are required to make book-entry transfers and receive and transmit
these payments on behalf of their respective beneficial owners.

Beneficial owners that are not participants or indirect participants but
desire to purchase, sell or otherwise transfer ownership of, or other interests
in, book-entry notes may do so only through participants and indirect
participants. In addition, beneficial owners will receive all distributions of
principal and interest from the indenture trustee, or a paying agent on behalf
of the indenture trustee, through DTC participants. DTC will forward these
distributions to its participants, which thereafter will forward them to
indirect participants or beneficial owners. beneficial owners will not be
recognized by the indenture trustee, the servicer or any paying agent as holders
of the notes, and beneficial owners will be permitted to exercise the rights of
the holders of the notes only indirectly through DTC and its participants.

Because of time zone differences, credits of securities received in
Cedelbank or Euroclear as a result of a transaction with a participant will be
made during subsequent securities settlement processing and dated the business
day following the DTC settlement date. These credits or any transactions in the
securities settled during this processing will be reported to the relevant
Euroclear or Cedelbank participants on that business day. Cash received in
Cedelbank or Euroclear as a result of sales of securities by or through a
Cedelbank participant or Euroclear participant to a DTC participant will be
received with value on the DTC settlement date but will be available in the
relevant Cedelbank or Euroclear cash account only as of the business day
following settlement in DTC. For information concerning tax documentation
procedures relating to the notes, see "Certain Federal Income Tax Consequences -
REMIC Securities" in the accompanying prospectus.

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<PAGE>

Transfers between participants will occur in accordance with DTC rules.
Transfers between Cedelbank 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 Cedelbank
participants or Euroclear participants, on the other, will be effected in DTC in
accordance with DTC rules on behalf of the relevant European international
clearing system by the relevant depositary; however, these cross-market
transactions will require delivery of instructions to the relevant European
international clearing system by the counterparty in this system in accordance
with its rules and procedures and within its established deadlines. 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. Cedelbank
participants and Euroclear participants may not deliver instructions directly to
the European Depositaries.

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

Euroclear was created in 1968 to hold securities for participants of
Euroclear 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 notes and any risk from lack of
simultaneous transfers of securities and cash. Transactions may now be settled
in any of 31 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, under contract with Euroclear Clearance Systems S.C., a Belgian
cooperative corporation. 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 Euroclear Clearance. Euroclear
Clearance 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.

S-23
<PAGE>
Securities clearance accounts and cash accounts with the Euroclear operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
Operating Procedures of the Euroclear System and applicable Belgian law. The
Terms and Conditions govern transfers of securities and cash within Euroclear,
withdrawals of securities and cash from Euroclear, and receipts of payments on
securities in Euroclear. All securities in Euroclear are held on a fungible
basis without attribution of specific notes 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 notes will be made on each distribution
date by the indenture trustee to Cede & Co., as nominee of DTC. DTC will be
responsible for crediting the amount of these payments to the accounts of the
applicable DTC participants in accordance with DTC's normal procedures. Each DTC
participant will be responsible for disbursing this payment to the beneficial
owners of the book-entry notes that it represents and to each financial
intermediary for which it acts as agent. Each financial intermediary will be
responsible for disbursing funds to the beneficial owners of the book-entry
notes that it represents.

Under a book-entry format, beneficial owners of the book-entry notes may
experience some delay in their receipt of payments, since these payments will be
forwarded by the indenture trustee to Cede & Co., as nominee of DTC.
Distributions on notes held through Cedelbank or Euroclear will be credited to
the cash accounts of Cedelbank participants or Euroclear participants in
accordance with the relevant system's rules and procedures, to the extent
received by the relevant depositary. These distributions will be subject to tax
reporting in accordance with relevant United States tax laws and regulations.
Because DTC can only act on behalf of financial intermediaries, the ability of a
beneficial owner to pledge book-entry notes to persons or entities that do not
participate in the DTC system, or otherwise take actions in respect of the
book-entry notes, may be limited due to the lack of physical notes for the
book-entry notes. In addition, issuance of the book-entry notes in book-entry
form may reduce the liquidity of the notes in the secondary market since some
potential investors may be unwilling to purchase notes for which they cannot
obtain physical notes.

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

DTC has advised the depositor and the servicer that it will take any action
permitted to be taken by a holder of the notes under the Indenture only at the
direction of one or more participants to whose accounts with DTC the book-entry
notes are credited. Additionally, DTC has advised the depositor that it will
take these actions concerning specified percentages of voting rights only at the
direction of and on behalf of participants whose holdings of book-entry notes
evidence the specified percentages of voting rights. DTC may take conflicting
actions with respect to percentages of voting rights to the extent that
participants whose holdings of book-entry notes evidence the percentages of
voting rights authorize divergent action.

None of the trust, the owner trustee, the depositor, the servicer, the note
insurer or the indenture 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 notes held by Cede & Co., as nominee for DTC, or for
maintaining, supervising or reviewing any records relating to the beneficial
ownership interests.

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

S-24
<PAGE>

DEFINITIVE NOTES

The notes, which will be issued initially as book-entry notes, will be
converted to definitive notes and reissued to beneficial owners or their
nominees, rather than to DTC or its nominee, only if (a) DTC or the servicer
advises the indenture trustee in writing that DTC is no longer willing or able
to discharge properly its responsibilities as depository of the book-entry notes
and DTC or the servicer is unable to locate a qualified successor or (b) the
indenture trustee, at its option, elects to terminate the book-entry system
through DTC.

Upon the occurrence of any event described in the immediately preceding
paragraph, DTC will be required to notify all participants of the availability
through DTC of definitive notes. Upon delivery of definitive notes, the
indenture trustee will reissue the book-entry notes as definitive notes to
beneficial owners. Distributions of principal of, and interest on, the
book-entry notes will thereafter be made by the indenture trustee, or a paying
agent on behalf of the indenture trustee, directly to holders of definitive
notes in accordance with the procedures set forth in the Indenture. Definitive
notes will be transferable and exchangeable at the offices of the indenture
trustee or the note registrar. No service charge will be imposed for any
registration of transfer or exchange, but the indenture trustee may require
payment of a sum sufficient to cover any tax or other governmental charge
imposed in connection therewith.

ASSIGNMENT AND PLEDGE OF INITIAL MORTGAGE LOANS

Pursuant to the Loan Sale Agreement, the originators will sell, transfer,
assign, set over and otherwise convey the mortgage loans, without recourse, to
the depositor on the closing date. Pursuant to the Sale and Servicing
Agreement, the depositor will sell, transfer, assign, set over and otherwise
convey without recourse to the trust, all right, title and interest in and to
each mortgage loan, including all principal outstanding as of, and interest due
after, the cut-off date. Each transfer will convey all right, title and
interest in and to (a) principal outstanding as of the cut-off date, and (b)
interest due on each mortgage loan after the cut-off date; provided, however,
-------- -------
that the originators will not convey, and the originators reserve and retain all
their respective right, title and interest in and to, principal, including
principal prepayments in full and curtailments or partial prepayments, received
on each mortgage loan on or prior to the cut-off date and interest due on each
mortgage loan on or prior to the cut-off date.

Pursuant to the Indenture, the trust will pledge to the indenture trustee
in trust for the benefit of the holders of the notes and the note insurer, all
right, title and interest in and to each mortgage loan, including all principal
outstanding as of, and interest due after, the cut-off date, as collateral
security for the notes.

ASSIGNMENT AND PLEDGE OF SUBSEQUENT MORTGAGE LOANS

The trust may acquire subsequent mortgage loans with the funds on deposit
in either pre-funding account at any time during the period from the closing
date until the earliest of

- the date on which the amount on deposit in pre-funding account is less
than $100,000,

- the date on which an event of default occurs under the terms of the
Indenture, or

- the close of business on ____________.

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<PAGE>

The amount on deposit in the pre-funding accounts will be reduced during
the this period by the amount thereof used to purchase subsequent mortgage loans
in accordance with the terms of the Indenture. The depositor expects that the
amount on deposit in each of the pre-funding accounts will be reduced to less
than $100,000 by ____________. To the extent funds in the pre-funding accounts
are not used to purchase subsequent mortgage loans by ____________, these funds
will be used to prepay the principal of the related class of notes on the
following distribution date. Subsequent mortgage loans will be transferred by
the originators to the depositor and transferred by the depositor to the trust.
The trust will then pledge the subsequent mortgage loans to the indenture
trustee, on behalf of the holders of the notes and the note insurer.

DELIVERY OF MORTGAGE LOAN DOCUMENTS

In connection with the sale, transfer, assignment or pledge of the mortgage
loans to the trust, the trust will cause to be delivered to the collateral
agent, on behalf of the indenture trustee, on the closing date, the following
documents concerning each mortgage loan which constitute the mortgage file:

(a) the original mortgage note, endorsed without recourse in blank by the
originator, including all intervening endorsements showing a complete
chain of endorsement;

(b) the original mortgage with evidence of recording indicated thereon or,
in limited circumstances, a copy thereof certified by the applicable
recording office;

(c) the recorded mortgage assignment(s), or copies thereof certified by
the applicable recording office, if any, showing a complete chain of
assignment from the originator of the mortgage loan to the originator
- which assignment may, at the originator's option, be combined with
the assignment referred to in clause (d) below;

(d) a mortgage assignment in recordable form, which, if acceptable for
recording in the relevant jurisdiction, may be included in a blanket
assignment or assignments, of each mortgage from the originator to the
indenture trustee;

(e) originals of all assumption, modification and substitution agreements
in those instances where the terms or provisions of a mortgage or
mortgage note have been modified or the mortgage or mortgage note has
been assumed; and

(f) an original title insurance policy or (A) a copy of the title
insurance policy, or (B) a binder thereof or copy of the binder
together with a certificate from the originator that the original
mortgage has been delivered to the title insurance company that issued
the binder for recordation.

Pursuant to the Sale and Servicing Agreement, the collateral agent, on
behalf of the indenture trustee, agrees to execute and deliver on or prior to
the closing date, or, for subsequent mortgage loans, on or prior to the
subsequent transfer date, an acknowledgment of receipt of the original mortgage
note, item (a) above, for each of the mortgage loans, with any exceptions noted.
The collateral agent, on behalf of the indenture trustee, agrees, for the
benefit of the holders of the notes and the note insurer, to review, or cause to
be reviewed, each mortgage file within thirty days after the closing date or the
subsequent transfer date, as applicable - or, for any Qualified Substitute
Mortgage Loan, within thirty days after the receipt by the collateral agent
thereof - and to deliver a certification generally to the effect that, as to
each mortgage loan listed in the schedule of mortgage loans,

- all documents required to be delivered to it pursuant to the Sale and
Servicing Agreement are in its possession,

S-26
<PAGE>

- each of these documents has been reviewed by it and has not been
mutilated, damaged, torn or otherwise physically altered, appears
regular on its face and relates to the mortgage loan, and

- based on its examination and only as to the foregoing documents,
specified information included on the schedule of mortgage loans
accurately reflects the information included in the mortgage file
delivered on that date.

If the collateral agent, during the process of reviewing the mortgage
files, finds any document constituting a part of an mortgage file which is not
executed, has not been received or is unrelated to the mortgage loans, or that
any mortgage loan does not conform to the requirements above or to the
description thereof as included in the schedule of mortgage loans, the
collateral agent shall promptly so notify the indenture trustee, the servicer,
the depositor and the note insurer in writing with details thereof. The
depositor agrees to use reasonable efforts to cause to be remedied a material
defect in a document constituting part of an mortgage file of which it is so
notified by the collateral agent. If, however, within sixty days after the
collateral agent's notice of the defect, the depositor has not caused the defect
to be remedied and the defect materially and adversely affects the interest of
the holders of the notes or the interests of the note insurer in the mortgage
loan, the depositor or the originator will either (a) substitute in lieu of the
mortgage loan a Qualified Substitute Mortgage Loan and, if the then outstanding
principal balance of the Qualified Substitute Mortgage Loan is less than the
principal balance of the mortgage loan as of the date of the substitution plus
accrued and unpaid interest thereon, deliver to the servicer a substitution
adjustment equal to the amount of any such shortfall or (b) purchase the
mortgage loan at a price equal to the outstanding principal balance of the
mortgage loan as of the date of purchase, plus the greater of (1) all accrued
and unpaid interest thereon and (2) thirty days' interest thereon, computed at
the mortgage interest rate, net of the servicing fee if the servicer is
effecting the repurchase, plus the amount of any unreimbursed servicing advances
made by the servicer, which purchase price shall be deposited in the
Distribution Account on the next succeeding servicer remittance date after
deducting therefrom any amounts received in respect of the repurchased mortgage
loan or Loans and being held in the Distribution Account for future distribution
to the extent these amounts have not yet been applied to principal or interest
on the mortgage loan. In addition, the depositor and the originators shall be
obligated to indemnify the indenture trustee, the collateral agent, the holders
of the notes and the note insurer for any third-party claims arising out of a
breach by the depositor or the originators of representations or warranties
regarding the mortgage loans. The obligation of the depositor and the
originators to cure a breach or to substitute or purchase any mortgage loan and
to indemnify constitute the sole remedies respecting a material breach of any
representation or warranty to the holders of the notes, the indenture trustee,
the collateral agent and the note insurer.

REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR

The depositor will represent, among other things, for each mortgage loan,
as of the closing date or the subsequent transfer date, as applicable, the
following:

1. the information included in the schedule of mortgage loans for each
mortgage loan is true and correct;

2. all of the original or certified documentation constituting the
mortgage files, including all material documents related thereto, has been
or will be delivered to the collateral agent, on behalf of the indenture
trustee, on the closing date or the subsequent transfer date, as
applicable;

3. the mortgaged property consists of a single parcel of real property
separately assessed for tax purposes, upon which is erected a detached or
an attached one-family residence or a detached two- to six-family dwelling,
or an individual condominium unit in a low-rise condominium, or a mobile
home unit, or an individual unit in a planned unit development, or a
commercial property, or a mixed use or multiple purpose property. The
residence, dwelling or unit is not,

S-27
<PAGE>

- a unit in a cooperative apartment,

- a property constituting part of a syndication,

- a time share unit,

- a property held in trust,

- a manufactured dwelling,

- a log-constructed home, or

- a recreational vehicle;

4. each mortgage is a valid first or second lien on a fee simple, or
its equivalent under applicable state law, estate in the real property
securing the amount owed by the mortgagor under the mortgage note subject
only to,

- the lien of current real property taxes and assessments which are
not delinquent,

- any first mortgage loan on the property,

- covenants, conditions and restrictions, rights of way, easements
and other matters of public record as of the date of recording of
the mortgage, the exceptions appearing of record being acceptable
to mortgage lending institutions generally in the area wherein
the property subject to the mortgage is located or specifically
reflected in the appraisal obtained in connection with the
origination of the mortgage loan obtained by the depositor, and

- other matters to which like properties are commonly subject which
do not materially interfere with the benefits of the security
intended to be provided by the mortgage;

5. immediately prior to the transfer and assignment by the depositor
to the depositor, the depositor had good title to, and was the sole owner
of each mortgage loan, free of any interest of any other person, and the
depositor has transferred all right, title and interest in each mortgage
loan to the depositor;

6. each mortgage loan conforms, and all the mortgage loans in the
aggregate conform, to the description thereof in this prospectus
supplement; and

7. all of the mortgage loans were originated in accordance with the
underwriting criteria described in this prospectus supplement.

Pursuant to the Sale and Servicing Agreement, upon the discovery by any of
the holder of the notes, the depositor, the servicer, any subservicer, the note
insurer, the collateral agent or the indenture trustee that any of the
representations and warranties contained in the Sale and Servicing Agreement
have been breached in any material respect as of the closing date or the
subsequent transfer date, as applicable, with the result that the interests of
the holders of the notes in the mortgage loan or the interests of the note
insurer were materially and adversely affected, notwithstanding that any
representation and warranty was made to the depositor's or the originator's best
knowledge and the depositor or the originator lacked knowledge of the breach,
the party discovering the breach is required to give prompt written notice to
the other parties. Subject to specified provisions of the Sale and Servicing
Agreement, within sixty days of the earlier to occur of the depositor's or an
originator's discovery or its receipt of notice of any breach, the depositor or
the originators will

S-28
<PAGE>

- promptly cure the breach in all material respects,

- remove each mortgage loan which has given rise to the requirement
for action by the depositor or the originators, substitute one or
more Qualified Substitute Mortgage Loans and, if the outstanding
principal balance of the Qualified Substitute Mortgage Loans as
of the date of the substitution is less than the outstanding
principal balance, plus accrued and unpaid interest thereon, of
the replaced mortgage loans as of the date of substitution,
deliver to the trust as part of the amounts remitted by the
servicer on the distribution date the amount of the shortfall, or

- purchase the mortgage loan at a price equal to the principal
balance of the mortgage loan as of the date of purchase plus the
greater of

- all accrued and unpaid interest thereon and

- thirty days' interest thereon computed at the mortgage
interest rate, net of the servicing fee if ____________ is
the servicer, plus the amount of any unreimbursed servicing
advances made by the servicer,

and deposit the purchase price into the Distribution Account on the next
succeeding servicer remittance date after deducting therefrom any amounts
received in respect of this repurchased mortgage loan or mortgage loans and
being held in the Distribution Account for future distribution to the extent
these amounts have not yet been applied to principal or interest on the mortgage
loan. In addition, the depositor and the originators shall be obligated to
indemnify the trust, the owner trustee, the indenture trustee, the collateral
agent, the holders of the notes and the note insurer for any third-party claims
arising out of a breach by the depositor or the originators of representations
or warranties regarding the mortgage loans. The obligation of the depositor and
the originators to cure any breach or to substitute or purchase any mortgage
loan and to indemnify constitute the sole remedies respecting a material breach
of any representation or warranty to the holders of the notes, the indenture
trustee, the collateral agent and the note insurer.

PAYMENTS ON THE MORTGAGE LOANS

The Sale and Servicing Agreement provides that the servicer, for the
benefit of the holders of the notes, shall establish and maintain the Collection
Account, which will generally be (a) an account maintained with a depository
institution or trust company whose long term unsecured debt obligations are
rated by each rating agency in one of its two highest rating categories at the
time of any deposit therein or (b) trust accounts maintained with a depository
institution acceptable to each rating agency and the note insurer. The Sale and
Servicing Agreement permits the servicer to direct any depository institution
maintaining the Collection Account to invest the funds in the Collection Account
in one or more eligible investments that mature, unless payable on demand, no
later than the business day preceding the date on which the servicer is required
to transfer the servicer remittance amount from the Collection Account to the
Distribution Account, as described below.

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<PAGE>

The servicer is obligated to deposit or cause to be deposited in the
Collection Account on a daily basis, amounts representing the following payments
received and collections made by it after the cut-off date, other than in
respect of monthly payments on the mortgage loans due on each mortgage loan up
to and including any due date occurring on or prior to the cut-off date:

- all payments on account of principal, including prepayments of
principal;

- all payments on account of interest on the mortgage loans;

- all Liquidation Proceeds and all Insurance Proceeds to the extent the
proceeds are not to be applied to the restoration of the mortgaged
property or released to the borrower in accordance with the express
requirements of law or in accordance with prudent and customary
servicing practices;

- all Net REO Proceeds;

- all other amounts required to be deposited in the Collection Account
pursuant to the Sale and Servicing Agreement; and

- any amounts required to be deposited in connection with net losses
realized on investments of funds in the Collection Account.

The indenture trustee will be obligated to set up an account for each class
of notes a distribution account into which the servicer will deposit or cause to
be deposited the servicer remittance amount on the _____ day of each month.
The servicer remittance amount for a servicer remittance date is equal to the
sum, without duplication, of

- all collections of principal and interest on the mortgage loans,
including principal prepayments, Net REO Proceeds and Liquidation
Proceeds, if any, collected by the servicer during the prior calendar
month,

- all Periodic Advances made by the servicer with respect to payments
due to be received on the mortgage loans on the due date and

- any other amounts required to be placed in the Collection Account by
the servicer pursuant to the Sale and Servicing Agreement,

but excluding the following:

(a) amounts received on particular mortgage loans, for which the servicer
has previously made an unreimbursed Periodic Advance, as late payments
of interest, or as Net Liquidation Proceeds, to the extent of the
unreimbursed Periodic Advance;

(b) amounts received on a particular mortgage loan for which the servicer
has previously made an unreimbursed servicing advance, to the extent
of the unreimbursed servicing advance;

(d) all net income from eligible investment that is held in the Collection
Account for the account of the servicer;

(e) all amounts actually recovered from the servicer in respect of late
fees, assumption fees, prepayment fees and similar fees;

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(f) Net Foreclosure Profits; and

(g) other amounts which are reimbursable to the servicer, as provided in
the Sale and Servicing Agreement.

The amounts described in clauses (a) through (g) above may be withdrawn by
the servicer from the Collection Account on or prior to each servicer remittance
date.

OVER-COLLATERALIZATION PROVISIONS

Over-collateralization Resulting from Cash Flow Structure. The Indenture
requires that, starting with the second distribution date, the Excess Interest
for a pool of mortgage loans, if any, that is not used to make
cross-collateralization payments will be applied on each distribution date as an
accelerated payment of principal on the related class of notes, but only to the
limited extent hereafter described. The application of Excess Interest as a
payment of principal has the effect of accelerating the amortization of a class
of notes relative to the amortization of the related pool of mortgage loans.
The Excess Interest from a pool of mortgage loans will be used

- to reimburse the note insurer for any amounts due to it,

- as needed to pay Net Mortgage Loan Interest Shortfalls relating to
that class,

- as needed to make cross-collateralization payments in respect of the
other pool of mortgage loans,

- as a payment of principal to the related class of notes until the
distribution date on which the amount of over-collateralization has
reached the required level, and

- as needed to fund the Cross-collateralization Reserve Account relating
to the other pool of mortgage loans.

Notwithstanding the foregoing, in the event specified tests enumerated in the
Indenture are violated, all available Excess Interest will be used as a payment
of principal to the related class of notes to accelerate the amortization of the
notes.

The Indenture requires that, starting with the second distribution date,
Excess Interest from a pool of mortgage loans that is not used to make
cross-collateralization payments will be applied as an accelerated payment of
principal on the related class of notes until the Over-collateralized Amount has
increased to the level required by the Indenture. After this time, if it is
necessary to re-establish the required level of over-collateralization, Excess
Interest from each pool of mortgage loans that is not used to make
cross-collateralization payments will again be applied as an accelerated payment
of principal on the related class of notes. Notwithstanding the foregoing, in
the event specified tests enumerated in the Indenture are violated, all
available Excess Interest from each pool of mortgage loans will be used as a
payment of principal to accelerate the amortization of the related class of
notes. Initially, the Over-collateralized Amount of each pool of mortgage loans
will be an amount equal to approximately 0.50% of the sum of (x) the aggregate
principal balance of the mortgage loans in each pool on the closing date and (y)
the original amount on deposit in the related pre-funding account on the closing
date.

In the event that the required level of the Specified Over-collateralized
Amount for a pool of mortgage loans is permitted to decrease or "step down" on a
distribution date in the future, the Indenture provides that a portion of the
principal which would otherwise be distributed to the holders of the related
class of notes on the distribution date shall instead be distributed in the
priority described in this prospectus supplement under "-Flow of Funds." This
has the effect of decelerating the amortization of the related class of notes
relative to the amortization of that pool of mortgage loans, and of reducing the
Over-collateralized Amount. If, on any distribution date, the Excess
Over-collateralized Amount is, or, after taking into account all other
distributions to be made on the distribution date would be, greater than zero -
i.e., the Over-collateralized Amount is or would be greater than the related
Specified Over-collateralized Amount - then any amounts relating to principal
which would otherwise be distributed to the holders of the related class of
notes on this distribution date shall instead be distributed in the priority
described in this prospectus supplement under "-Flow of Funds", in an amount
equal to the Over-collateralization Reduction Amount.

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The Indenture provides that, on any distribution date, all amounts
collected on account of principal - other than any such amount applied to the
payment of an Over-collateralization Reduction Amount - for each pool of
mortgage loans during the a due period of the prior calendar month will be
distributed to the holders of the related class of notes on the distribution
date. In addition, the Sale and Servicing Agreement provides that the principal
balance of any mortgage loan which becomes a Liquidated Mortgage Loan shall then
equal zero. The Sale and Servicing Agreement does not contain any rule which
requires that the amount of any Liquidated Loan Loss be distributed to the
holders of the related class of notes on the distribution date which immediately
follows the event of loss; i.e., the Sale and Servicing Agreement does not
require the current recovery of losses. However, the occurrence of a Liquidated
Loan Loss will reduce the Over-collateralized Amount for that pool of mortgage
loans, which, to the extent that the reduction causes the Over-collateralized
Amount to be less than the Specified Over-collateralized Amount applicable to
the related distribution date, will require the payment of an
Over-collateralization Increase Amount on that distribution date, or, if
insufficient funds are available on that distribution date, on subsequent
distribution dates, until the Over-collateralized Amount equals the related
Specified Over-collateralized Amount. The effect of the foregoing is to allocate
losses to the holders of the related trust certificates by reducing, or
eliminating entirely, payments of Excess Interest and Over-collateralization
Reduction Amounts which the holders would otherwise receive.

Over-collateralization and the Note Insurance Policy. The Indenture
requires the indenture trustee to make a claim for an Insured Payment under the
note insurance policy not later than the third business day prior to any
distribution date as to which the indenture trustee has determined that an
Over-collateralization Deficit will occur for the purpose of applying the
proceeds of the Insured Payment as a payment of principal to the holders of the
related class of notes on that distribution date. The note insurer has the
option on any distribution date to make a payment of principal, including in
respect of Liquidated Loan Losses, up to the amount that would have been payable
to the holders of the notes if sufficient funds were available thereof.
Additionally, under the terms of the Indenture, the note insurer will have the
option to cause Excess Interest to be applied without regard to any limitation
upon the occurrence of particular trigger events, or in the event of an "event
of default" under the Insurance Agreement. However, investors in the notes
should realize that, under extreme loss or delinquency scenarios, they may
temporarily receive no distributions of principal.

CROSS-COLLATERALIZATION PROVISIONS

Cross-collateralization Payments. On each distribution date, available
Excess Interest from a pool of mortgage loans, if any, will be paid to the
holders of the class of notes relating to the other pool of mortgage loans to
the extent of the Shortfall Amount for the other pool. The
cross-collateralization provisions of the transaction are limited to the payment
of specified credit losses, certain interest shortfalls and any amounts due the
note insurer. Excess Interest from one pool of mortgage loans will not be used
to build over-collateralization for the other pool of mortgage loans.

Cross-collateralization Reserve Account. Each class of notes will have the
benefit of a Cross-collateralization Reserve Account. On each distribution date,
available Excess Interest from a pool of mortgage loans, if any, will be paid
into the Cross-collateralization Reserve Account relating to the other pool of
mortgage loans, until the amount of funds on deposit therein equals the
Specified Reserve Amount for the other pool. If the amount on deposit in the
Cross-collateralization Reserve Account for a pool of mortgage loans on any
distribution date exceeds the Specified Reserve Amount for the pool and the
distribution date, the amount of this excess shall be distributed in the
priority described in this prospectus supplement under "-Flow of Funds."

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Funds on deposit in a Cross-collateralization Reserve Account will be used
on any distribution date to make payments in respect of the Shortfall Amount for
either pool, to the extent that there is no Excess Interest available therefor
on that distribution date.

FLOW OF FUNDS

On each distribution date, the indenture trustee, based solely on the
information received from the servicer in the servicer remittance report prior
to the distribution date, shall make payments in respect of each pool of
mortgage loans to the holders of the related class of notes and reimbursement to
the note insurer under the Insurance Agreement, to the extent of funds,
including any Insured Payments, on deposit in the related Distribution Account,
as follows:

(a) to the indenture trustee, an amount equal to the fees then due to it
for the related class of notes;

(b) from amounts then on deposit in the related Distribution Account,
excluding any Insured Payments, to the note insurer the Reimbursement
Amount as of that distribution date;

(c) from amounts then on deposit in the related Distribution Account, the
Interest Distribution Amount for the related class of notes;

(d) from amounts then on deposit in the related Distribution Account, the
Principal Distribution Amount for the related class of notes, until
the principal balance of the class of notes is reduced to zero;

(e) from amounts then on deposit in the related Distribution Account the
amount of any Net Mortgage Loan Interest Shortfalls for the related
class of notes;

(f) from amounts then on deposit in the related Distribution Account, to
the holders of the other class of notes, the Shortfall Amount for the
other class;

(g) from amounts then on deposit in the related Distribution Account, to
the Cross-collateralization Reserve Account relating to the other
class of notes, the amount necessary for the balance of the account to
equal the Specified Reserve Amount; and

(h) following the making by the indenture trustee of all allocations,
transfers and disbursements described above, to the holders of the
related trust certificates, the amount remaining on the distribution
date in the related Distribution Account, if any.

EVENTS OF DEFAULT

Upon the occurrence of an event of default, the indenture trustee, upon the
direction of the majority holders - which shall be the note insurer in the
absence of a default by the note insurer under the Insurance Agreement - shall
declare or, with respect to an event of default described in clauses (1) through
(7) below, the occurrence shall result in the automatic declaration of, the
aggregate outstanding principal balance of all the notes to be due and payable
together with all accrued and unpaid interest thereon without presentment,
demand, protest or other notice of any kind, all of which are waived by the
trust. An event of default, wherever used in this prospectus supplement, means
any one of the following events:

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1. the trust shall fail to distribute or cause to be distributed to
the indenture trustee, for the benefit of the holders of the notes, on any
distribution date, all or part of any Interest Distribution Amount due on
the notes on the distribution date and all or a part of any Net Mortgage
Loan Interest Shortfalls due on the notes on the distribution date;

2. the trust shall fail to distribute or cause to be distributed to
the indenture trustee, for the benefit of the holders of the notes, (x) on
any distribution date an amount equal to the principal due on the
outstanding notes on the distribution date, to the extent that sufficient
funds are on deposit in the Collection Account or (y) on the final stated
maturity date for any class of notes, the aggregate outstanding principal
balance of the related class of notes.

3. the trust shall breach or default in the due observance of any one
or more of the negative covenants under the Indenture.

4. the trust shall consent to the appointment of a custodian,
receiver, trustee or liquidator, or other similar official, of itself, or
of a substantial part of its property, or shall admit in writing its
inability to pay its debts generally as they come due, or a court of
competent jurisdiction shall determine that the trust is generally not
paying its debts as they come due, or the trust shall make a general
assignment for the benefit of creditors;

5. the trust shall file a voluntary petition in bankruptcy or a
voluntary petition or an answer seeking reorganization in a proceeding
under any bankruptcy laws, as now or hereafter in effect, or an answer
admitting the material allegation of a petition filed against the trust in
any such proceeding, or the trust shall, by voluntary petition, answer or
consent, seek relief under the provisions of any now existing or future
bankruptcy or other similar law providing for the reorganization or
winding-up of debtors, or providing for an agreement, composition,
extension or adjustment with its creditors;

6. an order, judgment or decree shall be entered in any proceeding by
any court of competent jurisdiction appointing, without the consent,
express or legally implied, of the trust, a custodian, receiver, trustee or
liquidator, or other similar official, of the trust or any substantial part
of its property, or sequestering any substantial part of its respective
property, and any such order, judgment or decree or appointment or
sequestration shall remain in force undismissed, unstayed or unvacated for
a period of ninety days after the date of entry thereof; or

7. a petition against the trust in a proceeding under applicable
bankruptcy laws or other insolvency laws, as now or hereafter in effect,
shall be filed and shall not be stayed, withdrawn or dismissed within
ninety days thereafter, or if, under the provisions of any law providing
for reorganization or winding-up of debtors which may apply to the trust,
any court of competent jurisdiction shall assume jurisdiction, custody or
control of the trust or any substantial part of its property, and such
jurisdiction, custody or control shall remain in force unrelinquished,
unstayed or unterminated for a period of ninety days.

REPORTS TO NOTEHOLDERS

Pursuant to the Indenture, on each distribution date the indenture trustee
will deliver to the servicer, the note insurer, the depositor and each holder of
a note or a trust certificate a written remittance report containing information
including, without limitation, the amount of the distribution on the
distribution date, the amount of the distribution allocable to principal and
allocable to interest, the aggregate outstanding principal balance of the notes
as of the distribution date, the amount of any Insured Payment included in the
distributions on the distribution date and any other information as required by
the Indenture.

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AMENDMENT

The Indenture may be amended from time to time by the trust and the
indenture trustee by written agreement, upon the prior written consent of the
note insurer, without notice to, or consent of, the holder of the notes, to cure
any ambiguity, to correct or supplement any provisions in this prospectus
supplement, to comply with any changes in the Code, or to make any other
provisions concerning matters or questions arising under the Indenture which
shall not be inconsistent with the provisions of the Indenture; provided, that
--------
this action shall not, as evidenced by an opinion of counsel delivered to, but
not obtained at the expense of, the indenture trustee, adversely affect in any
material respect the interests of any holder of the notes; provided, further,
-------- -------
that no such amendment shall 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 note without the consent of the holder of the note, or change
the rights or obligations of any other party to the Indenture without the
consent of that party.

The Indenture may be amended from time to time by the trust and the
indenture trustee with the consent of the note insurer, and the holders of the
majority of the percentage interest of the notes and trust certificates for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of the Indenture or of modifying in any manner the rights of
the holders; provided, however, that no such amendment shall 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 note without the consent of
the holder of the note or reduce the percentage for each class whose holders are
required to consent to any such amendment without the consent of the holders of
100% of each class of notes affected thereby.

The Loan Sale Agreement and the Sale and Servicing Agreement contain
substantially similar restrictions regarding amendment.

SERVICING OF THE MORTGAGE LOANS

THE SERVICER

____________ will act as the servicer of the mortgage loan pools
____________ and ____________ will act as subservicers for a portion of the
mortgage loans. See "The Originators, the Depositor, the Servicer and the
Subservicer" in this prospectus supplement. The servicer and the subservicers
will service the mortgage loans on behalf of the trust, for the benefit of the
note insurer and the holders of the notes and will be required to use the same
care as they customarily employ in servicing and administering mortgage loans
for their own account, in accordance with accepted mortgage servicing practices
of prudent lending institutions, and giving due consideration to the reliance of
the note insurer and the holders of the notes on them.

SERVICING FEES AND OTHER COMPENSATION AND PAYMENT OF EXPENSES

As compensation for its activities as servicer under the Sale and Servicing
Agreement, the servicer shall be entitled to a servicing fee for each mortgage
loan, which shall be payable monthly from amounts on deposit in the Collection
Account. The servicing fee shall be an amount equal to interest at one-twelfth
of the servicing fee rate for the mortgage loan on the outstanding principal
balance of the mortgage loan. The servicing fee rate for each mortgage loan
will be 0.50% per annum. In addition, the servicer shall be entitled to
receive, as additional servicing compensation, to the extent permitted by
applicable law and the mortgage notes, any late payment charges, assumption
fees, prepayment fees or similar items. The servicer shall also be entitled to
withdraw from the Collection Account any net interest or other income earned on
deposits therein. The servicer shall pay all expenses incurred by it in
connection with its servicing activities under the Sale and Servicing Agreement
and shall not be entitled to reimbursement therefor except as specifically
provided in the Sale and Servicing Agreement.

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PERIODIC ADVANCES AND SERVICER ADVANCES

Periodic Advances. Subject to the servicer's determination that the action
would not constitute a nonrecoverable advance, the servicer is required to make
Periodic Advances on each servicer remittance date. This Periodic Advances by
the servicer are reimbursable to the servicer subject to a number of conditions
and restrictions, and are intended to provide both sufficient funds for the
payment of interest to the holders of the notes, plus an additional amount
intended to maintain a specified level of over-collateralization and to pay the
indenture trustee's fees, and the premium due the note insurer. Notwithstanding
the servicer's good faith determination that a Periodic Advance was recoverable
when made, if the Periodic Advance becomes a nonrecoverable advance, the
servicer will be entitled to reimbursement therefor from the trust estate. See
"Description of the Notes - Payments on the Mortgage Loans" in this prospectus
supplement.

Servicing Advances. Subject to the servicer's determination that the action
would not constitute a nonrecoverable advance and that a prudent mortgage lender
would make a like advance if it or an affiliate owned the mortgage loan, the
servicer is required to advance amounts on the mortgage loans constituting
"out-of-pocket" costs and expenses relating to

- the preservation and restoration of the mortgaged property,

- enforcement proceedings, including foreclosures,

- expenditures relating to the purchase or maintenance of a first lien
not included in the trust estate on the mortgaged property, and

- other customary amounts described in the Sale and Servicing Agreement.

These servicing advances by the servicer are reimbursable to the servicer
subject to a number of conditions and restrictions. In the event that,
notwithstanding the servicer's good faith determination at the time the
servicing advance was made, that it would not be a nonrecoverable advance, the
servicing advance becomes a nonrecoverable advance, the servicer will be
entitled to reimbursement therefor from the trust estate.

Recovery of Advances. The servicer may recover Periodic Advances and
servicing advances to the extent permitted by the Sale and Servicing Agreement
or, if not recovered from the mortgagor on whose behalf the servicing advance or
Periodic Advance was made, from late collections on the mortgage loan, including
Liquidation Proceeds, Insurance Proceeds and any other amounts as may be
collected by the servicer from the mortgagor or otherwise relating to the
mortgage loan. In the event a Periodic Advance or a servicing advance becomes a
nonrecoverable advance, the servicer may be reimbursed for the advance from the
Distribution Account.

The servicer shall not be required to make any Periodic Advance or
servicing advance which it determines would be a nonrecoverable Periodic Advance
or nonrecoverable servicing advance. A Periodic Advance or servicing advance is
"nonrecoverable" if in the good faith judgment of the servicer, the Periodic
Advance or servicing advance would not ultimately be recoverable.

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PREPAYMENT INTEREST SHORTFALLS

Not later than the close of business on the _____ day of each month, the
servicer is required to remit to the indenture trustee a payment of Compensating
Interest in respect of Prepayment Interest Shortfalls and shall not have the
right to reimbursement therefor. Insured Payments do not cover Prepayment
Interest Shortfalls.

CIVIL RELIEF ACT INTEREST SHORTFALLS

The reduction, if any, in interest payable on the mortgage loans in the
applicable pool attributable to the application of the Civil Relief Act will not
reduce the amount of Current Interest due to the holders of the class A-1 notes
or class A-2 notes, respectively. However, in the event the full amount of
Current Interest is not available on any distribution date due to Civil Relief
Act interest shortfalls in the applicable pool, the amount of this shortfall
will not be covered by the note insurance policy. These shortfalls in Current
Interest will be paid from the Excess Interest, if any, otherwise payable in
respect of over-collateralization, cross-collateralization or to the holder of
the trust certificate relating to the applicable pool. See "Risk Factors -
Legal Considerations" in this prospectus supplement.

OPTIONAL PURCHASE OF DEFAULTED MORTGAGE LOANS

The depositor, or any affiliate of the depositor, has the option, but is
not obligated, to purchase from the trust any mortgage loan ninety days or more
delinquent at a purchase price equal to the outstanding principal balance
thereof as of the date of purchase, plus all accrued and unpaid interest on the
principal balance, computed at the mortgage interest rate - net of the servicing
fee, if ________ is the servicer - plus the amount of any unreimbursed Periodic
Advances and servicing advances made by the servicer for the mortgage loan in
accordance with the provisions specified in the Sale and Servicing Agreement.

SERVICER REPORTS

On each servicer remittance date, the servicer is required to deliver to
the note insurer, the indenture trustee, and the collateral agent, a servicer
remittance report setting forth the information necessary for the indenture
trustee to make the distributions described under "-Flow of Funds" in this
prospectus supplement and containing the information to be included in the
indenture trustee's remittance report for that distribution date.

The servicer is required to deliver to the note insurer, the indenture
trustee, the collateral agent, S&P and Moody's, not later than April 30th of
each year, starting in ___________, an officer's certificate stating that

- the servicer has fully complied with the servicing provisions of the
Sale and Servicing Agreement,

- a review of the activities of the servicer during the preceding
calendar year and of performance under the Sale and Servicing
Agreement has been made under the officer's supervision, and

- to the best of the officer's knowledge, based on that review, the
servicer has fulfilled all its obligations under the Sale and
Servicing Agreement for that year, or, if there has been a default in
the fulfillment of any obligation, specifying each default known to
that officer and the nature and status thereof including the steps
being taken by the servicer to remedy the default.

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Not later than April 30th of each year, the servicer, at its expense, is
required to cause to be delivered to the note insurer, the indenture trustee,
the collateral agent, S&P and Moody's from a firm of independent certified
public accountants, who may also render other services to the servicer, a
statement to the effect that the firm has examined certain documents and records
relating to the servicing of the mortgage loans during the preceding calendar
year, or any longer period from the closing date to the end of the following
calendar year, and that, on the basis of the examination conducted substantially
in compliance with generally accepted auditing standards and the requirements of
the Uniform Single Attestation Program for Mortgage Bankers or the Audit Program
for Mortgages serviced for Freddie Mac, the servicing has been conducted in
compliance with the Sale and Servicing Agreement except for any significant
exceptions or errors in records that, in the opinion of the firm, generally
accepted auditing standards and the Uniform Single Attestation Program for
Mortgage Bankers or the Audit Program for Mortgages serviced for Freddie Mac
require it to report, in which case the exceptions and errors shall be so
reported.

COLLECTION AND OTHER SERVICING PROCEDURES

The servicer will be responsible for making reasonable efforts to collect
all payments called for under the mortgage loans and will, consistent with the
Sale and Servicing Agreement, follow the collection procedures as it follows for
loans held for its own account which are comparable to the mortgage loans.
Consistent with the above, the servicer may, in its discretion, (a) waive any
late payment charge and (b) arrange with a mortgagor a schedule for the
liquidation of delinquencies, subject to the provisions of the Sale and
Servicing Agreement.

If a mortgaged property has been or is about to be conveyed by the
mortgagor, the servicer will be obligated to accelerate the maturity of the
mortgage loan, unless it reasonably believes it is unable to enforce that
mortgage loan's "due-on-sale" clause under applicable law. If it reasonably
believes it may be restricted for any reason from enforcing any "due-on-sale"
clause, the servicer may enter into an assumption and modification agreement
with the person to whom the property has been or is about to be conveyed,
pursuant to which that person becomes liable under the mortgage note.

Any fee collected by the servicer for entering into an assumption agreement
will be retained by the servicer as additional servicing compensation. In
connection with any assumption, the mortgage interest rate borne by the mortgage
note relating to each mortgage loan may not be decreased. For a description of
circumstances in which the servicer may be unable to enforce "due-on-sale"
clauses, see "Certain Legal Aspects of the Mortgage Loans and Contracts - The
Mortgage Loans - 'Due-on-Sale' Clauses" in the accompanying prospectus.

HAZARD INSURANCE

The servicer is required to cause to be maintained for each mortgaged
property a hazard insurance policy with coverage which contains a standard
mortgagee's clause in an amount equal to the lesser of (a) the maximum insurable
value of the mortgaged property or (b) the principal balance of the mortgage
loan plus the outstanding balance of any mortgage loan senior to the mortgage
loan, but in no event may this amount be less than is necessary to prevent the
borrower from becoming a coinsurer thereunder. As stated above, all amounts
collected by the servicer under any hazard policy, except for amounts to be
applied to the restoration or repair of the mortgaged property or released to
the borrower in accordance with the servicer's normal servicing procedures, to
the extent they constitute Net Liquidation Proceeds or Insurance Proceeds, will
ultimately be deposited in the related Distribution Account. The ability of the
servicer to assure that hazard insurance proceeds are appropriately applied may
be dependent on its being named as an additional insured under any hazard
insurance policy, or upon the extent to which information in this regard is
furnished to the servicer by a borrower. The Sale and Servicing Agreement
provides that the servicer may satisfy its obligation to cause hazard policies
to be maintained by maintaining a blanket policy issued by an insurer acceptable
to the rating agencies insuring against losses on the mortgage loans. If this
blanket policy contains a deductible clause, the servicer is obligated to
deposit in the related Distribution Account the sums which would have been
deposited therein but for that clause.

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In general, the standard form of fire and extended coverage policy covers
physical damage to or destruction of the improvements on the property by fire,
lightning, explosion, smoke, windstorm and hail, and riot, strike and civil
commotion, subject to the conditions and exclusions specified in each policy.
Although the policies relating to the mortgage loans will be underwritten by
different insurers under different state laws in accordance with different
applicable state forms and therefore will not contain identical terms and
conditions, the terms thereof are dictated by respective state laws, and most of
these policies typically do not cover any physical damage resulting from the
following: war, revolution, governmental actions, floods and other
weather-related causes, earth movement, including earthquakes, landslides and
mudflows, nuclear reactions, wet or dry rot, vermin, rodents, insects or
domestic animals, theft and, in some cases, vandalism. The foregoing list is
merely indicative of the types of uninsured risks and is not intended to be
all-inclusive.

The hazard insurance policies covering the mortgaged properties typically
contain a co-insurance 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 improvements on the property in order to recover the
full amount of any partial loss. If the insured's coverage falls below this
specified percentage, that clause generally provides that the insurer's
liability in the event of partial loss does not exceed the greater of (a) the
replacement cost of the improvements less physical depreciation or (b) this
proportion of the loss as the amount of insurance carried bears to the specified
percentage of the full replacement cost of these improvements.

Since residential and commercial properties, generally, have historically
appreciated in value over time, if the amount of hazard insurance maintained on
the improvements securing the mortgage loans were to decline as the principal
balances owing thereon decreased, hazard insurance proceeds could be
insufficient to restore fully the damaged property in the event of a partial
loss.

REALIZATION UPON DEFAULTED MORTGAGE LOANS

The servicer will foreclose upon, or otherwise comparably convert to
ownership, mortgaged properties securing such of the mortgage loans as come into
default when, in the opinion of the servicer, no satisfactory arrangements can
be made for the collection of delinquent payments. In connection with the
foreclosure or other conversion, the servicer will follow the practices as it
deems necessary or advisable and as are in keeping with the servicer's general
loan servicing activities and the Sale and Servicing Agreement; provided, that
--------
the servicer will not expend its own funds in connection with foreclosure or
other conversion, correction of a default on a senior mortgage or restoration of
any property unless the foreclosure, correction or restoration is determined to
increase Net Liquidation Proceeds.

REMOVAL AND RESIGNATION OF THE SERVICER

The note insurer may, pursuant to the Sale and Servicing Agreement, remove
the servicer upon the occurrence and continuation beyond the applicable cure
period of an event described in clauses (g), (h) or (i) below and the indenture
trustee, only at the direction of the note insurer or the majority holders of
notes, with the consent of the note insurer, in the case of any direction of the
majority holders, may remove the servicer upon the occurrence and continuation
beyond the applicable cure period of an event described in clause (a), (b), (c),
(d), (e) or (f) below. Each of the following constitutes a servicer event of
default:

S-39
<PAGE>

(a) any failure by the servicer to remit to the indenture trustee any
payment required to be made by the servicer under the terms of the
Sale and Servicing Agreement, other than servicing advances covered by
clause (b) below, which continues unremedied for one business day
after the date upon which written notice of any failure, requiring the
same to be remedied, shall have been given to the servicer and the
note insurer by the indenture trustee or to the servicer and the
indenture trustee by the note insurer or the holders of notes
evidencing percentage interests of at least 25%;

(b) the failure by the servicer to make any required servicing advance
which failure continues unremedied for a period of thirty days after
the date on which written notice of any failure, requiring the same to
be remedied, shall have been given to the servicer by the indenture
trustee or to the servicer and the indenture trustee by any holder of
a note or the note insurer;

(c) any failure on the part of the servicer duly to observe or perform in
any material respect any other of the covenants or agreements on the
part of the servicer contained in the Sale and Servicing Agreement, or
the failure of any representation and warranty enumerated in the Sale
and Servicing Agreement, which continues unremedied for a period of
thirty days after the date on which written notice of any failure,
requiring the same to be remedied, shall have been given to the
servicer by the indenture trustee, or to the servicer and the
indenture trustee by any holder of a note or the note insurer;

(d) a decree or order of a court or agency or supervisory authority having
jurisdiction in an involuntary case under any present or future
federal or state bankruptcy, insolvency or similar law or for the
appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the
servicer and this decree or order shall have remained in force,
undischarged or unstayed for a period of sixty days;

(e) the servicer shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or
relating to the servicer or of or relating to all or substantially all
of the servicer's property;

(f) the servicer shall admit in writing its inability generally to pay its
debts as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment
for the benefit of its creditors, or voluntarily suspend payment of
its obligations;

(g) the delinquency or loss experience of the mortgage loans exceeds
levels specified in the Sale and Servicing Agreement;

(h) the note insurer shall notify the indenture trustee of any "event of
default" under the Insurance Agreement; or

(i) the occurrence of an event of default under the Indenture.

S-40
<PAGE>

The servicer may not assign its obligations under the Sale and Servicing
Agreement nor resign from the obligations and duties thereby imposed on it
except by mutual consent of the servicer, _______, if _______ is not the
servicer, the note insurer, the collateral agent and the indenture trustee, or
upon the determination that the servicer's duties thereunder are no longer
permissible under applicable law and such incapacity cannot be cured by the
servicer without the incurrence, in the reasonable judgment of the note insurer,
of unreasonable expense. No such resignation shall become effective until a
successor has assumed the servicer's responsibilities and obligations in
accordance with the Sale and Servicing Agreement.

Upon removal or resignation of the servicer, the indenture trustee will be
the successor servicer. The indenture trustee, as successor servicer, will be
obligated to make Periodic Advances and servicing advances and other advances
unless it determines reasonably and in good faith that the advances would not be
recoverable. If, however, the indenture trustee is unwilling or unable to act as
successor servicer, or if the majority holders, with the consent of the note
insurer, or the note insurer so requests, the indenture trustee shall appoint,
or petition a court of competent jurisdiction to appoint, in accordance with the
provisions of the Sale and Servicing Agreement and subject to the approval of
the note insurer, any established mortgage loan servicing institution acceptable
to the note insurer having a net worth of not less than $____________ as the
successor servicer in the assumption of all or any part of the responsibilities,
duties or liabilities of the servicer.

Pursuant to the Sale and Servicing Agreement, the servicer covenants and
agrees to act as the servicer for an initial term from the closing date to
____________, which term will be extendable by the note insurer by notice to the
indenture trustee for successive terms of three calendar months each, until the
termination of the trust estate. The servicer will, upon its receipt of each
notice of extension, become bound for the duration of the term covered by the
extension notice to continue as the servicer subject to and in accordance with
the other provisions of the Sale and Servicing Agreement. If as of the fifteenth
day prior to the last day of any term of the servicer the indenture trustee
shall not have received any extension notice from the note insurer, the
indenture trustee will, within five days thereafter, give written notice of
non-receipt to the note insurer and the servicer. The note insurer has agreed to
extend each three month term of the servicer, in the absence of a servicer event
of default under the Sale and Servicing Agreement.

The indenture trustee and any other successor servicer in that capacity is
entitled to the same reimbursement for advances and no more than the same
servicing compensation as the servicer. See "-Servicing and Other Compensation
and Payment of Expenses" in this prospectus supplement.

OPTIONAL CLEAN-UP CALL ON THE NOTES

The servicer may, at its option, call the class A-1 notes or the class A-2
notes, separately, on the Note Clean-up Call Date by depositing an amount equal
to the aggregate outstanding principal balance of the class of notes on that
distribution date, plus accrued and unpaid interest thereon, and any unpaid
amounts due the note insurer in respect of the class of notes into the related
Distribution Account. The mortgage loans relating to the redeemed class will
remain pledged to the indenture trustee, for the benefit of the holders of the
notes, to secure the cross-collateralization obligations of the trust with
regard to the other class.

TERMINATION; PURCHASE OF MORTGAGE LOANS

The Indenture will terminate upon notice to the indenture trustee of
either: (a) the later of the distribution to noteholders of the final payment or
collection on the last mortgage loan, or Periodic Advances of same by the
servicer, or the disposition of all funds from the last mortgage loan and the
remittance of all funds due under the Indenture and the payment of all amounts
due and payable to the note insurer, the collateral agent and the indenture
trustee or (b) mutual consent of the servicer, the note insurer and all holders
in writing; provided, however, that in no event will the trust terminate later
-------- -------
than twenty-one years after the death of the last surviving lineal descendant of
the person named in the Trust Agreement.

S-41
<PAGE>

Subject to provisions in the Indenture concerning adopting a plan of
complete liquidation, the servicer may, at its option and at its sole cost and
expense, terminate the Indenture on any date on which the aggregate principal
balance of the mortgage loans is less than 10% of the sum of (x) the aggregate
original principal balance of the mortgage loans purchased on the closing date
and (y) the original amount on deposit in the pre-funding accounts, by
purchasing, on the next succeeding distribution date, all of the outstanding
mortgage loans and REO Properties at a price equal to the sum of

- 100% of the principal balance of each outstanding mortgage loan and
each REO property,

- the greater of (a) the aggregate amount of accrued and unpaid interest
on the mortgage loans through the due period and (b) thirty days'
accrued interest thereon computed at a rate equal to the mortgage
interest rate, in each case net of the servicing fee,

- any unreimbursed amounts due to the note insurer under the Indenture,
the Sale and Servicing Agreement, the Insurance Agreement and, without
duplication, accrued and unpaid Insured Payments, and

- the indenture trustee's fees.

Any such purchase shall be accomplished by depositing into each Distribution
Account the portion of the purchase price specified above which relates to the
class of notes. No such termination is permitted without the prior written
consent of the note insurer if it would result in a draw on the note insurance
policy.

THE NOTE INSURANCE POLICY

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

Simultaneously with the issuance of the notes, the note insurer will
deliver the note insurance policy to the indenture trustee, for the benefit of
the holders of the notes. Under the note insurance policy, the note insurer will
irrevocably and unconditionally guarantee payment on each distribution date to
the indenture trustee, for the benefit of the holders of the notes, of the
Insured Distribution Amounts for the related class of notes calculated in
accordance with the original terms of the notes when issued and without regard
to any amendment or modification of the notes or the Indenture except amendments
or modifications to which the note insurer has given its prior written consent.
In addition, for any distribution date occurring on a date when an event of
default under the Insurance Agreement, as described below, has occurred and is
continuing or a date on or after the first date on which a claim is made under
the note insurance policy, the note insurer at its sole option, may pay any or
all of the outstanding principal balance of the notes. Mortgage Loan Interest
Shortfalls will not be covered by payments under the note insurance policy.

Payment of claims under the note insurance policy will be made by the note
insurer following receipt by the note insurer of the appropriate notice for
payment on the later to occur of (a) 12:00 noon, New York City time, on the
second business day following receipt of notice for payment, and (b) 12:00 noon,
New York City time, on the relevant distribution date.

S-42
<PAGE>

If any payment of an amount guaranteed by the note insurer pursuant to the
note insurance policy is avoided as a preference payment under applicable
bankruptcy, insolvency, receivership or similar law the note insurer will pay
the amount out of the funds of the note insurer on the later of

- the date when due to be paid pursuant to the bankruptcy order referred
to below or

- the first to occur of

- the fourth business day following receipt by the note insurer
from the indenture trustee of (A) a certified copy of the order
of the court or other governmental body which exercised
jurisdiction to the effect that a holder is required to return
principal or interest distributed on a note during the term of
the note insurance policy because these distributions were
avoidable preferences under applicable bankruptcy law, (B) a
certificate of the holder(s) that the bankruptcy order has been
entered and is not subject to any stay, and (C) an assignment
duly executed and delivered by the holder(s), in such form as is
reasonably required by the note insurer and provided to the
holder(s) by the note insurer, irrevocably assigning to the note
insurer all rights and claims of the holder(s) relating to or
arising under the notes against the debtor which made the
preference payment or otherwise concerning the preference
payment, or

- the date of receipt by the note insurer from the indenture
trustee of the items referred to in clauses (A), (B) and (C)
above if, at least four business days prior to the date of
receipt, the note insurer shall have received written notice from
the indenture trustee that these items were to be delivered on
that date and that date was specified in the notice.

This payment shall be disbursed to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the bankruptcy order and
not to the indenture trustee or any holder directly - unless a holder has
previously paid the amount to the receiver, conservator, debtor-in-possession or
trustee in bankruptcy named in the bankruptcy order, in which case the payment
shall be disbursed to the indenture trustee for distribution to the holder upon
proof of the payment reasonably satisfactory to the note insurer.

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

Under the note insurance policy, "business day" means any day other than a
Saturday or Sunday or a day on which banking institutions in the City of New
York, New York or the State of New York, are authorized or obligated by law or
executive order to be closed. The note insurer's obligations under the note
insurance policy to make Insured Payments shall be discharged to the extent
funds are transferred to the indenture trustee as provided in the note insurance
policy, whether or not the funds are properly applied by the indenture trustee.

S-43
<PAGE>

The note insurer shall be subrogated to the rights of each holder to
receive payments of principal and interest, as applicable, with respect to
distributions on the notes to the extent of any payment by the note insurer
under the note insurance policy. To the extent the note insurer makes Insured
Payments, either directly or indirectly, as by paying through the indenture
trustee, to the holders of notes, the note insurer will be subrogated to the
rights of the holders, as applicable, with respect to this Insured Payment and
shall be deemed to the extent of the payments so made to be a registered holder
for purposes of payment.

Claims under the note insurance policy will rank equally with any other
unsecured debt and unsubordinated obligations of the note insurer except for
particular obligations in respect of tax and other payments to which preference
is or may become afforded by statute. Claims against the note insurer under the
note insurance policy constitute pari passu claims against the general assets of
the note insurer. The terms of the note insurance policy cannot be modified or
altered by any other agreement or instrument, or by the merger, consolidation or
dissolution of the trust. The note insurance policy is governed by the laws of
the State of New York. The note insurance policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.

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

Pursuant to the terms of the Indenture, unless a note insurer default
exists, the note insurer shall be deemed to be the holder of the notes for all
purposes, other than for payment on the notes, will be entitled to exercise all
rights of the holders thereunder, without the consent of the holders, and the
holders may exercise these rights only with the prior written consent of the
note insurer. In addition, the note insurer will, as a third-party beneficiary
to the Indenture, the Sale and Servicing Agreement and the Loan Sale Agreement,
have, among others, the following rights:

- the right to give notices of breach or to terminate the rights and
obligations of the servicer under the Sale and Servicing Agreement in
the event of a servicer event of default and to institute proceedings
against the servicer;

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

- the right to remove the indenture trustee pursuant to the Indenture;

- the right to direct the actions of the indenture trustee during the
continuation of a servicer default;

- the right to require the depositor to repurchase mortgage loans for
breach of representation and warranty or defect in documentation;

- the right to direct foreclosures upon the failure of the servicer to
do so in accordance with the Sale and Servicing Agreement;

- the right to direct all matters relating to a bankruptcy or other
insolvency proceeding involving the depositor; and

- the right to direct the indenture trustee to investigate specified
matters.

The note insurer's consent will be required prior to, among other things,
(x) the removal of the indenture trustee, (y) the appointment of any successor
indenture trustee or servicer or (z) any amendment to the Indenture or the Sale
and Servicing Agreement.

S-44
<PAGE>

The trust, the depositor, the servicer, the originators and the note
insurer will enter into the Insurance Agreement pursuant to which the trust, the
depositor, the servicer and the originators will agree to reimburse, with
interest, the note insurer for amounts paid pursuant to claims under the note
insurance policy; provided, the payment obligations shall be non-recourse
--------
obligations of the depositor, the originators, the trust and the servicer and
shall be payable only from monies available for the payment in accordance with
the provisions of the Indenture. The servicer will further agree to pay the note
insurer all reasonable charges and expenses which the note insurer may pay or
incur relative to any amounts paid under the note insurance policy or otherwise
in connection with the transaction and to indemnify the note insurer against
specified liabilities. Except to the extent provided therein, amounts owing
under the Insurance Agreement will be payable solely from the trust estate. An
"event of default" under the Insurance Agreement will constitute an event of
default under the Indenture and a servicer event of default under the Sale and
Servicing Agreement and allow the note insurer, among other things, to direct
the indenture trustee to terminate the servicer. An "event of default" under the
Insurance Agreement includes:

- the originators', the depositor's or the servicer's failure to pay
when due any amount owed under the Insurance Agreement or other
documents,

- the inaccuracy or incompleteness in any material respect of any
representation or warranty of the originators, the depositor or the
servicer in the Insurance Agreement, the Sale and Servicing Agreement,
the Indenture or other documents,

- the originators', the depositor's or the servicer's failure to perform
or to comply with any covenant or agreement in the Insurance
Agreement, the Sale and Servicing Agreement, the Indenture and other
documents,

- a finding or ruling by a governmental authority or agency that the
Insurance Agreement, the Sale and Servicing Agreement, the Indenture
or other documents are not binding on the originators, the depositor
or the servicer,

- the originators', the depositor's or the servicer's failure to pay its
debts in general or the occurrence of specified events of insolvency
or bankruptcy with respect to the depositor or the servicer, and

- the occurrence of specified "performance test violations" designed to
measure the performance of the mortgage loans.

THE NOTE INSURER

The following information has been obtained from ________________________
and has not been verified by the originators, the servicer, the depositor or the
underwriter. No representation or warranty is made by the depositor, the
originators, the servicer, the depositor or the underwriter with respect
thereto.

THE NOTE INSURER

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

S-45
<PAGE>

The principal executive offices of ____________ are located at
________________________, and its telephone number at that location is
____________.

REINSURANCE

Pursuant to an intercompany agreement, liabilities on financial guaranty
insurance written or reinsured from third parties by ____________ or any of its
domestic operating insurance company subsidiaries are generally reinsured among
these companies on an agreed-upon percentage substantially proportional to their
respective capital, surplus and reserves, subject to applicable statutory risk
limitations. In addition, ____________ reinsures a portion of its liabilities
under some of its financial guaranty insurance policies with other reinsurers
under various treaties and on a transaction-by-transaction basis. This
reinsurance is utilized by ____________ as a risk management device and to
comply with statutory and rating agency requirements; it does not alter or limit
____________ obligations under any financial guaranty insurance policy.

RATINGS

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

CAPITALIZATION

The following table sets forth the capitalization of ____________ and its
wholly owned subsidiaries on ____________ the basis of generally accepted
accounting principles as of ____________:

[Note insurer to provide]

For further information concerning ____________, see the Consolidated
Financial Statements of ____________, and the notes thereto, incorporated by
reference in this prospectus supplement. ____________ financial statements are
included as exhibits to the annual report on Form 10-K and Quarterly Reports on
Form 10-Q filed with the Commission by ____________ and may be reviewed at the
EDGAR website maintained by the Commission. Copies of the statutory quarterly
and annual statements filed with the State of ____________ Insurance Department
by ____________ are available upon request to the State of ____________
Insurance Department.

INSURANCE REGULATION

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

S-46
<PAGE>

PREPAYMENT AND YIELD CONSIDERATIONS

The weighted average life of, and, if purchased at other than par, the
yield to maturity on, a note will be directly related to the rate of payment of
principal of the mortgage loans, including for this purpose voluntary payment in
full of mortgage loans prior to stated maturity, liquidations due to defaults,
casualties and condemnations, and repurchases of or substitutions for mortgage
loans by ____________ or an affiliate of ____________ as required or permitted
under the Indenture, the Sale and Servicing Agreement or the Loan Sale
Agreement.

The actual rate of principal prepayments on pools of mortgage loans is
influenced by a variety of economic, tax, geographic, demographic, social, legal
and other factors and has fluctuated considerably in recent years. In addition,
the rate of principal prepayments may differ among pools of mortgage loans at
any time because of specific factors relating to the mortgage loans in the
particular pool, including, among other things, the age of the mortgage loans,
the geographic locations of the properties securing the loans and the extent of
the mortgagors' equity in these properties, and changes in the mortgagors'
housing needs, job transfers and unemployment.

The rate of prepayments on conventional mortgage loans has fluctuated
significantly in recent years. In general, if prevailing interest rates fall
significantly below the interest rates of some mortgage loans at the time of
origination, these mortgage loans may be subject to higher prepayment rates than
if prevailing rates remain at or above those at the time these mortgage loans
were originated. Conversely, if prevailing interest rates rise appreciably above
the interest rates of some mortgage loans at the time of origination, these
mortgage loans may experience a lower prepayment rate than if prevailing rates
remain at or below those at the time these mortgage loans were originated.
However, there can be no assurance that the mortgage loans will conform to the
prepayment experience of conventional mortgage loans or to any past prepayment
experience or any published prepayment forecast. No assurance can be given as to
the level of prepayments on mortgage loans that the trust estate will
experience.

As indicated above, if purchased at other than par, the yield to maturity
on a note will be affected by the rate of the payment of principal on the
mortgage loans. If the actual rate of payments on the mortgage loans is slower
than the rate anticipated by an investor who purchases a note at a discount, the
actual yield to the investor will be lower than the investor's anticipated
yield. If the actual rate of payments on the mortgage loans is faster than the
rate anticipated by an investor who purchases a note at a premium, the actual
yield to the investor will be lower than the investor's anticipated yield.

S-47
<PAGE>

The final stated maturity date is expected to be ____________ for the class
A-1 notes and the class A-2 notes. Each final stated maturity date was
calculated using the assumption that the final stated maturity date is thirteen
months after the final stated maturity date of the mortgage loan having the
latest maturity date in each pool and assuming a subsequent mortgage loan having
a final stated maturity date of ____________ is purchased by the trust and
included in each pool. The weighted average life of the notes 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 for any
class of the notes could occur significantly earlier than the final stated
maturity date because:

- prepayments, including, for this purpose, prepayments attributable to
foreclosure, liquidation, repurchase and the like, on mortgage loans
are likely to occur,

- thirteen months have been added to obtain the final stated maturity
date above,

- the over-collateralization provisions of the transaction result in the
application of Excess Interest to the payment of principal;

- the servicer may cause a liquidation of the trust estate when the
aggregate outstanding principal amount of the mortgage loans is less
than 10% of the sum of (a) the aggregate principal balance of the
mortgage loans purchased on the closing date and (b) the original
amount on deposit in the pre-funding accounts; and

- the servicer may, at its option, call the class A-1 notes or the class
A-2 notes, separately, when the aggregate outstanding principal
balance of the class A-1 notes or the class A-2 notes, respectively,
is equal to or less than 10% of the aggregate original principal
balance of the class A-1 notes or the class A-2 notes, respectively.

Weighted average life refers to the average amount of time that will elapse
from the date of issuance of a security until each dollar of principal of the
security is scheduled to be repaid to an investor. The weighted average life of
the notes will be influenced by the rate at which principal of the mortgage
loans is paid, which may be in the form of scheduled amortization or prepayments
- - for this purpose, the term "prepayment" includes liquidations due to default.

Prepayments on mortgage loans are commonly measured relative to a
prepayment model or standard. The model used in this prospectus supplement, Home
Equity Prepayment or HEP, is a prepayment assumption which represents an assumed
rate of prepayment each month relative to the then outstanding principal balance
of a pool of mortgage loans for the life of the mortgage loans. For example, 25%
HEP assumes a constant prepayment rate of 2.5% per annum of the then outstanding
principal balance of the mortgage loans in the first month of the life of the
mortgage loans and an additional 2.5% per annum in each month thereafter up to
and including the tenth month. Beginning in the eleventh month and in each month
thereafter during the life of the mortgage loans, 25% HEP assumes a constant
prepayment rate of 25% per annum. As used in the table below, 0% prepayment
assumption assumes prepayment rates equal to 0% of the prepayment assumption -
i.e., no prepayments on the mortgage loans having the characteristics described
below. The prepayment assumption does not purport to be a historical description
of prepayment experience or a prediction of the anticipated rate of prepayment
of any pool of mortgage loans, including the mortgage loans.

The following table has been prepared on the basis of the following
modeling assumptions:

- The mortgage loans prepay at the indicated percentage of the
prepayment assumption,

- distributions on the notes are received in cash on the ____ day of
each month commencing in ____________,

- no defaults or delinquencies in, or modifications, waivers or
amendments respecting the payment by the mortgagors of principal and
interest on the mortgage loans occur,

- scheduled payments are assumed to be received on the last day of each
month commencing in ____________, or as presented in the following
table, and prepayments represent payments in full of individual
mortgage loans and are assumed to be received on the last day of each
month, commencing in ____________, or as presented in the following
table, and include thirty (30) days' interest thereon,

S-48
<PAGE>

- the notes are purchased on ____________,

- the Specified Over-collateralized Amount is as enumerated in the
Indenture,

- on each distribution date, all Excess Interest for each pool is
applied to build up over-collateralization necessary to satisfy the
Specified Over-Collateralized Amount for each pool, except for the
first distribution date, on which the amount of Excess Interest
applied to build up over-collateralization is zero,

- the mortgage loans in pool I consist of ____________ mortgage loans
having the following characteristics:

<TABLE>
<CAPTION>
Principal Mortgage Net Mortgage Original Amortizing Remaining Amortizing Remaining Term to
Balance ($) Interest Rate (%) Interest Rate (%) Term (in months) Term (in months) Maturity (in months)
- ----------- ----------------- ----------------- -------------------- --------------------- --------------------
<S> <C> <C> <C> <C> <C>
</TABLE>

The mortgage loans in pool II consists of ____________ mortgage loans
having the following characteristics:

The foregoing modeling assumptions are assumptions and are not necessarily
indicative of actual performance.

Based upon the foregoing modeling assumptions, the tables below indicate
the weighted average life and earliest retirement date of the notes assuming
that the mortgage loans prepay according to the indicated percentages of the
prepayment assumption.

WEIGHTED AVERAGE LIVES

Class A-1 Notes
Prepayment Weighted Average Earliest
Assumption (HEP) Life in Years Retirement Date
---------------- -------------- ---------------

Class A-2 Notes
Prepayment Weighted Average Earliest
Assumption (HEP) Life in Years Retirement Date
---------------- -------------- ---------------

The foregoing tables were prepared assuming that:

- the weighted average life of each class of notes is determined by

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- multiplying the amount of each principal payment used to retire
the related class of notes by the number of years from the
closing date to the final distribution date when the related
class of notes is fully retired,

- adding the results, and

- dividing the sum by the original principal balance of that class;
and

- the call of the class A-1 notes or the class A-2 notes, respectively,
occurs as stated in this prospectus supplement.

______________________

There is no assurance that prepayments will occur or, if they do occur,
that they will occur at any percentage of HEP.

The Indenture provides that none of the note insurer, the trust, the owner
trustee, the indenture trustee, the depositor, the depositor, the originators or
the servicer will be liable to any holder for any loss or damage incurred by the
holder as a result of any difference in the rate of return received by the
holder as compared to the applicable note rate, with respect to any holder of
notes upon reinvestment of the funds received in connection with any premature
repayment of principal on the notes, including any such repayment resulting from
any prepayment by the mortgagor, any liquidation of the mortgage loan, or any
repurchase of or substitution for any mortgage loan by the depositor or the
servicer.

CERTAIN FEDERAL INCOME TAX CONSIDERATIONS

The following discussion of certain material federal income tax
consequences of the purchase, ownership and disposition of the notes is to be
considered only in connection with "Certain Federal Income Tax Consequences" in
the accompanying prospectus. The discussion in this prospectus supplement and in
the accompanying prospectus is based upon laws, regulations, rulings and
decisions now in effect, all of which are subject to change. The discussion
below and in the accompanying prospectus does not purport to deal with all
federal tax consequences applicable to all categories of investors, some of
which may be subject to special rules. Investors should consult their own tax
advisors in determining the federal, state, local and any other tax consequences
to them of the purchase, ownership and disposition of the notes.

TREATMENT OF THE NOTES

The originators, the depositor and the trust agree, and the holders of the
notes will agree by their purchase of the notes, to treat the notes as
indebtedness for all federal, state and local income tax purposes. There are no
regulations, published rulings or judicial decisions involving the
characterization for federal income tax purpose of securities with terms
substantially the same as the notes. In general, whether instruments such as
the notes constitute indebtedness for federal income tax purposes is a question
of fact, the resolution of which is based primarily upon the economic substance
of the instruments and the transaction pursuant to which they are issued rather
than merely upon the form of the transaction or the manner in which the
instruments are labeled. The Internal Revenue Service and the courts have
stated various factors to be taken into account in determining, for federal
income tax purposes, whether an instrument constitutes indebtedness and whether
a transfer of property is a sale because the transferor has relinquished
substantial incidents of ownership in the property or whether the transfer is a
borrowing secured by the property. On the basis of its analysis of these
factors as applied to the facts and its analysis of the economic substance of
the contemplated transaction, ________________________, special tax counsel to
the depositor, is of the opinion that, for federal income tax purposes, the
notes will be treated as indebtedness, and not as an ownership interest in the
mortgage loans, or an equity interest in the sub-trust of the trust consisting
of the pool I mortgage loans or the pool II mortgage loans, as the case may be,
or in a separate association taxable as a corporation or other taxable entity.
See "Certain Federal Income Tax Consequences - Debt Securities" in the
accompanying prospectus.

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If the notes are characterized as indebtedness, interest paid or accrued on
a note will be treated as ordinary income to holders of the notes and principal
payments on a note will be treated as a return of capital to the extent of the
holder's basis in the note allocable thereto. An accrual method taxpayer will be
required to include in income interest on the notes when earned, even if not
paid, unless it is determined to be uncollectible. The indenture trustee, on
behalf of the trust, will report to the holders of the notes of record and the
IRS the amount of interest paid and original issue discount, if any, accrued on
the notes to the extent required by law.

Possible Alternative Characterizations of the Notes. Although, as described
above, it is the opinion of tax counsel that for federal income tax purposes,
the notes will be characterized as indebtedness, this opinion is not binding on
the IRS and thus no assurance can be given that such a characterization will
prevail. If the IRS successfully asserted that the notes did not represent debt
for federal income tax purposes, holders of the notes would likely be treated as
owning an interest in a partnership and not an interest in an association, or a
publicly traded partnership, taxable as a corporation or a taxable mortgage
pool. If the holders of the notes were treated as owing an equitable interest in
a partnership, the partnership itself would not be subject to federal income
tax; rather each partner would be taxed individually on their respective
distributive share of the partnership's income, gain, loss, deductions and
credits. The amount, timing and characterization of items of income and
deduction for a holder of a note would differ if the notes were held to
constitute partnership interests, rather than indebtedness. Since the parties
will treat the notes as indebtedness for federal income tax purposes, none of
the servicer, the indenture trustee or the owner trustee will attempt to satisfy
the tax reporting requirements that would apply under this alternative
characterization of the notes. Investors that are foreign persons are strongly
advised to consult their own tax advisors in determining the federal, state,
local and other tax consequences to them of the purchase, ownership and
disposition of the notes.

Special Tax Attributes. The notes will not represent "real estate assets"
for purposes of Section 856(c)(4)(A) of the Code or "[l]oans secured by an
interest in real property" within the meaning of Section 7701(a)(19)(C) of the
Code.

Discount and Premium. It is not anticipated that the notes will be issued
with any original issue discount. See "Certain Federal Income Tax Consequences -
Discount and Premium - Original Issue Discount" in the accompanying prospectus.
The prepayment assumption that will be used for purposes of computing original
issue discount, if any, for federal income tax purposes is the prepayment
assumption using 25% HEP. See "Prepayment and Yield Considerations" in this
prospectus supplement. In addition, a subsequent purchaser who buys a note for
less than its principal amount may be subject to the "market discount" rules of
the Code. See "Certain Federal Income Tax Consequences - Discount and Premium -
Market Discount" in the accompanying prospectus. A subsequent purchaser who buys
a note for more than its principal amount may be subject to the "market premium"
rules of the Code. See "Certain Federal Income Tax Consequences - Discount and
Premium - Securities Purchased at a Premium" in the accompanying prospectus.

Sale or Redemption of the Notes. If a note is sold or retired, the seller
will recognize gain or loss equal to the difference between the amount realized
on the sale and that holder's adjusted basis in the note. See "Certain Federal
Income Tax Consequences - Debt Securities - Sale or Exchange" in the
accompanying prospectus.

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Other Matters. For a discussion of backup withholding and taxation of
foreign investors in the notes, see "Certain Federal Income Tax Consequences -
Backup Withholding" and " -Foreign Investors - Grantor Trust, REMIC Regular and
Debt Securities" in the accompanying prospectus.

TREATMENT OF THE TRUST

Tax counsel is of the opinion that neither the sub-trust of the trust
consisting of the pool I mortgage loans nor the sub-trust of the trust
consisting of the pool II mortgage loans will be characterized as an
association, or a publicly traded partnership, taxable as a corporation or a
taxable mortgage pool.

ERISA CONSIDERATIONS

- The Employee Retirement Income Security Act of 1974 and the Code
impose certain restrictions on

- employee benefit plans - as defined in Section 3(3) of ERISA,

- plans described in section 4975(e)(1) of the Code, including
individual retirement accounts or Keogh plans,

- any entities whose underlying assets include plan assets by reason of
a plan's investment in such entities and

- persons who have specified relationships to such plans -
"Parties-in-Interest" under ERISA and "Disqualified Persons" under the
Code.

Section 406 of ERISA prohibits plans from engaging in particular
transactions involving the assets of such plans with Parties-in-Interest with
respect to such plans, unless a statutory or administrative exemption is
applicable to the transaction. Excise taxes under Section 4975 of the Code,
penalties under Section 502 of ERISA and other penalties may be imposed on plan
fiduciaries and Parties-in-Interest, or Disqualified Persons, that engage in
"prohibited transactions" involving assets of a plan. Individual retirement
arrangements and other plans that are not subject to ERISA, but are subject to
Section 4975 of the Code, and Disqualified Persons with respect to these
arrangements and plans, also may be subject to excise taxes and other penalties
if they engage in prohibited transactions. Moreover, based on the reasoning of
the United States Supreme Court in John Hancock Life Ins. Co. v. Harris Trust
and Sav. Bank, 114 S. Ct. 517 (1993), an insurance company's general account may
be deemed to include assets of the Plans investing in the general account -
e.g., through the purchase of an annuity contract. ERISA also imposes specified
duties on persons who are fiduciaries of Plans subject to ERISA.

Some transactions involving the purchase, holding or transfer of the notes
might be deemed to constitute prohibited transactions under ERISA and the Code
if assets of the trust were deemed to be assets of a plan. Under a regulation
issued by the United States Department of Labor, the assets of the trust would
be treated as plan assets of a plan for the purposes of ERISA and the Code only
if the lan acquires an "equity interest" in the trust and none of the exceptions
contained in this plan assets regulation is applicable. An equity interest is
defined under the plan assets regulation as an interest other than an instrument
which is treated as indebtedness under applicable local law and which has no
substantial equity features. Although there is little guidance on the subject,
the depositor believes that the notes should be treated as indebtedness without
substantial equity features for purposes of the plan assets regulation. This
determination is based in part on the traditional debt features of the notes,
including the reasonable expectation of purchasers of the notes that the notes
will be repaid when due, as well as the absence of conversion rights, warrants
and other typical equity features. The debt treatment of the notes could change
if the trust incurs losses. However, even if the notes are treated as debt for
such purposes, the acquisition or holding of notes by or on behalf of a plan
could be considered to give rise to a prohibited transaction if the trust or any
of its affiliates is or becomes a Party-in-Interest or a Disqualified Person
with respect to such plan. In this case, particular exemptions from the
prohibited transaction rules could be applicable depending on the type and
circumstances of the plan fiduciary making the decision to acquire a note.
Included among these exemptions are: PTCE 90-1, regarding investments by
insurance company pooled separate accounts; PTCE 95-60, regarding investments by
insurance company general accounts; PTCE 91-38, regarding investments by bank
collective investment funds; PTCE 96-23, regarding transactions affected by
in-house asset managers; and PTCE 84-14, regarding transactions effected by
"qualified professional asset managers." Each investor using the assets of a
plan which acquires the notes, or to whom the notes are transferred, will be
deemed to have represented that the acquisition and continued holding of the
notes will be covered by one of the exemptions listed above or by another
Department of Labor Class Exemption.

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LEGAL INVESTMENT

The notes will not constitute "mortgage related securities" for purposes of
the Secondary Mortgage Market Enhancement Act of 1984.

PLAN OF DISTRIBUTION

Subject to the terms and conditions of the Underwriting Agreement dated
____________ between the depositor and ____________, as underwriter, the
depositor has agreed to sell to the underwriter and the underwriter has agreed
to purchase from the depositor the notes. The depositor is obligated to sell,
and the underwriter is obligated to purchase, all of the notes offered hereby if
any are purchased.

The underwriter has advised the depositor that it proposes to offer the
notes purchased by the underwriter for sale from time to time in one or more
negotiated transactions or otherwise, at market prices prevailing at the time of
sale, at prices related to such market prices or at negotiated prices. The
underwriter may effect these transactions by selling these notes to or through
dealers, and these dealers may receive compensation in the form of underwriting
discounts, concessions or commissions from the underwriter or purchasers of the
notes for whom they may act as agent. Any dealers that participate with the
underwriter in the distribution of the notes purchased by the underwriter may be
deemed to be underwriters, and any discounts or commissions received by them or
the underwriter and any profit on the resale of notes by them or the underwriter
may be deemed to be underwriting discounts or commissions under the Securities
Act of 1933.

In connection with the offering of the notes, the underwriter and its
affiliates may engage in transactions that stabilize, maintain or otherwise
affect the market price of the notes. These transactions may include
stabilization transactions effected in accordance with Rule 104 of Regulation M,
pursuant to which that person may bid for or purchase the notes for the purpose
of stabilizing its market price. Any of the transactions described in this
paragraph may result in the maintenance of the price of the notes at a level
above that which might otherwise prevail in the open market. None of the
transactions described in this paragraph is required, and, if they are taken,
may be discontinued at any time without notice.

For further information regarding any offer or sale of the notes pursuant
to this prospectus supplement and the accompanying prospectus, see "Plan of
Distribution" in the accompanying prospectus.

The Underwriting Agreement provides that the depositor will indemnify the
underwriter or contribute to losses arising out of specified liabilities,
including liabilities under the Securities Act.

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INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

The Securities and Exchange Commission allows us to "incorporate by
reference" certain information already on file with it. This means that we can
disclose important information to you by referring you to those documents. This
information is considered part of this prospectus supplement, and later
information that is filed will automatically update and supersede this
information. We incorporate by reference all of the documents listed in the
accompanying prospectus under the heading "Incorporation of Certain Information
by Reference" and the financial statements of ________________________ included
in, or as exhibits to, the following documents:

- the Annual Report on Form 10-K for the year ended ____________; and

- the Quarterly Report on Form 10-Q for the quarter ended ____________.

You should rely only on the information incorporated by reference or
provided in this prospectus supplement and the accompanying prospectus. We have
not authorized anyone else to provide you with different information. You
should not assume that the information in this prospectus supplement or the
accompanying prospectus is accurate as of any date other than the date on the
cover page of this prospectus supplement or the accompanying prospectus.

ADDITIONAL INFORMATION

Prudential Securities Secured Financing Corporation has filed with the
Securities and Exchange Commission a registration statement under the Securities
Act of 1933, for the notes offered pursuant to this prospectus supplement. This
prospectus supplement and the accompanying prospectus, which form a part of the
registration statement, omit certain information contained in such registration
statement pursuant to the rules and regulations of the Securities and Exchange
Commission. You may read and copy the registration statement at the Public
Reference Room at the Securities and Exchange Commission at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. and at the Securities and Exchange
Commission's regional offices at Seven World Trade Center, 13th Floor, New York,
New York, 10048 and Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Please call the Securities and Exchange
Commission at 1-800-SEC-0330 for further information on the Public Reference
Rooms. In addition, the Securities and Exchange Commission maintains a site on
the World Wide Web containing reports, proxy materials, information statements
and other items. The address is http://www.sec.gov.

EXPERTS

The consolidated balance sheets of ____________ and subsidiaries as of
____________ and the related consolidated statements of income, changes in
shareholder's equity, and cash flows for each of the three years in the period
ended ________________________, incorporated by reference in this prospectus
supplement, have been incorporated in this prospectus supplement in reliance on
the report of ____________, independent accountants, given on the authority of
that firm as experts in accounting and auditing.

LEGAL MATTERS

Certain legal matters in connection with the notes will be passed upon for
the originators, the depositor and the servicer by ____________, ____________,
for the trust by ____________, ____________, and for the depositor and the
underwriter by ____________, ____________.

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RATINGS

It is a condition to the original issuance of the notes that they will
receive ratings of "[ ]" by _________ and "[ ]" by ___________. The
ratings assigned to the notes will take into account the claims-paying ability
of the note insurer. Explanations of the significance of these ratings may be
obtained from ______________________________________ and
____________________________. These ratings will be the views only of the
rating agencies. There is no assurance that any such ratings will continue for
any period of time or that these ratings will not be revised or withdrawn. Any
such revision or withdrawal of these ratings may have an adverse effect on the
market price of the notes.

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GLOSSARY

The following terms have the meanings given below when used in this
prospectus supplement.

Available Amount means, for any pool of mortgage loans and any distribution
date, the amount on deposit in the related Distribution Account, exclusive of
the amount of any Insured Payment and the Servicing Fee, on that distribution
date.

Class A-1 Interest Distribution Amount means, for any distribution date, an
amount equal to the sum of the Current Interest for the class A-1 notes on that
distribution date, less the amount of any Class A-1 Mortgage Loan Interest
Shortfalls relating to that distribution date.

Class A-1 Mortgage Loan Interest Shortfalls means, for any distribution
date, the aggregate of the Mortgage Loan Interest Shortfalls in pool I, if any,
for that distribution date, to the extent any Mortgage Loan Interest Shortfalls
are not paid by the servicer as Compensating Interest.

Class A-1 Note Rate means, with respect to any distribution date, the per
annum rate equal to ____%; provided, that, on any distribution date after the
--------
Note Clean-Up Call Date for the class A-1 notes, the Class A-1 Note Rate will be
_____%.

Class A-2 Interest Distribution Amount for any distribution date will be an
amount equal to the sum of the Current Interest for the class A-2 notes on that
distribution date, less the amount of any Class A-2 Mortgage Loan Interest
Shortfalls relating to that distribution date.

Class A-2 Mortgage Loan Interest Shortfalls for any distribution date will
be the aggregate of the Mortgage Loan Interest Shortfalls in pool II, if any,
for that distribution date, to the extent any Mortgage Loan Interest Shortfalls
are not paid by the servicer as Compensating Interest.

Class A-2 Note Rate means, for any distribution date, the per annum rate
equal to _____%; provided, that, on any distribution date after the Note
--------
Clean-up Call Date for the class A-2 notes, the Class A-2 Note Rate will be
_____%. Compensating Interest means an amount equal to the lesser of (a) the
aggregate of the Prepayment Interest Shortfalls for the related distribution
date resulting from principal prepayments in full during the related due period
and (b) its aggregate servicing fees received in the related due period Current
Interest for any pool of mortgage loans and any distribution date is the
interest that will accrue on the related class of notes at the applicable note
rate on the aggregate outstanding principal balance of such class during the
accrual period.

Excess Interest for any pool of mortgage loans and any distribution date is
equal to the excess of (x) the Available Amount for that pool and that
distribution date over (y) the sum of

- the Interest Distribution Amount for that pool and that distribution
date,

- Principal Distribution Amount for that pool and that distribution date
- calculated for this purpose without regard to any
Over-collateralization Increase Amount or portion thereof included
therein,

- any Reimbursement Amount or other amount owed to the note insurer
relating to that pool and

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- the indenture trustee's fees for that pool and that distribution date.

Excess Over-collateralized Amount means, for each pool of mortgage loans
and a distribution date, the difference, if any, between (a) the
Over-collateralized Amount that would apply on that distribution date after
taking into account all distributions to be made on that distribution date,
except for any distributions of related Over-collateralization Reduction
Amounts, and (b) the Specified Over-collateralized Amount.

Foreclosure Profits as to any servicer remittance date, are the excess, if
any, of (a) Net Liquidation Proceeds in respect of each mortgage loan that
became a Liquidated Mortgage Loan during the month immediately preceding the
month of that servicer remittance date over (b) the sum of the unpaid principal
balance of each such Liquidated Mortgage Loan plus accrued and unpaid interest
on the unpaid principal balance from the due date to which interest was last
paid by the mortgagor.

Insurance Proceeds are proceeds paid by any insurer pursuant to any
insurance policy covering a mortgage loan to the extent these proceeds are not
applied to the restoration of the mortgaged property or released to the
mortgagor. "Insurance Proceeds" do not include "Insured Payments."

Insured Distribution Amount for any pool of mortgage loans and any
distribution date, is the sum of:

- the Interest Distribution Amount for that pool and that distribution
date,

- the amount of the Over-collateralization Deficit applicable to that
pool and that distribution date, if any, and

- on the distribution date which is a final stated maturity date, the
aggregate outstanding principal balance for the related class of
notes.

Insured Payment for any pool of mortgage loans and any distribution date
will equal the amount by which the Insured Distribution Amount for that pool and
that distribution date exceeds the Available Amount less the indenture trustee's
fees for that pool and that distribution date.

Interest Distribution Amount means the Class A-1 Interest Distribution
Amount or the Class A-2 Interest Distribution Amount, as applicable.

Liquidation Expenses as to any Liquidated Mortgage Loan are all expenses
incurred by the servicer in connection with the liquidation of the mortgage
loan, including, without duplication, unreimbursed expenses for real property
taxes and unreimbursed servicing advances. In no event may Liquidation Expenses
on a Liquidated Mortgage Loan exceed the Liquidation Proceeds.

Liquidated Loan Loss as to any Liquidated Mortgage Loan is the excess, if
any, of (a) the unpaid principal balance of that Liquidated Mortgage Loan plus
accrued and unpaid interest on the unpaid principal balance from the due date to
which interest was last paid by the Mortgagor over (b) the sum of the Net
Liquidation Proceeds and the amount of any previously unreimbursed Periodic
Advances in respect of the mortgage loan.

Liquidation Proceeds are amounts, other than Insurance Proceeds, received
by the servicer in connection with (a) the taking of all or a part of a
Mortgaged Property by exercise of the power of eminent domain or condemnation or
(b) the liquidation of a defaulted mortgage loan through a sale, foreclo-sure
sale, REO Disposition or otherwise.

Mortgage Loan Interest Shortfalls means Civil Relief Act interest
shortfalls and Prepayment Interest Shortfalls.

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Net Foreclosure Profits as to any servicer remittance date, are the excess,
if any, of (a) the aggregate Foreclosure Profits on that servicer remittance
date over (b) Liquidated Loan Losses on that servicer remittance date. Net
Liquidation Proceeds as to any Liquidated Mortgage Loan, are Liquidation
Proceeds net of Liquidation Expenses and net of any unreimbursed Periodic
Advances made by the servicer.

Net Mortgage Loan Interest Shortfalls means the Class A-1 Mortgage Loan
Interest Shortfalls or the Class A-2 Mortgage Loan Interest Shortfalls, as
applicable. Net REO Proceeds as to any REO property, are REO Proceeds net of any
expenses of the servicer.

Note Clean-up Call Date means the first distribution date on which the
aggregate outstanding principal balance of the related class of notes is equal
to or less than 10% of the aggregate original principal balance of such class of
notes Over-collateralized Amount means, for any distribution date and a pool of
mortgage loans, the excess, if any, of (x) the sum of (a) the aggregate
principal balances of the mortgage loans in that pool as of the close of
business on the last day of the preceding calendar month and (b) the amounts, if
any, on deposit in the pre-funding accounts, over (y) the aggregate principal
balance of the related class of notes as of that distribution date -following
the making of all distributions on that distribution date, other than any
Over-collateralization Increase Amount for that distribution date.
Over-collateralization Deficit for any distribution date, is the amount by which
the aggregate outstanding principal balance of the notes exceeds the sum of

- the aggregate principal balance of the mortgage loans,

- any amount on deposit in the pre-funding accounts on that distribution
date, and

- any amounts on deposit in the Cross-collateralization Reserve Accounts
on that distribution date, after application of all amounts due on
that distribution date.

Over-collateralization Increase Amount for any pool of mortgage loans and
any distribution date is the amount of Excess Interest to be applied as an
accelerated payment of principal on the related class of notes until the
over-collateralization for that pool reaches the Specified Over-collateralized
Amount. This payment is limited to the extent of the Available Amount as
described in the definition of "Principal Distribution Amount.

Over-collateralization Reduction Amount for any pool of mortgage loans and
any distribution date, is the difference, if any, between (a) the
Over-collateralized Amount for that pool that would apply on that distribution
date after taking into account all distributions to be made on that distribution
date - except for any distributions of related Over-collateralization Reduction
Amounts - and (b) the Specified Over-collateralized Amount for that pool and
that distribution date to the extent of principal available for distribution.

Periodic Advances means advances made by the servicer on each distribution
date for delinquent payments of interest on the mortgage loans, at a rate equal
to the interest rate on the mortgage note, less the servicing fee rate.

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Prepayment Interest Shortfall means, for any distribution date, an amount
equal to the excess, if any, of (a) thirty days' interest on the outstanding
principal balance of these mortgage loans at a per annum rate equal to the
mortgage interest rate - or at any lower rate as may be in effect for these
mortgage loan because of application of the Civil Relief Act, any reduction as a
result of a bankruptcy proceeding and/or any reduction by a court of the monthly
payment due on these mortgage loan - minus the rate at which the servicing fee
is calculated, over (b) the amount of interest actually remitted by the
mortgagor in connection with the principal prepayment in full, less the
servicing fee for such mortgage loan in such month.

Principal Distribution Amount for any pool of mortgage loans and any
distribution date will be the lesser of:

(a) the excess of (x) the sum, as of that distribution date, of (A)
the Available Amount for that pool and (B) any Insured Payment on the
related class of notes over (y) the sum of Interest Distribution Amount for
that pool, the indenture trustee's fees, and the Reimbursement Amount
allocable to the related class of notes; and

(b) the sum, without duplication, of:

(1) all principal in respect of the mortgage loans in that pool
actually collected during the related due period;

(2) the principal balance of each mortgage loan that either was
repurchased by the depositor or purchased by the servicer on
the servicer remittance date from that pool, to the extent
the principal balance is actually received by the indenture
trustee;

(3) any substitution adjustments delivered by the depositor on
the servicer remittance date in connection with a
substitution of a mortgage loan in that pool, to the extent
the substitution adjustments are actually received by the
indenture trustee;

(4) the Net Liquidation Proceeds actually collected by the
servicer of all mortgage loans in that pool during the prior
calendar month, to the extent the Net Liquidation Proceeds
relate to principal;

(5) on the ____________ or ____________ distribution dates,
moneys released from the related pre-funding account, if
any;

(6) the proceeds received by the indenture trustee upon the
exercise by the servicer of its option to call the related
class of notes, to the extent those proceeds relate to
principal;

(7) the amount of any Over-collateralization Deficit for that
pool for that distribution date;

(8) the proceeds received by the indenture trustee on any
termination of the trust, to the extent those proceeds
relate to principal, allocable to that pool;

(9) the amount of any Over-collateralization Increase Amount for
that pool for that distribution date, to the extent of any
Excess Interest for that pool available for that purpose,
exclusive of the amount of Excess Interest for that pool
necessary to make the payment of (A) any Net Mortgage Loan
Interest Shortfalls for that pool and that distribution date
and (B) the Shortfall Amount for the other pool and that
distribution date;

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(10) if the note insurer shall so elect, an amount of principal,
including Liquidated Loan Losses, that would have been
payable pursuant to clauses (1) through (9) above if
sufficient funds were available therefor;

minus
-----

(11) the amount of any Over-collateralization Reduction Amount
for that pool for that distribution date.

In no event will the Principal Distribution Amount for a pool for any
distribution date be (x) less than zero or (y) greater than the then outstanding
aggregate principal balance for the notes.

Qualified Substitute Mortgage Loan means any mortgage loan or mortgage
loans substituted for a deleted mortgage loan and which, among other things,

- relates or relate to a detached one-family residence or to the same
type of residential dwelling or commercial property as the deleted
mortgage loan and, has or have the same or a better lien priority as
the deleted mortgage loan and has or have the same occupancy status as
the deleted mortgage loan or is or are owner-occupied mortgaged
property or properties,

- matures or mature no later than, and not more than one year earlier
than, the deleted mortgage loan,

- has or have a LTV or LTV at the time of the substitution no higher
than the LTV of the deleted mortgage loan,

- has or have a CLTV or CLTVs at the time of the substitution no higher
than the CLTV of the deleted mortgage loan,

- has or have a principal balance or principal balances, after
application of all payments received on or prior to the date of
substitution, not substantially less and not more than the principal
balance of the deleted mortgage loan as of that date,

- has or have a mortgage interest rate of at least the same interest
rate as the deleted mortgage loan and

- complies or comply, as of the date of substitution, with each
representation and warranty enumerated in the Loan Sale Agreement.

Reimbursement Amount means, for each pool of mortgage loans and each
distribution date, the lesser of (x) the excess of (a) the amount then on
deposit in the Distribution Account over (b) the Insured Distribution Amounts
for that pool and that distribution date and (y) the amount of all Insured
Payments and other amounts due to the note insurer for that pool pursuant to the
Insurance Agreement, including the premium amount, which have not been
previously paid.

REO Proceeds are monies received from any REO property, including, without
limitation, proceeds from the rental of the mortgaged property.

Shortfall Amount means, for a pool of mortgage loans and any distribution
date, the sum of

S-60
<PAGE>

- any shortfall in the amount of the Interest Distribution Amount for
that pool actually distributed to the holders of the related class of
notes,

- any shortfall in the amount of the Net Mortgage Loan Interest
Shortfalls for that pool actually distributed to the holders of the
related class of notes,

- the amount of any Over-collateralization Deficit for that pool and
that distribution date and

- any shortfall in the payment of any amounts owed the note insurer.

Specified Over-collateralized Amount for a pool of mortgage loans and any
distribution date will be the amount of Over-collateralization which the note
insurer requires for that pool and that distribution date.

Specified Reserve Amount means, for each pool of mortgage loans and any
distribution date, the difference between (x) the Specified Over-collateralized
Amount for that pool and that distribution date and (y) the Over-collateralized
Amount for that pool on that distribution date.

<PAGE>

No dealer, salesman or other person has been authorized to give any information
or to make any representations not contained in this prospectus supplement and
the prospectus and, if given or made, such information or representations must
not be relied upon as having been authorized by the depositor or by the
underwriter. This prospectus supplement and the prospectus do not constitute an
offer to sell, or a solicitation of an offer to buy, the securities offered
hereby by anyone in any jurisdiction in which such an offer or solicitation is
not authorized or in which the person making the offer or solicitation is not
qualified to do so or to anyone to whom it is unlawful to make any such offer or
solicitation. Neither the delivery of this prospectus supplement and the
prospectus nor any sale made hereunder shall, under any circumstances, create an
implication that information in this prospectus supplement or in the prospectus
is correct as of any time since the date of this prospectus supplement or the
prospectus.

<TABLE>
<CAPTION>
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT

<S> <C>
Table of Contents. . . . . . . . . . . . . . . . . . . . . . . . S-__
Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-__
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . S-__
Transaction Overview . . . . . . . . . . . . . . . . . . . . . . S-__
The Mortgage Loan Pools. . . . . . . . . . . . . . . . . . . . . S-__
The Originators, the Depositor, the Servicer and the Subservicer S-__
The Owner Trustee. . . . . . . . . . . . . . . . . . . . . . . . S-__
The Indenture Trustee. . . . . . . . . . . . . . . . . . . . . . S-__
The Collateral Agent . . . . . . . . . . . . . . . . . . . . . . S-__
Description of the Notes and the Trust Certificates. . . . . . . S-__
Servicing of the Mortgage Loans. . . . . . . . . . . . . . . . . S-__
The Note Insurance Policy. . . . . . . . . . . . . . . . . . . . S-__
The Note Insurer . . . . . . . . . . . . . . . . . . . . . . . . S-__
Prepayment and Yield Considerations. . . . . . . . . . . . . . . S-__
Certain Federal Income Tax Considerations. . . . . . . . . . . . S-__
ERISA Considerations . . . . . . . . . . . . . . . . . . . . . . S-__
Legal Investment . . . . . . . . . . . . . . . . . . . . . . . . S-__
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . S-__
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-__
Ratings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-__
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . S-__
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-__

PROSPECTUS

Summary of Prospectus. . . . . . . . . . . . . . . . . . . . . . __
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . __
The Sponsor. . . . . . . . . . . . . . . . . . . . . . . . . . . __
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . __
The Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . __
The Trust Funds. . . . . . . . . . . . . . . . . . . . . . . . . __
Description of the Securities. . . . . . . . . . . . . . . . . . __
Credit Enhancement . . . . . . . . . . . . . . . . . . . . . . . __
Prepayment and Yield Considerations. . . . . . . . . . . . . . . __
Servicing of the Loans . . . . . . . . . . . . . . . . . . . . . __
Certain Legal Aspects of the Loans . . . . . . . . . . . . . . . __
Certain Federal Income Tax Consequences. . . . . . . . . . . . . __
State Tax Considerations . . . . . . . . . . . . . . . . . . . . __
ERISA Considerations . . . . . . . . . . . . . . . . . . . . . . __
Legal Investment . . . . . . . . . . . . . . . . . . . . . . . . __
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . __
Incorporation of Certain Information by Reference. . . . . . . . __
Additional Information . . . . . . . . . . . . . . . . . . . . . __
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . __
Rating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . __
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . __
</TABLE>

$_______________

______________________
ISSUER

_________________________
SERVICER

PRUDENTIAL SECURITIES
SECURED FINANCING CORPORATION
SPONSOR

$__________
CLASS A-1 NOTES
$__________
CLASS A-2 NOTES

MORTGAGE-BACKED NOTES,
SERIES _______

__________________

PROSPECTUS SUPPLEMENT
__________________

___________________

__________

<PAGE>

FORM OF PROSPECTUS
SUPPLEMENT - CERTIFICATES
Prospectus supplement to prospectus dated ____________
$___________
______________________
MORTGAGE-BACKED CERTIFICATES, SERIES _______
$_____ ___% CLASS A-1 CERTIFICATES $_______ ____% CLASS A-2 CERTIFICATES
_____________ PRUDENTIAL SECURITIES SECURED
Depositor FINANCING CORPORATION
Sponsor
-------

The certificates ownership interests in the trust fund only and are not
interests in or obligations of any other person. The trust fund
consists primarily of two pools of fixed-rate business and consumer purpose home
equity loans secured by first- or second-lien mortgages on residential or
commercial real properties.

Neither the certificates nor the underlying mortgage loans will be insured or
guaranteed by any governmental agency or instrumentality.

THE TRUST FUND -

THE CERTIFICATES -

- - Each class of offered certificates will represent a beneficial ownership
interest in one pool of mortgage loans.

CREDIT ENHANCEMENT -

- - The certificates will have the benefit of a financial guaranty insurance
policy to be issued by

[certificate insurer]

- - The certificates will be cross-collateralized to a limited extent.

- - The certificates have the benefit of initial over-collateralization.

- - Excess interest will be used in the early years of the transaction to
increase this over-collateralization.

<TABLE>
<CAPTION>
ORIGINAL CERTIFICATE PRICE TO THE UNDERWRITING PROCEEDS TO THE RATINGS FINAL STATED
CLASS PRINCIPAL BALANCE PUBLIC DISCOUNT DEPOSITOR [ ] MATURITY DATE
- ----- --------------------- -------------- -------------- ---------------- ------- -------------
<S> <C> <C> <C> <C> <C> <C>
A-1 $ _____________ ____% ____% $ _____________
A-2 $ _____________ ____% ____% $ _____________
- ----- --------------------- -------------- --------------
Total $ _____________ $ ____________ $ ______ $ ____________
</TABLE>

You will also be required to pay the interest that accrued on your note since
________. The proceeds to the depositor are calculated without taking into
effect the expenses of this offering, which are expected to be $________.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

_____________________
The date of this prospectus supplement is ________

<PAGE>

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

We provide information to you about the certificates in two separate
documents that progressively provide more detail: (1) the accompanying
prospectus, which provides general information, some of which may not apply to
your series of certificates, and (2) this prospectus supplement, which describes
the specific terms of your series of certificates.

This prospectus supplement does not contain complete information about the
offering of the certificates. Additional information is contained in the
accompanying prospectus. You are urged to read both this prospectus supplement
and the accompanying prospectus in full. We cannot sell the certificates to you
unless you have received both this prospectus supplement and the accompanying
prospectus.

THE ACCOMPANYING PROSPECTUS CONTAINS INFORMATION WHICH DESCRIBES THE
POSSIBLE CHARACTERISTICS OF DIFFERENT SERIES OF SECURITIES, AND IS NOT INTENDED
TO BE CONTRADICTORY TO THE INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT.
IF THE ACCOMPANYING PROSPECTUS CONTEMPLATES MULTIPLE OPTIONS, YOU SHOULD RELY ON
THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT AS TO THE APPLICABLE OPTION. We
include cross-references in this prospectus supplement and the accompanying
prospectus to captions in these materials where you can find further information
concerning a particular topic. The following table of contents provides the
pages on which these captions are located.

<TABLE>
<CAPTION>
TABLE OF CONTENTS

<S> <C>
<PAGE>
S-iii

SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RISK FACTORS. . . . . . . . . . . . . . . . . . . . . . . . . 3
TRANSACTION OVERVIEW. . . . . . . . . . . . . . . . . . . . . 8
Parties . . . . . . . . . . . . . . . . . . . . . . . . . . 8
The Transaction . . . . . . . . . . . . . . . . . . . . . . 8
THE MORTGAGE LOAN POOLS . . . . . . . . . . . . . . . . . . . 9
The Pool I Mortgage Loans . . . . . . . . . . . . . . . . . 10
The Pool II Mortgage Loans. . . . . . . . . . . . . . . . . 14
Conveyance of subsequent mortgage loans . . . . . . . . . . 17
THE ORIGINATORS, THE DEPOSITOR AND THE SERVICER . . . . . . . 18
Underwriting Guidelines . . . . . . . . . . . . . . . . . . 18
The Servicer. . . . . . . . . . . . . . . . . . . . . . . . 18
Delinquency and Loan Loss Experience. . . . . . . . . . . . 18
THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . 20
THE COLLATERAL AGENT. . . . . . . . . . . . . . . . . . . . . 20
DESCRIPTION OF THE CERTIFICATES . . . . . . . . . . . . . . . 20
Book-Entry Registration . . . . . . . . . . . . . . . . . . 21
Definitive Certificates . . . . . . . . . . . . . . . . . . 25
Assignment and Pledge of Initial Mortgage Loans . . . . . . 25
Assignment and Pledge of Subsequent Mortgage Loans. . . . . 25
Delivery of Mortgage Loan Documents . . . . . . . . . . . . 26
Representations and Warranties of the Depositor . . . . . . 27
Payments on the Mortgage Loans. . . . . . . . . . . . . . . 29
Over-collateralization Provisions . . . . . . . . . . . . . 31
Cross-collateralization Provisions. . . . . . . . . . . . . 32
Flow of Funds . . . . . . . . . . . . . . . . . . . . . . . 33
Reports to Certificateholders . . . . . . . . . . . . . . . 33
Amendment . . . . . . . . . . . . . . . . . . . . . . . . . 34
SERVICING OF THE MORTGAGE LOANS . . . . . . . . . . . . . . . 34
The Servicer. . . . . . . . . . . . . . . . . . . . . . . . 34
Servicing Fees and Other Compensation and Payment of Expenses 34
Periodic Advances and Servicer Advances . . . . . . . . . . . 35
Prepayment Interest Shortfalls. . . . . . . . . . . . . . . . 36
Civil Relief Act Interest Shortfalls. . . . . . . . . . . . . 36
Optional Purchase of Defaulted Mortgage Loans . . . . . . . . 36

S-ii
<PAGE>

Servicer Reports. . . . . . . . . . . . . . . . . . . . . . . 36
Collection and Other Servicing Procedures . . . . . . . . . . 37
Hazard Insurance. . . . . . . . . . . . . . . . . . . . . . . 37
Realization Upon Defaulted Mortgage Loans . . . . . . . . . . 38
Removal and Resignation of the Servicer . . . . . . . . . . . 38
Termination; Purchase of Mortgage Loans . . . . . . . . . . . 40
THE CERTIFICATE INSURANCE POLICY. . . . . . . . . . . . . . . 41
THE CERTIFICATE INSURER . . . . . . . . . . . . . . . . . . . 44
The Certificate Insurer . . . . . . . . . . . . . . . . . . . 44
Reinsurance . . . . . . . . . . . . . . . . . . . . . . . . . 45
Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Capitalization. . . . . . . . . . . . . . . . . . . . . . . . 45
Insurance Regulation. . . . . . . . . . . . . . . . . . . . . 45
PREPAYMENT AND YIELD CONSIDERATIONS . . . . . . . . . . . . . 46
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS . . . . . . . . . . 49
ERISA CONSIDERATIONS. . . . . . . . . . . . . . . . . . . . . 50
LEGAL INVESTMENT. . . . . . . . . . . . . . . . . . . . . . . 52
PLAN OF DISTRIBUTION. . . . . . . . . . . . . . . . . . . . . 52
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE . . . . . . 53
ADDITIONAL INFORMATION. . . . . . . . . . . . . . . . . . . . 53
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . 54
RATINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
GLOSSARY. . . . . . . . . . . . . . . . . . . . . . . . . . . 55
</TABLE>

S-iii
<PAGE>

SUMMARY

This summary highlights selected information from this prospectus supplement 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
certificates, carefully read this entire prospectus supplement and the
accompanying prospectus.

_______________________________

THE CERTIFICATES

The ___________ will issue the class A-1 certificates and the class A-2
certificates. The class A certificates are being offered to you by this
prospectus supplement.

The class A certificates will accrue interest at the interest rate, have the
original principal balance and have the final stated maturity date indicated on
the cover of this prospectus supplement.

The trust will also issue one class of residual certificates, the class R
certificates, for each class of class A certificates. The class R certificates
are not offered by this prospectus supplement.

DISTRIBUTIONS

Distributions on the certificates will be made on the ____ day of each month,
or, if the ____ day is not a business day, on the next succeeding business
day, beginning on _________.

DISTRIBUTIONS OF INTEREST

On each distribution date, each class of certificates is entitled to receive its
current interest.

- - Current Interest. The current interest for a distribution date is the
interest which accrues on a class of certificates at that class's
certificate rate on the outstanding principal balance of the class during
the accrual period.

- - Accrual Period. The accrual period for the certificates is the calendar
month preceding the distribution date.

All computations of interest accrued on the certificates will be made on the
basis of a 360-day year consisting of twelve 30-day months.

DISTRIBUTIONS OF PRINCIPAL

The holders of each class of certificates are entitled to receive distributions
of principal on each distribution date which generally reflect collections of
principal during the preceding calendar month on the mortgage loans in the pool
relating to their class.

In addition, in accordance with the over-collateralization features of the
transaction, holders may also receive extra distributions of principal from
excess interest on a distribution date.

THE MORTGAGE LOANS

The aggregate principal balance of the mortgage loans purchased by the trust on
the closing date will be less than the amount required to be held by the trust.
The amount of the difference will be taken from the proceeds of the sale of the
certificates, placed in the pre-funding accounts and used for the purchase of
mortgage loans by the trust after the closing date.

S-1
<PAGE>

SERVICING OF THE MORTGAGE LOANS

__________________ will act as servicer and will be obligated to service and
administer the mortgage loans.

OPTION OF THE SERVICER TO TERMINATE THE TRUST

ERISA CONSIDERATIONS

Subject to the conditions described under "ERISA Considerations" in this
prospectus supplement, the certificates may be purchased by any employee benefit
plan or other retirement arrangement subject to ERISA or the Internal Revenue
Code.

FEDERAL INCOME TAX STATUS

An election will be made to treat the trust fund as a REMIC. The class A
certificates will be designated as "regular interests" and the class R
certificates will be designated as "residual interests" in the REMIC.
The class A certificates will be treated as newly originated debt instruments
and the beneficial owners will be required to report income thereon in
accordance with the accrual method of accounting.

RATINGS

In order to be issued, the certificates must be rated [ ] by ________ and [ ] by
________, taking into account the certificate insurance policy issued for the
certificates.

S-2
<PAGE>

RISK FACTORS

Investors should consider, among other things, the following factors - as
well as the factors enumerated under "Risk Factors" in the accompanying
prospectus - before deciding to invest in the certificates.

If the principal balance of the eligible mortgage loans available for
purchase by the trust on _____________ is less than the amount on
deposit in either pre-funding account on that date, the remaining
amount will be applied as a prepayment of principal on the following
distribution date to the holders of the class of certificates relating
to that pre-funding account. You will bear the risk of reinvesting
these unscheduled distributions and there can be no assurance that you
will be able to reinvest them at a yield equaling or exceeding the
yield on your certificate.

Any purchase of additional mortgage loans by the trust using funds on
deposit in the pre-funding accounts is subject to the following
conditions, among others:

- each additional mortgage loan must satisfy specified statistical
criteria and representations and warranties;

- additional mortgage loans will not be selected in a manner that
is believed to be adverse to the interests of the holders of the
certificates and the certificate insurer; and

- opinions of counsel will be delivered with concerning the
validity of the conveyance of additional mortgage loans.

If the originators do not have additional mortgage loans which satisfy
these conditions with an aggregate principal balance equal to the
amount on deposit in the pre-funding accounts, such a prepayment will
occur.

BECAUSE MANY OF THE MORTGAGE LOANS BACKING YOUR CERTIFICATE WERE MADE TO
BORROWERS WITH IMPAIRED OR UNSUBSTANTIATED CREDIT HISTORIES, THERE IS A GREATER
RISK OF DELINQUENT PAYMENTS ON THESE MORTGAGE LOANS, WHICH COULD LEAD TO GREATER
RISK OF LOSSES ON YOUR CERTIFICATE.

The mortgage loans were made, in part, to borrowers who, for one
reason or another, are not able, or do not wish, to obtain financing
from traditional sources such as commercial banks. These mortgage
loans may be considered to be of a riskier nature than mortgage loans
made by traditional sources of financing, so that the holders of the
certificates may be deemed to be at greater risk than if the mortgage
loans were made to other types of borrowers.

The underwriting standards used in the origination of the mortgage
loans held by the trust are generally less stringent than those of
Fannie Mae or Freddie Mac concerning a borrower's credit history and
in certain other respects. Borrowers on the mortgage loans may have an
impaired or unsubstantiated credit history. As a result of this less
stringent approach to underwriting, the mortgage loans purchased by
the trust may experience higher rates of delinquencies, defaults and
foreclosures than mortgage loans underwritten in a manner which is
more similar to the Fannie Mae and Freddie Mac guidelines.

S-3
<PAGE>

GEOGRAPHIC CONCENTRATION OF THE MORTGAGE LOANS IN PARTICULAR JURISDICTIONS MAY
RESULT IN GREATER LOSSES IF THOSE JURISDICTIONS EXPERIENCE ECONOMIC DOWNTURNS.

Some geographic regions of the United States from time to time will
experience weaker regional economic conditions and housing markets,
and, consequently, will experience higher rates of loss and
delinquency on mortgage loans generally. Any concentration of the
mortgage loans in such a region may present risk considerations in
addition to those generally present for similar mortgage-backed
securities without this concentration. The mortgaged properties
underlying the mortgage loans are located primarily on the eastern
seaboard of the United States. This may subject the mortgage loans
held by the trust to the risk that a downturn in the economy in this
area of the country would more greatly affect the pool than if the
pool were more diversified. In particular, the states listed below had
the following percentages of mortgage loans in pool I and pool II,
measured as of _______, ______, which are secured by mortgaged
properties located in the their states:

POOL I % % % % %
POOL II % % % % %

Because of the relative geographic concentration of the mortgage loans
within the states of _____________, _____________, _____________,
_____________ and _____________, losses on the mortgage loans may be
higher than would be the case if the mortgage loans were more
geographically diversified. For example, some of the mortgaged
properties may be more susceptible to particular types of special
hazards, such as earthquakes and other natural disasters and major
civil disturbances, than residential or commercial properties located
in other parts of the country. In addition, the economies of
_____________, _____________, _____________, _____________ and
_____________ may be adversely affected to a greater degree than the
economies of other areas of the country by regional developments. If
the _____________, _____________, _____________, _____________ and
_____________ residential or commercial real estate markets experience
an overall decline in property values after the dates of origination
of the respective mortgage loans, then the rates of delinquencies,
foreclosures and losses on the mortgage loans may be expected to
increase and this increase may be substantial.

Approximately ____% of the mortgage loans in pool I, measured as of
_____, ____, and ____% of the mortgage loans in pool II, measured as
of ____, ____, are not fully amortized over their terms and instead
require substantial balloon payments on their maturity dates. Because
the principal balances of these balloon loans do not fully amortize
over their term, these balloon loans may involve greater risks of
default than mortgage loans whose principal balance is fully amortized
over the term of the mortgage loan. The borrower's ability to pay the
balloon amount due at maturity of his or her balloon loan will depend
on the borrower's ability to obtain adequate refinancing or funds from
other sources to repay the balloon loan. The originators have only
limited historical default data concerning their balloon loans and
they do not believe that their data is sufficient to predict the
default experience of the balloon loans.

S-4
<PAGE>

A PORTION OF THE MORTGAGE LOANS ARE SECURED BY SUBORDINATE MORTGAGES; IN THE
EVENT OF A DEFAULT, THESE MORTGAGE LOANS ARE MORE LIKELY TO EXPERIENCE LOSSES.

Approximately _____% of the mortgage loans in pool I, measured as of
____, _____, and ____% of the mortgage loans in pool II, measured as
of ____, ____, are secured by subordinate or junior mortgages which
are subordinate to the rights of the holder of the senior mortgages.
As a result, the proceeds from any liquidation, insurance or
condemnation proceedings will be available to satisfy the principal
balance of such a mortgage loan only to the extent that the claims, if
any, of each senior mortgagee are satisfied in full, including any
foreclosure costs. In addition, a holder of a junior mortgage may not
foreclose on the mortgaged property securing the mortgage unless it
forecloses subject to the related senior mortgages, in which case it
must either pay the entire amount of the senior mortgages to the
mortgagees at or prior to the foreclosure sale or undertake the
obligation to make payments on each senior mortgage in the event of
default thereunder. In servicing business and consumer purpose home
equity loans in its portfolio, it is the servicer's practice to
satisfy or reinstate each such first mortgage at or prior to the
foreclosure sale only to the extent that it determines any amount so
paid will be recoverable from future payments and collections on the
mortgage loans or otherwise. The trust will have no source of funds to
satisfy any senior mortgage or make payments due to any senior
mortgagee.

An overall decline in the residential or commercial real estate
markets could adversely affect the values of the mortgaged properties
such that the outstanding principal balances of the mortgage loans,
together with the primary senior financing thereon, equals or exceeds
the value of the mortgaged properties. Such a decline would adversely
affect the position of a second mortgagee before having such an effect
on that of the first mortgagee. A rise in interest rates over a period
of time and the general condition of the mortgaged property as well as
other factors may have the effect of reducing the value of the
mortgaged property from the appraised value at the time the mortgage
loan was originated. If there is a reduction in value of the mortgaged
property, the ratio of the amount of the mortgage loan to the value of
the mortgaged property may increase over what it was at the time the
mortgage loan was originated. Such an increase may reduce the
likelihood of liquidation or other proceeds being sufficient to
satisfy the mortgage loan after satisfaction of any first liens.

A PORTION OF THE MORTGAGE LOANS ARE HIGH LTV RATIOS WHICH MAY NOT HAVE ADEQUATE
SECURITY IN THE EVENT OF A DEFAULT, WHICH COULD LEAD TO LOSSES ON YOUR NOTE.

Even though all of the mortgage loans are secured be residential real
estate, approximately _____% of the mortgage loans in pool I, measured
as of ____, _____, and ____% of the mortgage loans in pool II,
measured as of ____, ____, are secured by real estate which has a
value that may be close to, or even less than, the amount of the loan.
As a result, the mortgaged properties may not provide adequate
security for these high LTV loans. Underwriting analysis with respect
to high LTV loans relies more heavily on the mortgagor's
creditworthiness than on the protection afforded by the security
interest in the underlying mortgaged property.

S-5
<PAGE>

Additionally, there is also the risk that if the borrower moves, he or
she will be unable to pay the loan in full from the proceeds of the
sale of the property. The costs incurred by the servicer in the
collection and liquidation of high LTV loans may be higher than with
respect to other loans, because the servicer may be required to pursue
collection solely against the borrower. Consequently, the losses on
defaulted high LTV loans may be more severe as there is no assurance
that any proceeds will be recovered, which could lead to losses on
your certificate.

SECURITY INTERESTS IN THE MANUFACTURED HOMES MAY NOT BE PERFECTED AND THE ISSUER
MAY NOT REALIZE UPON THE FULL AMOUNT DUE UNDER THE LOAN.

Approximately _____% of the mortgage loans in pool I, measured as of
____, _____, and ____% of the mortgage loans in pool II, measured as
of ____, ____, are secured by manufactured homes and, in some cases,
the real estate on which the manufactured home is located. Some
federal and state laws, which do not apply to other types of mortgage
loans, limit the issuer's ability to foreclose on manufactured homes
or may limit the amount realized to less than the amount due under the
loan. These limitations could cause losses on your certificate.

PREPAYMENTS ON THE MORTGAGE LOANS COULD LEAD TO SHORTFALLS IN THE PAYMENT OF
INTEREST ON YOUR CERTIFICATE.

The scheduled monthly payment dates for the mortgage loans occur
throughout a month. When a principal prepayment in full is made on a
mortgage loan, the mortgagor is charged interest only up to the date
of the prepayment, instead of for a full month. However, the principal
receipts will only be passed through to the holders of the
certificates once a month, on the distribution date which follows the
calendar month in which the prepayment was received by the servicer.
The servicer is obligated to pay, without any right of reimbursement,
those shortfalls in interest collections payable on the certificates
that are attributable to the difference between the interest paid by a
mortgagor in connection with a prepayment in full and thirty days'
interest on the mortgage loan, but only to the extent of the servicing
fee for that calendar month.

If the servicer fails to make these payments or the shortfall exceeds
the servicing fee, there will be less funds available for the payment
of interest on the related class of certificates. These shortfalls of
interest, if they result in the inability of the trust to pay the full
amount of the current interest on the related class of certificates,
are not covered by the certificate insurance policy.

YEAR 2000 ISSUES COULD LEAD TO DELAYS IN PAYMENT OR LOSSES ON YOUR CERTIFICATE.

There is a significant uncertainty regarding the effect of the year
2000 problem because computer systems that do not properly recognize
date sensitive information when the year changes to 2000 could
generate erroneous data or altogether fail. The servicer and the
originators, as well as third parties that have relationships with
them, including vendors and borrowers, may experience significant year
2000 issues. These issues may have a serious adverse effect on the
operations of the servicer, the originator or these third parties,
including a shut-down of operations for a period of time, which may,
in turn, have a material adverse effect on their business, financial
condition and results of operations.

S-6
<PAGE>

IF DTC EXPERIENCES YEAR 2000 PROBLEMS, YOU COULD EXPERIENCE DELAYS IN PAYMENT OR
LOSSES ON YOUR CERTIFICATE.

If problems associated with the year 2000 issue were to occur with
respect to DTC, its systems - as the same relate to the timely payment
of distributions, including principal and interest payments, to
securityholders, book-entry deliveries, and settlement of trades
within DTC - or third parties, including, but not limited to, issuers,
their agents and its participating organizations as well as third
party vendors on whom DTC relies for information or the provision of
services, including telecommunication and electrical utility service
providers among others, distributions to the beneficial owners of
certificates could be delayed or otherwise adversely affected.

S-7
<PAGE>

Some of the terms used in this prospectus supplement are capitalized. These
capitalized terms have specified definitions, which are included at the end of
this prospectus supplement under the heading "Glossary."

TRANSACTION OVERVIEW
PARTIES

The Trustee. _____________, a _____________ banking corporation. The
corporate trust office of the trustee is located at _____________, and its
telephone number is _____________. For a description of the trustee and its
responsibilities with respect to the certificates, see "The Trustee" in this
prospectus supplement.

The Certificate Insurer. ___________________________, a _____________
financial guaranty insurance company. The certificate insurer will issue a
financial guaranty insurance policy for the benefit of the holders of the
certificates. For a description of the business and selected financial
information of the certificate insurer, see "The Certificate Insurance Policy"
and "The Certificate Insurer" in this prospectus supplement.

The Rating Agencies. ________________ and ________________ will issue
ratings for each class of certificates.

THE TRANSACTION

Formation of the Trust and Issuance of the Certificates. The trust will be
formed pursuant to the terms of a Pooling and Servicing Agreement, dated as of
_____________, between the trustee, the collateral agent, the servicer and the
depositor. Under the Pooling and Servicing Agreement, the trust will also issue
the certificates to the depositor, together evidencing the entire beneficial
ownership interest in the sub-trust of the trust consisting of a pool of
mortgage loans.

S-8
<PAGE>

Sale and Servicing of the Mortgage Loans. The mortgage loans have been
originated or purchased by the originators pursuant to their respective
underwriting guidelines, as described under "The Originators, the Depositor and
the Servicer." The originators will sell the mortgage loans to the depositor,
pursuant to Loan Sale Agreement, dated as of _____________, among the
originators and the depositor. The depositor will deposit the mortgage loans in
the trust pursuant to the Pooling and Servicing Agreement. The servicer will
service the mortgage loans pursuant to the terms of the Pooling and Servicing
Agreement.

Issuance of the Certificate Insurance Policy. The certificate insurer will
issue the certificate insurance policy pursuant to the terms of an Insurance and
Indemnity Agreement, dated as of _____________, among the certificate insurer,
the trust, the depositor, the originators and the servicer.

THE MORTGAGE LOAN POOLS

Difference between Statistical Calculation Date and Closing Date Pools.
The statistical information presented in this prospectus supplement concerning
the mortgage loans is based on the pools of mortgage loans that existed on a
statistical calculation date, in this case _______, ____. Pool I aggregated
$_____________ as of the statistical calculation date and pool II aggregated
$_____________ as of the statistical calculation date. The depositor expects
that the actual pools on the closing date will represent approximately
$_____________ in aggregate principal balance of mortgage loans in pool I, as of
a cut-off date of ________, ____, and approximately $_____________ in aggregate
principal balance of mortgage loans in pool II, as of the cut-off date. The
additional mortgage loans will represent mortgage loans acquired or to be
acquired by the trust on or prior to the closing date. In addition, with
respect to the pools as of the statistical calculation date as to which
statistical information is presented in this prospectus supplement, some
amortization will occur prior to the closing date. Moreover, some mortgage
loans included in the pools as of the statistical calculation date may prepay in
full, or may be determined not to meet the eligibility requirements for the
final pools, and may not be included in the final pools. As a result of the
foregoing, the statistical distribution of characteristics as of the closing
date for the final mortgage loan pools will vary somewhat from the statistical
distribution of the characteristics as of the statistical calculation date as
presented in this prospectus supplement, although this variance should not be
material. In the event that the depositor does not, as of the closing date,
have the full amount of mortgage loans which the depositor expects to sell to
the trust on this date, the depositor will increase the size of the pre-funding
accounts and the capitalized interest accounts, as applicable.

Additional mortgage loans are intended to be purchased by the trust from
time to time on or before _____________ from funds on deposit in the pre-funding
accounts. These subsequent mortgage loans to be purchased by the trust, if
available, will be originated or purchased by the originators, sold by the
originators to the depositor and then sold by the depositor to the trust. The
Pooling and Servicing Agreement will provide that the mortgage loans, following
the conveyance of the subsequent mortgage loans, must in the aggregate conform
to specified characteristics described below under " - Conveyance of subsequent
mortgage loans."

Unless otherwise noted, all statistical percentages in this prospectus
supplement are approximate and are measured by the aggregate principal balance
of the applicable mortgage loans in relation to the aggregate principal balance
of the mortgage loans in the applicable pool, in each case, as of the
statistical calculation date.

S-9
<PAGE>

The majority of the mortgage loans have a prepayment fee clause. These
prepayment fee clauses generally provide that the mortgagor pay, upon
prepayment, one or more of the following:

- a fee equal to a percentage, negotiated at origination, of the
outstanding principal balance of the mortgage loan,

- a fee which is designed to allow the holder of the mortgage note to
earn interest on the mortgage loan as if the mortgage loan remained
outstanding until a designated point in time, or

THE POOL I MORTGAGE LOANS

As of the statistical calculation date, the mortgage loans in pool I had
the following characteristics:

- there were ___ mortgage loans under which the mortgaged properties are
located in __ states,

- the aggregate principal balance, after application of all payments due
on or before the statistical calculation date, was $_____________,

- the minimum principal balance was $_____________, the maximum
principal balance was $_____________, and the average principal
balance was $_____________,

- the mortgage interest rates ranged from _____% to ____% per annum, and
the weighted average mortgage interest rate was approximately ____%
per annum,

- the original term to stated maturity ranged from ___ months to 360
months,

S-10
<PAGE>

- no mortgage loan had a maturity later than _________,

- the weighted average CLTV was approximately _____%,

- approximately _____% of mortgage loans are secured by first liens, and
approximately _____% of mortgage loans are secured by second liens,
and

S-11
<PAGE>

The following tables present statistical information on the mortgage loans
in pool I. Due to rounding, the percentages shown may not precisely total
100.00%.

<TABLE>
<CAPTION>
GEOGRAPHICAL DISTRIBUTION OF MORTGAGED PROPERTIES
POOL I

S-12
<PAGE>

<TABLE>
<CAPTION>
DISTRIBUTION OF REMAINING TERMS TO MATURITY
(in months)
POOL I

S-13
<PAGE>

<TABLE>
<CAPTION>
DISTRIBUTION BY PROPERTY TYPE
POOL I

THE POOL II MORTGAGE LOANS

As of the statistical calculation date, the mortgage loans in pool II had
the following characteristics:

- there were ___ mortgage loans under which the mortgaged properties are
located in ___ states,

- the aggregate principal balance, after application of all payments due
on or before the statistical calculation date, was $_____________,

- the minimum principal balance was $_____________, the maximum
principal balance was $_____________, and the average principal
balance was $_____________,

- the mortgage interest rates ranged from ____% to ___% per annum, and
the weighted average mortgage interest rate was approximately ___% per
annum,

- the original term to stated maturity ranged from __ months to 360
months,

- no mortgage loan had a maturity later than _____________,

- the weighted average CLTV was approximately ____%,

S-14
<PAGE>

- approximately ____% of mortgage loans are secured by first liens, and
approximately ____% of mortgage loans are secured by second liens, and

The following tables present statistical information on the mortgage loans
in pool II. Due to rounding, the percentages shown may not precisely total
100.00%.

<TABLE>
<CAPTION>
GEOGRAPHICAL DISTRIBUTION OF MORTGAGED PROPERTIES
POOL II

S-15
<PAGE>

<TABLE>
<CAPTION>
DISTRIBUTION OF REMAINING TERMS TO MATURITY
(in months)
POOL II

RANGE OF CURRENT MORTGAGE NUMBER OF AGGREGATE UNPAID % OF STATISTICAL CALCULATION DATE
LOAN PRINCIPAL BALANCES MORTGAGE LOANS PRINCIPAL BALANCE AGGREGATE PRINCIPAL BALANCE
- ------------------------- -------------- ----------------- ---------------------------------
<S> <C> <C> <C>
Total
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION BY LIEN STATUS

POOL II

S-16
<PAGE>

<TABLE>
<CAPTION>
DISTRIBUTION BY OCCUPANCY STATUS
POOL II

CONVEYANCE OF SUBSEQUENT MORTGAGE LOANS

The Pooling and Servicing Agreement permits the trust to acquire subsequent
mortgage loans with the funds on deposit in the pre-funding accounts. It is
expected that the amount on deposit in the pre-funding accounts on the closing
date will be approximately $_____________ for pool I and $_____________ for pool
II. Accordingly, the statistical characteristics of the mortgage loans in pool
I and pool II will vary as of any subsequent cut-off date upon the acquisition
of subsequent mortgage loans.

The obligation of the trust to purchase the subsequent mortgage loans on
any subsequent transfer date during the Pre-Funding Period is subject to the
following requirements:

- the original term to maturity of the subsequent mortgage loan may not
exceed 360 months for pool I and 360 months for pool II;

- the subsequent mortgage loan must have a mortgage interest rate of at
least ____% for pool I and ____% for pool II;

- the purchase of the subsequent mortgage loans is consented to by the
certificate insurer and the rating agencies, notwithstanding the fact
that the subsequent mortgage loans meet the parameters stated in this
prospectus supplement;

- the principal balance of any subsequent mortgage loan may not exceed
$_____________ for pool I and $_____________ for pool II;

- no more than _____% for pool I and ____% for pool II of the aggregate
principal balance of the subsequent mortgage loans may be second
liens;

S-17
<PAGE>

- no more than ____% for pool I and ___% for pool II of the subsequent
mortgage loans may be balloon loans;

- no more than ____% for pool I and ____% for pool II of the subsequent
mortgage loans may be secured by mixed-use properties, commercial
properties, or five or more unit multifamily properties; and

The Pooling and Servicing Agreement will provide that any of these
requirements may be waived or modified in any respect upon prior written consent
of the certificate insurer, with the exception of the requirements concerning
maximum principal balance.

THE ORIGINATORS, THE DEPOSITOR AND THE SERVICER

[Corporate description]
[To be supplied by originators, depositor and servicer]

UNDERWRITING GUIDELINES

[To be supplied by originators]

THE SERVICER

[To be supplied by servicer]

DELINQUENCY AND LOAN LOSS EXPERIENCE

S-18
<PAGE>

<TABLE>
<CAPTION>
DELINQUENCY AND FORECLOSURE EXPERIENCE
(DOLLARS IN THOUSANDS)

Past due loans:
60-89 days
90 days or more
-------- -------- -------- -------- -------- --------

Total past due loans

REO Properties
-------- -------- -------- -------- -------- --------

Total past due loans, foreclosures
pending and REO Properties(3)
</TABLE>

The foregoing table was prepared assuming that:

- The past due period is based on the actual number of days that a
payment is contractually past due; a loan as to which a monthly
payment was due 60-89 days prior to the reporting period is considered
60-89 days past due, etc.;

- total past due loans includes pending foreclosures; and

- an "REO property" is a property acquired and held as a result of
foreclosure or deed in lieu of foreclosure.

<TABLE>
<CAPTION>
LOAN CHARGE-OFF EXPERIENCE
(DOLLARS IN THOUSANDS)

AT AT AT
-- --
<S> <C> <C> <C>
Servicing portfolio at period end
Average outstanding
Gross losses
Loan recoveries

Net loan charge-offs

Net loan charge-offs as a percentage
of servicing portfolio at period end
Net loan charge-offs as a percentage
of average outstanding
</TABLE>

The foregoing table was prepared assuming that:

S-19
<PAGE>

- "gross losses" means the outstanding principal balance plus accrued
but unpaid interest on liquidated mortgage loans.

THE TRUSTEE

________________________, a ____________ banking corporation, has an office
at ________________________. The trustee will act as initial authenticating
agent, paying agent and certificate registrar pursuant to the terms of the
Pooling and Servicing Agreement.

THE COLLATERAL AGENT

DESCRIPTION OF THE CERTIFICATES

On the closing date, the trust will issue the class A-1 certificates, the
class A-2 certificates and both classes of class R certificates pursuant to the
Pooling and Servicing Agreement. Each class A-1 certificate represents a
beneficial ownership interest in the portion of the trust estate consisting of
the pool I mortgage loans and, to the extent provided in this prospectus
supplement, the pool II mortgage loans. Each class A-2 certificate represents a
beneficial ownership interest in the portion of the trust estate consisting of
the pool II mortgage loans and, to the extent provided in this prospectus
supplement, the pool I mortgage loans. Pursuant to the Pooling and Servicing
Agreement, the trust will also issue two class R certificates, one relating to
the class A-1 certificates and the other relating to the class A-2 certificates.
Together the class A certificate and the related class R certificate represent
the entire beneficial ownership interest in the portion of the trust consisting
of the related pool of mortgage loans. None of the class R certificates may be
transferred without the consent of the certificate insurer and compliance with
the transfer provisions of the Pooling and Servicing Agreement.

The trust estate consists of

- the mortgage loans, together with the mortgage files relating thereto
and all collections thereon and proceeds thereof collected after the
cut-off date,

- the assets as from time to time are identified as REO property and
collections thereon and proceeds thereof,

- assets that are deposited in the accounts relating to the trust,
including amounts on deposit in the Accounts and invested in
accordance with the Pooling and Servicing Agreement,

S-20
<PAGE>

- the trustee's rights with respect to the mortgage loans under all
insurance policies required to be maintained pursuant to the
Pooling and Servicing Agreement and any insurance proceeds,

- Liquidation Proceeds and

- released mortgaged property proceeds. In addition, the depositor
will cause the certificate insurer to issue the certificate
insurance policy under which it will guarantee payments to the
holders of the certificates as described in this prospectus
supplement.

The class A certificates will be issued only in book-entry form, in
denominations of $1,000 initial principal balance and integral multiples of
$1,000 in excess thereof, except that one certificate of each class may be
issued in a different amount.

BOOK-ENTRY REGISTRATION

The certificates are sometimes referred to in this prospectus supplement as
"book-entry certificates." No person acquiring an interest in the book-entry
certificates will be entitled to receive a definitive certificate representing
an obligation of the trust, except under the limited circumstances described in
this prospectus supplement. beneficial owners may elect to hold their interests
through DTC, in the United States, or Cedelbank or the Euroclear System, in
Europe. Transfers within DTC, Cedelbank or Euroclear, as the case may be, will
be in accordance with the usual rules and operating procedures of the relevant
system. So long as the certificates are book-entry certificates, these
certificates will be evidenced by one or more certificates registered in the
name of Cede & Co., which will be the "holder" of these certificates, as the
nominee of DTC or one of the relevant depositaries. Cross-market transfers
between persons holding directly or indirectly through DTC, on the one hand, and
counterparties holding directly or indirectly through Cedelbank or Euroclear, on
the other, will be effected in DTC through The Chase Manhattan Bank, the
relevant depositories of Cedelbank or Euroclear, respectively, and each a
participating member of DTC. The certificates will initially be registered in
the name of Cede & CoThe interests of the holders of these certificates will be
represented by book-entries on the records of DTC and participating members
thereof. All references in this prospectus supplement to any certificates
reflect the rights of beneficial owners only as these rights may be exercised
through DTC and its participating organizations for so long as these
certificates are held by DTC.

The beneficial owners of certificates may elect to hold their certificates
through DTC in the United States, or Cedelbank or Euroclear if they are
participants in these systems, or indirectly through organizations which are
participants in these systems. The book-entry certificates will be issued in one
or more certificates per class of certificates which in the aggregate equal the
outstanding principal balance of the related class of certificates and will
initially be registered in the name of Cede & Co., the nominee of DTC. Cedelbank
and Euroclear will hold omnibus positions on behalf of their participants
through customers' securities accounts in Cedelbank'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. Chase will act as depositary for Cedelbank and Morgan Guaranty
Trust Company of New York will act as depositary for Euroclear. Investors may
hold their beneficial interests in the book-entry certificates in minimum
denominations representing principal amounts of $1,000. Except as described
below, no beneficial owner will be entitled to receive a physical or definitive
certificate representing this certificate. Unless and until definitive
certificates are issued, it is anticipated that the only "holder" of these
certificates will be Cede & Co., as nominee of DTC. beneficial owners will not
be "holders" or "certificateholders" as those terms are used in the Pooling and
Servicing Agreement. Beneficial owners are only permitted to exercise their
rights indirectly through participants and DTC.

S-21
<PAGE>

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

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

Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC is required to make book-entry transfers of book-entry
certificates, such as the certificates, among participants on whose behalf it
acts for the book-entry certificates and to receive and transmit distributions
of principal of and interest on the book-entry certificates. Participants and
indirect participants with which beneficial owners have accounts with respect to
the book-entry certificates similarly are required to make book-entry transfers
and receive and transmit these payments on behalf of their respective beneficial
owners.

Beneficial owners that are not participants or indirect participants but
desire to purchase, sell or otherwise transfer ownership of, or other interests
in, book-entry certificates may do so only through participants and indirect
participants. In addition, beneficial owners will receive all distributions of
principal and interest from the trustee, or a paying agent on behalf of the
trustee, through DTC participants. DTC will forward these distributions to its
participants, which thereafter will forward them to indirect participants or
beneficial owners. beneficial owners will not be recognized by the trustee, the
servicer or any paying agent as holders of the certificates, and beneficial
owners will be permitted to exercise the rights of the holders of the
certificates only indirectly through DTC and its participants.

Because of time zone differences, credits of securities received in
Cedelbank or Euroclear as a result of a transaction with a participant will be
made during subsequent securities settlement processing and dated the business
day following the DTC settlement date. These credits or any transactions in the
securities settled during this processing will be reported to the relevant
Euroclear or Cedelbank participants on that business day. Cash received in
Cedelbank or Euroclear as a result of sales of securities by or through a
Cedelbank participant or Euroclear participant to a DTC participant will be
received with value on the DTC settlement date but will be available in the
relevant Cedelbank or Euroclear cash account only as of the business day
following settlement in DTC. For information concerning tax documentation
procedures relating to the certificates, see "Certain Federal Income Tax
Consequences - REMIC Securities" in the accompanying prospectus.

S-22
<PAGE>

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

Euroclear was created in 1968 to hold securities for participants of
Euroclear and to clear and settle transactions between Euroclear participants
through simultaneous electronic book-entry delivery against payment, thereby
eliminating the need for physical movement of certificates and any risk from
lack of simultaneous transfers of securities and cash. Transactions may now be
settled in any of 31 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, under contract with Euroclear Clearance Systems S.C., a Belgian
cooperative corporation. 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 Euroclear Clearance. Euroclear
Clearance 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.

S-23
<PAGE>

Securities clearance accounts and cash accounts with the Euroclear operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
Operating Procedures of the Euroclear System and applicable Belgian law. The
Terms and Conditions govern transfers of securities and cash within Euroclear,
withdrawals of securities and cash from Euroclear, and receipts of payments on
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 Cede & Co., as nominee of DTC. DTC will be
responsible for crediting the amount of these payments to the accounts of the
applicable DTC participants in accordance with DTC's normal procedures. Each DTC
participant will be responsible for disbursing this payment to the beneficial
owners of the book-entry certificates that it represents and to each financial
intermediary for which it acts as agent. Each financial intermediary will be
responsible for disbursing funds to the beneficial owners of the book-entry
certificates that it represents.

Under a book-entry format, beneficial owners of the book-entry certificates
may experience some delay in their receipt of payments, since these payments
will be forwarded by the trustee to Cede & Co., as nominee of DTC. Distributions
on certificates held through Cedelbank or Euroclear will be credited to the cash
accounts of Cedelbank participants or Euroclear participants in accordance with
the relevant system's rules and procedures, to the extent received by the
relevant depositary. These distributions will be subject to tax reporting in
accordance with relevant United States tax laws and regulations. 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 the certificates in
the secondary market since some potential investors may be unwilling to purchase
certificates for which they cannot obtain physical certificates.

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

DTC has advised the depositor and the servicer that it will take any action
permitted to be taken by a holder of the certificates under the Pooling and
Servicing Agreement only at the direction of one or more participants to whose
accounts with DTC the book-entry certificates are credited. Additionally, DTC
has advised the depositor that it will take these actions concerning specified
percentages of voting rights only at the direction of and on behalf of
participants whose holdings of book-entry certificates evidence the specified
percentages of voting rights. DTC may take conflicting actions with respect to
percentages of voting rights to the extent that participants whose holdings of
book-entry certificates evidence the percentages of voting rights authorize
divergent action.

None of the trust, the depositor, the servicer, the certificate insurer 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 the beneficial
ownership interests.

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

S-24
<PAGE>

DEFINITIVE CERTIFICATES

The certificates, which will be issued initially as book-entry
certificates, will be converted to definitive certificates and reissued to
beneficial owners or their nominees, rather than to DTC or its nominee, only if
(a) DTC or the servicer advises the trustee in writing that DTC is no longer
willing or able to discharge properly its responsibilities as depository of the
book-entry certificates and DTC or the servicer is unable to locate a qualified
successor or (b) the trustee, at its option, elects to terminate the book-entry
system through DTC.

Definitive certificates will be transferable and exchangeable at the
offices of the trustee or the certificate registrar. No service charge will be
imposed for any registration of transfer or exchange, but the trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge imposed in connection therewith.

ASSIGNMENT AND PLEDGE OF INITIAL MORTGAGE LOANS

Pursuant to the Loan Sale Agreement, the originators will sell, transfer,
assign, set over and otherwise convey the mortgage loans, without recourse, to
the depositor on the closing date. Pursuant to the Pooling and Servicing
Agreement, the depositor will sell, transfer, assign, set over and otherwise
convey without recourse to the trustee, on behalf of the trust, all right, title
and interest in and to each mortgage loan, including all principal outstanding
as of, and interest due after, the cut-off date. Each transfer will convey all
right, title and interest in and to (a) principal outstanding as of the cut-off
date, and (b) interest due on each mortgage loan after the cut-off date;
provided, however, that the originators will not convey, and the originators
- -------- -------
reserve and retain all their respective right, title and interest in and to,
principal, including principal prepayments in full and curtailments or partial
prepayments, received on each mortgage loan on or prior to the cut-off date and
(ii) interest due on each mortgage loan on or prior to the cut-off date.

ASSIGNMENT AND PLEDGE OF SUBSEQUENT MORTGAGE LOANS

The trust may acquire subsequent mortgage loans with the funds on deposit
in either pre-funding account at any time during the period from the closing
date until the earliest of

- the date on which the amount on deposit in pre-funding account is less
than $100,000,

- the date on which an event of default occurs under the terms of the
Pooling and Servicing Agreement, or

- the close of business on ____________.

The amount on deposit in the pre-funding accounts will be reduced during
the this period by the amount thereof used to purchase subsequent mortgage loans
in accordance with the terms of the Pooling and Servicing Agreement. The
depositor expects that the amount on deposit in each of the pre-funding accounts
will be reduced to less than $100,000 by ____________. To the extent funds in
the pre-funding accounts are not used to purchase subsequent mortgage loans by
____________, these funds will be used to prepay the principal of the related
class of certificates on the following distribution date. Subsequent mortgage
loans will be transferred by the originators to the depositor and transferred by
the depositor to the trust. The trust will then pledge the subsequent mortgage
loans to the trustee, on behalf of the holders of the certificates and the
certificate insurer.

S-25
<PAGE>

DELIVERY OF MORTGAGE LOAN DOCUMENTS

In connection with the sale, transfer, assignment or pledge of the mortgage
loans to the trust, the trust will cause to be delivered to the collateral
agent, on behalf of the trustee, on the closing date, the following documents
concerning each mortgage loan which constitute the mortgage file:

(a) the original mortgage note, endorsed without recourse in blank by the
originator, including all intervening endorsements showing a complete
chain of endorsement;

(b) the original mortgage with evidence of recording indicated thereon or,
in limited circumstances, a copy thereof certified by the applicable
recording office;

Pursuant to the Pooling and Servicing Agreement, the collateral agent, on
behalf of the trustee, agrees to execute and deliver on or prior to the closing
date, or, for subsequent mortgage loans, on or prior to the subsequent transfer
date, an acknowledgment of receipt of the original mortgage note, item (a)
above, for each of the mortgage loans, with any exceptions noted. The
collateral agent, on behalf of the trustee, agrees, for the benefit of the
holders of the certificates and the certificate insurer, to review, or cause to
be reviewed, each mortgage file within thirty days after the closing date or the
subsequent transfer date, as applicable - or, for any Qualified Substitute
Mortgage Loan, within thirty days after the receipt by the collateral agent
thereof - and to deliver a certification generally to the effect that, as to
each mortgage loan listed in the schedule of mortgage loans,

- all documents required to be delivered to it pursuant to the Pooling
and Servicing Agreement are in its possession,

- each of these documents has been reviewed by it and has not been
mutilated, damaged, torn or otherwise physically altered, appears
regular on its face and relates to the mortgage loan, and

S-26
<PAGE>

If the collateral agent, during the process of reviewing the mortgage
files, finds any document constituting a part of an mortgage file which is not
executed, has not been received or is unrelated to the mortgage loans, or that
any mortgage loan does not conform to the requirements above or to the
description thereof as included in the schedule of mortgage loans, the
collateral agent shall promptly so notify the trustee, the servicer, the
depositor and the certificate insurer in writing with details thereof. The
depositor agrees to use reasonable efforts to cause to be remedied a material
defect in a document constituting part of an mortgage file of which it is so
notified by the collateral agent. If, however, within sixty days after the
collateral agent's notice of the defect, the depositor has not caused the defect
to be remedied and the defect materially and adversely affects the interest of
the holders of the certificates or the interests of the certificate insurer in
the mortgage loan, the depositor or the originator will either (a) substitute in
lieu of the mortgage loan a Qualified Substitute Mortgage Loan and, if the then
outstanding principal balance of the Qualified Substitute Mortgage Loan is less
than the principal balance of the mortgage loan as of the date of the
substitution plus accrued and unpaid interest thereon, deliver to the servicer a
substitution adjustment equal to the amount of any such shortfall or (b)
purchase the mortgage loan at a price equal to the outstanding principal balance
of the mortgage loan as of the date of purchase, plus the greater of (1) all
accrued and unpaid interest thereon and (2) thirty days' interest thereon,
computed at the mortgage interest rate, net of the servicing fee if the servicer
is effecting the repurchase, plus the amount of any unreimbursed servicing
advances made by the servicer, which purchase price shall be deposited in the
Distribution Account on the next succeeding servicer remittance date after
deducting therefrom any amounts received in respect of the repurchased mortgage
loan or Loans and being held in the Distribution Account for future distribution
to the extent these amounts have not yet been applied to principal or interest
on the mortgage loan. In addition, the depositor and the originators shall be
obligated to indemnify the trustee, the collateral agent, the holders of the
certificates and the certificate insurer for any third-party claims arising out
of a breach by the depositor or the originators of representations or warranties
regarding the mortgage loans. The obligation of the depositor and the
originators to cure a breach or to substitute or purchase any mortgage loan and
to indemnify constitute the sole remedies respecting a material breach of any
representation or warranty to the holders of the certificates, the trustee, the
collateral agent and the certificate insurer.

REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR

The depositor will represent, among other things, for each mortgage loan,
as of the closing date or the subsequent transfer date, as applicable, the
following:

1. the information included in the schedule of mortgage loans for each
mortgage loan is true and correct;

2. all of the original or certified documentation constituting the
mortgage files, including all material documents related thereto, has been
or will be delivered to the collateral agent, on behalf of the trustee, on
the closing date or the subsequent transfer date, as applicable;

S-27
<PAGE>

- a unit in a cooperative apartment,

- a property constituting part of a syndication,

- a time share unit,

- a property held in trust,

- a manufactured dwelling,

- a log-constructed home, or

- a recreational vehicle;

- the lien of current real property taxes and assessments
which are not delinquent,

- any first mortgage loan on the property,

- covenants, conditions and restrictions, rights of way,
easements and other matters of public record as of the date
of recording of the mortgage, the exceptions appearing of
record being acceptable to mortgage lending institutions
generally in the area wherein the property subject to the
mortgage is located or specifically reflected in the
appraisal obtained in connection with the origination of the
mortgage loan obtained by the depositor, and

- other matters to which like properties are commonly subject
which do not materially interfere with the benefits of the
security intended to be provided by the mortgage;

6. each mortgage loan conforms, and all the mortgage loans in the
aggregate conform, to the description thereof in this prospectus
supplement; and

7. all of the mortgage loans were originated in accordance with the
underwriting criteria described in this prospectus supplement.

Pursuant to the Pooling and Servicing Agreement, upon the discovery by any
of the holder of the certificates, the depositor, the servicer, any subservicer,
the certificate insurer, the collateral agent or the trustee that any of the
representations and warranties contained in the Pooling and Servicing Agreement
have been breached in any material respect as of the closing date or the
subsequent transfer date, as applicable, with the result that the interests of
the holders of the certificates in the mortgage loan or the interests of the
certificate insurer were materially and adversely affected, notwithstanding that
any representation and warranty was made to the depositor's or the originator's
best knowledge and the depositor or the originator lacked knowledge of the
breach, the party discovering the breach is required to give prompt written
notice to the other parties. Subject to specified provisions of the Pooling and

S-28
<PAGE>

Servicing Agreement, within sixty days of the earlier to occur of the
depositor's or an originator's discovery or its receipt of notice of any breach,
the depositor or the originators will

- promptly cure the breach in all material respects,

- remove each mortgage loan which has given rise to the requirement for
action by the depositor or the originators, substitute one or more
Qualified Substitute Mortgage Loans and, if the outstanding principal
balance of the Qualified Substitute Mortgage Loans as of the date of
the substitution is less than the outstanding principal balance, plus
accrued and unpaid interest thereon, of the replaced mortgage loans as
of the date of substitution, deliver to the trust as part of the
amounts remitted by the servicer on the distribution date the amount
of the shortfall, or

- purchase the mortgage loan at a price equal to the principal balance
of the mortgage loan as of the date of purchase plus the greater of

- all accrued and unpaid interest thereon and

- thirty days' interest thereon computed at the mortgage interest
rate, net of the servicing fee if ____________ is the servicer,
plus the amount of any unreimbursed servicing advances made by
the servicer,

and deposit the purchase price into the Distribution Account on the next
succeeding servicer remittance date after deducting therefrom any amounts
received in respect of this repurchased mortgage loan or mortgage loans and
being held in the Distribution Account for future distribution to the extent
these amounts have not yet been applied to principal or interest on the mortgage
loan. In addition, the depositor and the originators shall be obligated to
indemnify the trust, the trustee, the collateral agent, the holders of the
certificates and the certificate insurer for any third-party claims arising out
of a breach by the depositor or the originators of representations or warranties
regarding the mortgage loans. The obligation of the depositor and the
originators to cure any breach or to substitute or purchase any mortgage loan
and to indemnify constitute the sole remedies respecting a material breach of
any representation or warranty to the holders of the certificates, the trustee,
the collateral agent and the certificate insurer.

PAYMENTS ON THE MORTGAGE LOANS

The Pooling and Servicing Agreement provides that the servicer, for the
benefit of the holders of the certificates, shall establish and maintain the
Collection Account, which will generally be (a) an account maintained with a
depository institution or trust company whose long term unsecured debt
obligations are rated by each rating agency in one of its two highest rating
categories at the time of any deposit therein or (b) trust accounts maintained
with a depository institution acceptable to each rating agency and the
certificate insurer. The Pooling and Servicing Agreement permits the servicer
to direct any depository institution maintaining the Collection Account to
invest the funds in the Collection Account in one or more eligible investments
that mature, unless payable on demand, no later than the business day preceding
the date on which the servicer is required to transfer the servicer remittance
amount from the Collection Account to the Distribution Account, as described
below.

The servicer is obligated to deposit or cause to be deposited in the
Collection Account on a daily basis, amounts representing the following
payments received and collections made by it after the cut-off date, other
than in respect of monthly payments on the mortgage loans due on each
mortgage loan up to and including any due date occurring on or prior to the
cut-off date:

- all payments on account of principal, including prepayments of
principal;

- all payments on account of interest on the mortgage loans;

S-29
<PAGE>

- all Net REO Proceeds;

- all other amounts required to be deposited in the Collection Account
pursuant to the Pooling and Servicing Agreement; and

- any amounts required to be deposited in connection with net losses
realized on investments of funds in the Collection Account.

The trustee will be obligated to set up an account for each class of
certificates a distribution account into which the servicer will deposit or
cause to be deposited the servicer remittance amount on the _____ day of each
month.

The servicer remittance amount" for a servicer remittance date is
equal to the sum, without duplication, of

- all Periodic Advances made by the servicer with respect to payments
due to be received on the mortgage loans on the due date and

- any other amounts required to be placed in the Collection Account by
the servicer pursuant to the Pooling and Servicing Agreement,

but excluding the following:

(b) amounts received on a particular mortgage loan for which the servicer
has previously made an unreimbursed servicing advance, to the extent
of the unreimbursed servicing advance;

(d) all net income from eligible investment that is held in the Collection
Account for the account of the servicer;

(e) all amounts actually recovered from the servicer in respect of late
fees, assumption fees, prepayment fees and similar fees;

(f) Net Foreclosure Profits; and

(g) other amounts which are reimbursable to the servicer, as provided in
the Pooling and Servicing Agreement.

S-30
<PAGE>

The amounts described in clauses (a) through (g) above may be withdrawn by
the servicer from the Collection Account on or prior to each servicer remittance
date.

OVER-COLLATERALIZATION PROVISIONS

Over-collateralization Resulting from Cash Flow Structure. The Pooling and
Servicing Agreement requires that, starting with the second distribution date,
the Excess Interest for a pool of mortgage loans, if any, that is not used to
make cross-collateralization payments will be applied on each distribution date
as an accelerated payment of principal on the related class of certificates, but
only to the limited extent hereafter described. The application of Excess
Interest as a payment of principal has the effect of accelerating the
amortization of a class of certificates relative to the amortization of the
related pool of mortgage loans. The Excess Interest from a pool of mortgage
loans will be used

- to reimburse the certificate insurer for any amounts due to it,

- as needed to pay Net Mortgage Loan Interest Shortfalls relating to
that class,

- as needed to make cross-collateralization payments in respect of the
other pool of mortgage loans,

- as a payment of principal to the related class of certificates until
the distribution date on which the amount of over-collateralization
has reached the required level, and

- as needed to fund the Cross-collateralization Reserve Account relating
to the other pool of mortgage loans.

Notwithstanding the foregoing, in the event specified tests enumerated in the
Pooling and Servicing Agreement are violated, all available Excess Interest will
be used as a payment of principal to the related class of certificates to
accelerate the amortization of the certificates.

The Pooling and Servicing Agreement requires that, starting with the second
distribution date, Excess Interest from a pool of mortgage loans that is not
used to make cross-collateralization payments will be applied as an accelerated
payment of principal on the related class of certificates until the
Over-collateralized Amount has increased to the level required by the Pooling
and Servicing Agreement. After this time, if it is necessary to re-establish
the required level of over-collateralization, Excess Interest from each pool of
mortgage loans that is not used to make cross-collateralization payments will
again be applied as an accelerated payment of principal on the related class of
certificates. Notwithstanding the foregoing, in the event specified tests
enumerated in the Pooling and Servicing Agreement are violated, all available
Excess Interest from each pool of mortgage loans will be used as a payment of
principal to accelerate the amortization of the related class of certificates.
Initially, the Over-collateralized Amount of each pool of mortgage loans will be
an amount equal to approximately 0.50% of the sum of (x) the aggregate principal
balance of the mortgage loans in each pool on the closing date and (y) the
original amount on deposit in the related pre-funding account on the closing
date.

In the event that the required level of the Specified Over-collateralized
Amount for a pool of mortgage loans is permitted to decrease or "step down" on a
distribution date in the future, the Pooling and Servicing Agreement provides
that a portion of the principal which would otherwise be distributed to the
holders of the related class of certificates on the distribution date shall
instead be distributed in the priority described in this prospectus supplement
under "-Flow of Funds." This has the effect of decelerating the amortization of
the related class of certificates relative to the amortization of that pool of
mortgage loans, and of reducing the Over-collateralized Amount. If, on any
distribution date, the Excess Over-collateralized Amount is, or, after taking
into account all other distributions to be made on the distribution date would
be, greater than zero - i.e., the Over-collateralized Amount is or would be
greater than the related Specified Over-collateralized Amount - then any amounts
relating to principal which would otherwise be distributed to the holders of the
related class of certificates on this distribution date shall instead be
distributed in the priority described in this prospectus supplement under "-Flow
of Funds", in an amount equal to the Over-collateralization Reduction Amount.

S-31
<PAGE>

The Pooling and Servicing Agreement provides that, on any distribution date, all
amounts collected on account of principal - other than any such amount applied
to the payment of an Over-collateralization Reduction Amount - for each pool of
mortgage loans during the a due period of the prior calendar month will be
distributed to the holders of the related class of certificates on the
distribution date. In addition, the Pooling and Servicing Agreement provides
that the principal balance of any mortgage loan which becomes a Liquidated
Mortgage Loan shall then equal zero. The Pooling and Servicing Agreement does
not contain any rule which requires that the amount of any Liquidated Loan Loss
be distributed to the holders of the related class of certificates on the
distribution date which immediately follows the event of loss; i.e., the Pooling
and Servicing Agreement does not require the current recovery of losses.
However, the occurrence of a Liquidated Loan Loss will reduce the
Over-collateralized Amount for that pool of mortgage loans, which, to the extent
that the reduction causes the Over-collateralized Amount to be less than the
Specified Over-collateralized Amount applicable to the related distribution
date, will require the payment of an Over-collateralization Increase Amount on
that distribution date, or, if insufficient funds are available on that
distribution date, on subsequent distribution dates, until the
Over-collateralized Amount equals the related Specified Over-collateralized
Amount. The effect of the foregoing is to allocate losses to the holders of the
related class R certificates by reducing, or eliminating entirely, payments of
Excess Interest and Over-collateralization Reduction Amounts which the holders
would otherwise receive.

Over-collateralization and the Certificate Insurance Policy. The Pooling
and Servicing Agreement requires the trustee to make a claim for an Insured
Payment under the certificate insurance policy not later than the third business
day prior to any distribution date as to which the trustee has determined that
an Over-collateralization Deficit will occur for the purpose of applying the
proceeds of the Insured Payment as a payment of principal to the holders of the
related class of certificates on that distribution date. The certificate insurer
has the option on any distribution date to make a payment of principal,
including in respect of Liquidated Loan Losses, up to the amount that would have
been payable to the holders of the certificates if sufficient funds were
available thereof. Additionally, under the terms of the Pooling and Servicing
Agreement, the certificate insurer will have the option to cause Excess Interest
to be applied without regard to any limitation upon the occurrence of particular
trigger events, or in the event of an "event of default" under the Insurance
Agreement. However, investors in the certificates should realize that, under
extreme loss or delinquency scenarios, they may temporarily receive no
distributions of principal.

CROSS-COLLATERALIZATION PROVISIONS

Cross-collateralization Payments. On each distribution date, available
Excess Interest from a pool of mortgage loans, if any, will be paid to the
holders of the class of certificates relating to the other pool of mortgage
loans to the extent of the Shortfall Amount for the other pool. The
cross-collateralization provisions of the transaction are limited to the payment
of specified credit losses, certain interest shortfalls and any amounts due the
certificate insurer. Excess Interest from one pool of mortgage loans will not
be used to build over-collateralization for the other pool of mortgage loans.

Cross-collateralization Reserve Account. Each class of certificates will
have the benefit of a Cross-collateralization Reserve Account. On each
distribution date, available Excess Interest from a pool of mortgage loans, if
any, will be paid into the Cross-collateralization Reserve Account relating to
the other pool of mortgage loans, until the amount of funds on deposit therein
equals the Specified Reserve Amount for the other pool. If the amount on deposit
in the Cross-collateralization Reserve Account for a pool of mortgage loans on
any distribution date exceeds the Specified Reserve Amount for the pool and the
distribution date, the amount of this excess shall be distributed in the
priority described in this prospectus supplement under "-Flow of Funds."

S-32
<PAGE>

FLOW OF FUNDS

On each distribution date, the trustee, based solely on the information
received from the servicer in the servicer remittance report prior to the
distribution date, shall make payments in respect of each pool of mortgage loans
to the holders of the related class of certificates and reimbursement to the
certificate insurer under the Insurance Agreement, to the extent of funds,
including any Insured Payments, on deposit in the related Distribution Account,
as follows:

(a) to the trustee, an amount equal to the fees then due to it for the
related class of certificates;

(b) from amounts then on deposit in the related Distribution Account,
excluding any Insured Payments, to the certificate insurer the
Reimbursement Amount as of that distribution date;

(c) from amounts then on deposit in the related Distribution Account, the
Interest Distribution Amount for the related class of certificates;

(d) from amounts then on deposit in the related Distribution Account, the
Principal Distribution Amount for the related class of certificates,
until the principal balance of the class of certificates is reduced to
zero;

(e) from amounts then on deposit in the related Distribution Account the
amount of any Net Mortgage Loan Interest Shortfalls for the related
class of certificates;

(f) from amounts then on deposit in the related Distribution Account, to
the holders of the other class of certificates, the Shortfall Amount
for the other class;

(g) from amounts then on deposit in the related Distribution Account, to
the Cross-collateralization Reserve Account relating to the other
class of certificates, the amount necessary for the balance of the
account to equal the Specified Reserve Amount; and

(h) following the making by the trustee of all allocations, transfers and
disbursements described above, to the holders of the related class R
certificates, the amount remaining on the distribution date in the
related Distribution Account, if any.

REPORTS TO CERTIFICATEHOLDERS

Pursuant to the Pooling and Servicing Agreement, on each distribution date
the trustee will deliver to the servicer, the certificate insurer, the depositor
and each holder of a certificate or a class R certificate a written remittance
report containing information including, without limitation, the amount of the
distribution on the distribution date, the amount of the distribution allocable
to principal and allocable to interest, the aggregate outstanding principal
balance of the certificates as of the distribution date, the amount of any
Insured Payment included in the distributions on the distribution date and any
other information as required by the Pooling and Servicing Agreement.

S-33
<PAGE>

AMENDMENT

The Pooling and Servicing Agreement may be amended from time to time by the
trust and the trustee by written agreement, upon the prior written consent of
the certificate insurer, without notice to, or consent of, the holder of the
certificates, to cure any ambiguity, to correct or supplement any provisions in
this prospectus supplement, to comply with any changes in the Code, or to make
any other provisions concerning matters or questions arising under the Pooling
and Servicing Agreement which shall not be inconsistent with the provisions of
the Pooling and Servicing Agreement; provided, that this action shall not, as
--------
evidenced by an opinion of counsel delivered to, but not obtained at the expense
of, the trustee, adversely affect in any material respect the interests of any
holder of the certificates; provided, further, that no such amendment shall
-------- -------
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 the certificate, or change the rights or
obligations of any other party to the Pooling and Servicing Agreement without
the consent of that party.

The Pooling and Servicing Agreement may be amended from time to time by the
trust and the trustee with the consent of the certificate insurer, and the
holders of the majority of the percentage interest of the certificates and class
R certificates 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; provided,
--------
however, that no such amendment shall 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 the
certificate or reduce the percentage for each class whose holders are required
to consent to any such amendment without the consent of the holders of 100% of
each class of certificates affected thereby. The Loan Sale Agreement contains
substantially similar restrictions regarding amendment.

SERVICING OF THE MORTGAGE LOANS

THE SERVICER

____________ will act as the servicer of the mortgage loan pools
____________ and ____________ will act as subservicers for a portion of the
mortgage loans. See "The Originators, the Depositor, the Servicer and the
Subservicer" in this prospectus supplement. The servicer and the subservicers
will service the mortgage loans on behalf of the trust, for the benefit of the
certificateholders and the certificate insurer and will be required to use the
same care as they customarily employ in servicing and administering mortgage
loans for their own account, in accordance with accepted mortgage servicing
practices of prudent lending institutions, and giving due consideration to the
reliance of the certificate insurer and the holders of the certificates on them.

SERVICING FEES AND OTHER COMPENSATION AND PAYMENT OF EXPENSES

As compensation for its activities as servicer under the Pooling and
Servicing Agreement, the servicer shall be entitled to a servicing fee for each
mortgage loan, which shall be payable monthly from amounts on deposit in the
Collection Account. The servicing fee shall be an amount equal to interest at
one-twelfth of the servicing fee rate for the mortgage loan on the outstanding
principal balance of the mortgage loan. The servicing fee rate for each
mortgage loan will be 0.50% per annum. In addition, the servicer shall be
entitled to receive, as additional servicing compensation, to the extent
permitted by applicable law and the mortgage notes, any late payment charges,
assumption fees, prepayment fees or similar items. The servicer shall also be
entitled to withdraw from the Collection Account any net interest or other
income earned on deposits therein. The servicer shall pay all expenses incurred
by it in connection with its servicing activities under the Pooling and
Servicing Agreement and shall not be entitled to reimbursement therefor except
as specifically provided in the Pooling and Servicing Agreement.

S-34
<PAGE>

PERIODIC ADVANCES AND SERVICER ADVANCES

Periodic Advances. Subject to the servicer's determination that the action
would not constitute a nonrecoverable advance, the servicer is required to make
Periodic Advances on each servicer remittance date. This Periodic Advances by
the servicer are reimbursable to the servicer subject to a number of conditions
and restrictions, and are intended to provide both sufficient funds for the
payment of interest to the holders of the certificates, plus an additional
amount intended to maintain a specified level of over-collateralization and to
pay the trustee's fees, and the premium due the certificate insurer.
Notwithstanding the servicer's good faith determination that a Periodic Advance
was recoverable when made, if the Periodic Advance becomes a nonrecoverable
advance, the servicer will be entitled to reimbursement therefor from the trust
estate. See "Description of the Certificates - Payments on the Mortgage Loans"
in this prospectus supplement.

- the preservation and restoration of the mortgaged property,

- enforcement proceedings, including foreclosures,

- expenditures relating to the purchase or maintenance of a first lien
not included in the trust estate on the mortgaged property, and

- other customary amounts described in the Pooling and Servicing
Agreement.

Recovery of Advances. The servicer may recover Periodic Advances and
servicing advances to the extent permitted by the Pooling and Servicing
Agreement or, if not recovered from the mortgagor on whose behalf the servicing
advance or Periodic Advance was made, from late collections on the mortgage
loan, including Liquidation Proceeds, Insurance Proceeds and any other amounts
as may be collected by the servicer from the mortgagor or otherwise relating to
the mortgage loan. In the event a Periodic Advance or a servicing advance
becomes a nonrecoverable advance, the servicer may be reimbursed for the advance
from the Distribution Account.

S-35
<PAGE>

PREPAYMENT INTEREST SHORTFALLS

Not later than the close of business on the _____ day of each month, the
servicer is required to remit to the trustee a payment of Compensating Interest
in respect of Prepayment Interest Shortfalls and shall not have the right to
reimbursement therefor. Insured Payments do not cover Prepayment Interest
Shortfalls.

CIVIL RELIEF ACT INTEREST SHORTFALLS

The reduction, if any, in interest payable on the mortgage loans in the
applicable pool attributable to the application of the Civil Relief Act will not
reduce the amount of Current Interest due to the holders of the class A-1
certificates or class A-2 certificates, respectively. However, in the event the
full amount of Current Interest is not available on any distribution date due to
Civil Relief Act interest shortfalls in the applicable pool, the amount of this
shortfall will not be covered by the certificate insurance policy. These
shortfalls in Current Interest will be paid from the Excess Interest, if any,
otherwise payable in respect of over-collateralization, cross-collateralization
or to the holder of the class R certificate relating to the applicable pool.
See "Risk Factors - Legal Considerations" in this prospectus supplement.

OPTIONAL PURCHASE OF DEFAULTED MORTGAGE LOANS

SERVICER REPORTS

On each servicer remittance date, the servicer is required to deliver to
the certificate insurer, the trustee, and the collateral agent, a servicer
remittance report setting forth the information necessary for the trustee to
make the distributions described under "-Flow of Funds" in this prospectus
supplement and containing the information to be included in the trustee's
remittance report for that distribution date.

The servicer is required to deliver to the certificate insurer, the
trustee, the collateral agent, S&P and Moody's, not later than April 30th of
each year, starting in ________, an officer's certificate stating that

- the servicer has fully complied with the servicing provisions of the
Pooling and Servicing Agreement,

- a review of the activities of the servicer during the preceding
calendar year and of performance under the Pooling and Servicing
Agreement has been made under the officer's supervision, and

- to the best of the officer's knowledge, based on that review, the
servicer has fulfilled all its obligations under the Pooling and
Servicing Agreement for that year, or, if there has been a default in
the fulfillment of any obligation, specifying each default known to
that officer and the nature and status thereof including the steps
being taken by the servicer to remedy the default.

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<PAGE>

Not later than April 30th of each year, the servicer, at its expense, is
required to cause to be delivered to the certificate insurer, the trustee, the
collateral agent, S&P and Moody's from a firm of independent certified public
accountants, who may also render other services to the servicer, a statement to
the effect that the firm has examined certain documents and records relating to
the servicing of the mortgage loans during the preceding calendar year, or any
longer period from the closing date to the end of the following calendar year,
and that, on the basis of the examination conducted substantially in compliance
with generally accepted auditing standards and the requirements of the Uniform
Single Attestation Program for Mortgage Bankers or the Audit Program for
Mortgages serviced for Freddie Mac, the servicing has been conducted in
compliance with the Pooling and Servicing Agreement except for any significant
exceptions or errors in records that, in the opinion of the firm, generally
accepted auditing standards and the Uniform Single Attestation Program for
Mortgage Bankers or the Audit Program for Mortgages serviced for Freddie Mac
require it to report, in which case the exceptions and errors shall be so
reported.

COLLECTION AND OTHER SERVICING PROCEDURES

The servicer will be responsible for making reasonable efforts to collect
all payments called for under the mortgage loans and will, consistent with the
Pooling and Servicing Agreement, follow the collection procedures as it follows
for loans held for its own account which are comparable to the mortgage loans.
Consistent with the above, the servicer may, in its discretion, (a) waive any
late payment charge and (b) arrange with a mortgagor a schedule for the
liquidation of delinquencies, subject to the provisions of the Pooling and
Servicing Agreement.

HAZARD INSURANCE

The servicer is required to cause to be maintained for each mortgaged
property a hazard insurance policy with coverage which contains a standard
mortgagee's clause in an amount equal to the lesser of (a) the maximum insurable
value of the mortgaged property or (b) the principal balance of the mortgage
loan plus the outstanding balance of any mortgage loan senior to the mortgage
loan, but in no event may this amount be less than is necessary to prevent the
borrower from becoming a coinsurer thereunder. As stated above, all amounts
collected by the servicer under any hazard policy, except for amounts to be
applied to the restoration or repair of the mortgaged property or released to
the borrower in accordance with the servicer's normal servicing procedures, to
the extent they constitute Net Liquidation Proceeds or Insurance Proceeds, will
ultimately be deposited in the related Distribution Account. The ability of the
servicer to assure that hazard insurance proceeds are appropriately applied may
be dependent on its being named as an additional insured under any hazard
insurance policy, or upon the extent to which information in this regard is
furnished to the servicer by a borrower. The Pooling and Servicing Agreement
provides that the servicer may satisfy its obligation to cause hazard policies
to be maintained by maintaining a blanket policy issued by an insurer acceptable
to the rating agencies insuring against losses on the mortgage loans. If this
blanket policy contains a deductible clause, the servicer is obligated to
deposit in the related Distribution Account the sums which would have been
deposited therein but for that clause.

S-37
<PAGE>

REALIZATION UPON DEFAULTED MORTGAGE LOANS

The servicer will foreclose upon, or otherwise comparably convert to
ownership, mortgaged properties securing such of the mortgage loans as come into
default when, in the opinion of the servicer, no satisfactory arrangements can
be made for the collection of delinquent payments. In connection with the
foreclosure or other conversion, the servicer will follow the practices as it
deems necessary or advisable and as are in keeping with the servicer's general
loan servicing activities and the Pooling and Servicing Agreement; provided,
--------
that the servicer will not expend its own funds in connection with foreclosure
or other conversion, correction of a default on a senior mortgage or restoration
of any property unless the foreclosure, correction or restoration is determined
to increase Net Liquidation Proceeds.

REMOVAL AND RESIGNATION OF THE SERVICER

The certificate insurer may, pursuant to the Pooling and Servicing
Agreement, remove the servicer upon the occurrence and continuation beyond the
applicable cure period of an event described in clauses (g), (h) or (i) below
and the trustee, only at the direction of the certificate insurer or the
majority holders of certificates, with the consent of the certificate insurer,
in the case of any direction of the majority holders, may remove the servicer
upon the occurrence and continuation beyond the applicable cure period of an
event described in clause (a), (b), (c), (d), (e) or (f) below. Each of the
following constitutes a servicer event of default:

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<PAGE>

(a) any failure by the servicer to remit to the trustee any payment
required to be made by the servicer under the terms of the Pooling and
Servicing Agreement, other than servicing advances covered by clause
(b) below, which continues unremedied for one business day after the
date upon which written notice of any failure, requiring the same to
be remedied, shall have been given to the servicer and the certificate
insurer by the trustee or to the servicer and the trustee by the
certificate insurer or the holders of certificates evidencing
percentage interests of at least 25%;

(b) the failure by the servicer to make any required servicing advance
which failure continues unremedied for a period of thirty days after
the date on which written notice of any failure, requiring the same to
be remedied, shall have been given to the servicer by the trustee or
to the servicer and the trustee by any holder of a certificate or the
certificate insurer;

(c) any failure on the part of the servicer duly to observe or perform in
any material respect any other of the covenants or agreements on the
part of the servicer contained in the Pooling and Servicing Agreement,
or the failure of any representation and warranty enumerated in the
Pooling and Servicing Agreement, which continues unremedied for a
period of thirty days after the date on which written notice of any
failure, requiring the same to be remedied, shall have been given to
the servicer by the trustee, or to the servicer and the trustee by any
holder of a certificate or the certificate insurer;

(g) the delinquency or loss experience of the mortgage loans exceeds
levels specified in the Pooling and Servicing Agreement; or

(h) the certificate insurer shall notify the trustee of any "event of
default" under the Insurance Agreement.

The servicer may not assign its obligations under the Pooling and Servicing
Agreement nor resign from the obligations and duties thereby imposed on it
except by mutual consent of the servicer, ________, if ________ is not the
servicer, the certificate insurer, the collateral agent and the trustee, or upon
the determination that the servicer's duties thereunder are no longer
permissible under applicable law and such incapacity cannot be cured by the
servicer without the incurrence, in the reasonable judgment of the certificate
insurer, of unreasonable expense. No such resignation shall become effective
until a successor has assumed the servicer's responsibilities and obligations in
accordance with the Pooling and Servicing Agreement.

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<PAGE>

Upon removal or resignation of the servicer, the trustee will be the
successor servicer. The trustee, as successor servicer, will be obligated to
make Periodic Advances and servicing advances and other advances unless it
determines reasonably and in good faith that the advances would not be
recoverable. If, however, the trustee is unwilling or unable to act as successor
servicer, or if the majority holders, with the consent of the certificate
insurer, or the certificate insurer so requests, the trustee shall appoint, or
petition a court of competent jurisdiction to appoint, in accordance with the
provisions of the Pooling and Servicing Agreement and subject to the approval of
the certificate insurer, any established mortgage loan servicing institution
acceptable to the certificate insurer having a net worth of not less than
$____________ as the successor servicer in the assumption of all or any part of
the responsibilities, duties or liabilities of the servicer.

Pursuant to the Pooling and Servicing Agreement, the servicer covenants and
agrees to act as the servicer for an initial term from the closing date to
____________, which term will be extendable by the certificate insurer by notice
to the trustee for successive terms of three calendar months each, until the
termination of the trust estate. The servicer will, upon its receipt of each
notice of extension, become bound for the duration of the term covered by the
extension notice to continue as the servicer subject to and in accordance with
the other provisions of the Pooling and Servicing Agreement. If as of the
fifteenth day prior to the last day of any term of the servicer the trustee
shall not have received any extension notice from the certificate insurer, the
trustee will, within five days thereafter, give written notice of non-receipt to
the certificate insurer and the servicer. The certificate insurer has agreed to
extend each three month term of the servicer, in the absence of a servicer event
of default under the Pooling and Servicing Agreement.

The trustee and any other successor servicer in that capacity is entitled
to the same reimbursement for advances and no more than the same servicing
compensation as the servicer. See "-Servicing and Other Compensation and Payment
of Expenses" in this prospectus supplement.

TERMINATION; PURCHASE OF MORTGAGE LOANS

The Pooling and Servicing Agreement will terminate upon notice to the
trustee of either: (a) the later of the distribution to certificateholders of
the final payment or collection on the last mortgage loan, or Periodic Advances
of same by the servicer, or the disposition of all funds from the last mortgage
loan and the remittance of all funds due under the Pooling and Servicing
Agreement and the payment of all amounts due and payable to the certificate
insurer, the collateral agent and the trustee or (b) mutual consent of the
servicer, the certificate insurer and all holders in writing; provided, however,
-------- -------
that in no event will the trust terminate later than twenty-one years after the
death of the last surviving lineal descendant of the person named in the Trust
Agreement.

Subject to provisions in the Pooling and Servicing Agreement concerning
adopting a plan of complete liquidation, the servicer may, at its option and at
its sole cost and expense, terminate the Pooling and Servicing Agreement on any
date on which the aggregate principal balance of the mortgage loans is less than
10% of the sum of (x) the aggregate original principal balance of the mortgage
loans purchased on the closing date and (y) the original amount on deposit in
the pre-funding accounts, by purchasing, on the next succeeding distribution
date, all of the outstanding mortgage loans and REO Properties at a price equal
to the sum of

S-40
<PAGE>

- 100% of the principal balance of each outstanding mortgage loan and
each REO property,

- any unreimbursed amounts due to the certificate insurer under the
Pooling and Servicing Agreement, the Insurance Agreement and, without
duplication, accrued and unpaid Insured Payments, and

- the trustee's fees.

Any such purchase shall be accomplished by depositing into each Distribution
Account the portion of the purchase price specified above which relates to the
class of certificates. No such termination is permitted without the prior
written consent of the certificate insurer if it would result in a draw on the
certificate insurance policy.

THE CERTIFICATE INSURANCE POLICY

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

Simultaneously with the issuance of the certificates, the certificate
insurer will deliver the certificate insurance policy to the trustee, for the
benefit of the holders of the certificates. Under the certificate insurance
policy, the certificate insurer will irrevocably and unconditionally guarantee
payment on each distribution date to the trustee, for the benefit of the holders
of the certificates, of the Insured Distribution Amounts for the related class
of certificates calculated in accordance with the original terms of the
certificates when issued and without regard to any amendment or modification of
the certificates or the Pooling and Servicing Agreement except amendments or
modifications to which the certificate insurer has given its prior written
consent. In addition, for any distribution date occurring on a date when an
event of default under the Insurance Agreement, as described below, has occurred
and is continuing or a date on or after the first date on which a claim is made
under the certificate insurance policy, the certificate insurer at its sole
option, may pay any or all of the outstanding principal balance of the
certificates. Mortgage Loan Interest Shortfalls will not be covered by payments
under the certificate insurance policy.

Payment of claims under the certificate insurance policy will be made by
the certificate insurer following receipt by the certificate insurer of the
appropriate notice for payment on the later to occur of (a) 12:00 noon, New York
City time, on the second business day following receipt of notice for payment,
and (b) 12:00 noon, New York City time, on the relevant distribution date. If
any payment of an amount guaranteed by the certificate insurer pursuant to the
certificate insurance policy is avoided as a preference payment under applicable
bankruptcy, insolvency, receivership or similar law the certificate insurer will
pay the amount out of the funds of the certificate insurer on the later of

- the date when due to be paid pursuant to the bankruptcy order referred
to below or

- the first to occur of

S-41
<PAGE>

- the fourth business day following receipt by the certificate insurer
from the trustee of (A) a certified copy of the order of the court or
other governmental body which exercised jurisdiction to the effect
that a holder is required to return principal or interest distributed
on a certificate during the term of the certificate insurance policy
because these distributions were avoidable preferences under
applicable bankruptcy law, (B) a certificate of the holder(s) that the
bankruptcy order has been entered and is not subject to any stay, and
(C) an assignment duly executed and delivered by the holder(s), in
such form as is reasonably required by the certificate insurer and
provided to the holder(s) by the certificate insurer, irrevocably
assigning to the certificate insurer all rights and claims of the
holder(s) relating to or arising under the certificates against the
debtor which made the preference payment or otherwise concerning the
preference payment, or

- the date of receipt by the certificate insurer from the trustee of the
items referred to in clauses (A), (B) and (C) above if, at least four
business days prior to the date of receipt, the certificate insurer
shall have received written notice from the trustee that these items
were to be delivered on that date and that date was specified in the
notice.

This payment shall be disbursed to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the bankruptcy order and
not to the trustee or any holder directly - unless a holder has previously paid
the amount to the receiver, conservator, debtor-in-possession or trustee in
bankruptcy named in the bankruptcy order, in which case the payment shall be
disbursed to the trustee for distribution to the holder upon proof of the
payment reasonably satisfactory to the certificate insurer.

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

Under the certificate insurance policy, "business day" means any day other
than a Saturday or Sunday or a day on which banking institutions in the City of
New York, New York or the State of New York, are authorized or obligated by law
or executive order to be closed. The certificate insurer's obligations under the
certificate insurance policy to make Insured Payments shall be discharged to the
extent funds are transferred to the trustee as provided in the certificate
insurance policy, whether or not the funds are properly applied by the trustee.

The certificate insurer shall be subrogated to the rights of each holder to
receive payments of principal and interest, as applicable, with respect to
distributions on the certificates to the extent of any payment by the
certificate insurer under the certificate insurance policy. To the extent the
certificate insurer makes Insured Payments, either directly or indirectly, as by
paying through the trustee, to the holders of certificates, the certificate
insurer will be subrogated to the rights of the holders, as applicable, with
respect to this Insured Payment and shall be deemed to the extent of the
payments so made to be a registered holder for purposes of payment.

S-42
<PAGE>

Claims under the certificate insurance policy will rank equally with any
other unsecured debt and unsubordinated obligations of the certificate insurer
except for particular obligations in respect of tax and other payments to which
preference is or may become afforded by statute. Claims against the certificate
insurer under the certificate insurance policy constitute pari passu claims
against the general assets of the certificate insurer. The terms of the
certificate insurance policy cannot be modified or altered by any other
agreement or instrument, or by the merger, consolidation or dissolution of the
trust. The certificate insurance policy is governed by the laws of the State of
New York. The certificate insurance policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.

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

Pursuant to the terms of the Pooling and Servicing Agreement, unless a
certificate insurer default exists, the certificate insurer shall be deemed to
be the holder of the certificates for all purposes, other than for payment on
the certificates, will be entitled to exercise all rights of the holders
thereunder, without the consent of the holders, and the holders may exercise
these rights only with the prior written consent of the certificate insurer. In
addition, the certificate insurer will, as a third-party beneficiary to the
Pooling and Servicing Agreement and the Loan Sale Agreement, have, among others,
the following rights:

the right to give notices of breach or to terminate the rights and
obligations of the servicer under the Pooling and Servicing Agreement in the
event of a servicer event of default and to institute proceedings against the
servicer;

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

- the right to remove the trustee pursuant to the Pooling and Servicing
Agreement;

- the right to direct the actions of the trustee during the continuation
of a servicer default;

- the right to require the depositor to repurchase mortgage loans for
breach of representation and warranty or defect in documentation;

- the right to direct foreclosures upon the failure of the servicer to
do so in accordance with the Pooling and Servicing Agreement;

- the right to direct all matters relating to a bankruptcy or other
insolvency proceeding involving the depositor; and

- the right to direct the trustee to investigate specified matters.

The certificate insurer's consent will be required prior to, among other
things, (x) the removal of the trustee, (y) the appointment of any successor
trustee or servicer or (z) any amendment to the Pooling and Servicing Agreement.

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<PAGE>

The trust, the depositor, the servicer, the originators and the certificate
insurer will enter into the Insurance Agreement pursuant to which the trust, the
depositor, the servicer and the originators will agree to reimburse, with
interest, the certificate insurer for amounts paid pursuant to claims under the
certificate insurance policy; provided, the payment obligations shall be
--------
non-recourse obligations of the depositor, the originators, the trust and the
servicer and shall be payable only from monies available for the payment in
accordance with the provisions of the Pooling and Servicing Agreement. The
servicer will further agree to pay the certificate insurer all reasonable
charges and expenses which the certificate insurer may pay or incur relative to
any amounts paid under the certificate insurance policy or otherwise in
connection with the transaction and to indemnify the certificate insurer against
specified liabilities. Except to the extent provided therein, amounts owing
under the Insurance Agreement will be payable solely from the trust estate. An
"event of default" under the Insurance Agreement will constitute an event of
default under the Pooling and Servicing Agreement and a servicer event of
default under the Pooling and Servicing Agreement and allow the certificate
insurer, among other things, to direct the trustee to terminate the servicer. An
"event of default" under the Insurance Agreement includes:

- the originators', the depositor's or the servicer's failure to pay
when due any amount owed under the Insurance Agreement or other
documents,

- the inaccuracy or incompleteness in any material respect of any
representation or warranty of the originators, the depositor or the
servicer in the Insurance Agreement, the Pooling and Servicing
Agreement or other documents,

- the originators', the depositor's or the servicer's failure to perform
or to comply with any covenant or agreement in the Insurance
Agreement, the Pooling and Servicing Agreement and other documents,

- a finding or ruling by a governmental authority or agency that the
Insurance Agreement, the Pooling and Servicing Agreement or other
documents are not binding on the originators, the depositor or the
servicer,

- the occurrence of specified "performance test violations" designed to
measure the performance of the mortgage loans.

THE CERTIFICATE INSURER

____________ is a monoline insurance company incorporated in ______ under
the laws of the State of ____________. ________________________ is licensed to
engage in the financial guaranty insurance business in all 50 states, the
District of Columbia and Puerto Rico.
___________ and its subsidiaries are engaged in the business of writing
financial guaranty insurance, principally in respect of securities offered in
domestic and foreign markets. In general, financial guaranty insurance consists
of the issuance of a guaranty of scheduled payments of an issuer's securities -
thereby enhancing the credit rating of those securities - in consideration for
the payment of a premium to the insurer. ____________ and its subsidiaries
principally insure asset-backed, collateralized and municipal securities.
Asset-backed securities are generally supported by residential or commercial
mortgage loans, consumer or trade receivables, securities or other assets having
an ascertainable cash flow or market value. Collateralized securities include
public utility first mortgage bonds and sale/leaseback obligation bonds.
Municipal securities consist largely of general obligation bonds, special
revenue bonds and other special obligations of state and local governments.
____________ insures both newly issued securities sold in the primary market and
outstanding securities sold in the secondary market that satisfy ____________
underwriting criteria.

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<PAGE>

The principal executive offices of ____________ are located at
________________________, and its telephone number at that location is
____________.

REINSURANCE

RATINGS

CAPITALIZATION

The following table sets forth the capitalization of ____________ and its
wholly owned subsidiaries on ____________ the basis of generally accepted
accounting principles as of ____________:

[Certificate insurer to provide]

For further information concerning ____________, see the Consolidated
Financial Statements of ____________, and the certificates thereto, incorporated
by reference in this prospectus supplement. ____________ financial statements
are included as exhibits to the annual report on Form 10-K and Quarterly Reports
on Form 10-Q filed with the Commission by ____________ and may be reviewed at
the EDGAR website maintained by the Commission. Copies of the statutory
quarterly and annual statements filed with the State of ____________ Insurance
Department by ____________ are available upon request to the State of
____________ Insurance Department.

INSURANCE REGULATION

S-45
<PAGE>

PREPAYMENT AND YIELD CONSIDERATIONS

The weighted average life of, and, if purchased at other than par, the
yield to maturity on, a certificate will be directly related to the rate of
payment of principal of the mortgage loans, including for this purpose voluntary
payment in full of mortgage loans prior to stated maturity, liquidations due to
defaults, casualties and condemnations, and repurchases of or substitutions for
mortgage loans by ____________ or an affiliate of ____________ as required or
permitted under the Pooling and Servicing Agreement or the Loan Sale Agreement.

As indicated above, if purchased at other than par, the yield to maturity
on a certificate will be affected by the rate of the payment of principal on the
mortgage loans. If the actual rate of payments on the mortgage loans is slower
than the rate anticipated by an investor who purchases a certificate at a
discount, the actual yield to the investor will be lower than the investor's
anticipated yield. If the actual rate of payments on the mortgage loans is
faster than the rate anticipated by an investor who purchases a certificate at a
premium, the actual yield to the investor will be lower than the investor's
anticipated yield.

The final stated maturity date is expected to be ____________ for the class
A-1 certificates and the class A-2 certificates. Each final stated maturity date
was calculated using the assumption that the final stated maturity date is
thirteen months after the final stated maturity date of the mortgage loan having
the latest maturity date in each pool and assuming a subsequent mortgage loan
having a final stated maturity date of ____________ is purchased by the trust
and included in each pool. The weighted average life of the 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 for any class of the certificates could occur significantly
earlier than the final stated maturity date because:

S-46
<PAGE>

- prepayments, including, for this purpose, prepayments attributable to
foreclosure, liquidation, repurchase and the like, on mortgage loans
are likely to occur,

- thirteen months have been added to obtain the final stated maturity
date above,

- the over-collateralization provisions of the transaction result in the
application of Excess Interest to the payment of principal;

- the servicer may, at its option, call the class A-1 certificates or
the class A-2 certificates, separately, when the aggregate outstanding
principal balance of the class A-1 certificates or the class A-2
certificates, respectively, is equal to or less than 10% of the
aggregate original principal balance of the class A-1 certificates or
the class A-2 certificates, respectively.

Weighted average life refers to the average amount of time that will elapse
from the date of issuance of a security until each dollar of principal of the
security is scheduled to be repaid to an investor. The weighted average life of
the certificates will be influenced by the rate at which principal of the
mortgage loans is paid, which may be in the form of scheduled amortization or
prepayments - for this purpose, the term "prepayment" includes liquidations due
to default.

Prepayments on mortgage loans are commonly measured relative to a
prepayment model or standard. The model used in this prospectus supplement, Home
Equity Prepayment or HEP, is a prepayment assumption which represents an assumed
rate of prepayment each month relative to the then outstanding principal balance
of a pool of mortgage loans for the life of the mortgage loans. For example, 25%
HEP assumes a constant prepayment rate of 2.5% per annum of the then outstanding
principal balance of the mortgage loans in the first month of the life of the
mortgage loans and an additional 2.5% per annum in each month thereafter up to
and including the tenth month. Beginning in the eleventh month and in each month
thereafter during the life of the mortgage loans, 25% HEP assumes a constant
prepayment rate of 25% per annum. As used in the table below, 0% prepayment
assumption assumes prepayment rates equal to 0% of the prepayment
assumption-i.e., no prepayments on the mortgage loans having the characteristics
described below. The prepayment assumption does not purport to be a historical
description of prepayment experience or a prediction of the anticipated rate of
prepayment of any pool of mortgage loans, including the mortgage loans.

The following table has been prepared on the basis of the following
modeling assumptions:

- The mortgage loans prepay at the indicated percentage of the
prepayment assumption,

- distributions on the certificates are received in cash on the ____ day
of each month commencing in ____________,

- no defaults or delinquencies in, or modifications, waivers or
amendments respecting the payment by the mortgagors of principal and
interest on the mortgage loans occur,

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<PAGE>

- the certificates are purchased on ____________,

- the Specified Over-collateralized Amount is as enumerated in the
Pooling and Servicing Agreement,

- the mortgage loans in pool I consist of ____________ mortgage loans
having the following characteristics:

The mortgage loans in pool II consists of ____________ mortgage loans
having the following characteristics:

The foregoing modeling assumptions are assumptions and are not necessarily
indicative of actual performance.

Based upon the foregoing modeling assumptions, the tables below indicate
the weighted average life and earliest retirement date of the certificates
assuming that the mortgage loans prepay according to the indicated percentages
of the prepayment assumption.

WEIGHTED AVERAGE LIVES

Class A-1 Certificates
Prepayment Weighted Average Earliest
Assumption (HEP) Life in Years Retirement Date
---------------- ------------- ---------------

Class A-2 Certificates

Prepayment Weighted Average Earliest
Assumption (HEP) Life in Years Retirement Date
---------------- ------------- ---------------

The foregoing tables were prepared assuming that:

- the weighted average life of each class of certificates is determined
by

S-48
<PAGE>

- multiplying the amount of each principal payment used to retire
the related class of certificates by the number of years from the
closing date to the final distribution date when the related
class of certificates is fully retired,

- adding the results, and

- dividing the sum by the original principal balance of that class;
and

- the call of the class A-1 certificates or the class A-2 certificates,
respectively, occurs as stated in this prospectus supplement.

______________________

There is no assurance that prepayments will occur or, if they do occur,
that they will occur at any percentage of HEP.

The Pooling and Servicing Agreement provides that none of the certificate
insurer, the trust, the trustee, the depositor, the depositor, the originators
or the servicer will be liable to any holder for any loss or damage incurred by
the holder as a result of any difference in the rate of return received by the
holder as compared to the applicable certificate rate, with respect to any
holder of certificates upon reinvestment of the funds received in connection
with any premature repayment of principal on the certificates, including any
such repayment resulting from any prepayment by the mortgagor, any liquidation
of the mortgage loan, or any repurchase of or substitution for any mortgage loan
by the depositor or the servicer.

CERTAIN FEDERAL INCOME TAX CONSIDERATIONS

The following discussion of certain material federal income tax
consequences of the purchase, ownership and disposition of the certificates is
to be considered only in connection with "Certain Federal Income Tax
Consequences" in the accompanying prospectus. The discussion in this prospectus
supplement and in the accompanying prospectus is based upon laws, regulations,
rulings and decisions now in effect, all of which are subject to change. The
discussion below and in the accompanying prospectus does not purport to deal
with all federal tax consequences applicable to all categories of investors,
some of which may be subject to special rules. Investors should consult their
own tax advisors in determining the federal, state, local and any other tax
consequences to them of the purchase, ownership and disposition of the
certificates.

An election will be made to treat the trust as a REMIC for federal income
tax purposes. __________, special tax counsel, will deliver its opinion that,
assuming compliance with the Pooling and Servicing Agreement, the trust will be
treated as a REMIC for federal income tax purposes. The class A certificates
will be designated as "regular interests" in the REMIC, and the class R
certificates will be designated as the sole "residual interest" in the REMIC.
The class R certificates are "REMIC Residual Certificates" for purposes of the
Prospectus.

The certificates possess certain special tax attributes by virtue of the
REMIC provisions of the Code. See "Certain Federal Income Tax Consequences -
REMIC Securities" in the Prospectus.

The class A certificates generally will be treated as debt instruments for
federal income tax purposes. Beneficial owners, or registered holders, in the
case of definitive certificates, of the class A certificates will be required to
report income on such certificates in accordance with the accrual method of
accounting. It is not anticipated that the class A certificates will be issued
with original issue discount. See "Certain Federal Income Tax Consequences -
Original Issue Discount" in the Prospectus. The prepayment assumption for
calculating original issue discount is 100% of the Prepayment Assumption. See
"Prepayment and Yield Considerations" herein.

S-49
<PAGE>

ERISA CONSIDERATIONS

The Employee Retirement Income Security Act of 1974 and the Code impose
certain restrictions on

- employee benefit plans-as defined in Section 3(3) of ERISA-,

- plans described in section 4975(e)(1) of the Code, including
individual retirement accounts or Keogh plans,

- any entities whose underlying assets include plan assets by reason of
a plan's investment in such entities and

- persons who have certain specified relationships to such Plans -
"Parties-in-Interest" under ERISA and "Disqualified Persons" under the
Code.

Section 406 of ERISA prohibits plans from engaging in certain transactions
involving the assets of such plans with Parties-in-Interest with respect to such
plans, unless a statutory or administrative exemption is applicable to the
transaction. Excise taxes under Section 4975 of the Code, penalties under
Section 502 of ERISA and other penalties may be imposed on plan fiduciaries and
Parties-in-Interest or Disqualified Persons that engage in "prohibited
transactions" involving assets of a plan. Individual retirement arrangements
and other plans that are not subject to ERISA, but are subject to Section 4975
of the Code, and Disqualified Persons with respect to such arrangements and
plans, also may be subject to excise taxes and other penalties if they engage in
prohibited transactions. Moreover, based on the reasoning of the United States
Supreme Court in John Hancock Life Ins. Co. v. Harris Trust and Sav. Bank, 114
S. Ct. 517 (1993), an insurance company's general account may be deemed to
include assets of the Plans investing in the general account - e.g., through the
purchase of an annuity contract. ERISA also imposes certain duties on persons
who are fiduciaries of plans subject to ERISA.

The Department of Labor has issued a regulation describing what constitutes
the assets of a lan when the plan acquires an equity interest in another entity.
This plan asset regulation states that, unless an exemption described in the
regulation is applicable, the underlying assets of an entity in which a plan
makes an equity investment will be considered, for purposes of ERISA, to be the
assets of the investing plan. Pursuant to the plan asset regulation, if the
assets of the trust were deemed to be plan assets by reason of a plan's
investment in any class A certificates, such plan assets would include an
undivided interest in any assets held in such trust. Therefore, in the absence
of an exemption, the purchase, sale or holding of any class A certificate by a
plan subject to Section 406 of ERISA or Section 4975 of the Code might result in
prohibited transactions and the imposition of excise taxes and civil penalties.
On _______, the Department of Labor issued to ____________________ an individual
administrative exemption, Prohibited Transaction Exemption ____, from certain of
the prohibited transaction rules of ERISA with respect to the initial purchase,
the holding and the subsequent resale by a plan of certificates in pass-through
trusts that meet the conditions and requirements of this exemption. Among the
conditions that must be satisfied for this exemption to apply are the following:

(a) The acquisition of the class A certificates by a plan is on terms,
including the price for the class A certificates, that are at least as
favorable to the plan as they would be in an arm's length transaction with
an unrelated party;

S-50
<PAGE>

(b) The rights and interests evidenced by the class A certificates
acquired by the plan are not subordinated to the rights and interests
evidenced by other certificates of the trust fund;

(c) The class A certificates acquired by the plan have received a
rating at the time of such acquisition that is in one of the three highest
generic rating categories from any of Standard & Poor's, Moody's, Fitch
IBCA, or Duff & Phelps Credit Rating Co.;

(d) The sum of all payments made to the underwriter in connection with
the distribution of the class A certificates represents not more than
reasonable compensation for underwriting the class A certificates. The sum
of all payments made to and retained by the servicer represents not more
than reasonable compensation for the servicer's services under the Pooling
and Servicing Agreement and reimbursement of the servicer's reasonable
expenses in connection therewith;

(e) The trustee is not an affiliate of any other member of the
restricted group; and

(f) The plan investing in the class A certificates is an "accredited
investor" as defined in Rule 501(a)(1) of Regulation D of the Securities
and Exchange Commission under the Securities Act of 1933.

The trust fund also must meet the following requirements:

- The corpus of the trust fund must consist solely of assets of the type
which have been included in other investment pools;

- certificates in such other investment pools must have been rated in
one of the three highest rating categories of Standard & Poor's,
Moody's, Duff & Phelps or Fitch IBCA for at least one year prior to
the plan's acquisition of certificates; and

- certificates evidencing interests in such other investment pools must
have been purchased by investors other than plans for at least one
year prior to any plan's acquisition of class A certificates.

In order for the exemption to apply to certain self-dealing/conflict of
interest prohibited transactions that may occur when a plan fiduciary causes the
plan to acquire class A certificates, the Exemption requires, among other
matters, that:

- in the case of an acquisition in connection with the initial issuance
of certificates, at least fifty percent of each class of certificates
in which plans have invested is acquired by persons independent of the
restricted group and at least fifty percent of the aggregate interest
in the trust fund is acquired by persons independent of the restricted
group;

- such fiduciary, or its affiliate, is an obligor with respect to 5
percent or less of the fair market value of the obligations contained
in the trust fund;

- the plan's investment in class A certificates does not exceed
twenty-five percent (25%) of all of the certificates outstanding at
the time of the acquisition and

- immediately after the acquisition, no more than twenty-five percent
(25%) of the assets of the plan are invested in certificates
representing an interest in one or more trusts containing assets sold
or serviced by the same entity.

S-51
<PAGE>

The exemption does not apply to certain prohibited transactions in the case
of plans sponsored by the underwriter, the trustee, the servicer, any obligor
with respect to more than 5% of the fair market value of the mortgage loans
included in the trust fund, any entity deemed to be a "sponsor" of the trust
fund as such term is defined in the exemption, or any affiliate of any such
party.

The exemption may be available for the purchase of the certificates by
plans following the expiration of the Pre-Funding Period. Before purchasing a
class A certificate, a fiduciary of an ERISA plan should make its own
determination as to the availability of the exemptive relief provided in the
exemption and whether the conditions of such exemption will be applicable to the
class A certificates. Any fiduciary of an ERISA plan considering whether to
purchase a class A certificate should also carefully review with its own legal
advisors the applicability of the fiduciary duty and prohibited transaction
provisions of ERISA and the Code to such investment. The exemption will not
apply with respect to the certificates until such time that the balance of the
Pre-Funding Account for that class is reduced to zero. Accordingly, until such
time, the certificates may not be purchased by any entity using the assets of a
plan.

A governmental plan as defined in Section 3(32) of ERISA is not subject to
ERISA, or Code Section 4975. However, such a governmental plan may be subject to
a federal, state, or local law, which is, to a material extent, similar to the
provisions of ERISA or Code Section 4975. A fiduciary of a governmental plan
should make its own determination as to the need for and the availability of any
exemptive relief under similar law.

The sale of certificates to a plan is in no respect a representation by the
depositor or the underwriter that this investment meets all relevant legal
requirements with respect to investments by plans generally or any particular
plan, or that this investment is appropriate for lans generally or any
particular ERISA plan.

LEGAL INVESTMENT

The certificates will not constitute "mortgage related securities" for
purposes of the Secondary Mortgage Market Enhancement Act of 1984.

PLAN OF DISTRIBUTION

Subject to the terms and conditions of the Underwriting Agreement dated
____________ between the depositor and ____________, as underwriter, the
depositor has agreed to sell to the underwriter and the underwriter has agreed
to purchase from the depositor the certificates. The depositor is obligated to
sell, and the underwriter is obligated to purchase, all of the certificates
offered hereby if any are purchased.

The underwriter has advised the depositor that it proposes to offer the
certificates purchased by the underwriter for sale from time to time in one or
more negotiated transactions or otherwise, at market prices prevailing at the
time of sale, at prices related to such market prices or at negotiated prices.
The underwriter may effect these transactions by selling these certificates to
or through dealers, and these dealers may receive compensation in the form of
underwriting discounts, concessions or commissions from the underwriter or
purchasers of the certificates for whom they may act as agent. Any dealers that
participate with the underwriter in the distribution of the certificates
purchased by the underwriter may be deemed to be underwriters, and any discounts
or commissions received by them or the underwriter and any profit on the resale
of certificates by them or the underwriter may be deemed to be underwriting
discounts or commissions under the Securities Act of 1933.

S-52
<PAGE>

In connection with the offering of the certificates, the underwriter and
its affiliates may engage in transactions that stabilize, maintain or otherwise
affect the market price of the certificates. These transactions may include
stabilization transactions effected in accordance with Rule 104 of Regulation M,
pursuant to which that person may bid for or purchase the certificates for the
purpose of stabilizing its market price. Any of the transactions described in
this paragraph may result in the maintenance of the price of the certificates at
a level above that which might otherwise prevail in the open market. None of the
transactions described in this paragraph is required, and, if they are taken,
may be discontinued at any time without notice.

For further information regarding any offer or sale of the certificates
pursuant to this prospectus supplement and the accompanying prospectus, see
"Plan of Distribution" in the accompanying prospectus.

The Underwriting Agreement provides that the depositor will indemnify the
underwriter or contribute to losses arising out of specified liabilities,
including liabilities under the Securities Act.

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

- the Annual Report on Form 10-K for the year ended ____________; and

- the Quarterly Report on Form 10-Q for the quarter ended ____________.

ADDITIONAL INFORMATION

Prudential Securities Secured Financing Corporation has filed with the
Securities and Exchange Commission a registration statement under the Securities
Act of 1933, for the certificates offered pursuant to this prospectus
supplement. This prospectus supplement and the accompanying prospectus, which
form a part of the registration statement, omit certain information contained in
such registration statement pursuant to the rules and regulations of the
Securities and Exchange Commission. You may read and copy the registration
statement at the Public Reference Room at the Securities and Exchange Commission
at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. and at the
Securities and Exchange Commission's regional offices at Seven World Trade
Center, 13th Floor, New York, New York, 10048 and Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Please call the
Securities and Exchange Commission at 1-800-SEC-0330 for further information on
the Public Reference Rooms. In addition, the Securities and Exchange Commission
maintains a site on the World Wide Web containing reports, proxy materials,
information statements and other items. The address is http://www.sec.gov.

S-53
<PAGE>

EXPERTS

LEGAL MATTERS

Certain legal matters in connection with the certificates will be passed
upon for the originators, the depositor and the servicer by ____________,
____________, for the trust by ____________, ____________, and for the depositor
and the underwriter by ____________, ____________.

RATINGS

It is a condition to the original issuance of the certificates that they
will receive ratings of [ ] by ________ and [ ] by ________. The ratings
assigned to the certificates will take into account the claims-paying ability of
the certificate insurer. Explanations of the significance of these ratings may
be obtained from ________________________and _______________________. These
ratings will be the views only of the rating agencies. There is no assurance
that any such ratings will continue for any period of time or that these ratings
will not be revised or withdrawn. Any such revision or withdrawal of these
ratings may have an adverse effect on the market price of the certificates.

S-54
<PAGE>
GLOSSARY

The following terms have the meanings given below when used in this
prospectus supplement.

Class A-1 Interest Distribution Amount means, for any distribution date, an
amount equal to the sum of the Current Interest for the class A-1 certificates
on that distribution date, less the amount of any Class A-1 Mortgage Loan
Interest Shortfalls relating to that distribution date.

Class A-1 Certificate Rate means, with respect to any distribution date,
the per annum rate equal to ____%.

Class A-2 Interest Distribution Amount for any distribution date will be an
amount equal to the sum of the Current Interest for the class A-2 certificates
on that distribution date, less the amount of any Class A-2 Mortgage Loan
Interest Shortfalls relating to that distribution date.

Class A-2 Certificate Rate means, for any distribution date, the per annum
rate equal to _____%.

Compensating Interest means an amount equal to the lesser of (a) the
aggregate of the Prepayment Interest Shortfalls for the related distribution
date resulting from principal prepayments in full during the related due period
and (b) its aggregate servicing fees received in the related due period

Current Interest for any pool of mortgage loans and any distribution date
is the interest that will accrue on the related class of certificates at the
applicable certificate rate on the aggregate outstanding principal balance of
such class during the accrual period.

Excess Interest for any pool of mortgage loans and any distribution date is
equal to the excess of (x) the Available Amount for that pool and that
distribution date over (y) the sum of

- the Interest Distribution Amount for that pool and that distribution
date,

- any Reimbursement Amount or other amount owed to the certificate
insurer relating to that pool and

- the trustee's fees for that pool and that distribution date.

S-55
<PAGE>

Insured Distribution Amount for any pool of mortgage loans and any
distribution date, is the sum of:

- the Interest Distribution Amount for that pool and that distribution
date,

- the amount of the Over-collateralization Deficit applicable to that
pool and that distribution date, if any, and

- on the distribution date which is a final stated maturity date, the
aggregate outstanding principal balance for the related class of
certificates.

Insured Payment for any pool of mortgage loans and any distribution date
will equal the amount by which the Insured Distribution Amount for that pool and
that distribution date exceeds the Available Amount less the trustee's fees for
that pool and that distribution date.

Interest Distribution Amount means the Class A-1 Interest Distribution
Amount or the Class A-2 Interest Distribution Amount, as applicable.

Mortgage Loan Interest Shortfalls means Civil Relief Act interest
shortfalls and Prepayment Interest Shortfalls.

S-56
<PAGE>

Net Liquidation Proceeds as to any Liquidated Mortgage Loan, are
Liquidation Proceeds net of Liquidation Expenses and net of any unreimbursed
Periodic Advances made by the servicer.

Net Mortgage Loan Interest Shortfalls means the Class A-1 Mortgage Loan
Interest Shortfalls or the Class A-2 Mortgage Loan Interest Shortfalls, as
applicable.

Net REO Proceeds as to any REO property, are REO Proceeds net of any
expenses of the servicer.

Over-collateralized Amount means, for any distribution date and a pool of
mortgage loans, the excess, if any, of (x) the sum of (a) the aggregate
principal balances of the mortgage loans in that pool as of the close of
business on the last day of the preceding calendar month and (b) the amounts, if
any, on deposit in the pre-funding accounts, over (y) the aggregate principal
balance of the related class of certificates as of that distribution date
following the making of all distributions on that distribution date, other than
any Over-collateralization Increase Amount for that distribution date.

Over-collateralization Deficit for any distribution date, is the amount by
which the aggregate outstanding principal balance of the certificates exceeds
the sum of

- the aggregate principal balance of the mortgage loans,

- any amount on deposit in the pre-funding accounts on that distribution
date, and

- any amounts on deposit in the Cross-collateralization Reserve Accounts
on that distribution date, after application of all amounts due on
that distribution date.

Over-collateralization Increase Amount for any pool of mortgage loans and
any distribution date is the amount of Excess Interest to be applied as an
accelerated payment of principal on the related class of certificates until the
over-collateralization for that pool reaches the Specified Over-collateralized
Amount. This payment is limited to the extent of the Available Amount as
described in the definition of "Principal Distribution Amount.

Periodic Advances means advances made by the servicer on each distribution date
for delinquent payments of interest on the mortgage loans, at a rate equal to
the interest rate on the mortgage note, less the servicing fee rate.

S-57
<PAGE>

Principal Distribution Amount for any pool of mortgage loans and any
distribution date will be the lesser of:

(a) the excess of (x) the sum, as of that distribution date, of (A)
the Available Amount for that pool and (B) any Insured Payment on the
related class of certificates over (y) the sum of Interest Distribution
Amount for that pool, the trustee's fees, and the Reimbursement Amount
allocable to the related class of certificates; and

(b) the sum, without duplication, of:

(1) all principal in respect of the mortgage loans in that pool
actually collected during the related due period;

(4) the Net Liquidation Proceeds actually collected by the
servicer of all mortgage loans in that pool during the prior
calendar month, to the extent the Net Liquidation Proceeds
relate to principal;

(5) on the ____________ or ____________ distribution dates,
moneys released from the related pre-funding account, if
any;

(6) the proceeds received by the trustee upon the exercise by
the servicer of its option to call the related class of
certificates, to the extent those proceeds relate to
principal;

(7) the amount of any Over-collateralization Deficit for that
pool for that distribution date;

(8) the proceeds received by the trustee on any termination of
the trust, to the extent those proceeds relate to principal,
allocable to that pool;

S-58
<PAGE>

(10) if the certificate insurer shall so elect, an amount of
principal, including Liquidated Loan Losses, that would have
been payable pursuant to clauses (1) through (9) above if
sufficient funds were available therefor;

minus
-----

(11) the amount of any Over-collateralization Reduction Amount
for that pool for that distribution date.

In no event will the Principal Distribution Amount for a pool for any
distribution date be (x) less than zero or (y) greater than the then outstanding
aggregate principal balance for the certificates.

Qualified Substitute Mortgage Loan means any mortgage loan or mortgage
loans substituted for a deleted mortgage loan and which, among other things,

- matures or mature no later than, and not more than one year earlier
than, the deleted mortgage loan,

- has or have a LTV or LTV at the time of the substitution no higher
than the LTV of the deleted mortgage loan,

- has or have a CLTV or CLTVs at the time of the substitution no higher
than the CLTV of the deleted mortgage loan,

- has or have a mortgage interest rate of at least the same interest
rate as the deleted mortgage loan and

- complies or comply, as of the date of substitution, with each
representation and warranty enumerated in the Loan Sale Agreement.

Reimbursement Amount means, for each pool of mortgage loans and each
distribution date, the lesser of (x) the excess of (a) the amount then on
deposit in the Distribution Account over (b) the Insured Distribution Amounts
for that pool and that distribution date and (y) the amount of all Insured
Payments and other amounts due to the certificate insurer for that pool pursuant
to the Insurance Agreement, including the premium amount, which have not been
previously paid.

REO Proceeds are monies received from any REO property, including, without
limitation, proceeds from the rental of the mortgaged property.
Shortfall Amount means, for a pool of mortgage loans and any distribution date,
the sum of

- any shortfall in the amount of the Interest Distribution Amount for
that pool actually distributed to the holders of the related class of
certificates,

S-59
<PAGE>

- any shortfall in the amount of the Net Mortgage Loan Interest
Shortfalls for that pool actually distributed to the holders of the
related class of certificates,

- the amount of any Over-collateralization Deficit for that pool and
that distribution date and

- any shortfall in the payment of any amounts owed the certificate
insurer.

Specified Over-collateralized Amount for a pool of mortgage loans and any
distribution date will be the amount of Over-collateralization which the
certificate insurer requires for that pool and that distribution date.

S-60
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<TABLE>
<CAPTION>
TABLE OF CONTENTS

PROSPECTUS SUPPLEMENT

<S> <C>
Table of Contents. . . . . . . . . . . . . . . . . . . . . . . . S-__
Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-__
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . S-__
Transaction Overview . . . . . . . . . . . . . . . . . . . . . . S-__
The Mortgage Loan Pools. . . . . . . . . . . . . . . . . . . . . S-__
The Originators, the Depositor, the Servicer and the Subservicer S-__
The Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . S-__
The Collateral Agent . . . . . . . . . . . . . . . . . . . . . . S-__
Description of the Certificates. . . . . . . . . . . . . . . . . S-__
Servicing of the Mortgage Loans. . . . . . . . . . . . . . . . . S-__
The Certificate Insurance Policy . . . . . . . . . . . . . . . . S-__
The Certificate Insurer. . . . . . . . . . . . . . . . . . . . . S-__
Prepayment and Yield Considerations. . . . . . . . . . . . . . . S-__
Certain Federal Income Tax Considerations. . . . . . . . . . . . S-__
ERISA Considerations . . . . . . . . . . . . . . . . . . . . . . S-__
Legal Investment . . . . . . . . . . . . . . . . . . . . . . . . S-__
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . S-__
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-__
Ratings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-__
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . S-__
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-__

PROSPECTUS

$_______________

______________________
ISSUER

_________________________
SERVICER

PRUDENTIAL SECURITIES
SECURED FINANCING CORPORATION
SPONSOR

$__________
CLASS A-1 CERTIFICATES
$__________
CLASS A-2 CERTIFICATES

MORTGAGE-BACKED CERTIFICATES,
SERIES _______

__________________

PROSPECTUS SUPPLEMENT
__________________

___________________

__________

<PAGE>

PROSPECTUS

PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION Asset-Backed Securities
Sponsor Issuable in Series
- --------------------------------------------------------------------------------

YOU SHOULD READ THE SECTION ENTITLED "RISK FACTORS" STARTING ON PAGE 3 OF THIS
PROSPECTUS AND CONSIDER THESE FACTORS BEFORE MAKING A DECISION TO INVEST IN THE
SECURITIES.

Retain this prospectus for future reference. This prospectus may not be used to
consummate sales of securities unless accompanied by the prospectus supplement
relating to the offering of the securities.

THE SECURITIES

- - will be issued from time to time in series,

- - will consist of either asset-backed certificates or asset-backed notes,

- - will be issued by a trust or other special purpose entity established by
the sponsor,

- - will be backed by one or more pools of mortgage loans or manufactured
housing contracts held by the issuer,

- - may have one or more forms of credit enhancement, such as insurance
policies or reserve funds.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OF DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

PRUDENTIAL SECURITIES

The date of this prospectus is _______, 1999

i
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS

<S> <C>
SUMMARY OF PROSPECTUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
THE SPONSOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
THE TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
THE TRUST FUNDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
The Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
The Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Fixed Retained Yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Insurance Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Acquisition of the Loans from the Originator . . . . . . . . . . . . . . . . . . . . 17
Assignment of the Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Pre-Funding Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
DESCRIPTION OF THE SECURITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Principal and Interest on the Securities . . . . . . . . . . . . . . . . . . . . . . 25
Form of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
CREDIT ENHANCEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Subordination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Overcollateralization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Cross-Collateralization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Surety Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Letters of Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Special Hazard Insurance Policies. . . . . . . . . . . . . . . . . . . . . . . . . . 29
Reserve Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Other Insurance, Guarantees and Similar Instruments or Agreements. . . . . . . . . . 30
Reduction or Substitution of Credit Enhancement. . . . . . . . . . . . . . . . . . . 30
PREPAYMENT AND YIELD CONSIDERATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 30
Interest Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Interest Shortfalls Due to Principal Prepayments . . . . . . . . . . . . . . . . . . 31
Weighted Average Life of Securities. . . . . . . . . . . . . . . . . . . . . . . . . 32
SERVICING OF THE LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
The Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Payments on Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Advances and Limitations Thereon . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Adjustment to Servicing Compensation in Connection with Prepaid and Liquidated Loans 36
Reports to Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Collection and Other Servicing Procedures. . . . . . . . . . . . . . . . . . . . . . 38
Enforcement of Due-on-Sale Clauses; Realization Upon Defaulted Loans . . . . . . . . 38
Servicing Compensation and Payment of Expenses . . . . . . . . . . . . . . . . . . . 39
Evidence as to Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Certain Matters Regarding the Servicer . . . . . . . . . . . . . . . . . . . . . . . 40
Events of Default; Rights Upon Event of Default. . . . . . . . . . . . . . . . . . . 41
Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Termination; Purchase or Other Disposition of Loans. . . . . . . . . . . . . . . . . 44
CERTAIN LEGAL ASPECTS OF THE LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . 45
The Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
The Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Installment Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Soldiers' and Sailors' Civil Relief Act. . . . . . . . . . . . . . . . . . . . . . . 59
Type of mortgaged property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Certain Matters Relating to Insolvency . . . . . . . . . . . . . . . . . . . . . . . 59
Bankruptcy Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
CERTAIN FEDERAL INCOME TAX CONSEQUENCES. . . . . . . . . . . . . . . . . . . . . . . . 61
Grantor Trust Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
REMIC Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Debt Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Partnership Interests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
FASIT Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Discount and Premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Backup Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Foreign Investors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
STATE TAX CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
ERISA CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Consultation with Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
LEGAL INVESTMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE. . . . . . . . . . . . . . . . . . . 88
ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
RATINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
GLOSSARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
</TABLE>

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SUMMARY OF PROSPECTUS

This summary highlights selected information from this prospectus 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 your
series of securities, read carefully this entire prospectus and the accompanying
prospectus supplement.

THE SPONSOR

Prudential Securities Secured Financing Corporation will act as the sponsor
of the issuers, meaning that it will establish the issuers and cause them to
issue the securities.

SECURITIES OFFERED

Each class of securities will consist of one or more classes of ownership
securities or debt securities. Ownership securities represent beneficial
ownership interests in the assets held by the issuer. Ownership securities will
be issued in the form of certificates. Debt securities represent indebtedness
secured by the assets of the issuer. Debt securities will be issued in the form
of notes.

Each series of securities will be issued in one or more classes, one or more of
which may be classes of:

- - fixed-rate securities,

- - adjustable-rate securities,

- - compound-interest or accrual securities,

- - planned-amortization-class securities,

- - principal-only securities,

- - interest-only securities,

- - participating securities,

- - senior securities, or

- - subordinated securities.

The interest rate, principal balance, notional balance, minimum
denomination and form of each class of securities will be described in the
accompanying prospectus supplement. The securities will be available in either
fully registered or book-entry form, as described in the accompanying prospectus
supplement.

THE LOANS

Each issuer will hold one or more pools of loans, which may include:

- - conventional mortgage loans or manufactured housing contracts secured by
one-to-four family residential properties and/or manufactured homes,

- - mortgage loans secured by security interests in shares issued by private,
non-profit cooperative housing corporations,

- - mortgage loans secured by junior liens on the mortgaged properties,

- - mortgage loans with loan-to-value ratios in excess of the appraised value
of the mortgaged property,

- - home improvement retail installment contracts, and

- - revolving home equity lines of credit.

The sponsor will direct the issuer to acquire the loans from affiliated
originators, unaffiliated originators or warehouse trusts created by the sponsor
or an affiliate to finance the origination of loans.

DISTRIBUTIONS ON THE SECURITIES

Owners of securities will be entitled to receive payments in the manner
described in the accompanying prospectus supplement, which will specify:

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- - whether distributions will be made monthly, quarterly, semi-annually or at
other intervals and dates,

- - the amount allocable to payments of principal and interest on any
distribution date, and

- - whether distributions will be made on a pro rata, random lot, or other
basis.

CREDIT ENHANCEMENT

A series of securities, or classes within a series, may have the benefit of
one or more types of credit enhancement, including:

- - the use of excess interest to cover losses and to create
over-collateralization,

- - the subordination of distributions on the lower classes to the
distributions on more senior classes,

- - the allocation of losses on the underlying loans to the lower classes, and

- - the use of cross support, reserve funds, financial guarantee insurance
policies, guarantees and letters of credit.

The protection against losses afforded by any credit enhancement will be
limited in the manner described in the accompanying prospectus supplement.

REDEMPTION OR REPURCHASE OF SECURITIES

One or more classes of securities may be redeemed or repurchased in whole
or in part by the issuer, the servicer, the provider of credit enhancement, or
their affiliates at the times described in the accompanying prospectus
supplement and at the price at least equal to the amount necessary to pay all
outstanding principal and accrued interest on the redeemed classes.

ERISA LIMITATIONS

Employee benefit plans should carefully review with their own legal
advisors whether the purchase or holding of the securities could give rise to a
transaction prohibited or otherwise impermissible under ERISA or the Internal
Revenue Code.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

Each class of securities offered by this prospectus and the accompanying
prospectus supplement will constitute one of the following for federal income
tax purposes:

- - interests in a trust treated as a grantor trust,

- - "regular interests" or "residual interests" in a trust treated as one or
more "real estate mortgage investment conduits",

- - debt issued by the issuer,

- - interests in an issuer which is treated as a partnership, or

- - "regular interests", "high-yield interests" or "ownership interests" in a
trust treated as one or more "financial asset securitization investment
trusts".

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<PAGE>
RISK FACTORS

You should consider the following risk factors prior to any purchase of any
class of securities. You should also consider the information under the caption
"Risk Factors" in the accompanying prospectus supplement.

YOUR INVESTMENT IN ANY SECURITY MAY BE AN ILLIQUID INVESTMENT; YOU SHOULD BE
PREPARED TO HOLD YOUR SECURITY TO MATURITY.

A secondary market for these securities is unlikely to develop. If it does
develop, it may not provide you with sufficient liquidity of investment or
continue for the life of these securities. The underwriter(s) may establish
a secondary market in the securities, although no underwriter will be
obligated to do so. The securities are not expected to be listed on any
securities exchange or quoted in the automated quotation system of a
registered securities association.

Issuance of the securities in book-entry form may also reduce the liquidity
in the secondary trading market, since some investors may be unwilling to
purchase securities for which they cannot obtain definitive physical
securities.

AS A RESULT OF PREPAYMENT ON THE LOANS OR EARLY REDEMPTION OF THE SECURITIES,
YOU COULD BE FULLY PAID SIGNIFICANTLY EARLIER THAN WOULD OTHERWISE BE THE CASE,
WHICH MAY ADVERSELY AFFECT THE YIELD TO MATURITY ON YOUR SECURITIES.

The yield to maturity of the securities may be adversely affected by a
higher or lower than anticipated rate of prepayments on the loans. The
yield to maturity on interest-only securities purchased at premiums or
discounts to par will be extremely sensitive to the rate of prepayments on
the loans.

The underlying loans may be prepaid in full or in part at any time,
although prepayment may require the borrower to pay of a prepayment penalty
or premium. These penalties will generally not be property of the issuer,
and will not be available to fund distributions owing to you. We cannot
predict the rate of prepayments of the loans, which is influenced by a wide
variety of economic, social and other factors, including prevailing
mortgage market interest rates, the availability of alternative financing,
local and regional economic conditions and homeowner mobility. Therefore,
we can give no assurance as to the level of prepayments that a trust fund
will experience.

Prepayments may result from mandatory prepayments relating to unused monies
held in pre-funding accounts, voluntary early payments by borrowers,
including payments in connection with refinancings of the first mortgages,
sales of mortgaged properties subject to "due-on-sale" provisions and
liquidations due to default, as well as the receipt of proceeds from
physical damage, credit life and disability insurance policies. In
addition, repurchases or purchases from the issuer of loans or the payment
of substitution adjustments will have the same effect on the securities as
a prepayment of the loans.

One or more classes of securities of any series may be subject to optional
or mandatory redemption or in whole or in part, on or after a specified
date, or on or after the time when the aggregate outstanding principal
amount of the underlying loans or the securities is less than a specified
amount or percentage. You will bear the risk of reinvesting unscheduled
distributions resulting from a redemption.

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Any of the foregoing principal prepayments may adversely affect the yield
to maturity of the prepaid securities. Since prevailing interest rates are
subject to fluctuation, there can be no assurance that you will be able to
reinvest these prepayments at a yield equaling or exceeding the yield on
your securities.

CREDIT ENHANCEMENT, EVEN IF PROVIDED, WILL IN ANY EVENT BE LIMITED IN BOTH
AMOUNT AND SCOPE OF COVERAGE, AND MAY NOT BE SUFFICIENT TO COVER ALL LOSSES OR
RISKS ON YOUR INVESTMENT.

Credit enhancement may be provided in limited amounts to cover some, but
not all, types of losses on the underlying loans and, in most cases, will
reduce over time in accordance with a schedule or formula. Furthermore,
credit enhancement may provide only very limited coverage as to some types
of losses, and may provide no coverage as to other types of losses.
Generally, credit enhancement does not directly or indirectly guarantee to
the investors any specified rate of prepayments, which is one of the
principal risks of your investment. The amount and types of coverage, the
identification of any entity providing the coverage, the terms of any
subordination and any other information will be described in the
accompanying prospectus supplement.

PROPERTY VALUES MAY DECLINE, LEADING TO HIGHER LOSSES ON THE LOANS.

An investment in securities such as these, which are backed by residential
real estate loans, may be affected by a decline in real estate values and
changes in the borrowers' financial condition. If property values were to
decline, the rates of delinquencies and foreclosures may rise, thereby
increasing the likelihood of loss. If these losses are not covered by any
credit enhancement, you will bear all risk of these losses and will have to
look primarily to the value of the mortgaged properties for recovery of the
outstanding principal and unpaid interest on the defaulted loans.

FORECLOSURE OF MORTGAGED PROPERTIES INVOLVE DELAYS AND EXPENSE AND COULD CAUSE
LOSSES ON THE LOANS.

Even if the mortgaged properties provide adequate security for the loans,
substantial delays could be encountered in connection with the foreclosure
of defaulted loans, and corresponding delays in the receipt of the
foreclosure proceeds could occur. Foreclosures are regulated by state
statutes, rules and judicial decisions and are subject to many of the
delays and expenses of other lawsuits, sometimes requiring several years to
complete. The servicer will be entitled to reimburse itself for any
expenses it has paid in attempting to recover amounts due on the liquidated
loans, including payments to prior lienholders, accrued fees of the
servicer, legal fees and costs of legal action, real estate taxes, and
maintenance and preservation expenses, which will reduce the amount of the
net recovery by the trust.

ENVIRONMENTAL CONDITIONS ON THE MORTGAGED PROPERTY MAY GIVE RISE TO LIABILITY
FOR THE ISSUER.

Real property pledged as security to a lender may be subject to
environmental risks which could cause losses on your securities. Under the
laws of some states, contamination of a mortgaged property may give rise to
a lien on the mortgaged property to assure the costs of clean-up. In
several states, this type of lien has priority over the lien of an existing
mortgage or owner's interest against the property. In addition, under the
laws of some states and under CERCLA, a lender may be liable, as an "owner"
or "operator," for costs of addressing releases or threatened releases of
hazardous substances that require remedy at a property, if agents or
employees of the lender have become sufficiently involved in the operations
of the borrower, regardless of whether or not the environmental damage or
threat was caused by a prior owner. A lender also will increase its risk of
environmental liability upon the foreclosure of the mortgaged property,
since the lender may then become the legal owner of the property.

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<PAGE>
STATE AND FEDERAL CREDIT PROTECTION LAWS MAY LIMIT COLLECTION OF PRINCIPAL AND
INTEREST ON THE LOANS.

Residential mortgage lending is highly regulated at both the federal and
state levels and violations of these laws, policies and principles may
limit the ability of the servicer to collect all or part of the amounts due
on the loans, may entitle the borrower to a refund of amounts previously
paid and, in addition, could subject the issuer, as the owner of the loan,
to damages and administrative enforcement. The occurrence of any of the
foregoing could cause losses on your securities.

THE SOLDIERS' AND SAILORS' CIVIL RELIEF ACT MAY LIMIT THE ABILITY TO COLLECT ON
THE LOANS.

The terms of the Soldiers' and Sailors' Civil Relief Act of 1940, or
similar state legislation, benefit mortgagors who enter military service
after the origination of his or her loan, including a mortgagor who is a
member of the National Guard or is in reserve status at the time of the
origination of the loan and is later called to active duty. These
mortgagors may not be charged interest, including fees and charges, above
an annual rate of 6% during the period of the mortgagor's active duty
status, unless a court orders otherwise upon application of the lender. The
implementation of the Soldiers' and Sailors' Civil Relief Act could have an
adverse effect, for an indeterminate period of time, on the ability of the
servicer to collect full amounts of interest on these loans.

In addition, the Soldiers' and Sailors' Civil Relief Act imposes
limitations that would impair the ability of the servicer to foreclose on
loans during the mortgagor's period of active duty status. Thus, in the
event that these loans go into default, there may be delays and losses
occasioned by the inability to realize upon the mortgaged property in a
timely fashion.

THE RATINGS ASSIGNED TO YOUR SECURITIES MAY BE LOWERED OR WITHDRAWN.

The ratings assigned to the securities will be based on, among other
things, the adequacy of the value of the trust fund and any credit
enhancement with respect to a series. Any rating which is assigned may not
remain in effect for any given period of time or may be lowered or
withdrawn entirely by the rating agencies if, in their judgment,
circumstances in the future so warrant. Ratings may also be lowered or
withdrawn because of an adverse change in the financial or other condition
of a provider of credit enhancement or a change in the rating of a credit
enhancement provider's long term debt.

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Some of the terms used in this prospectus are capitalized. These
capitalized terms have specified definitions, which are included at the end of
this prospectus under the heading "Glossary."

THE SPONSOR

Prudential Securities Secured Financing Corporation was incorporated in the
State of Delaware on August 26, 1988 as a wholly-owned, limited purpose finance
subsidiary of Prudential Securities Group Inc., a wholly-owned indirect
subsidiary of The Prudential Insurance Company of America. The sponsor's
principal executive offices are located at One New York Plaza, 14th Floor, New
York, New York 10292. Its telephone number is (212) 778-1000.

Unless otherwise specified in the applicable prospectus supplement, the
sponsor will have no servicing obligations or responsibilities with respect to
any mortgage loan pool, contract pool or trust fund. The sponsor does not have,
nor is it expected in the future to have, any significant assets.

Neither the sponsor nor Prudential Securities Group Inc. nor any of their
affiliates, including The Prudential Insurance Company of America, will insure
or guarantee the securities of any series.

USE OF PROCEEDS

Unless otherwise specified in the applicable prospectus supplement,
substantially all of the net proceeds from the sale of each series of securities
will be used for the purchase of the loans represented by the securities of a
series or to reimburse amounts previously used to effect the purchase of the
loans, the costs of carrying the loans until the sale of the securities and
other expenses connected with pooling the loans and issuing the securities.

THE TRUSTEE

The prospectus supplement for each series of securities will specify the
entity acting as trustee for a series. The commercial bank or trust company
serving as trustee may have normal banking relationships with the sponsor, the
issuer, the servicer or any of their respective affiliates. The trustee's
liability in connection with the issuance and sale of the securities is limited
solely to the express obligations of the trustee enumerated in the agreements
under which a series was issued.

The trustee may resign at any time, in which event the servicer will be
obligated to appoint a successor trustee. The servicer or the issuer may also
remove the trustee if the trustee ceases to be eligible to act as trustee for a
series under the Issuing Agreement, if the trustee becomes insolvent or in order
to change the situs of the trust fund for state-tax reasons. Upon becoming aware
of these circumstances, the servicer or the issuer, as the case may be, will
become obligated to appoint a successor trustee. The trustee may also be removed
at any time by the holders of securities evidencing not less than a specified
percentage of the voting interest in the trust fund. Any resignation and removal
of the trustee, and the appointment of a successor trustee, will not become
effective until acceptance of the appointment by the successor trustee. The
trustee, and any successor trustee, will have a combined capital and surplus, or
shall be a member of a bank holding system with an aggregate combined capital
and surplus, of at least $50,000,000 and will be subject to supervision or
examination by federal or state authorities.

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<PAGE>
THE TRUST FUNDS

The securities offered by this prospectus will consist of either
asset-backed certificates or asset-backed notes, which represent either
beneficial ownership interests in, or debt secured by, the trust fund consisting
of the assets of a trust or another special-purpose entity issuing the
securities. The trust fund for each series of securities will consist primarily
of a segregated pool of loans comprised of mortgage loans and/or manufactured
housing contracts. In addition, a trust fund may also include one or more of
the following:

- - amounts held from time to time in the Collection Account relating to the
securities;

- - the issuer's interest in any primary mortgage insurance, hazard insurance,
title insurance and/or other insurance policies relating to a loan;

- - any property which initially secured a mortgage loan and which has been
acquired by foreclosure or trustee's sale or deed in lieu of foreclosure or
trustee's sale;

- - any manufactured home which initially secured a contract and which is
acquired by repossession;

- - any reserve funds;

- - one or more guarantees, letters of credit, insurance policies, surety bonds
or any other credit enhancement arrangement; and

- - any other assets as may be specified in the accompanying prospectus
supplement.

Some of the loans may be delinquent to the extent and as specified in the
accompanying prospectus supplement. The percentage of those loans which are
delinquent shall not exceed 10% of the aggregate principal balance of the loans
in the pool as of the cut-off date for that series. Unless otherwise specified
in the applicable prospectus supplement, the trust fund will not include,
however, the portion of interest on the loans which constitutes the Fixed
Retained Yield, if any. See "-Fixed Retained Yield" below.

The mortgage loan pool and/or contract pool for a series will be originated
or acquired by an originator of mortgage loans and/or contracts and transferred
to the issuer either directly by the originator or through a special-purpose
affiliate thereof. The mortgage loan pool or contract pool relating to a series
will be serviced by a servicer specified in the accompanying prospectus
supplement, which may be the originator, under a Servicing Agreement.

THE MORTGAGE LOANS

Each mortgage loan pool will consist of mortgage loans evidenced by
promissory notes or other evidences of indebtedness that provide for an original
term to maturity of not more than 40 years, for monthly payments and for
interest on the outstanding principal amounts thereof at a rate that is either
fixed or adjustable, as described in the accompanying prospectus supplement.
The mortgage loans may provide for fixed level payments or be graduated payment
loans, graduated equity loans, balloon loans, buy-down loans or mortgage loans
with other payment characteristics as described in the accompanying prospectus
supplement. In addition, the mortgage loan pools may include participation
interests in mortgage loans, in which event references in this prospectus to
payments on mortgage loans underlying the participations shall mean payments
thereon allocable to the participation interests, and the meaning of other terms
relating to mortgage loans will be similarly adjusted. Similarly, the mortgage

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loan pools may include mortgage loans with respect to which a Fixed Retained
Yield has been retained by the originator, in which event references in this
prospectus to mortgage loans and payments thereon shall mean the mortgage loans
exclusive of the Fixed Retained Yield. The prospectus supplement for a series
will specify whether there will be any Fixed Retained Yield in any mortgage loan
and, if so, the owner thereof. See "Servicing of the Loans-Fixed Retained
Yield" in this prospectus. The mortgage loans will be secured by mortgages,
deeds of trust or other similar security instruments creating first, second or
more junior liens on conventional one-to four-family residential properties,
which may include mixed-use or vacation properties, all of which will be located
in any of the fifty states, the District of Columbia or the Commonwealth of
Puerto Rico. The mortgage loans may also consist of installment contracts for
the sale of real estate. If so provided in the applicable prospectus
supplement, a mortgage loan pool may also contain cooperative apartment loans
evidenced by promissory notes secured by security interests in shares issued by
private, non-profit, cooperative housing corporations and in the proprietary
leases or occupancy agreements granting exclusive rights to occupy specific
dwellings in the cooperatives' buildings. In the case of a cooperative
apartment loan, the proprietary lease or occupancy agreement securing the
cooperative apartment loan is generally subordinate to any blanket mortgage on
the cooperative apartment building and/or the underlying land. Additionally,
the proprietary lease or occupancy agreement is subject to termination and the
cooperative shares are subject to cancellation by the cooperative if the
tenant-stockholder fails to pay maintenance or other obligations or charges owed
by the tenant-stockholder.

Each mortgage loan must have an original term of maturity of not less than
5 years and not more than 40 years. Mortgage loans having LTVs at the time of
origination exceeding 80% will generally be supported by external credit
enhancement or be covered by primary mortgage insurance providing coverage on at
least the amount of the mortgage loan in excess of 75% of the original fair
market value of the mortgaged property and remaining in force until the
principal balance of the mortgage loan is reduced to 80% of the original fair
market value. The fair market value of the mortgaged property securing any
mortgage loan is, unless otherwise specified in the applicable prospectus
supplement, the lesser of (x) the appraised value of the mortgaged property
determined in an appraisal obtained by the originator of the mortgage loan at
origination, acquisition, or, in the case of a refinancing, an appraisal
obtained at the origination of the refinanced mortgage loan, and (y) the sale
price for the mortgaged property.

No assurance can be given that values of the mortgaged properties have
remained or will remain at the levels which existed on the dates of origination
of the mortgage loans. If the residential real estate market should experience
an overall decline in property values such that the outstanding balances of the
mortgage loans and any secondary financing on the mortgaged properties in a
particular trust fund 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. To
the extent that the losses are not covered by the methods of credit enhancement
for the series or the insurance policies described in this prospectus, they will
be borne by holders of the securities of the series relating to the trust fund.
Furthermore, in a declining real estate market a new appraisal could render the
cut-off date LTVs of the mortgage loans as unreliable measures of leverage.

The prospectus supplement for each series will describe selected
characteristics of the mortgage loan pool, which may include the aggregate
principal balance of the mortgage loans as of the cut-off date, the range of
original terms to maturity of the mortgage loans, the weighted average remaining
term to stated maturity at the cut-off date of the mortgage loans, the earliest
and latest origination dates of the mortgage loans, the range of loan interest
rates and Net Loan Rates borne by the mortgage loans, the weighted average loan
interest rate at the cut-off date of the mortgage loans, the range of LTVs at
the time of origination and the highest outstanding principal balance at
origination of any mortgage loan. A maximum of 5% of the mortgage loans, by
aggregate principal

8
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balance as of the cut-off date, that are included in a trust fund may deviate
from the characteristics that are described in the accompanying prospectus
supplement.

All of the mortgage loans in a trust fund will have monthly payments due on
a specified day of each month and will, with respect to mortgage loans secured
by residential mortgaged properties, require at least monthly payments of
interest on any outstanding balance. The mortgage loan pools may include
adjustable-rate mortgage loans that provide for payment adjustments to be made
less frequently than adjustments in the payments. Each adjustment in the loan
interest rate which is not made at the time of a corresponding adjustment in
payments - and which adjusted amount of interest is not paid currently on a
voluntary basis by the mortgagor - will result in either a decrease, if the loan
interest rate rises, or an increase, if the loan interest rate declines, in the
rate of amortization of the mortgage loan. Moreover, these payment adjustments
on the mortgage loans may be subject to a number of limitations, as specified in
the accompanying prospectus supplement, which may also affect the rate of
amortization on the mortgage loan. As a result of these provisions, or in
accordance with the payment schedules of some graduated payment loans and other
mortgage loans, the amount of interest accrued in any month may equal or exceed
the scheduled monthly payment on the mortgage loan. In any of these months, no
principal would be payable on the mortgage loan and, if the accrued interest
exceeded the scheduled monthly payment, there would be deferred interest.
Deferred interest is added to the principal balance of the mortgage loan and
will bear interest at the loan interest rate until paid. If these limitations
prevent the payments from being sufficient to amortize fully the mortgage loan
by its stated maturity date, a lump sum payment equal to the remaining unpaid
principal balance of the mortgage loan will be due on its stated maturity date.
See "Prepayment and Yield Considerations" in this prospectus.

The mortgaged properties will consist of residential properties, including
detached homes, townhouses, units in planned unit developments, condominium
units, mixed-use properties, vacation homes and small scale multifamily
properties, all of which constitute a "dwelling or mixed residential and
commercial structure" within the meaning of Section 3(a)(41)(A)(i) of the
Securities Exchange Act of 1934, except for a de minimis portion of any trust
fund which may be comprised of other types of properties. The mortgage loans
will be secured by liens on fee simple or leasehold interests - in those states
in which long-term ground leases are used as an alternative to fee interests -
in the mortgaged properties, or liens on shares issued by cooperatives and the
proprietary leases or occupancy agreements occupy specified units in the
cooperatives' buildings. The geographic distribution of mortgaged properties
will be included in the accompanying prospectus supplement. Each prospectus
supplement will also describe the percentage of the aggregate principal balance
as of the cut-off date of the mortgage loans in the mortgage loan pool
representing the refinancing of existing mortgage indebtedness and the types of
mortgaged properties.

Buy-Down Loans. A trust fund may contain mortgage loans subject to
temporary buy-down plans under which the monthly payments made by the mortgagor
during the early years of the mortgage loan will be less than the scheduled
monthly payments on the mortgage loan. The shortfall in payment made by the
mortgagor under the terms of the buy-down plan will be compensated for from an
amount contributed by the originator of the mortgage loan or another source and,
if so specified in the accompanying prospectus supplement, placed in a custodial
account by the servicer. If the mortgagor on a buy-down loan prepays the
mortgage loan in its entirety, or defaults on the mortgage loan and the
mortgaged property is sold in liquidation thereof, during the period when the
mortgagor is not obligated, on account of the buy-down plan, to pay the full
scheduled monthly payment otherwise due on the buy-down loan, the unpaid
principal balance of the buy-down loan will be reduced by the amounts remaining
in the custodial account with respect to the buy-down loan, and the amounts

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shall be deposited in the Collection Account, net of any amounts paid with
respect to the buy-down loan by any insurer, guarantor or other person under a
credit enhancement arrangement described in the accompanying prospectus
supplement.

Balloon Loans. A trust fund may include mortgage loans which are amortized
over 30 years or some other term, or which do not provide for amortization prior
to maturity, but which have a shorter term that causes the outstanding principal
balance of the mortgage loan to be due and payable at maturity in an amount
greater than the regular scheduled payment. If specified in the accompanying
prospectus supplement, the originator will be obligated to refinance its balloon
loan at its maturity at a new interest rate determined prior to maturity by
reference to an index plus a margin specified in the mortgage note. The
mortgagor is not, however, obligated to refinance the balloon loan through the
originator. In the event a mortgagor refinances a balloon loan, the new loan
will not be included in the trust fund. See "Prepayment and Yield
Considerations" in this prospectus.

Home Equity Lines of Credit. The trust fund may include "home equity
revolving lines of credit" or home equity lines. A home equity line establishes
a maximum credit limit with respect to the borrower, and permits the borrower to
draw additional funds, and repay the aggregate outstanding balance in each case
from time to time in such a manner so that the aggregate outstanding balance of
the home equity line does not exceed the maximum credit limit. Home equity lines
are generally evidenced by a loan agreement rather than a note. Home equity
lines generally may be drawn down from time to time by the borrower writing a
check against the account, or acknowledging the advance in a supplement to the
loan agreement. A home equity line will be secured by either a senior or a
junior lien mortgage, and will bear interest at either a fixed or an adjustable
rate.

In a number of states, the borrower must, on the opening of an account,
draw an initial advance of not less than a specified amount. Home equity lines
generally amortize according to an amortization period established at the time
of the initial advance. The amortization period is the length of time in which
the initial advance plus interest will be repaid in full and generally ranges
from 5 years to 15 years depending on the credit limit assigned. Generally, the
amortization period will be longer the higher the credit limit. The minimum
monthly payment on a home equity line will generally be equal to the sum of the
following:

- - a basic monthly payment in an amount necessary to completely repay the
then-outstanding balance and the applicable finance charge in equal
installments over the assigned amortization period;

- - any monthly escrow charges;

- - any delinquency or other similar charges; and

- - any past due amounts, including past due finance charges.

The basic monthly payment amount is typically recomputed each time the loan
interest rate adjusts and whenever additional funds are advanced; the
recomputation in the case of an additional advance of funds may also reset the
amortization schedule. The effect of each additional advance of funds on the
home equity line is to reset the commencement date of the original maturity term
to the date of the additional advance. For example, a home equity line made
originally with a 15-year maturity from date of origination changes at the time
of the next adjustment or additional advance of funds to a home equity line with
a maturity of 15 years from the date of the additional advance of funds. For
some home equity lines, the same type of recomputation exists for adjustments of
the loan interest rate.

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Prior to the expiration of a specified period, the reduction of the account
to a zero balance and the closing of a home equity line account may result in a
prepayment penalty. A prepayment penalty also may be assessed against the
borrower if a home equity line account is closed by the servicer due to a
default by the borrower under the loan agreement.

Each loan agreement will provide that the servicer has the right to require
the borrower to pay the entire balance plus all other accrued but unpaid charges
immediately, and to cancel the borrower's credit privileges under the loan
agreement if, among other things, the borrower fails to make any minimum payment
when due under the loan agreement, if there is a material change in the
borrower's ability to repay the home equity line, or if the borrower sells any
interest in the property securing the loan agreement, thereby causing the
"due-on-sale" clause in the trust deed or mortgage to become effective.

Junior Liens. Mortgage loans which are secured by junior mortgages are
subordinate to the rights of the mortgagees under the senior mortgage or
mortgages. Accordingly, liquidation, insurance and condemnation proceeds
received with respect to the mortgaged property will be available to satisfy the
outstanding balance of the mortgage loan only to the extent that the claims of
the senior mortgages have been satisfied in full, including any liquidation and
foreclosure costs. In addition, a junior mortgagee foreclosing on its mortgage
may be required to purchase the mortgaged property for a price sufficient to
satisfy the claims of the holders of any senior mortgages which are also being
foreclosed. In the alternative, a junior mortgagee which acquires title to a
mortgaged property, through foreclosure, deed-in-lieu of foreclosure or
otherwise may take the property subject to any senior mortgages and continue to
perform with respect to any senior mortgages, in which case the junior mortgagee
must comply with the terms of any senior mortgages or risk foreclosure by the
senior mortgagee.

High LTV Loans. A mortgage loan pool may include mortgage loans with
combined LTVs in excess of 100%, generally up to a maximum of 125%. For these
high LTV loans, more emphasis in the underwriting analysis is placed on the
borrower's payment history and ability to repay debt, rather than on the
collateral value of the mortgaged property. High LTV loans are generally
targeted as debt consolidation loans for repeat or frequent borrowers with
generally strong credit ratings. Lending decisions for high LTV loans are based
on an analysis of the prospective mortgagor's documented cash flow and credit
history supplemented by a collateral evaluation deemed appropriate by the
originator.

Graduated Equity Loans. A mortgage loan pool may include graduated equity
loans. Graduated equity loans are fixed-rate, fully-amortizing mortgage loans
which provide for monthly payments based on a 10- to 30-year amortization
schedule, and which provide for scheduled annual payment increases for a number
of years and level payments thereafter. The full amount of the scheduled payment
increases during the early years is applied to reduce the outstanding principal
balance of the mortgage loans.

Graduated Payment Loans. A mortgage loan pool may include graduated payment
loans. Graduated payment loans provide for payments of monthly installments
which increase annually in each of a specified number of initial years and level
monthly payments thereafter. Payments during the early years are required in
amounts lower than the amounts which would be payable on a level debt service
basis due to the deferral of a portion of the interest accrued on the mortgage
loan. Deferred interest is added to the principal balance of the mortgage loan
and is paid, together with interest thereon, in the later years of the
obligation. Because the monthly payments during the early years of the mortgage
loan are not sufficient to pay the full interest accruing on the mortgage loan,
the interest payments on the mortgage loan may not be sufficient in its early
years to meet its proportionate share of the distributions expected to be made
on the securities. Thus, if the mortgage loans include graduated payment loans,

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the servicer will establish a reserve fund which, together with reinvestment
income thereon, will be sufficient to cover the amount by which payments of
interest on the graduated payment loans assumed in calculating distributions
expected to be made on the securities of a series exceed scheduled interest
payments according to the relevant graduated payment mortgage plan for the
period during which excess occurs.

Convertible Mortgage Loans. A trust fund may contain convertible mortgage
loans which may either (x) switch from a fixed-rate mortgage to an
adjustable-rate mortgage under the terms of the underlying mortgage note or (y)
switch from an adjustable-rate mortgage to a fixed-rate mortgage under the terms
of the underlying mortgage note. These mortgage loans will be automatically
repurchased by the originator or the servicer upon the occurrence of the
conversion.

Payment Terms.

The payment terms of the mortgage loans to be included in a trust fund for
a series will be described in the accompanying prospectus supplement and may
include any of the following features of combinations thereof or other features
described in the accompanying prospectus supplement:

- - Interest may be payable at a loan interest rate that may be a fixed rate, a
rate adjustable from time to time in relation to an index, a rate that is
fixed for a period of time 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 or a fixed rate to an adjustable rate.
Changes to a loan interest rate may be subject to periodic limitations,
maximum rates, minimum rates or a combination of these limitations. Accrued
interest may be deferred and added to the principal of a mortgage loan for
these periods and under other circumstances as may be specified in the
accompanying prospectus supplement. Mortgage loans may provide for the
payment of interest at a rate lower than the specified loan interest rate
for a period of time of for the life of the mortgage loan, and the amount
of any difference may be contributed from funds supplied by the seller of
the mortgaged property or another source.

- - 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 a loan interest rate that is different from
the loan interest rate or may not be amortized during all or a portion of
the original term. Payment of all or a substantial portion of the principal
may be due on maturity. Principal may include deferred interest that has
been added to the principal balance of the mortgage loan.

- - 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.

- - 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 specified periods.
Some 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 subsequent prepayment. Other mortgage loans may
permit prepayments without

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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 particular transfers of the mortgaged property. Other
mortgage loans may be assumable by persons meeting the then applicable
underwriting standards of the originator.

Amortization of the Mortgage Loans.

The mortgage loans will provide for payments that are allocated to
principal and interest according to either the actuarial method, the simple
interest method or the "Rule of 78s" method, as described in the accompanying
prospectus supplement. The accompanying prospectus supplement will state
whether any of the mortgage loans will provide for deferred interest or negative
amortization.

An actuarial mortgage loan provides for payments in level monthly
installments - except, in the case of balloon loans, for the final payment -
consisting of interest equal to one-twelfth of the applicable loan interest rate
times the unpaid principal balance, with the remainder of the payment applied to
principal.

A simple interest mortgage loan provides for the amortization of the amount
financed under the mortgage loan over a series of equal monthly payments -
except, in the case of a balloon loan, for the final payment. Each monthly
payment consists of an installment of interest which is calculated on the basis
of the outstanding principal balance of the mortgage loan being multiplied by
the stated loan interest rate and further multiplied by a fraction, the
numerator of which is the number of days in the period elapsed since the
preceding payment of interest was made and the denominator of which is the
number of days in the annual period for which interest accrues on the mortgage
loan. As payments are received under a simple interest mortgage loan, the amount
received is applied first to interest accrued to the date of payment and the
balance is applied to reduce the unpaid principal balance. Accordingly, if a
borrower pays a fixed monthly installment on a simple interest mortgage loan
before its scheduled due date, the portion of the payment allocable to interest
for the period since the preceding payment was made will be less than it would
have been had the payment been made as scheduled, and the portion of the payment
applied to reduce the unpaid principal balance will be correspondingly greater.
However, the next succeeding payment will result in an allocation of a greater
amount to interest if the payment is made on its scheduled due date.

Conversely, if a borrower pays a fixed monthly installment after its
scheduled due date, the portion of the payment allocable to interest for the
period since the preceding payment was made will be greater than it would have
been had the payment been made as scheduled, and the remaining portion, if any,
of the payment applied to reduce the unpaid principal balance will be
correspondingly less. If each scheduled payment under a simple interest mortgage
loan is made on or prior to its scheduled due date, the principal balance of the
mortgage loan will amortize in the manner described in the preceding paragraph.
However, if the borrower consistently makes scheduled payments after the
scheduled due date, the mortgage loan will amortize more slowly than scheduled.
If a simple interest mortgage loan is prepaid, the borrower is required to pay
interest only to the date of prepayment.

Some of the mortgage loans held by an issuer may be loans insured under the
FHA Title I credit insurance program created under Sections 1 and 2(a) of the
National Housing Act of 1934. Under the Title I program, the FHA is authorized
and empowered to insure qualified lending institutions against losses on
eligible loans. The Title I program operates as a coinsurance program in which
the FHA insures up to 90% of specified losses incurred on an individual insured
loan, including the unpaid principal balance of the loan, but only to the extent

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of the insurance coverage available in the lender's FHA insurance coverage
reserve account. The owner of the loan bears the uninsured loss on each loan.
The types of loans which are eligible for insurance by the FHA under the Title I
program include property improvement loans made to finance actions or items that
substantially protect or improve the basic livability or utility of a property
and includes:

- single family, multifamily and nonresidential property improvement
loans;

- manufactured home improvement loans, where the home is classified as
personality;

- historic preservation loans; and

- fire safety equipment loans for existing health care facilities.

If specific information respecting the mortgage loans to be included in a
trust fund is not known to the issuer at the time the securities of a series are
initially offered, more general information of the nature described above will
be provided in the prospectus supplement and final specific information will be
disclosed in a Current Report on Form 8-K to be available to investors on the
date of issuance thereof and to be filed with the Securities and Exchange
Commission promptly after the initial issuance of the securities. A copy of the
Issuing Agreement with respect to each series of securities will be attached to
the Form 8-K and will be available for inspection at the corporate trust office
of the trustee specified in the accompanying prospectus supplement. A schedule
of the mortgage loans relating to a series will be attached to the Issuing
Agreement delivered to the trustee upon delivery of the securities.

THE CONTRACTS

Each contract pool will consist of conventional manufactured housing
installment sales contracts and installment loan agreements originated by the
originator, or by a manufactured housing dealer in the ordinary course of
business and purchased by the originator. Each contract will be secured by
manufactured homes, each of which will be located in any of the fifty states,
the District of Columbia and the Commonwealth of Puerto Rico. The contracts
will be fully amortizing and will bear interest at a fixed or adjustable annual
percentage rate. The contract pool may include contracts with respect to which
a Fixed Retained Yield has been retained, in which event references in this
prospectus to contracts and payments thereon shall mean the contracts exclusive
of the Fixed Retained Yield. The prospectus supplement for a series will
specify whether there will be any Fixed Retained Yield in any contract, and if
so, the owner thereof. See "Fixed Retained Yield" in this prospectus.

The originator will represent that the manufactured homes securing the
contracts consist of "manufactured homes" within the meaning of 42 United States
Code, Section 5402(6), which defines a "manufactured home" as "a structure,
transportable in one or more sections, which in the traveling mode, is eight
body feet or more in width or forty body feet or more in length, or, when
erected on site, is three hundred twenty or more square feet, and which is built
on a permanent chassis designed to be used as a dwelling with or without a
permanent foundation when connected to the required utilities, and includes the
plumbing, heating, air-conditioning, and electrical systems contained therein;
except that such term shall include any structure which meets all the
requirements of [this] paragraph except the size requirements and with respect
to which the manufacturer voluntarily files a certification required by the
Secretary of Housing and Urban Development and complies with the standards
established under [this] chapter."

Manufactured homes, unlike site-built homes, generally depreciate in value.
Consequently, at any time after origination it is possible, especially in the

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case of contracts with high LTVs at origination, that the market value of a
manufactured home may be lower than the principal amount outstanding under the
contract.

The prospectus supplement for each series will describe a number of
characteristics of the contracts, which may include the aggregate principal
balance of the contracts in the contract pool as of the cut-off date for a
series, the range of original terms to maturity of the contracts in the contract
pool, the weighted average remaining term to stated maturity at the cut-off date
of the contracts, the earliest and latest origination dates of the contracts,
the range of loan interest rates and Net Loan Rates borne by the contracts, the
weighted average Net Loan Rate at the cut-off date of the contracts, the range
of the contracts which had loan-to-value ratios at the time of origination of
the contracts and the highest outstanding principal balance at origination of
any contract. A maximum of 5%, by aggregate principal balance as of the cut-off
date, of the aggregate contracts that are included in a trust fund will deviate
from the characteristics that are described in the accompanying prospectus
supplement.

The fair market value of the manufactured home securing any contract is,
unless otherwise specified in the applicable prospectus supplement, either (x)
the appraised value of the manufactured home determined in an appraisal obtained
by the originator at origination or acquisition and (y) the sale price for the
property, plus, in either case, sales and other taxes and, to the extent
financed, filing and recording fees imposed by law, premiums for insurance and
prepaid finance charges.

The contracts in a trust fund will generally have due dates on the first of
each month and will be fully-amortizing contracts. Contracts may have due dates
which occur on a date other than the first of each month. The contract pools may
include adjustable rate contracts that provide for payment adjustments to be
made less frequently than adjustments in the payments. Each adjustment in the
loan interest rate which is not made at the time of a corresponding adjustment
in payments will result in a decrease, if the loan interest rate rises, or an
increase, if the loan interest rate declines, in the rate of amortization of the
contract. Moreover, the payment adjustments on the contracts may be subject to
specified limitations, as specified in the prospectus supplement, which may also
affect the rate of amortization on the contract. As a result of these
provisions, the amount of interest accrued in any month may equal or exceed the
scheduled monthly payment on the contract. In any of these months, no principal
would be payable on the contract, and if the accrued interest exceeded the
scheduled monthly payment, the excess interest due would become deferred
interest that is added to the principal balance of the contract. Deferred
interest will bear interest at the loan interest rate until paid. If these
limitations prevent the payments from being sufficient to amortize fully the
contract by its stated maturity date, a lump sum payment equal to the remaining
unpaid principal balance will be due on its stated maturity date. See
"Prepayment and Yield Considerations" in this prospectus.

The geographic distribution of manufactured homes will be stated in the
accompanying prospectus supplement. Each prospectus supplement will state the
percentage of the aggregate principal balance of any contracts as of the cut-off
date in the contract pool which are secured by manufactured homes which have
become permanently affixed to real estate. Each prospectus supplement will also
state the percentage of the aggregate principal balance of the contracts as of
the cut-off date in the contract pool representing the refinancing of existing
mortgage indebtedness.

If specific information respecting the contracts to be included in a trust
fund is not known to the issuer at the time the securities of a series are
initially offered, more general information of the nature described above will
be provided in the prospectus supplement and final specific information will be
disclosed in a Current Report on Form 8-K to be available to investors on the
date of

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issuance thereof and to be filed with the Securities and Exchange Commission
promptly after the initial issuance of the securities.

FIXED RETAINED YIELD

The prospectus supplement for a series will specify whether a Fixed
Retained Yield has been retained with respect to the loans of a series, and, if
so, the owner thereof. Any Fixed Retained Yield will be established on a
loan-by-loan basis and will be specified in the schedule of loans attached as an
exhibit to the applicable Issuing Agreement. The servicer, with respect to
loans, may deduct the Fixed Retained Yield from payments as received and prior
to deposit of these payments in the Collection Account for a series or may,
unless an election has been made to treat the trust fund, or a portion of the
trust fund, as a REMIC, withdraw the Fixed Retained Yield from the Collection
Account after the entire payment has been deposited in the Collection Account.
Notwithstanding the foregoing, any partial payment or recovery of interest
received by the servicer relating to a loan, whether paid by the mortgagor or
obligor or received as Liquidation Proceeds, Insurance Proceeds or otherwise,
after deduction of all applicable servicing fees, will be allocated between
Fixed Retained Yield, if any, and interest on a pari passu basis.

INSURANCE POLICIES

The Issuing Agreement may require the servicer to cause to be maintained
for each loan a standard hazard insurance policy issued by a generally
acceptable insurer insuring the mortgaged property underlying the mortgage loan
or the manufactured home underlying the contract against loss by fire, with
extended coverage. Standard hazard insurance policies will generally be in an
amount at least equal to the lesser of 100% of the insurable value of the
improvements which are a part of the mortgaged property or manufactured home or
the principal balance of the loan; provided, however, that this insurance may
not be less than the minimum amount required to fully compensate for any damage
or loss on a replacement cost basis. The servicer may also maintain on property
acquired upon foreclosure, or deed in lieu of foreclosure, of any mortgage loan,
and on any manufactured home acquired by repossession a standard hazard
insurance policy in an amount that is at least equal to the lesser of 100% of
the insurable value of the improvements which are a part of the property or the
insurable value of the manufactured home or the principal balance of the loan
plus, if required by the applicable Issuing Agreement, accrued interest and
liquidation expenses; provided, however, that this insurance may not be less
than the minimum amount required to fully compensate for any damage or loss on a
replacement cost basis. Any amounts collected under any insurance policies,
other than amounts to be applied to the restoration or repair of the mortgaged
property or manufactured home or released to the borrower in accordance with
normal servicing procedures, will be deposited in the Collection Account.

The standard hazard insurance policies covering the mortgaged properties
generally will cover physical damage to, or destruction of, the improvements on
the mortgaged property caused by fire, lightning, explosion, smoke, windstorm,
hail, riot, strike and civil commotion, subject to the conditions and exclusions
particularized in each policy. Because the standard hazard insurance policies
relating to the mortgage loans will be underwritten by different insurers and
will cover mortgaged properties located in various states, these policies will
not contain identical terms and conditions. The most significant terms thereof,
however, generally will be determined by state law and generally will be
similar. Most of these policies typically will not cover any physical damage
resulting from the following: war, revolution, governmental actions, floods and
other water-related causes, earth movement, including earthquakes, landslides
and mudflows, nuclear reaction, wet or dry rot, vermin, rodents, insects or
domestic animals, hazardous wastes or hazardous substances, theft and, in some
cases, vandalism. The foregoing list is merely indicative of particular kinds of
uninsured risks and is not intended to be all-inclusive.

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The standard hazard insurance policies covering the contracts will provide,
at a minimum, the same coverage as a standard form fire and extended coverage
insurance policy that is customary for manufactured housing in the state in
which the manufactured home is located.

The servicer may maintain a blanket policy insuring against hazard losses on all
of the mortgaged properties or manufactured homes in lieu of maintaining the
required standard hazard insurance policies. The servicer will be liable for
the amount of any deductible under a blanket policy if the amount would have
been covered by a required standard hazard insurance policy, had it been
maintained.

In general, if a mortgaged property or manufactured home is located in an
area identified in the Federal Register by the Federal Emergency Management
Agency as having special flood hazards and the flood insurance has been made
available, the Issuing Agreement will require the servicer to cause to be
maintained a flood insurance policy meeting the requirements of the current
guidelines of the Federal Insurance Administration with a generally acceptable
insurance carrier. Generally, the Issuing Agreement will require that the flood
insurance be in an amount not less than the lesser of (x) the amount required to
compensate for any loss or damage to the mortgaged property on a replacement
cost basis and (y) the maximum amount of insurance which is available under the
federal flood insurance program.

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

The servicer shall obtain and maintain at its own expense and keep in full
force and effect a blanket fidelity bond and an error and omissions insurance
policy covering the servicer's officers and employees as well as office persons
acting on behalf of the servicer in connection with the servicing of the trust
fund.

Although the terms and conditions of primary mortgage insurance policies
differ, each primary mortgage insurance policy will generally cover losses up to
an amount equal to the excess of the unpaid principal amount of a defaulted
mortgage loan or contract, plus accrued and unpaid interest thereon and certain
approved expenses, over a specified percentage of the value of the mortgaged
property or manufactured home.

As conditions precedent to the filing or payment of a claim under a primary
mortgage insurance policy, the insured will typically be required, in the event
of default by the mortgagor, among other things, to:

- advance or discharge (x) hazard insurance premiums and (y) as
necessary and approved in advance by the insurer, real estate taxes,
protection and preservation expenses and foreclosure and similar
costs;

- in the event of any physical loss or damage to the mortgaged property,
have the mortgaged property restored to at least its condition at the
effective date of the primary mortgage insurance policy; and

- if the insurer pays the entire amount of the loss or damage, tender to
the insurer good and merchantable title to, and possession of, the
mortgaged property.

ACQUISITION OF THE LOANS FROM THE ORIGINATOR

The loans underlying a series of securities will be acquired by the issuer
from the originator, either directly or through a special-purpose affiliate of
the originator, under a Loan Sale Agreement. Each loan so acquired will have
been originated or acquired by the originator thereof in accordance with the

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underwriting criteria specified in the accompanying prospectus supplement. In
the Loan Sale Agreement, the originator will make a number of representations
and warranties concerning the loans being acquired from the originator as
described in this prospectus under "-Representations and Warranties".

ASSIGNMENT OF THE LOANS

At the time of the issuance of the securities of a series, the issuer will
cause the mortgage loans comprising the mortgage loan pool, including any rights
to, or security interests in, leases, rents and personal property, or the
contracts comprising the contract pool included in the trust fund to be assigned
to the trustee, together with all principal and interest received by or on
behalf of the issuer on or with respect to the loans after the cut-off date,
other than principal and interest due on or before the cut-off date and other
than any Fixed Retained Yield, and the originator shall thereupon be liable to
the trustee for defective loan documents or an uncured breach of the
representations or warranties regarding the loans, to the extent described
below. The trustee or its agent will, concurrently with the assignment,
authenticate and deliver the securities evidencing a series to the issuer in
exchange for the loans. Each loan will be identified in a schedule appearing as
an exhibit to the applicable Issuing Agreement. Each schedule will include,
among other things, the unpaid principal balance as of the close of business on
the applicable cut-off date, the scheduled monthly payment of principal, if any,
and interest, the maturity date and the loan interest rate for each loan in the
trust fund.

With respect to each mortgage loan in a trust fund, the mortgage note or
other promissory note, any assumption, modification or conversion to fixed
interest rate agreement, a copy of any recorded UCC-1 financing statements and
continuation statements, together with original executed UCC-2 or UCC-3
financing statements disclosing an assignment of a security interest in any
personal property constituting security for repayment of the mortgage loan to
the trustee, an executed re-assignment of assignment of leases, rents and
profits to the trustee if the assignment of leases, rents and profits is
separate from the mortgage, a mortgage assignment in recordable form and the
recorded mortgage or other documents as are required under applicable law to
create a perfected security interest in the mortgaged property in favor of the
trustee will be delivered to the trustee or to a designated custodian; provided,
--------
that, in instances where recorded documents cannot be delivered due to delays in
connection with recording, copies thereof, certified by the originator to be
true and complete copies of these documents, sent for recording, may be
delivered and the original recorded documents will be delivered promptly upon
receipt. As to each mortgage loan for which there is primary mortgage insurance,
the certificate of primary mortgage insurance will be delivered to the trustee.
The assignment of each mortgage will be recorded promptly after the initial
issuance of securities for the trust fund, except in states where, the recording
is not required to protect the trustee's interest in the mortgage loan against
the claim of any subsequent transferee or any successor to or creditor of the
originator or any affiliate of the originator.

With respect to any mortgage loans which are cooperative apartment loans,
the issuer will cause to be delivered to the trustee or to a designated
custodian the original cooperative note, the security agreement, the proprietary
lease or occupancy agreement, the recognition agreement, an executed financing
agreement and the relevant stock certificate and blank stock powers. The
originator will cause to be filed in the appropriate office an assignment and a
refinancing statement evidencing the trustee's security interest in each
cooperative apartment loan.

With respect to each contract, there will be delivered to the trustee or to
a designated custodian the original contract and copies of documents and
instruments to each contract and the security interest in the property securing
each contract. In order to give notice of the right, title and interest of
securityholders to the contracts, the sponsor will cause a UCC-1 financing

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statement to be executed identifying the trustee as the secured party and
identifying all contracts as collateral. The contracts will not be stamped or
otherwise marked to reflect their assignment to the issuer. Therefore, if,
through negligence, fraud or otherwise, a subsequent purchaser were able to take
physical possession of the contracts without notice of the assignment, the
interest of securityholders in the contracts could be defeated. See "Certain
Legal Aspects of the Loans."

The trustee or the designated custodian will hold the documents relating to
mortgage loans generally or contracts in trust for the benefit of
securityholders of the series and will review the documents within 45 days of
the date of the applicable Issuing Agreement. If any document is not delivered
or is found to be defective in any material respect or has not been recorded as
required by the applicable Loan Sale Agreement, the trustee or a designated
custodian shall immediately notify the servicer and the issuer, and the servicer
shall immediately notify the originator. If the originator cannot cure the
omission or defect within 60 days after receipt of notice, the originator will
be obligated, under the Loan Sale Agreement, either to repurchase the loan from
the trustee within 60 days after receipt of notice, at a price equal to the then
unpaid principal balance thereof, plus accrued and unpaid interest at the
applicable loan interest rate, less any Fixed Retained Yield and less the rate,
if any, of servicing fee payable with respect to the loan, through the last day
of the month in which the repurchase takes place or to substitute one or more
new loans for the loan. In the case of a loan so repurchased, the purchase price
will be deposited in the Collection Account. In the case of a substitution, the
substitution will be made in accordance with the standards described in "-
Representations and Warranties" below.

There can be no assurance that the originator will fulfill this repurchase
or substitution obligation. The servicer will be obligated to enforce the
obligation to the same extent as it must enforce the obligation of the
originator for a breach of representation or warranty. However, as in the case
of an uncured breach of a representation or warranty, neither the servicer,
unless the servicer is the originator, nor the issuer will be obligated to
purchase or substitute for the loan if the originator defaults on its repurchase
or substitution obligation, unless the breach also constitutes a breach of the
representations or warranties of the servicer or the issuer, as the case may be.
This repurchase or substitution obligation constitutes the sole remedy available
to the securityholders or the trustee for omission of, or a material defect in,
a constituent document.

The trustee will be authorized to appoint a custodian to maintain possession of
the documents relating to the loans. The custodian will keep the documents as
the trustee's agent under a custodial agreement.

REPRESENTATIONS AND WARRANTIES

The originator, in the Loan Sale Agreement, will have made a number of
representations and warranties concerning the mortgage loans. The originator
will have represented, among other things, substantially to the effect that:

- immediately prior to the sale and transfer of the mortgage loans, the
originator had good title to, and was the sole owner of, each mortgage
loan and there had been no other assignment or pledge thereof;

- as of the date of the transfer, the mortgage loans are subject to no
offsets, defenses or counterclaims;

- each mortgage loan at the time it was made complied in all material
respects with applicable state and federal laws, including, usury,
equal credit opportunity and disclosure laws;

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- a lender's policy of title insurance was issued on the date of the
origination of each mortgage loan and each policy is valid and remains
in full force and effect;

- as of the date of the transfer, each mortgaged property is free of
material damage and is in adequate repair and each mortgage is a valid
lien on the mortgaged property, subject only to

- the lien of current real property taxes and assessments,

- covenants, conditions and restrictions, rights of way, easements
and other matters of public record as of the date of the
recording of the mortgage, exceptions appearing of record and
either being acceptable to mortgage lending institutions
generally or specifically reflected in the lender's policy of
title insurance issued on the date of origination and either (x)
specifically referred to in the appraisal made in connection with
the origination of the mortgage loan or (y) which do not
adversely affect the appraised value of the mortgaged property as
set forth in the appraisal,

- other matters to which like properties are commonly subject which
do not materially interfere with the benefits of the security
intended to be provided by the mortgage, and

- in the case of second or more junior loans any senior loans of
record as of the date of recording of the mortgage loan;

- as of the date of the transfer, there are no delinquent tax or
assessment liens against the mortgaged property that would permit
taxing authority to initiate foreclosure proceedings; and

- with respect to each mortgage loan, if the mortgaged property is
located in an area identified by the Federal Emergency Management
Agency as having special flood hazards and subject in particular
circumstances to the availability of flood insurance under the federal
flood insurance program, the mortgaged property is covered by flood
insurance meeting the requirements of the applicable Issuing
Agreement.

The originator, in the Loan Sale Agreement, will have made a number of
representations and warranties concerning the contracts. The originator will
have represented, among other things, substantially to the effect that:

- immediately prior to the sale and transfer of the contracts, the
originator had good title to, and was the sole owner of, each contract
and there had been no other assignment or pledge thereof,

- as of the date of the transfer, the contracts are subject to no
offsets, defenses or counterclaims,

- each contract at the time it was made complied in all material
respects with applicable state and federal laws, including usury,
equal credit opportunity and disclosure laws,

- as of the date of the transfer, each contract is a valid first lien on
the manufactured home and the manufactured home is free of material
damage and is in adequate repair,

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- as of the date of the transfer, there are no delinquent tax or
assessment liens against the manufactured home, and

- with respect to each contract, the manufactured home securing the
contract is covered by a standard hazard insurance policy in the
amount required by the Issuing Agreement and all premiums then due on
the insurance have been paid in full.

All of the representations and warranties of the originator concerning a
loan will have been made as of the date on which the originator sold the loan to
the issuer. A substantial period of time may have elapsed between the date as
of which the representations and warranties were made and the later date of
initial issuance of the securities. Since the representations and warranties
referred to in the preceding paragraphs are the only representations and
warranties that will be made by the originator, the repurchase obligation
described below will not arise if, during the period commencing on the date of
sale of a loan by the originator, the relevant event occurs that would have
given rise to such an obligation had the event occurred prior to sale of the
affected loan. However, the issuer will not include any loan in the trust fund
for any series of securities if anything has come to the issuer's attention that
would cause it to believe that the representations and warranties of the
originator will not be accurate and complete in all material respects concerning
the loan as of the date of initial issuance of the securities.

The servicer, or the trustee if the servicer is the originator, will
promptly notify the originator of any breach of any representation or warranty
made by it concerning a loan which materially and adversely affects the
interests of the securityholders in the loan. If the originator cannot cure the
breach within 60 days after notice from the servicer or the trustee, as the case
may be, then the originator will be obligated either (1) to repurchase the loan
from the trust fund at the applicable purchase price or (2) subject to the
trustee's approval and to the extent permitted by the Issuing Agreement, to
substitute for the Deleted Loan one or more loans, as the case may be, but only
if (a) with respect to a trust fund or a portion of the trust fund for which a
REMIC election is to be made, the substitution is effected within two years of
the date of initial issuance of the securities or (b) with respect to a trust
fund for which no REMIC election is to be made, the substitution is effected
within 120 days of the date of initial issuance of the securities.

Any substitute loan will, on the date of substitution:

- have a LTV no greater than that of the Deleted Loan,

- have a loan interest rate not less than the loan interest rate of the
Deleted Loan,

- have a Net Loan Rate not less than the Net Loan Rate of the Deleted
Loan,

- have a remaining term to maturity not greater than that of the Deleted
Loan, and

- comply with all of the representations and warranties contained in the
Loan Sale Agreement as of the date of substitution.

If substitution is to be made for a Deleted Loan with an adjustable loan
interest rate, the substitute loan will also bear interest based on the same
index, margin, frequency and month of adjustment as the Deleted Loan. In the
event that one substitute loan is substituted for more than one Deleted Loan, or
more than one substitute loan is substituted for one or more Deleted Loans, then
the amount described above will be determined on the basis of aggregate
principal balances - provided, that in all events the tests for a "qualified
--------
mortgage" as described in Section 860G of the Code are met as to each
substituted loan - the rates will be determined on the basis of weighted average
loan interest rates and Net Loan Rates, as the case may be, and the terms will

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<PAGE>
be determined on the basis of weighted average remaining terms to maturity. In
the case of a substitute loan, the mortgage file relating, thereto will be
delivered to the trustee or the designated custodian and the originator will pay
an amount equal to the excess of (x) the unpaid principal balance of the Deleted
Loan, over (y) the unpaid principal balance of the substitute loan or loans,
together with interest on the excess at the loan interest rate to the next
scheduled due date of the Deleted Loan. Such amount will be deposited in the
Collection Account for distribution to securityholders. Except in those cases
in which the servicer is the originator, the servicer will be required under the
applicable Issuing Agreement to enforce this repurchase or substitution
obligation for the benefit of the trustee and the holders of the securities,
following the practices it would employ in its good faith business judgment were
it the owner of the loan. This repurchase or substitution obligation will
constitute the sole remedy available to holders of securities or the trustee for
a breach of representation by the originator.

None of the sponsor, the issuer or the servicer, unless the servicer is the
originator, will be obligated to purchase or substitute for a loan if the
originator defaults on its obligation to do so, and no assurance can be given
that the originator will carry out their respective repurchase obligations with
respect to loans.

The originator, the servicer or another entity specified in the
accompanying prospectus supplement, will make the representations and warranties
as to the types and geographical concentration of the mortgage loan pool or
contract pool and as to other matters concerning the pools as may be described
the accompanying prospectus supplement. Upon a breach of any representation or
warranty which materially and adversely affects the interests of the
securityholders in a loan, the entity making the representation or warranty will
be obligated either to cure the breach in all material respects, repurchase the
loan at the purchase price or substitute for the loan in the manner, and subject
to the conditions, described above regarding the obligations of the originator
with respect to missing or defective loan documents or the breach of the
originator's representations and warranties. This repurchase or substitution
obligation constitutes the sole remedy available to the securityholders or the
trustee for a breach of a representation or warranty by the originator, the
servicer or the other party, respectively.

PRE-FUNDING ACCOUNTS

A trust fund may include one or more Pre-Funding Accounts. On the closing
date for a series, a portion of the proceeds of the sale of the securities of a
series will be deposited in the Pre-Funding Account and may be used to acquire
additional loans or subsequent loans during the Pre-Funding Period. If any
funds remain on deposit in the Pre-Funding Account at the end of Pre-Funding
Period, that amount will be applied in the manner specified in the accompanying
prospectus supplement to prepay the securities of that series.

If a Pre-Funding Account is established,

- the Pre-Funding Period will not extend beyond the last day of the
third full month after the closing date,

- the additional loans to be acquired during the Pre-Funding Period will
be subject to the same representations and warranties and satisfy the
same eligibility requirements as the loans included in the trust fund
on the closing date, subject to the exceptions that are expressly
stated in the accompanying prospectus supplement, and

- prior to the purchase of additional loans, the amount on deposit in
the Pre-Funding Account will be invested in one or more eligible
investments allowed by the rating agencies or any Credit Enhancer,
which eligible investment must mature no later than the business day
prior to the next distribution date.

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If a Pre-Funding Account is established, one or more capitalized interest
accounts may be established and maintained with the trustee, for the benefit of
the securityholders. On the closing date for a series, a portion of the
proceeds of the sale of the securities of a series will be deposited in the
capitalized interest account and used to fund the excess, if any, of (a) the sum
of the amount of interest accrued on the securities of a series and specified
fees or expenses during the Pre-Funding Period, over (b) the amount of interest
available therefor from the loans in the trust fund. Any amounts on deposit in
the capitalized interest account at the end of the Pre-Funding Period that are
not necessary for these purposes will be distributed to the person specified in
the accompanying prospectus supplement.

If a trust fund includes a Pre-Funding Account and the principal balance of
additional loans delivered to the issuer during the Pre-Funding Period is less
than the original amount on deposit in the Pre-Funding Account, the
securityholders will receive a prepayment of principal as and to the extent
described in the accompanying prospectus supplement. Any principal prepayment
may adversely affect the yield to maturity of these securities. Since prevailing
interest rates are subject to fluctuation, there can be no assurance that
investors will be able to reinvest these prepayments at yields equaling or
exceeding the yields on the securities. It is possible that the yield on any
reinvestment will be lower, and may be significantly lower, than the yield on
the securities.

DESCRIPTION OF THE SECURITIES

The securities will be issued in series. Each series of securities or, in
some instances, two or more series of securities will be issued under an Issuing
Agreement. The following summaries describe particular provisions of the
Issuing Agreements. The summaries are not complete and are subject to all of
the provisions of the Issuing Agreement for the issuer and the accompanying
prospectus supplement. We will file each Issuing Agreement executed and
delivered with respect to each series with the Securities and Exchange
Commission as an exhibit to a Current Report on Form 8-K promptly after issuance
of the securities of a series. We will provide a copy of the Issuing Agreement,
without exhibits, relating to any series without charge upon written request of
a holder of a security of a series addressed to Prudential Securities Secured
Financing Corporation, One New York Plaza, 14th Floor, New York, New York 10292,
Attention: Managing Director-Asset Backed Finance Group.

Neither the securities nor the underlying loans will be guaranteed or
insured by any governmental agency or instrumentality or the sponsor, the
issuer, the servicer, the trustee, the originator or any of their respective
affiliates.

The securities will consist of two basic types: certificates representing
beneficial ownership interests in the assets held by the issuer and notes
representing debt secured by the assets held by the issuer. Each series or class
of securities may have a different Interest Rate, which may be fixed or
adjustable. The accompanying prospectus supplement will specify the Interest
Rate for each series or class of securities, or the initial Interest Rate and
the method for determining subsequent changes to the Interest Rate.

A series may include one or more classes of Strip Securities or Accrual
Securities. In addition, a series may include two or more classes that differ as
to timing, sequential order, priority of payment, Interest Rate or amount of
distributions of principal or interest or both. Distributions of principal or
interest or both on any class may be made upon the occurrence of specified

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events, in accordance with a schedule or formula, or on the basis of collections
from designated portions of the pool.

A series of securities may include one or more classes of securities that
are senior to one or more classes of securities which are subordinate with
respect to particular distributions of principal and interest and allocations of
losses on the loans. In addition, some classes of senior or subordinate
securities may be senior to other classes of senior or subordinate securities
with respect to the distributions or losses.

Each issuer may also issue classes of Equity Participation Securities.
These classes of securities may constitute what are commonly referred to as the
"residual interest," "ownership interest", "seller's interest" or the "general
partnership interest," depending upon the treatment of the issuer for federal
income tax purposes and generally will not be styled as having principal and
interest components. Any losses suffered by the trust fund will generally be
absorbed first by the class of Equity Participation Securities.

DISTRIBUTIONS.

Securityholders will be entitled to receive payments on their securities on
specified distribution dates. Distribution dates will occur monthly, quarterly
or semi-annually, as specified in the accompanying prospectus supplement. The
distribution date will be the specified day of each month, or, in the case of
quarterly-pay securities, the specified day of every third month; and, in the
case of semi-annually-pay securities, the specified day of every sixth month, or
if this day is not a business day, the next succeeding business day.

The accompanying prospectus supplement will describe a record date
preceding the distribution date, as of which the trustee or its paying agent
will fix the identity of the securityholders for the purpose of receiving
payments on the next succeeding distribution date. The record date will be
either the close of business as of the last day of the calendar month which
precedes the distribution date or the day immediately prior to the distribution
date.

The accompanying prospectus supplement and the Issuing Agreement will
describe a remittance period which occurs prior to each distribution date. For
example, in the case of monthly-pay securities, the calendar month preceding the
month in which a distribution date occurs. Interest accrued and principal
collected on or with respect to the pool during a remittance period will be
required to be remitted by the servicer to the trustee prior to the distribution
date and will be used to distribute payments to securityholders on the
distribution date. The Issuing Agreement may provide that all or a portion of
the principal collected on or with respect to the pool may be applied by the
trustee to the acquisition of additional loans during a specified period, rather
than used to distribute payments of principal to securityholders during that
period, with the result that the securities possess an interest-only period,
also commonly referred to as a revolving period, which will be followed by an
amortization period. Any interest-only or revolving period may, upon the
occurrence of specified events, terminate prior to the end of the specified
period and result in the earlier than expected amortization of the securities.

Beginning on the distribution date in the month following the month - or,
in the case of quarterly-pay securities, the third month following the month and
each third month thereafter or, in the case of semi-annually-pay securities, the
sixth month following the month and each sixth month thereafter - in which the
cut-off date occurs for a series of securities, distributions of principal and
accrued interest or, where applicable, of principal-only or interest-only, on
each class of securities entitled thereto will be made either by the trustee or
a paying agent appointed by the trustee, to the persons who are registered as
securityholders at the close of business on the record date. Interest that
accrues and is not payable on a class of securities will generally be added to
the principal balance of each security of a class. Distributions will be made

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in immediately available funds, by wire transfer or otherwise, to the account of
a securityholder at a bank or other entity having appropriate facilities
therefor, if the securityholder has so notified the trustee or the paying agent,
as the case may be, and the Issuing Agreement provides for the form of payment,
or by check mailed to the address of the person entitled thereto as it appears
on the security register; provided, however, that the final distribution in
-------- -------
retirement of the securities, other than any book-entry securities, will be made
only upon presentation and surrender of the securities at the office or agency
of the trustee specified in the notice to securityholders of the final
distribution.

PRINCIPAL AND INTEREST ON THE SECURITIES

The method of determining, and the amount of, distributions of principal
and interest, or, where applicable, of principal-only or interest-only, on a
particular series of securities will be described in the accompanying prospectus
supplement. Each class of securities, other than particular classes of Strip
Securities, may bear interest at a different Interest Rate. The accompanying
prospectus supplement will specify the Interest Rate for each class, or in the
case of an adjustable Interest Rate, the initial Interest Rate and the method
for determining the Interest Rate. Interest on the securities will be
calculated either on the basis of a 360-day year consisting of twelve 30-day
months, on the basis of the actual number of days in the accrual period over 360
or on the basis of the actual number of days in the accrual period over 365.

On each distribution date for a series of securities, the trustee will
distribute or cause the paying agent to distribute, as the case may be, to each
holder of record on the record date of a class of securities, an amount equal to
the percentage interest represented by the security held by the holder
multiplied by the distribution amount for that class. The distribution amount
for a class of securities for any distribution date will be the portion, if any,
of the principal distribution amount allocable to a class for the distribution
date, plus, if the class is entitled to payments of interest on the distribution
date, the interest accrued at the applicable Interest Rate on the principal
balance or notional amount of a class, less the amount of any deferred interest
added to the principal balance of the mortgage loans and/or the outstanding
balance of one or more classes of securities on the due date and any other
interest shortfalls allocable to securityholders which are not covered by
advances or the applicable credit enhancement.

In the case of a series of securities that includes two or more classes of
securities, the timing, sequential order, priority of payment or amount of
distributions of principal, and any schedule or formula or other provisions
applicable to the determination thereof, including distributions among multiple
classes of senior securities or subordinate securities, of each class shall be
as provided in the accompanying prospectus supplement. Generally, distributions
of principal of any class of securities will be made on a pro rata basis among
all of the securities of a class.

On or prior to the second business day next preceding the distribution
date, or any earlier day as shall be agreed by the Credit Enhancer, if any, and
the trustee, the trustee will determine the amounts of principal and interest
which will be passed through to securityholders on the immediately succeeding
distribution date. If the amount in the Collection Account is insufficient to
cover the amount to be passed through to securityholders, the trustee will be
required to notify the Credit Enhancer, if any, under the Issuing Agreement for
the purpose of funding this deficiency.

FORM OF SECURITIES

The securities of each series will be issued as physical certificates in
fully registered form only in the denominations specified in the accompanying
prospectus supplement, and will be transferable and exchangeable at the
corporate trust office of the registrar of the securities named in the

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<PAGE>
accompanying prospectus supplement. No service charge will be made for any
registration of exchange or transfer of securities, but the trustee may require
payment of a sum sufficient to cover any tax or other governmental charge.

If so specified in the accompanying prospectus supplement, specified
classes of a series of securities will be issued in uncertificated book-entry
form, and will be registered in the name of Cede, the nominee of DTC. DTC is a
limited purpose trust company organized under the laws of the State of New York,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the UCC and a "clearing agency" registered under the provisions of
Section 17A of the Securities Exchange Act of 1934. DTC was created to hold
securities for its participating organizations and facilitate the clearance and
settlement of securities transactions between these participants through
electronic book-entry changes in their accounts, thereby eliminating the need
for physical movement of certificates. Participants include securities brokers
and dealers, banks, trust companies and clearing corporations and may include
other organizations. Indirect access to the DTC system also is available to
others such as brokers, dealers, banks and trust companies that clear through or
maintain a custodial relationship with a participant, either directly or
indirectly.

Under a book-entry format, securityholders that are not participants or
indirect participants but desire to purchase, sell or otherwise transfer
ownership of securities registered in the name of Cede & Co., as nominee of DTC,
may do so only through participants and Indirect participants. In addition,
these securityholders will receive all distributions of principal of and
interest on the securities from the trustee through DTC and its participants.
Under a book-entry format, securityholders will receive payments after the
distribution date because, while payments are required to be forwarded to Cede &
Co., as nominee for DTC, on each distribution date, DTC will forward the
payments to its participants, which thereafter will be required to forward the
payments to indirect participants or securityholders. Unless and until physical
securities are issued, it is anticipated that the only securityholder will be
Cede & Co., as nominee of DTC, and that the beneficial holders of book-entry
securities will not be recognized by the trustee as securityholders under the
Issuing Agreement. The beneficial holders of the securities will only be
permitted to exercise the rights of securityholders under the Issuing Agreement
indirectly through DTC and its participants who in turn will exercise their
rights through DTC.

Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC is required to make book-entry transfers among participants
on whose behalf it acts with respect to the securities and is required to
receive and transmit payments of principal of and interest on the securities.
Participants and indirect participants with which securityholders have accounts
with respect to their book-entry securities similarly are required to make
book-entry transfers and receive and transmit the payments on behalf of their
respective securityholders. Accordingly, although securityholders will not
possess securities, the rules provide a mechanism by which securityholders will
receive distributions and will be able to transfer their interests.

Unless and until physical securities are issued, securityholders who are
not participants may transfer ownership of securities only through participants
by instructing the participants to transfer securities, by book-entry transfer,
through DTC for the account of the purchasers of the securities, which account
is maintained with their respective participants. Under the rules and in
accordance with DTC's normal procedures, transfers of ownership of securities
will be executed through DTC and the accounts of the respective participants at
DTC will be debited and credited. Similarly, the respective participants will
make debits or credits, as the case may be, on their records on behalf of the
selling and purchasing securityholders.

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Because DTC can only act on behalf of participants, who in turn act on
behalf of indirect participants and banks, the ability of a securityholder to
pledge securities to persons or entities that do not participate in the DTC
system, or otherwise take actions concerning the securities may be limited due
to the lack of a physical security.

DTC in general advises that it will take any action permitted to be taken
by a securityholder under an Issuing Agreement only at the direction of one or
more participants to whose account with DTC the securities are credited.
Additionally, DTC in general advises that it will take these actions with
respect to specified percentages of the securityholders only at the direction of
and on behalf of participants whose holdings include current principal amounts
of outstanding securities that satisfy the specified percentages. DTC may take
conflicting actions with respect to other current principal amounts of
outstanding securities to the extent that these actions are taken on behalf of
participants whose holdings include the requisite current principal amounts of
outstanding securities.

Any securities initially registered in the name of Cede & Co., as nominee
of DTC, will be issued in fully registered, certificated form to securityholders
or their nominees, rather than to DTC or its nominee only under the events
specified in the Issuing Agreement and described in the accompanying prospectus
supplement. Upon the occurrence of any of the events specified in the Issuing
Agreement and the prospectus supplement, DTC will be required to notify all
participants of the availability through DTC of physical securities. Upon
surrender by DTC of the securities representing the securities and instruction
for reregistration, the trustee will issue the securities in the form of
physical certificates, and thereafter the trustee will recognize the holders of
the physical certificates as securityholders. Thereafter, payments of principal
of and interest on the securities will be made by the trustee directly to
securityholders in accordance with the procedures described in this prospectus
and in the Issuing Agreement. The final distribution of any security, whether
physical certificates or securities registered in the name of Cede & Co.,
however, will be made only upon presentation and surrender of the securities on
the final distribution date at the office or agency as is specified in the
notice of final payment to securityholders.

None of the sponsor, the issuer, the originator, the servicer or the trustee
will have any liability for any actions taken by DTC, or its nominee, or
Cedelbank or the Euroclear System, including, without limitation, actions for
any aspect of the records relating to or payments made on account of beneficial
ownership interests in the securities held by Cede & Co., as nominee for DTC, or
for maintaining, supervising or reviewing any records relating to the beneficial
ownership interests.

CREDIT ENHANCEMENT

Various forms of credit enhancement may be provided with respect to one or
more classes of a series of securities or with respect to the loans in the trust
fund. Credit enhancement may be in the form of:

- the subordination of one or more classes of subordinate securities to
provide credit support to one or more classes of senior securities,

- overcollateralization,

- cross-collateralization,

- the use of a surety bond, financial guaranty insurance policy, special
hazard insurance policy, letter of credit or other third party
guarantees,

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- the use of a reserve fund, or

- any combination of the foregoing.

Any credit enhancement may not provide protection against all risks of loss
and may not guarantee repayment of the entire principal balance of the
securities and interest thereon. If losses occur that exceed the amount covered
by credit enhancement or are not covered by the credit enhancement, holders of
one or more classes of securities will bear their allocable share of
deficiencies.

The descriptions of any insurance policies or bonds described in this
prospectus or any prospectus supplement and the coverage thereunder are not
complete and are qualified in their entirety by reference to the actual forms of
the policies, copies of which are available upon request.

SUBORDINATION

The subordination of one or more classes of subordinate securities provides
credit enhancement to the senior securities. With respect to any
senior/subordinate series of securities, the total amount available for
distribution on each distribution date, as well as the method for allocating
this amount among the various classes of securities included in a series, will
be described in the accompanying prospectus supplement. Generally, the amount
available for contribution will be allocated first to interest on the senior
securities of a series, and then to principal of the senior securities up to the
amounts determined as specified in the accompanying prospectus supplement and
the Issuing Agreement, prior to allocation to the subordinate securities of a
series. In the event of any realized losses on the loans, the rights of the
subordinate securityholders to receive distributions with respect to the loans
will be subordinate to the rights of the senior securityholders.

OVERCOLLATERALIZATION

Subordination provisions of a series may be used to accelerate the
amortization of one or more classes of securities relative to the amortization
of the underlying loans. The accelerated amortization is achieved by the
application of excess interest to the payment of principal of one or more
classes of securities. This acceleration feature creates, with respect to the
loans or groups thereof, overcollateralization which results from the excess of
the aggregate principal balance of the loans, or a group thereof, over the
principal balance of the class. This acceleration may continue for the life of
the security, or may be limited. In the case of limited acceleration, once the
required level of overcollateralization is reached, the limited acceleration
feature may cease, unless necessary to maintain the required level of
overcollateralization.

CROSS-COLLATERALIZATION

The beneficial ownership of separate groups of assets included in a trust
fund or the obligations to make payments secured by a pledge of a separate group
of assets included in a trust fund may be evidenced by separate classes of the
series. In this case, credit enhancement may be provided by a
cross-collateralization feature which requires that distributions be made with
respect to one class of securities may be made from excess amounts available
from other asset groups within the same trust fund which support other classes
of securities. The prospectus supplement for a series that includes a
cross-collateralization feature will describe the manner and conditions for
applying the cross-collateralization feature.

The coverage provided by one or more forms of credit enhancement may apply
concurrently to two or more separate trust funds. If applicable, the prospectus
supplement will identify the trust funds to which the credit-collateralization
relates and the manner of determining the amount of the coverage provided
thereby and of the application of the coverage to the identified trust funds.

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SURETY BONDS

A surety bond or financial guaranty insurance policy may be obtained and
maintained for each class or series of securities. The bond insurer will be
described in the accompanying prospectus supplement. This description will
include financial information with respect to the bond insurer.

A surety bond will unconditionally and irrevocably guarantee to
securityholders that an amount equal to each full and complete insured payment
will be received by the trustee on behalf of securityholders, for distribution
by the trustee to each securityholder. The amount of any insured payment will be
defined in the accompanying prospectus supplement, and will generally equal the
full amount of the distributions of principal and interest to which
securityholders are entitled under the Issuing Agreement plus any other amounts
specified in the Issuing Agreement or in the accompanying prospectus supplement.

The specific terms of any surety bond will be described in the accompanying
prospectus supplement. Surety bonds may apply only to specified classes, or may
apply at the loan level and only to specified loans. Surety bonds may have
limitations including limitations on the bond insurer's obligation to guarantee
the obligations of the originator to repurchase or substitute for any loans.
surety bonds will not guarantee any specified rate of prepayments. In addition,
insured payments will generally not be available to cover interest shortfalls
arising from the application of the Soldiers' and Sailors' Civil Relief Act.

Subject to the terms of the Issuing Agreement, the bond insurer may be
subrogated to the rights of each securityholder to receive payments under the
securities to the extent of any payment by the bond insurer under the surety
bond.

LETTERS OF CREDIT

A letter of credit may be obtained from a bank and delivered to the
trustee. The letter of credit may provide direct coverage with respect to the
securities or support the issuer's or any other person's obligation under a
purchase obligation to make payments to the trustee with respect to one or more
components of credit enhancement. The bank issuing the letter of credit, as
well as the amount available under the letter of credit with respect to each
component of credit enhancement, will be specified in the accompanying
prospectus supplement and the Issuing Agreement.

SPECIAL HAZARD INSURANCE POLICIES

Any insurance policy covering special hazard losses which may be obtained
by the issuer for a trust fund will be issued by the insurer named in the
accompanying prospectus supplement. Each special hazard insurance policy will
protect holders of the series of securities from (x) losses due to direct
physical damage to a mortgaged property other than any loss of a type covered by
a hazard insurance policy or a flood insurance policy, if applicable, and (y)
losses from partial damage caused by reason of the application of the
co-insurance clauses contained in hazard insurance policies. Aggregate claims
under a special hazard insurance policy will be limited to a maximum amount of
coverage, as stated in the accompanying prospectus supplement and the Issuing
Agreement.

RESERVE FUNDS

If so provided in the accompanying prospectus supplement, the issuer will
deposit or cause to be deposited in reserve fund any combination of cash, one or
more irrevocable letters of credit or one or more eligible investments in
specified amounts, amounts otherwise distributable to subordinate
s
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ecurityholders, or any other instrument satisfactory to the rating agencies
rating the series, which will be applied and maintained in the manner and under
the conditions specified in the accompanying prospectus supplement. In the
alternate or in addition to an initial deposit, a reserve fund may be funded
through application of all or a portion of amounts otherwise payable on any
subordinate securities, on any Equity Participation Security or otherwise.
Amounts in a reserve fund may be distributed to securityholders, or applied to
reimburse the servicer for outstanding advances or may be used for other
purposes.

OTHER INSURANCE, GUARANTEES AND SIMILAR INSTRUMENTS OR AGREEMENTS

A trust fund may include in lieu of some or all of the foregoing or in
addition thereto, third party guarantees, and other arrangements for maintaining
timely payments or providing additional protection against losses on all or any
specified portion of the assets included in the trust fund, paying
administrative expenses, or accomplishing the other purpose as may be described
in the prospectus supplement. The trust fund may include a guaranteed
investment contract or reinvestment agreement under which funds held in one or
more accounts will be invested at a specified rate. If any class of securities
has a floating Interest Rate, or if any of the loans has a floating coupon rate,
the trust fund may include an interest rate swap contract, an interest rate cap
agreement or similar contract providing limited protection against interest rate
risks.

REDUCTION OR SUBSTITUTION OF CREDIT ENHANCEMENT

The amount of credit support provided by any of the forms of credit
enhancement, including, without limitation, a surety bond, special hazard
insurance policy, letter of credit, or any alternative form of credit
enhancement, may be reduced under specified circumstances. In most cases, the
amount available under any credit enhancement will be subject to periodic
reduction in accordance with a schedule or formula on a nondiscretionary basis
under the terms of the Issuing Agreement as the aggregate outstanding principal
balance of the loans declines. Additionally, in some cases, the credit
enhancement, and any replacements therefor, may be replaced, reduced or
terminated upon the written assurance from each rating agency rating a series
that the then current rating of the securities will not be adversely affected.
Furthermore, in the event that the credit rating of any obligor under any Credit
Enhancer is downgraded, the credit rating of the securities may be downgraded to
a corresponding level, and neither the sponsor nor the issuer thereafter will be
obligated to obtain replacement credit enhancement in order to restore the
rating of the securities, and also will be permitted to replace the credit
enhancement with other credit enhancement instruments issued by Credit Enhancer
whose credit ratings are equivalent to the downgraded level and in lower amounts
which would satisfy the downgraded level; provided, that the then current,
--------
albeit downgraded, rating of the series of securities is maintained. Where the
credit enhancement is in the form of a reserve fund, a permitted reduction in
the amount of credit enhancement will result in a release of all or a portion of
the assets in the reserve fund to any of the holders of the Equity Participation
Securities, the sponsor, the servicer, the originator or the other person that
is entitled thereto. Any assets so released will not be available to fund
distribution obligations in future periods.

PREPAYMENT AND YIELD CONSIDERATIONS

INTEREST RATES

Any class of securities of a series may have a fixed Interest Rate, or an
Interest Rate which varies based on changes in an index or based on changes with
respect to the underlying loans or may receive interest payments with respect to
the underlying loans in another manner specified in the accompanying prospectus
supplement.

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The prospectus supplement for each series will specify the range and the
weighted average of the loan interest rates and Net Loan Rates for the loans
underlying a series as of the cut-off date. Each monthly interest payment on a
loan will generally be calculated as the product of one-twelfth of the
applicable loan interest rate at the time of the calculation and the then unpaid
principal balance on the loan. If the trust fund includes adjustable-rate loans
or includes loans with different Net Loan Rates, the weighted average Net Loan
Rate may vary from time to time as described below. See "The Trust Funds." The
prospectus supplement for a series will also specify the initial Interest Rate
for each class of securities of a series having an Interest Rate and will
specify whether each Interest Rate is fixed or is variable.

The Net Loan Rate for any adjustable rate loan will change with any changes
in the index specified in the accompanying prospectus supplement on which the
loan interest rate adjustments are based, subject to any applicable periodic or
aggregate caps or floors on the loan interest rate or other limitations
described in the accompanying prospectus supplement. The weighted average Net
Loan Rate with respect to any series may vary due to changes in the Net Loan
Rates of adjustable rate loans, to the timing of the loan interest rate
readjustments of the loans and to different rates of payment of principal of
fixed or adjustable rate loans bearing different loan interest rates.

If the trust fund for a series includes adjustable rate loans, any limitations
on the periodic changes in a mortgagor's or obligor's monthly payment, any
limitations on the adjustments to the Net Loan Rates or loan interest rates, any
provision that could result in deferred interest and the effects, if any,
thereof on the yield on securities of the series will be discussed in the
accompanying prospectus supplement.

No distribution of principal and only a partial distribution of interest
will be made to securityholders with respect to a negatively amortizing loan.
Distribution of the portion of scheduled interest at the applicable Net Loan
Rate representing deferred interest with respect to the loan will be passed
through to the securityholders on the distribution date following the due date
on which it is received. Deferred interest will bear interest at the Net Loan
Rate for the loan. For federal income tax purposes, deferred interest may
constitute interest income to the trust fund and to securityholders at the time
that it accrues, rather than at the time that it is paid. See "Certain Federal
Income Tax Consequences."

INTEREST SHORTFALLS DUE TO PRINCIPAL PREPAYMENTS

When a loan is prepaid in full, the mortgagor or obligor pays interest on
the amount prepaid only to the date of prepayment and not thereafter.
Similarly, Liquidation Proceeds and Insurance Proceeds are also likely to
include interest only to the time of payment. When a loan is prepaid in part,
and the prepayment is applied as of a date other than the due date occurring in
the month of receipt or the due date occurring in the month following the month
of receipt, the mortgagor or obligor pays interest on the amount prepaid only to
the date of prepayment and not thereafter. The effect of the foregoing is to
reduce the aggregate amount of interest which would otherwise be passed through
to securityholders if the loan were outstanding, or if the partial prepayment
were applied, on the succeeding due date. To mitigate this reduction in yield,
the Issuing Agreement will provide whether with respect to any principal
prepayment or liquidation of any loan underlying the securities of a series, the
servicer will pay into the Collection Account for a series to the extent funds
are available for this purpose from the aggregate servicing fees, or portion
thereof as specified in the accompanying prospectus supplement, which the
servicer is entitled to receive relating to mortgagor or obligor payments or
other recoveries distributed on the distribution date, the amount, if any, as
may be necessary to assure that the amount paid into the Collection Account with
respect to the loan includes an amount equal to interest at the Net Loan Rate
for the loan for the period from the date of the prepayment or liquidation to
but not including the next due date. See "Servicing of the Loans-Adjustment to
Servicing Compensation in Connection with Prepaid and Liquidated Loans."

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WEIGHTED AVERAGE LIFE OF SECURITIES

Weighted average life of a security refers to the average amount of time
that will elapse from the date of issuance of the security until each dollar in
reduction of the principal amount of the security is distributed to the
investor. The weighted average life and the yield to maturity of any class of
the securities of a series will be influenced by, among other things, the rate
at which principal on the loans included in the mortgage loan pool or contract
pool for the security is paid, which is determined by scheduled amortization and
prepayments. For this purpose, the term "prepayments" includes prepayments and
liquidations due to default, casualty, condemnation and the like.

The loans may generally be prepaid in full or in part at any time, and
fixed rate loans will generally contain due-on-sale clauses permitting the
holder to accelerate the maturity of the loan upon conveyance of the mortgaged
property or manufactured home.

Prepayments on loans are commonly measured relative to a prepayment
standard or model. The prospectus supplement for each series will describe one
or more the prepayment standards or models and will contain tables setting forth
the weighted average life of each class and the percentage of the original
aggregate principal amount of each class that would be outstanding on specified
distribution dates for a series based on the assumptions stated in the
accompanying prospectus supplement, including assumptions that prepayments on
the loans are made at rates corresponding to various percentages of the
prepayment standard or model specified in the accompanying prospectus
supplement.

There is, however, no assurance that prepayment of the loans underlying a
series of securities will conform to any level of the prepayment standard or
model specified in the accompanying prospectus supplement. A number of economic,
geographic, social and other factors may affect prepayment experience. These
factors may include homeowner mobility, economic conditions, changes in
mortgagor's or obligor's housing needs, job transfers, unemployment, mortgagor's
or obligor's net equity in the properties securing the loans, servicing
decisions, enforceability of due-on-sale clauses, market interest rates, the
magnitude of taxes, and the availability of funds for refinancing. In general,
however, if prevailing interest rates fall significantly below the loan interest
rates on the loans underlying a series of securities, the prepayment rates of
the loans are likely to be higher than if prevailing rates remain at or above
the rates borne by the loans. It should be noted that securities of a series may
evidence an interest in a trust fund with different loan interest rates.
Accordingly, the prepayment experience of the securities will to some extent be
a function of the mix of loan interest rates of the loans. In addition, the
terms of the Servicing Agreement will require the servicer to enforce any
due-on-sale clause to the extent specified in the Servicing Agreement. See
"Servicing of the Loans-Enforcement of Due-on-Sale Clauses; Realization Upon
Defaulted Loans" and "Certain Legal Aspects of the Loans-Due-On-Sale Clauses"
for a description of particular provisions of each Servicing Agreement and a
number of legal developments that may affect the prepayment experience on the
loans.

A lower rate of principal prepayments than anticipated would negatively
affect the total return to investors in any securities of a series that are
offered at a discount to their principal amount or, if applicable, their parity
price, and a higher rate of principal prepayments than anticipated would
negatively affect the total return to investors in the securities of a series
that are offered at a premium to their principal amount or, if applicable, their
parity price. Parity price is the price at which a security will yield its
coupon, after giving effect to any payment delay. In addition, the yield to
investors in a class of securities which bears interest at an adjustable
Interest Rate, will

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also be affected by changes in the index on which any adjustable Interest
Rate is based. Changes in the index may not correlate with changes in prevailing
mortgage interest rates or financing rates for manufactured housing, and the
effect, if any, thereof on the yield of the securities will be discussed in the
accompanying prospectus supplement. The yield on some types of securities may be
particularly sensitive to prepayment rates, and further information with respect
to yield on the securities will be included in the applicable prospectus
supplement.

At the request of the mortgagor or obligor, the servicer may refinance the
loans in any trust fund by accepting prepayments thereon and making new loans
secured by a mortgage on the same property or a security interest in the same
manufactured home. Upon this refinancing, the new loans will not be included in
the trust fund. A mortgagor or obligor may be legally entitled to require the
servicer to allow such a refinancing. Any refinancing will have the same effect
as a prepayment in full of the loan.

The originator may be obligated, under specified circumstances, to
repurchase some of the loans. In addition, the terms of insurance policies
relating to the loans may permit the applicable insurer to purchase delinquent
loans. The proceeds of any repurchase will be deposited in the Collection
Account and the repurchase will have the same effect as a prepayment in full of
the loan. See "The Trust Funds-Assignment of the Loans." In addition, the
servicer may have the option to purchase all, but not less than all, of the
loans in any trust fund under specified limited conditions. For any series of
securities for which an election has been made to treat the trust fund or a
portion of the trust fund as a REMIC, any purchase may be effected only in a
"qualified liquidation," as defined in Code Section 860F(a)(4)(A). See
"Servicing of the Loans-Termination; Purchase or other Disposition of Loans."

SERVICING OF THE LOANS

The following summaries describe particular provisions of the Servicing
Agreements which relate to trust funds comprised of loans. The summaries do not
purport to be complete and are subject to and are qualified in their entirety by
reference to, all the provisions of the Servicing Agreement for each series
which may further modify the provisions summarized below. The provisions of
each Servicing Agreement will vary depending upon the nature of the securities
to be issued thereunder and the nature of the trust fund. We will file each
Servicing Agreement executed and delivered with respect to each series with the
Securities and Exchange Commission as an exhibit to a Current Report on Form 8-K
promptly after issuance of the securities of a series.

THE SERVICER

The servicer under each Servicing Agreement will be named in the
accompanying prospectus supplement. The servicer with respect to each series
will service the loans contained in the trust fund for a series. For trust
funds comprised of mortgage loans, the servicer will be a seller/servicer
approved by FNMA or FHLMC. Any servicer may delegate its servicing
responsibilities to one or more sub-servicers, but will not be relieved of its
liabilities with respect thereto.

The servicer will make a number of representations and warranties regarding
its authority to enter into, and its ability to perform its obligations under,
the Servicing Agreement. An uncured breach of a representation or warranty that
in any respect materially and adversely affects the interests of the
securityholders will constitute an event of default by the servicer under the
Servicing Agreement. See "Servicing of the Loans-Rights Upon Event of Default;
Events of Default-Loans."

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PAYMENTS ON LOANS

The servicer or the trustee will, as to each series of securities,
establish and maintain, or cause to be established and maintained the Collection
Account. The Collection Account will be maintained with a depository (1) whose
long-term debt obligations at the time of any deposit in the Collection Account
are rated not lower than the rating on the series of securities at the time of
the initial issuance thereof, (2) the deposits in which are insured by the
Federal Deposit Insurance Corporation through either the Bank Insurance Fund or
the Savings Association Insurance Fund, to the limit established by the FDIC,
and the uninsured deposits in which accounts are otherwise secured such that, as
evidenced by an opinion of counsel, the trustee for the benefit of the
securityholders of the series has a claim with respect to funds in the
Collection Account for a series, or a perfected security interest in any
collateral, which shall be limited to eligible investments, securing the funds,
that is superior to the claims of any other sponsor or general creditor of the
depository or (3) which is otherwise acceptable to each rating agency rating a
series.

A Collection Account may be maintained as an interest bearing or a
non-interest bearing account, or the funds held in the Collection Account may be
invested pending each succeeding distribution date in eligible investments
satisfactory to the rating agencies or any Credit Enhancer. Any of these
eligible investments shall mature not later than the business day preceding the
next distribution date and none of these investments shall be sold or disposed
of prior to the maturity date of the eligible investment; however, in the event
that an election has been made to treat the trust fund or a portion of the trust
fund with respect to a series as a REMIC, no eligible investments will be sold
or disposed of at a gain prior to maturity unless the servicer has received an
opinion of counsel or other evidence satisfactory to it that the sale or
disposition will not cause the trust fund or a portion of the trust fund to be
subject to the tax on "prohibited transactions" imposed by Code Section
860F(a)(1), otherwise subject the trust fund or a portion of the trust fund to
tax, or cause the trust fund of a portion of the trust fund to fail to qualify
as a REMIC. Any interest or other income earned on funds in the Collection
Account is generally paid to the servicer or its designee as additional
servicing compensation.

The servicer will deposit in the Collection Account for each series of
securities any amounts representing scheduled payments of principal and interest
on the loans due after the applicable cut-off date but received prior thereto,
and, the following payments and collections received or made by it with respect
to the loans subsequent to the applicable cut-off date, other than payments due
on or before the cut-off date:

- all payments on account of principal, including prepayments, and
interest, net of any portion thereof retained by a sub-servicer as its
servicing compensation and net of any Fixed Retained Yield;

- Net Liquidation Proceeds;

- Net Insurance Proceeds;

- all amounts required to be deposited in the Collection Account from
any reserve fund, and amounts available under any other form of credit
enhancement applicable to a series;

- all advances made by the servicer;

- all amounts withdrawn from buy-down funds or other funds described in
the accompanying prospectus supplement, if any, with respect to the
loans, in accordance with the terms of the respective agreements
applicable thereto;

- all proceeds from the repurchase of loans by the originator; and

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<PAGE>
- all other amounts required to be deposited in the Collection Account
under the Servicing Agreement

Notwithstanding the foregoing, the servicer will be entitled, at its
election, either (a) to withhold and pay itself the applicable servicing fee
and/or to withhold and pay to the owner thereof any Fixed Retained Yield from
any payment or other recovery on account of interest as received and prior to
deposit in the Collection Account or (b) to withdraw the applicable servicing
fee and/or any Fixed Retained Yield from the Collection Account after the entire
payment or recovery has been deposited in the Collection Account; however, with
respect to each trust fund or a portion of the trust fund as to which a REMIC
election has been made, the servicer will, in each instance, withhold and pay to
the owner thereof the Fixed Retained Yield prior to deposit of the payment or
recovery in the Collection Account.

Advances, amounts withdrawn from any reserve fund, and amounts available
under any other form of credit enhancement will be deposited in the Collection
Account not later than the business day preceding the distribution date on which
the amounts are required to be distributed. All other amounts will be deposited
in the Collection Account not later than the business day next following the day
of receipt and posting by the servicer.

If the servicer deposits in the Collection Account for a series any amount
not required to be deposited in the Collection Account, it may at any time
withdraw this amount from the Collection Account.

The servicer is permitted, from time to time, to make withdrawals from the
Collection Account for the following purposes, to the extent permitted in the
applicable Servicing Agreement:

- to reimburse itself for advances;

- to reimburse itself from Liquidation Proceeds for expenses incurred by
the servicer in connection with the liquidation of any defaulted loan
or property acquired in respect thereof and for amounts expended in
good faith in connection with the restoration of damaged property, to
reimburse itself from Insurance Proceeds for expenses incurred by the
servicer in connection with the restoration, preservation or repair of
the mortgaged properties or manufactured homes and expenses incurred
in connection with collecting on the insurance policies and, to the
extent that Liquidation Proceeds or Insurance Proceeds after the
reimbursement are in excess of the unpaid principal balance of the
loans together with accrued and unpaid interest thereon at the
applicable Net Loan Rate through the last day of the month in which
the Liquidation Proceeds or Insurance Proceeds were received, to pay
to itself out of the excess the amount of any unpaid servicing fees
and any assumption fees, late payment charges or other mortgagor or
obligor charges on the loans;

- to pay to itself the applicable servicing fee and/or pay the owner
thereof any Fixed Retained Yield, in the event the servicer is not
required, and has elected not, to withhold the amounts out of any
payment or other recovery with respect to a particular loan prior to
the deposit of the payment or recovery in the Collection Account;

- to reimburse itself and the issuer for specified expenses, including
taxes paid on behalf of the trust fund, incurred by and recoverable by
or reimbursable to it or the issuer, as the case may be;

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- to pay to the originator with respect to each loan or property
acquired in respect thereof that has been repurchased by the
originator, as the case may be, all amounts received thereon and not
distributed as of the date as of which the purchase price of the loan
was determined;

- to pay itself any interest earned on or investment income earned with
respect to funds in the Collection Account, all interest or income to
be withdrawn not later than the next distribution date;

- to make withdrawals from the Collection Account in order to make
distributions to securityholders; and

- to clear and terminate the Collection Account.

ADVANCES AND LIMITATIONS THEREON

The accompanying prospectus supplement will describe the circumstances, if
any, under which the servicer will make advances with respect to delinquent
payments on loans. The servicer will be obligated to make advances, and the
obligation may be limited in amount, or may not be activated until a portion of
a specified reserve fund is depleted. Advances are intended to provide
liquidity and not to guarantee or insure against losses. Accordingly, any funds
advanced are recoverable by the servicer out of amounts received on particular
loans which represent late recoveries of principal or interest, proceeds of
insurance policies or Liquidation Proceeds respecting which any advance was
made. If an advance is made and subsequently determined to be nonrecoverable
from late collections, proceeds of insurance policies, or Liquidation Proceeds
from the loan, the servicer may be entitled to reimbursement from other funds in
the Collection Account, or from a specified reserve fund as applicable, to the
extent specified in the accompanying prospectus supplement.

ADJUSTMENT TO SERVICING COMPENSATION IN CONNECTION WITH PREPAID AND LIQUIDATED
LOANS

When a mortgagor or obligor prepays a loan in full, the mortgagor or
obligor pays interest on the amount prepaid only to the date on which the
principal prepayment is made. Similarly, Liquidation Proceeds from a mortgaged
property or manufactured home will not include interest for any period after the
date on which the liquidation took place, and Insurance Proceeds may include
interest only to the date of settlement of the claims. Further, when a loan is
prepaid in part, and the prepayment is applied as of a date other than a due
date, the mortgagor or obligor pays interest on the amount prepaid only to the
date of prepayment and not thereafter. The effect of the foregoing is to reduce
the aggregate amount of interest which would otherwise be passed through to
securityholders if the loan were outstanding, or if the partial prepayment were
applied, on the succeeding due date. In order to mitigate the adverse effect to
securityholders of a series resulting from the prepayment or liquidation of a
loan or settlement of an insurance claim with respect thereto, the amount of the
aggregate servicing fees may be reduced by an amount equal to the accrual of
interest on any prepaid or liquidated loan at the Net Loan Rate from the date of
its prepayment or liquidation or the date of the insurance settlement to the
next due date. These reductions in the aggregate servicing fees will be made by
the servicer with respect to the loans under the applicable Servicing Agreement
but only to the extent that the aggregate amount of this interest does not
exceed the aggregate servicing fees relating to mortgagor or obligor payments or
other recoveries distributed on the distribution date. The amount of the offset
against the aggregate servicing fees will be included in the scheduled
distributions to securityholders on the distribution date on which the principal
prepayments, Liquidation Proceeds or Insurance Proceeds are passed through to
securityholders. See "Prepayment and Yield Considerations."

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REPORTS TO SECURITYHOLDERS

Unless otherwise specified or modified in the Servicing Agreement for each
series, a statement setting forth the following information, if applicable, will
be included with each distribution to securityholders of record of a series:

(a) the amount of principal distributed to holders of the securities
and the outstanding principal balance of the securities following the
distribution;

(b) the amount of interest distributed to holders of the securities
and the current interest on the securities;

(1) any overdue accrued interest included in the distribution,

(2) any remaining overdue accrued interest with respect to the
securities or

(3) any current shortfall in amounts to be distributed as accrued
interest to holders of the securities;

(d) the amounts of

(1) any overdue payments of scheduled principal included in the
distribution,

(2) any remaining overdue principal amounts with respect to the
securities,

(3) any current shortfall in receipt of scheduled principal
payments on the loans or

(4) any realized losses or Liquidation Proceeds to be allocated
as reductions in the outstanding principal balances of the securities;

(e) the amount received under any credit enhancement, and the
remaining amount available under the credit enhancement;

(f) the amount of any delinquencies with respect to payments on the
loans;

(g) the book value of any REO property acquired by the trust fund; and

(h) such other information as specified in the Issuing Agreement.

In addition, within a reasonable period of time after the end of each
calendar year, the trustee will furnish to each holder of record at any time
during the calendar year (x) the aggregate of amounts reported under clauses
(a), (b), and (d)(4) above for the calendar year and (y) the information
specified in the Issuing Agreement to enable securityholders to prepare their
tax returns including, without limitation, the amount of original issue discount
accrued on the securities, if applicable. Information in the distribution date
and annual statements provided to the holders will not have been examined and
reported upon by an independent public accountant. However, the servicer will
provide to the trustee a report by independent public accountants with respect
to the servicer's servicing of the loans. See "-Evidence as to Compliance" in
this prospectus.

A series of securities or one or more classes of a series may be issued in
book-entry form. In this event, owners of beneficial interests in the securities
will not be considered holders and will not receive the reports directly from
the trustee. The trustee will forward the reports only to the entity or its
nominee which is the registered holder of the global certificate which evidences
the book-entry securities. Beneficial owners will receive the reports from the
participants and indirect participants of the applicable

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book-entry system in accordance with the practices and procedures of these
entities.

COLLECTION AND OTHER SERVICING PROCEDURES

The servicer, directly or through sub-servicers, will make reasonable
efforts to collect all payments called for under the loans and will, consistent
with the Servicing Agreement, follow the collection procedures as it follows
with respect to mortgage loans or manufactured housing contracts serviced by it
that are comparable to the loans, as the case may be. Consistent with the
above, the servicer may, in its discretion, (x) waive any prepayment charge,
assumption fee, late payment charge or any other charge in connection with the
prepayment of a loan and (y) arrange with a mortgagor or obligor a schedule for
the liquidation of deficiencies running for not more than six months after the
applicable due date.

In accordance with the Servicing Agreement, the servicer, to the extent
permitted by law, will establish and maintain or will cause to be established
and maintained one or more escrow accounts in which the servicer will be
required to deposit or cause to be deposited payments by mortgagors or obligors,
as applicable, for taxes, assessments, mortgage and hazard insurance premiums
and other comparable items. Withdrawals from the escrow accounts may be made to
effect timely payment of taxes, assessments, mortgage and hazard insurance, to
refund to mortgagors or obligors amounts determined to be overages, to pay
interest to mortgagors or obligors on balances in the escrow accounts, if
required, to repair or otherwise protect the mortgaged properties or
manufactured homes and to clear and terminate this account. The servicer will be
responsible for the administration of each escrow account. The servicer will be
obligated to advance particular amounts which are not timely paid by mortgagors
or obligors, to the extent that the servicer determines that the amounts will be
recoverable out of Insurance Proceeds, Liquidation Proceeds, or otherwise.
Alternatively, if specified in the Servicing Agreement, in lieu of establishing
a escrow account, the servicer may procure a performance bond or other form of
insurance coverage, in an amount acceptable to each rating agency rating the
series of securities, covering loss occasioned by the failure to escrow these
amounts.

ENFORCEMENT OF DUE-ON-SALE CLAUSES; REALIZATION UPON DEFAULTED LOANS

Each Servicing Agreement will provide that, when any mortgaged property or
manufactured home is conveyed by the mortgagor or obligor, the servicer will
exercise its rights to accelerate the maturity of the loan under any
"due-on-sale" clause applicable thereto, if any, unless (a) it is not
exercisable under applicable law or (b) this exercise would result in loss of
insurance coverage with respect to the loan. In this case, the servicer is
authorized to take or enter into an assumption and modification agreement from
or with the person to whom the mortgaged property or manufactured home has been
or is about to be conveyed, and the person will become liable under the mortgage
note or contract and, unless prohibited by applicable state law, the mortgagor
or obligor remains liable thereon; provided, that the loan will continue to be
--------
covered by any pool insurance policy and any primary mortgage insurance policy,
and the loan interest rate with respect to the loan and the payment terms shall
remain unchanged. The servicer will also be authorized, with the prior approval
of any pool insurer and any primary mortgage insurer, if any, to enter into a
substitution of liability agreement with this person, and the original mortgagor
or obligor will be released from liability and this person will be substituted
as mortgagor or obligor and becomes liable under the mortgage note or contract.

The servicer is obligated under the Servicing Agreement to realize upon
defaulted loans to the extent provided in the Servicing Agreement. However, in
the case of foreclosure or of damage to a mortgaged property or manufactured
home from an uninsured cause, the servicer is not required to expend its own
funds to foreclose, repossess or restore any damaged property, unless it
reasonably determines (x) that this foreclosure, repossession or restoration

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will increase the proceeds to securityholders of a series of liquidation of the
loan after reimbursement of the servicer for its expenses and (y) that these
expenses will be recoverable to it through Liquidation Proceeds or Insurance
Proceeds. In the event that the servicer has expended its own funds for
foreclosure or to restore damaged property, it will be entitled to charge the
Collection Account for a series an amount equal to all costs and expenses
incurred by it.

The servicer may foreclose against property securing a defaulted loan
either by foreclosure, by sale or by strict foreclosure and in the event a
deficiency judgment is available against the mortgagor or other person may
proceed for the deficiency. See "Certain Legal Aspects of the Loans-The Mortgage
Loans-Anti-Deficiency Legislation and Other Limitations on Lenders" for a
description of the availability of deficiency judgments. It is anticipated that
in most cases the servicer will not seek deficiency judgments against any
mortgagor or obligor, and the servicer is not required under the Servicing
Agreement to seek deficiency judgments.

With respect to a trust fund, or one or more segregated pools of assets in
the trust fund, as to which a REMIC election has been made, if the trustee
acquires ownership of any mortgaged property or manufactured home as a result of
a default or imminent default of any loan secured by the mortgaged property or
manufactured home, the trustee generally will be required to dispose of the
property with two (2) years following its acquisition by the trust fund. The
servicer also will be required to administer the mortgaged property or
manufactured home in a manner which does not cause the mortgaged property or
manufactured home to fail to qualify as "foreclosure property" within the
meaning of Code Section 860G(a)(8) or result in the receipt by the trust fund of
any "net income from foreclosure property" within the meaning of Code Section
860G(c). In general, this would preclude the holding of the mortgaged property
or manufactured home as a dealer in the property or the receipt of rental income
based on the profits of the lessee.

The servicer may modify, waive or amend the terms of any loan without the
consent of the trustee or any securityholder. These modifications, waivers or
amendments shall only be given if the servicer determines that it is in the best
interests of securityholders and, generally, only if the loan is in default or
the servicer has determined that default is reasonably foreseeable.

SERVICING COMPENSATION AND PAYMENT OF EXPENSES

For each series of securities, the servicer will be entitled to be paid a
servicing fee on the loans until termination of the Servicing Agreement. The
servicer, at its election, will pay itself the servicing fee for a series with
respect to each loan by (a) withholding the servicing fee from any scheduled
payment of interest prior to deposit of the payment in the Collection Account
for a series or (b) withdrawing the servicing fee from the Collection Account
after the entire interest payment has been deposited in the Collection Account.
The servicer may also pay itself out of the Liquidation Proceeds or Insurance
Proceeds with respect to a loan, or withdraw from the Collection Account, the
servicing fee on the loan or other recoveries with respect thereto to the extent
provided in the Servicing Agreement. The servicing fee with respect to the
loans underlying the securities of a series will be specified in the applicable
prospectus supplement. Any additional servicing compensation in the form of
prepayment charges, assumption fees, late payment charges or otherwise will be
retained by the servicer to the extent not required to be deposited in the
Collection Account.

In addition to amounts payable to any sub-servicer, the servicer will pay
all expenses incurred in connection with the servicing of the loans underlying a
series, including, without limitation, payment of the hazard insurance policy
premiums and fees or other amounts payable in accordance with any applicable
agreement for the provision of credit enhancement for a series, payment of the
fees and disbursements of the trustee and any custodian, fees due to the
independent accountants and expenses incurred in connection with distributions
and reports to securityholders. However, some of these expenses may be
reimbursable to the servicer under the terms of the Issuing Agreement. In

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addition, the servicer will be entitled to reimbursement for particular expenses
incurred by it in connection with the liquidation of defaulted loans. In the
event that claims are either not made or are not fully paid from any applicable
form of credit enhancement, the trust fund will suffer a loss to the extent that
Net Liquidation Proceeds and Net Insurance Proceeds are less than the principal
balance of the loan, plus accrued interest thereon at the Net Loan Rate. In
addition, the servicer will be entitled to reimbursement of expenditures
incurred by it in connection with the restoration of any mortgaged property or
manufactured home, the right of reimbursement being prior to the rights of the
securityholders to receive Liquidation Proceeds and Insurance Proceeds. The
servicer is also entitled to reimbursement from the Collection Account of
advances, of advances made by it to pay taxes or insurance premiums with respect
to any mortgaged property or manufactured home and of particular losses against
which it is indemnified by the trust fund.

EVIDENCE AS TO COMPLIANCE

The applicable Servicing Agreement for each series will provide that each
year, a firm of independent public accountants will furnish a statement to the
trustee to the effect that this firm has examined specified documents and
records relating to the servicing of the loans by the servicer and that, on the
basis of the examination, this firm is of the opinion that the servicing has
been conducted in compliance with the Servicing Agreement, except for (x) any
exceptions as such firm believes to be immaterial and (y) any other exceptions
as are stated in this statement.

The applicable Servicing Agreement for each series will also provide for
delivery to the trustee for a series of an annual statement signed by an officer
of the servicer to the effect that the servicer has fulfilled its obligations
under the Servicing Agreement throughout the preceding calendar year.

CERTAIN MATTERS REGARDING THE SERVICER

The servicer may not resign from its obligations and duties under the
Servicing Agreement for each series, except upon its determination that its
duties thereunder are no longer permissible under applicable law or are in
material conflict by reason of applicable law with any other activities of a
type and nature presently carried on by it. No resignation will become
effective until the trustee for a series or a successor servicer has assumed the
servicer's obligations and duties under the Servicing Agreement. If the
servicer resigns for any of the foregoing reasons and the trustee is unable or
unwilling to assume responsibility for servicing the loans, it may appoint
another institution as servicer, as described under "Servicing of the
Loans-Events of Default; Rights Upon Event of Default " below.

The Servicing Agreement will provide that neither the servicer nor any
director, officer, employee or agent of either of them will be under any
liability to the trust fund or the securityholders, for the taking of any action
or for refraining from the taking of any action in good faith in accordance with
the Servicing Agreement or for errors in judgment; provided, however, that none
-------- -------
of the servicer or any director, officer, employee or agent of the servicer will
be protected against any liability that would otherwise be imposed by reason of
willful misfeasance, bad faith or negligence in the performance of his or its
duties or by reason of reckless disregard of his or its obligations and duties
thereunder. The Servicing Agreement will further provide that the servicer and
any director, officer, employee or agent of the servicer shall be entitled to
indemnification by the trust fund and will be held harmless against any loss,
liability or expense incurred in connection with any legal action relating to
the Servicing Agreement or the securities other than any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence in
the performance of his or its duties thereunder or by reason of reckless
disregard of his or its obligations and duties thereunder. In addition, the
Servicing Agreement will provide that the servicer will not be under any

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<PAGE>
obligation to appear in, prosecute or defend any legal action that is not
incidental to its duties under the Servicing Agreement and that in its opinion
may involve it in any expense or liability. The servicer may, however, in its
discretion, undertake any such action deemed by it necessary or desirable with
respect to the Servicing Agreement and the rights and duties of the parties
thereto and the interests of the securityholders thereunder. In this event, the
legal expenses and costs of the action and any liability resulting therefrom
will be expenses, costs and liabilities of the trust fund, and the servicer will
be entitled to be reimbursed therefor out of the Collection Account, and any
loss to the trust fund arising from the right of reimbursement will be allocated
pro rata among the various classes of securities unless otherwise specified in
the applicable Servicing Agreement.

Any person into which the servicer may be merged or consolidated, or any
person resulting from any merger, conversion or consolidation to which the
servicer is a party, or any person succeeding to the business through the
transfer of substantially all of its assets, or otherwise, of the servicer will
be the successor of the servicer under the Servicing Agreement; provided, that
--------
the successor or resulting entity is qualified to service mortgage loans for
FNMA or FHLMC and that each rating agency's rating of any securities for a
series in effect immediately prior to this event is not adversely affected
thereby.

The servicer also may have the right to assign its rights and delegate its
duties and obligations under the Servicing Agreement to an affiliate or in
connection with a sale or transfer of a substantial portion of its mortgage or
manufactured housing servicing portfolio; provided, that
--------

- in the case of a transfer by a servicer of mortgage loans, the
purchaser or transferee accepting the assignment or delegation is
qualified to service mortgage loans for FNMA or FHLMC,

- the purchaser or transferee is reasonably satisfactory to the issuer
and the trustee for a series and executes and delivers to the issuer
and the trustee an agreement, in form and substance reasonably
satisfactory to the issuer and the trustee, which contains an
assumption by the purchaser or transferee of the due and punctual
performance and observance of each covenant and condition to be
performed or observed by the servicer under the Servicing Agreement
from and after the date of the agreement; and

- each rating agency's rating of any securities for a series in effect
immediately prior to the assignment, sale or transfer is not
qualified, downgraded or withdrawn as a result of the assignment, sale
or transfer or

In the case of any assignment or delegation, the servicer will be released
from its obligations under the Servicing Agreement except for liabilities and
obligations incurred prior to the assignment and delegation.

EVENTS OF DEFAULT; RIGHTS UPON EVENT OF DEFAULT

Servicing Agreement. Events of default under the Servicing Agreement
generally include:

- any failure by the servicer to deposit amounts in the Collection
Account, which failure continues unremedied for the number of days
specified in the accompanying prospectus supplement after the giving
of written notice of any failure to the servicer by the trustee for a
series, or to the servicer and the trustee by the holders of a series
evidencing not less than a specified percentage of the aggregate
voting rights of the securities for a series,

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- any failure by the servicer duly to observe or perform in any material
respect any other of its covenants or agreements in the applicable
Issuing Agreement which continues unremedied for the number of days
specified in the accompanying prospectus supplement after the giving
of written notice of any failure to the servicer by the trustee, or to
the servicer and the trustee by the holders of a series evidencing not
less than a specified percentage of the aggregate voting rights of the
securities for a series, and

- particular events of insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings and particular actions
by the servicer indicating its insolvency, reorganization or inability
to pay its obligations.

The Servicing Agreement will specify the circumstances under which the
trustee of the holders of securities may remove the servicer upon the occurrence
and continuance of an event of default thereunder, whereupon the trustee will
succeed to all the responsibilities, duties and liabilities of the servicer
under the Servicing Agreement and will be entitled to reasonable servicing
compensation not to exceed the applicable servicing fee, together with other
servicing compensation in the form of assumption fees, late payment charges or
otherwise as provided in the Servicing Agreement.

In the event that the trustee is unwilling or unable so to act, it may
select, or petition a court of competent jurisdiction to appoint, a finance
institution, bank or loan servicing institution with a net worth specified in
the accompanying prospectus supplement to act as successor servicer under the
provisions of the applicable Servicing Agreement. The successor servicer would
be entitled to reasonable servicing compensation in an amount not to exceed the
servicing fee stated in the accompanying prospectus supplement, together with
the other servicing compensation in the form of assumption fees, late payment
charges or otherwise, as provided in the Servicing Agreement.

During the continuance of any event of default of a servicer under a
Servicing Agreement, the trustee will have the right to take action to enforce
its rights and remedies and to protect and enforce the rights and remedies of
the holders of a series, and holders of securities evidencing not less than a
specified percentage of the aggregate voting rights of the securities for a
series may direct the time, method and place of conducting any proceeding for
any remedy available to the trustee or exercising any trust or power conferred
upon that trustee. However, the trustee will not be under any obligation to
pursue any remedy or to exercise any of these trusts or powers unless the
securityholders have offered the trustee reasonable security or indemnity
against the cost, expenses and liabilities which may be incurred by the trustee
in pursuing the remedy. The trustee may decline to follow any direction by the
securityholders if the trustee determines that the action or proceeding so
directed may not lawfully be taken or would involve it in personal liability or
be unjustly prejudicial to the nonassenting holders.

Indenture. Events of default under the indenture for each series of notes
generally include:

- a default in the payment of any principal of or interest on any note
of a series, which continues for the period of time specified in the
accompanying prospectus supplement;

- failure to perform any other covenant of the issuer in the indenture
which continues for the period of time specified in the accompanying
prospectus supplement after notice thereof is given in accordance with
the procedures described in the accompanying prospectus supplement;

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- any representation or warranty made by the issuer in the indenture or
in any certificate or other writing delivered pursuant thereto or in
connection therewith with respect to or affecting a series having been
incorrect in a material respect as of the time made, and the breach is
not cured within the period of time specified in the accompanying
prospectus supplement after notice thereof is given in accordance with
the procedures described in the accompanying prospectus supplement;

- specified events of bankruptcy, insolvency, receivership or
liquidation of the issuer; or

- any other event of default provided with respect to notes of that
series.

If an event of default with respect to the notes of any series at the time
outstanding occurs and is continuing, either the trustee or the holders of a
majority of the then aggregate outstanding amount of the notes of a series may
declare the principal amount of all the notes of a series to be due and payable
immediately. This declaration may, under some circumstances, be rescinded and
annulled by the holders of a majority in aggregate outstanding amount of the
notes of a series.

If, following an event of default with respect to any series of notes, the
notes of a series have been declared to be due and payable, the trustee may, in
its discretion, notwithstanding this acceleration, elect to maintain possession
of the collateral securing the notes of a series and to continue to apply
distributions on the collateral as if there had been no declaration of
acceleration if the collateral continues to provide sufficient funds for the
payment of principal of and interest on the notes of a series as they would have
become due if there had not been such a declaration. In addition, the trustee
may not sell or otherwise liquidate the collateral securing the notes of a
series following an event of default other than a default in the payment of any
principal or interest on any note of a series for thirty (30) days or more,
unless (a) the holders of 100% of the then aggregate outstanding amount of the
notes of a series consent to the sale, (b) the proceeds of the sale or
liquidation are sufficient to pay in full the principal of and accrued interest
due and unpaid on the outstanding notes of a series at the date of the sale or
(c) the trustee determines that the collateral would not be sufficient on an
ongoing basis to make all payments on the notes as these payments would have
become due if the notes had not been declared due and payable, and the trustee
obtains the consent of the holders of a specified percentage of the then
aggregate outstanding amount of the notes of a series.

In the event that the trustee liquidates the collateral in connection with
an event of default involving a default for thirty (30) days or more in the
payment of principal of or interest on the notes of a series, the indenture
provides that the trustee will have a prior lien on the proceeds of any
liquidation for unpaid fees and expenses. As a result, upon the occurrence of
such an event of default, the amount available for distribution to the
noteholders may be less than would otherwise be the case. However, the trustee
may not institute a proceeding for the enforcement of its lien except in
connection with a proceeding for the enforcement of the lien of the Indenture
for the benefit of the noteholders after the occurrence of such an event of
default.

In the event the principal of the notes of a series is declared due and
payable, as described above, the holders of any notes issued at a discount from
par may be entitled to receive no more than an amount equal to the unpaid
principal amount thereof less the amount of the discount which is unamortized.

Subject to the provisions of the indenture relating to the duties of the
trustee, in case an event of default shall occur and be continuing with respect
to a series of Notes, the trustee will be under no obligation to exercise any of
the rights or powers under the indenture at the request or direction of any of
the holders of notes of a series, unless the holders offered to the trustee

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<PAGE>
security or indemnity satisfactory to it against the costs, expenses and
liabilities which might be incurred by it in complying with the request or
direction. Subject to these provisions for indemnification and specified
limitations contained in the indenture, the holders of a majority of the then
aggregate outstanding amount of the notes of a series shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the trustee or exercising any trust or power conferred on the
trustee with respect to the notes of a series, and the holders of a majority of
the then aggregate outstanding amount of the notes of a series may, in some
cases, waive any default with respect thereto, except a default in the payment
of principal or interest or a default of a covenant or provision of the
indenture that cannot be modified without the waiver or consent of all the
holders of the outstanding notes of a series affected thereby.

AMENDMENT

Each Issuing Agreement may be amended by the parties thereto without the
consent of the securityholders,

- to cure any ambiguity,

- to correct or supplement any provision of the Issuing Agreement that
may be inconsistent with any over provision of the Issuing Agreement,

- to comply with the requirements of the Code, or

- to make any other provisions with respect to matters or questions
arising under the Issuing Agreement that are not inconsistent with the
provisions thereof;

provided, that the action will not, as evidenced by an opinion of counsel,
- --------
adversely affect in any material respect the interests of the securityholders of
the series.

The Issuing Agreement may also be amended by the with the consent of the
holders of securities evidencing interests aggregating not less than a specified
percentage of the voting interests evidenced by the securities affected thereby,
for the purpose of adding any provisions to or changing in any manner or
eliminating, any of the provisions of the Issuing Agreement or of modifying in
any manner the rights of the securityholders; provided, however, that no
-------- -------
amendment may (i) reduce in any manner the amount of, or delay the timing of,
any payments received on or with respect to loans that are required to be
distributed on any securities, without the consent of the holder of the
security, (ii) adversely affect in any material respect the interests of the
holders of a class of securities of a series in a manner other than that
described in clause (i) above without the consent of the holders of securities
aggregating not less than a specified percentage of the Voting Interests
evidenced by the class, or (iii) reduce the aforesaid percentage of the
securities, the holders of which are required to consent to the amendment,
without the consent of the holders of all securities of the class affected then
outstanding.

TERMINATION; PURCHASE OR OTHER DISPOSITION OF LOANS

The obligations created by the Issuing Agreement for a series of securities
will terminate upon the earlier of (i) the later of the final payment or other
liquidation of the last loan subject thereto and the disposition of all property
acquired upon foreclosure of any loan and (ii) any purchase or disposition
described in the following paragraph. In no event, however, will the trust
created by the Issuing Agreement continue beyond the expiration of 21 years from
the death of the late survivor of persons named in the Issuing Agreement. For
each series of securities, the trustee will give written notice of termination
of the Issuing Agreement to each securityholder, and the final distribution will
be made only upon surrender and cancellation of the securities at an office or
agency appointed by the sponsor and specified in the notice of termination.

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Repurchase of the Remaining Loans. The Issuing Agreement for each series
may permit, but not require, the servicer or other entity specified in the
accompanying prospectus supplement to purchase from the trust fund for a series
all remaining loans at a price equal to 100% of the aggregate principal balance
of the loans plus, with respect to any property acquired in respect of a loan,
if any, the outstanding principal balance of the loan at the time of
foreclosure, less, in either case, unreimbursed advances, in the case of the
loans, only to the extent not already reflected in the computation of the
aggregate principal balance of the loans, and unreimbursed expenses that are
reimbursable under the terms of the Issuing Agreement plus, in either case,
accrued interest thereon at the weighted average rate on the loans through the
last day of the remittance period in which the repurchase occurs; provided,
--------
however, that if an election is made for treatment as a REMIC under the Code,
- -------
the repurchase price may equal the greater of (a) 100% of the aggregate
principal balance of the loans, plus accrued interest thereon at the applicable
Net Loan Rates on the loans through the last day of the month of the repurchase
and (b) the aggregate fair market value of the loans plus the fair market value
of any property acquired in respect of a loan and remaining in the trust fund.
The exercise of this right will effect early retirement of the securities of a
series, but this entity's right to so purchase is subject to the aggregate
principal balance of the loans at the time of repurchase being less than a fixed
percentage, which shall not exceed 20%, to be stated in the Issuing Agreement,
of the aggregate principal balance of the loans as of the cut-off date.

Mandatory Termination; Auction Sale. The trustee, the servicer or the
originator may be required to effect early retirement of a series of securities
by soliciting competitive bids for the purchase of the trust fund.

The mandatory termination may take the form of an auction sale. Within a
particular period following the failure of the holder of the optional
termination right to exercise the right, the required party shall solicit bids
for the purchase of all loans remaining in the trust fund. In the event that
satisfactory bids, which would not be less than an amount necessary to pay all
principal and interest on the securities outstanding, are received as specified
in the Issuing Agreement, the net sale proceeds will be distributed to
securityholders, in the same order of priority as collections received on the
loans. If satisfactory bids are not received, this party shall decline to sell
the loans and shall not be under any obligation to solicit any further bids or
otherwise negotiate any further sale of the loans. This sale and consequent
termination of the trust fund must constitute a "qualified liquidation" of each
REMIC established by the issuer under Section 860F of the Code, including,
without limitation, the requirement that the qualified liquidation takes place
over a period not to exceed 90 days.

CERTAIN LEGAL ASPECTS OF THE LOANS

The following discussion contains summaries of particular legal aspects of
mortgage loans and manufactured housing contracts which are general in nature.
Because these legal aspects are governed by applicable state law, which laws may
differ substantially, the summaries do not purport to be complete nor to reflect
the laws of any particular state, nor to encompass the laws of all states in
which the security for the loans is situated. The summaries are qualified in
their entirety by reference to the applicable federal and state laws governing
the loans.

THE MORTGAGE LOANS

The mortgage loans will, in general, be secured by either first, second or
more junior mortgages, deeds of trust, or other similar security agreements
depending upon the prevailing practice in the state in which the underlying
property is located. A mortgage creates a lien upon the real property described
in the mortgage. There are two parties to a mortgage: the mortgagor, who is the

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borrower; and the mortgagee, who is the lender. In a mortgage state instrument,
the mortgagor delivers to the mortgagee a note or bond evidencing the loan and
the mortgage. Although a deed of trust is similar to a mortgage, a deed of
trust has three parties: a borrower called the trustor, who is similar to a
mortgagor, a lender called the beneficiary, who is similar to a mortgagee, and a
third-party grantee called the trustee. Under a deed of trust, the borrower
grant the property, irrevocably until the debt is paid, in trust, generally with
a power of sale, to the trustee to secure payment of the loan. The trustee's
authority under a deed of trust and the mortgage's authority under a mortgage
are governed by the express provisions of the deed of trust or mortgage,
applicable law, and, in some cases, with respect to the deed of trust, the
directions of the beneficiary.

The real property covered by a mortgage is most often the fee estate in
land and improvements. However, a mortgage may encumber other interests in real
property such as a tenant's interest in a lease of land or improvements, or
both, and the leasehold estate created by the lease. A mortgage covering an
interest in real property other than the fee estate requires special provisions
in the instrument creating the interest or in the mortgage to protect the
mortgagee against termination of the interest before the mortgage is paid.

Foreclosure

Foreclosure of a mortgage is generally accomplished by judicial action.
Generally, the action is initiated by the service of legal pleadings upon all
parties having an interest of record in the real property. Delays in completion
of the foreclosure occasionally may result from difficulties in locating
necessary parties defendant. When the mortgagee's right of foreclosure is
contested, the legal proceedings necessary to resolve the issue can be
time-consuming. After the completion of a judicial foreclosure proceeding, the
court may issue a judgment of foreclosure and appoint a receiver or other
officer to conduct the sale of the property. In some states, mortgages may also
be foreclosed by advertisement, by a power of sale provided in the mortgage.
Foreclosure of a mortgage by advertisement is essentially similar to foreclosure
of a deed of trust by nonjudicial power of sale.

Foreclosure of a deed of trust is generally accomplished by a non-judicial
trustee's sale under a specific provision in the deed of trust that authorizes
the trustee to sell the property to a third party upon any default by the
borrower under the terms of the note or deed of trust. In some states, this
foreclosure also may be accomplished by judicial action in the manner provided
for foreclosure of mortgages. In some states, the trustee must record a notice
of default and send a copy to the borrower-trustor and to any person who has
recorded a request for a copy of a notice of default and notice of sale. In
addition, the trustee must provide notice in some states to any other individual
having an interest of record in the real property, including any junior
lienholders. If the deed of trust is not reinstated within any applicable cure
period, a notice of sale must be posted in a public place and, in most states,
published for a specified period of time in one or more newspapers. In addition,
some state be laws require that a copy of the notice of sale be posted on the
property and sent to all parties having an interest of record in the property.

In some states, the borrower-trustor has the right to reinstate the loan at
any time following default until shortly before the trustee's sale. In general,
the borrower, or any other person having, a junior encumbrance on the real
estate, may, during a reinstatement period, cure the default by paying the
entire amount in arrears plus the costs and expenses incurred in enforcing the
obligation. Some state laws control the amount of foreclosure expenses and
costs, including attorneys' fees, which may be recovered by a lender.

In case of foreclosure under either a mortgage or a deed of trust, the sale
by the receiver or other designated officer, or by the trustee, is a public
sale. However, because of the difficulty a potential buyer at the sale would
have in determining the exact status of title and because the physical condition
of the

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property may have deteriorated during the foreclosure proceedings, it is
uncommon for a third party to purchase the property at the foreclosure sale.
Rather, it is common for the lender to purchase the property from the trustee or
receiver for an amount equal to the unpaid principal amount of the note, accrued
and unpaid interest and the expenses of foreclosure. Thereafter, subject to the
right of the borrower in some states to remain in possession during the
redemption period, the lender will assume the burdens of ownership, including
obtaining hazard insurance and making the repairs at its own expense as are
necessary to render the property suitable for sale. The lender commonly will
obtain the services of a real estate broker and pay the broker a commission in
connection with the sale of the property. Depending upon market conditions, the
ultimate proceeds of the sale of the property may not equal the lender's
investment in the property. Any loss may be reduced by the receipt of mortgage
insurance proceeds.

Foreclosure on Shares of Cooperatives

The cooperative shares owned by the tenant-stockholder and pledged to the
lender are, in almost all cases, subject to restrictions on transfer described
in the cooperative's certificate of incorporation and by-laws, as well as the
proprietary lease of occupancy agreement, and may be cancelled by the
cooperative for failure by the tenant-stockholder to pay rent or other
obligations or charges owed by the tenant-stockholder, including mechanics'
liens against the cooperative apartment building incurred by the
tenant-stockholder. The proprietary lease or occupancy agreement generally
permits the cooperative to terminate the 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 the 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 a sale of the cooperative apartment,
subject, however, to the cooperative's right to sums due under the proprietary
lease or occupancy agreement. The total amount owed to the cooperative by the
tenant-stockholder, which the lender generally cannot restrict and does not
monitor, could reduce the value of the collateral below the outstanding
principal balance of the cooperative loan and accrued and unpaid interest
thereon.

Recognition agreements also provide that in the event of a foreclosure on a
cooperative loan, the lender must obtain the approval or consent of the
cooperative as required by the proprietary lease before transferring the
cooperative shares or assigning the proprietary lease. Generally, the lender is
not limited in any rights it may have to dispossess the tenant-stockholders.

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.

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Article 9 of the UCC provides that the proceeds of the sale will be applied
first to pay the costs and expenses of the sale and then to satisfy the
indebtedness secured by the lender's security interest. The recognition
agreement, however, generally provides that the lender's right to reimbursement
is subject to the right of the cooperative corporation to receive sums due under
the proprietary lease or occupancy agreement. If there are proceeds remaining,
the lender must account to the tenant-stockholder for the surplus. Conversely,
if a portion of the indebtedness remains unpaid, the tenant-stockholder is
generally responsible for the deficiency. See "-Anti-Deficiency Legislation and
Other Limitations on Lenders" below.

Rights of Redemption

In some states, after sale in accordance with a deed of trust and/or
foreclosure of a mortgage, the borrower and particular foreclosed junior lienors
are given a statutory period in which to redeem the property from the
foreclosure sale. In most states where the right of redemption is available,
statutory redemption may occur upon payment of the foreclosure purchase price,
accrued interest and taxes. In some states, the right to redeem is an equitable
right. The effect of a right of redemption is to diminish the ability of the
lender to sell the foreclosed property. The exercise of a right of redemption
would defeat the title of any purchaser at a foreclosure sale, or of any
purchaser from the lender subsequent to judicial foreclosure or sale under a
deed of trust. Consequently, the practical effect of the redemption right is to
force the lender to maintain the property and pay the expenses of ownership
until the redemption period has run.

Junior Mortgages; Rights of Senior Mortgages

The mortgage loans are secured by mortgages or deeds of trust some of which
are junior to other mortgages or deeds of trust held by other lenders or
institutional investors. The rights of the Trust, and therefore the
securityholders, as mortgagee under a junior mortgage or beneficiary under a
junior deed of trust, are subordinate to those of the mortgagee under the senior
mortgage or beneficiary under the senior deed of trust, including the prior
rights of the senior mortgagee to receive hazard insurance and condemnation
proceeds and to cause the property securing the mortgage loan to be sold upon
default of the mortgagor or trustor, thereby extinguishing the junior
mortgagee's or junior beneficiary's lien unless the junior mortgagee or junior
beneficiary asserts its subordinate interest in the property in foreclosure
litigation and, possibly, satisfies the defaulted senior mortgage or deed of
trust. As discussed more fully below, a junior mortgagee or junior beneficiary
may satisfy a defaulted senior loan in full and, in some states, may cure the
default and loan. In most states, no notice of default is required to be given
to a junior mortgagee or junior beneficiary and junior mortgagees or junior
beneficiaries are seldom given notice of defaults or senior mortgages. In order
for a foreclosure action in some states to be effective against a junior
mortgagee or junior beneficiary, the junior mortgagee or junior beneficiary must
be named in any foreclosure action, thus giving notice to junior lienors. It is
standard practice of the originators to protect their interest by attending any
sale of which they have notice or appearing and bidding for, or redeeming, the
property if it is in their best interest to do so.

The standard form of the mortgage or deed of trust used by most
institutional lenders, including the originators, confers on the mortgagee or
beneficiary the right both to receive all proceeds collected under any hazard
insurance policy and all awards made in connection with any condemnation
proceedings, and to apply the proceeds and awards to any indebtedness secured by
the mortgage or deed of trust. Thus, in the event improvements on the property
are damaged or destroyed by fire or other casualty, or in the event the property
is taken by condemnation, the mortgagee or beneficiary under any underlying
senior mortgages will have the prior right to collect and apply any insurance
proceeds payable under a hazard insurance policy to restore or repair the
property if feasible, and to collect any remaining insurance proceeds or any
award of damages in

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connection with the condemnation and to apply the same to the indebtedness
secured by the senior mortgages or deeds of trust. Proceeds in excess of the
amount of senior mortgage indebtedness, in most cases, may be applied to the
indebtedness of a junior mortgage or trust deed.

The form of mortgage or deed of trust used by most institutional lenders
typically contains a "future advance" clause, which provides, in essence, that
additional amounts advanced to or on behalf of the mortgagor or trustor by the
mortgagee or beneficiary are to be secured by the mortgage or deed of trust. The
priority of any advance made under the clause depends, in some states, on
whether the advance was an "obligatory" or "optional" advance. If the mortgagee
or beneficiary is obligated to advance the additional amounts, the advance is
entitled to receive the same priority as amounts initially advanced under the
mortgage or deed of trust, notwithstanding the fact that there may be junior
mortgages or deeds of trust and other liens which intervene between the date of
recording of the mortgage or deed of trust and the date of the future advance,
and, in some states, notwithstanding that the mortgagee or beneficiary had
actual knowledge of the intervening junior mortgages or deeds of trust and other
liens at the time of the advance. Where the mortgagee or beneficiary is not
obligated to advance additional amounts or, in some states, has actual knowledge
of the intervening junior mortgages or deeds of trust and other liens, the
advance will be subordinate to the intervening junior mortgages or deeds of
trust and other liens. Priority of advances under a "future advance" cause
rests, in some states, on state statutes giving priority to all advances made
under the loan agreement to a "credit limit" amount stated in the recorded
mortgage.

Another provision sometimes included in the form of the mortgage or deed of
trust used by institutional lenders, and included in some of the forms used by
the originators, obligates the mortgagor or trustor to pay, before delinquency,
all taxes and assessments on the property and, when due, all encumbrances,
charges and liens on the property which appear prior to the mortgage or deed of
trust, to provide and maintain fire insurance on the property, to maintain and
repair the property and not to commit or permit any waste thereof, and to appear
in and defend any action or proceeding purporting to affect the property or the
rights of the mortgagee or beneficiary under the mortgage or deed of trust.
Upon a failure of the mortgagor or trustor to perform any of these obligations,
the mortgagee or beneficiary is given the right under some mortgages or deeds of
trust to perform the obligations itself, at its election, with the mortgagor or
trustor agreeing to reimburse the mortgagee or beneficiary for any sums expended
by the mortgagee or beneficiary on behalf of the mortgagor or trustor. All sums
so expended by the mortgagee or beneficiary become part of the indebtedness
secured by the mortgage or deed of trust.

Anti-Deficiency Legislation and Other Limitations on Lenders

Some states have imposed statutory restrictions that limit the remedies of
a beneficiary under a deed of trust or a mortgage under a mortgage. In some
states, statutes limit the right of the beneficiary or mortgagee to obtain a
deficiency judgment against the borrower following foreclosure or sale under a
deed of trust. A deficiency judgment is a personal judgment against the former
borrower equal in most cases to the difference between the amount due to the
lender and the net amount realized upon the foreclosure sale.

Some state statutes may require the beneficiary or mortgagee to exhaust the
security afforded under a deed of trust or mortgage by foreclosure in an attempt
to satisfy the full debt before bringing a personal action against the borrower.
In some other states, the lender has the option of bringing a personal action
against the borrower on the debt without first exhausting the security; however,
in some of these states, the lender, following judgment on the personal action,
may be deemed to have elected a remedy and may be precluded from exercising

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remedies with respect to the security. Consequently, the practical effect of
the election requirement, when applicable, is that lenders will usually proceed
first against the security rather than bringing a personal action against the
borrower.

Other statutory provisions may limit any deficiency judgment against the
former borrower following a foreclosure sale to the excess of the outstanding
debt over the fair market value of the property at the time of the sale. The
purpose of these statutes is to prevent a beneficiary or a mortgagee from
obtaining a large deficiency judgment against the former borrower as a result of
low or no bids at the foreclosure sale.

In some states, exceptions to the anti-deficiency statutes are provided for
in particular instances where the value of the lender's security has been
impaired by acts or omissions of the borrower, for example, in the event of
waste of the property.

Generally, Article 9 of the UCC governs foreclosure on cooperative shares
and the proprietary lease or occupancy agreement and foreclosure on the
beneficial interest in a land trust. Some courts have interpreted Section 9-504
of the UCC to prohibit a deficiency award unless the creditor establishes that
the sale of the collateral, which, in the case of a mortgage loan secured by
shares of a cooperative, would be the shares and the proprietary lease or
occupancy agreement, was conducted in a commercially reasonable manner.

In addition to anti-deficiency and similar legislation, numerous other
federal and state statutory provisions, including the federal bankruptcy laws,
the federal Soldiers' and Sailors' Civil Relief Act and state laws affording
relief to debtors, may interfere with or affect the ability of a secured
mortgage lender to realize upon its security. For example, in a Chapter 13
proceeding under the federal Bankruptcy Code, when a court determines that the
value of a home is less than the principal balance of the loan, the court may
prevent a lender from foreclosing on the home, and, as part of the
rehabilitation plan, reduce the amount of the secured indebtedness to the value
of the home as it exists at the time of the proceeding, leaving the lender as a
general unsecured creditor for the difference between that value and the amount
of outstanding indebtedness. A bankruptcy court may grant the debtor a
reasonable time to cure a payment default, and in the case of a mortgage loan
not secured by the debtor's principal residence, also may reduce the monthly
payments due under the mortgage loan, change the rate of interest and alter the
mortgage loan repayment schedule. Some court decisions have applied the relief
to claims secured by the debtor's principal residence.

The Code, provides priority to specified tax liens over the lien of the
mortgage or deed of trust. The laws of some states provide priority to these tax
liens over the lien of the mortgage of deed of trust. Some environmental
protection laws may also impose liability for cleanup expenses on owners by
foreclosure on real property, which liability may exceed the value of the
property involved. Numerous federal and some state consumer protection laws
impose substantive requirements upon mortgage lenders in connection with the
origination, servicing and the enforcement of mortgage loans. These laws include
the federal Truth in Lending Act, Real Estate Settlement Procedures Act, Equal
Credit Opportunity Act, Fair Credit Billing Act, Fair Credit Reporting Act, and
similar statutes and regulations. These federal laws and state laws impose
specific statutory liabilities upon lenders who originate or service mortgage
loans and who fail to comply with the provisions of the law. In some cases, this
liability may affect assignees of the mortgage loans.

"Due-on-Sale" Clauses

The forms of note, mortgage and deed of trust relating to conventional
mortgage loans may contain a "due-on-sale" clause permitting acceleration of the
maturity of a loan if the borrower transfers its interest in the property. In
recent years, court decisions and legislative actions placed substantial

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restrictions on the right of lenders to enforce the clauses in many states.
However, effective October 15, 1982, Congress enacted the Garn Act which
purports to preempt state laws which prohibit the enforcement of "due-on-sale"
clauses by providing among other matters, that "due-on-sale" clauses in some
loans, which loans may include the mortgage loans, made after the effective date
of the Garn Act are enforceable, within specified limitations as set forth in
the Garn Act and the regulations promulgated thereunder. "Due-on-sale" clauses
contained in mortgage loans originated by federal savings and loan associations
or federal savings banks are fully enforceable under regulations of the Office
of Thrift Supervision, as successor to the Federal Home Loan Bank Board, which
preempt state law restrictions on the enforcement of the clauses. Similarly,
"due-on-sale" clauses in mortgage loans made by national banks and federal
credit unions are now fully enforceable under preemptive regulations of the
Office of the Comptroller of the Currency and the National Credit Union
Administration, respectively.

The Garn Act created a limited exemption from its general rule of
enforceability for "due-on-sale" clauses in some "window period" mortgage loans
which were originated by non-federal lenders and made or assumed in some "window
period" states during the "window period," prior to October 15, 1982, in which
that state prohibited the enforcement of "due-on-sale" clauses by constitutional
provision, statute or statewide court decision. Though neither the Garn Act nor
the OTS regulations promulgated thereunder actually names the window period
states, FHLMC has taken the position, in prescribing mortgage loan servicing
standards with respect to mortgage loans which it has purchased, that the window
period states were: Arizona, Arkansas, California, Colorado, Georgia, Iowa,
Michigan, Minnesota, New Mexico, Utah and Washington. Under the Garn Act, unless
a window period state took action by October 15, 1985, the end of the window
period, to further regulate enforcement of "due-on-sale" clauses in window
period mortgage loans, "due-on-sale" clauses would become enforceable even in
window period loans. Five of the window period states, Arizona, Minnesota,
Michigan, New Mexico and Utah, have taken actions which restrict the
enforceability of "due-on-sale" clauses in window period loans beyond October
15, 1985. The actions taken vary among these states.

By virtue of the Garn Act, the servicer may generally be permitted to
accelerate any conventional mortgage loan which contains a "due-on-sale" clause
upon transfer of an interest in the property subject to the mortgage or deed of
trust. With respect to any mortgage loan secured by a residence occupied or to
be occupied by the borrower, this ability to accelerate will not apply to
particular types of transfers, including:

- the granting of a leasehold interest which has a term of three years
or less and which does not contain an option to purchase,

- a transfer to a relative resulting from the death of a borrower, or a
transfer where the spouse or children becomes an owner of the property
in each case where the transferee(s) will occupy the property,

- a number resulting from a decree of dissolution of marriage, legal
separation agreement or from an incidental property settlement
agreement by which the spouse becomes an owner of the property,

- the creation of a lien or other encumbrance subordinate to the
lender's security instrument which does not relate to a transfer of
rights of occupancy in the property; provided, that the lien or
--------
encumbrance is not created by a contract for deed,

- a transfer by devise, descent or operation of law on the death of a
joint tenant or tenant by the entirety, and

- other transfers as set forth in the Garn Act and the regulations
thereunder.

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The extent of the effect of the Garn Act on the average lives and
delinquency rates of the mortgage loans cannot be predicted. See "Prepayment
and Yield Considerations."

Applicability of Usury Laws

Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980, provides that state usury limitations shall not apply to specified
types of residential first mortgage loans originated by specified lenders after
March 31, 1980. The OTS is authorized to issue rules and regulations and to
publish interpretations governing implementation of Title V. The statute
authorized any state to reimpose interest rate limits by adopting before April
1, 1983, a law or constitutional provision which expressly rejects application
of the federal law. Fifteen states have adopted laws reimposing or reserving
the right to impose interest rate limits. In addition, even where Title V is
not so rejected, any state is authorized to adopt a provision limiting specified
other loan charges.

Unless otherwise specified in the accompanying prospectus supplement, the
originator will represent and warrant in the Loan Sale Agreement that all of the
mortgage loans were originated in full compliance with applicable state laws,
including usury laws. See "The Trust Funds-Representations and Warranties."
Adjustable Rate Loans

The laws of some states may provide that mortgage notes relating to
adjustable rate loans are not negotiable instruments under the UCC. In this
event, the trustee will not be deemed to be a "holder in due course" within the
meaning of the UCC and may take this mortgage note subject to a number of
restrictions on its ability to foreclose and to a number of contractual defenses
available to a mortgagor.

Enforceability of Certain Provisions

Standard forms of note, mortgage and deed of trust generally contain
provisions obligating the borrower to pay a late charge if payments are not
timely made and in some circumstances may provide for prepayment fees or
penalties if the obligation is paid prior to maturity. In some states, there
are or may be specific limitations upon late charges which a lender may collect
from a borrower for delinquent payments. Some states also limit the amounts
that a lender may collect from a borrower as an additional charge if the loan is
prepaid. Under the servicing agreement, late charges and prepayment fees, to
the extent permitted by law and not waived by the servicer, will be retained by
the servicer as additional servicing compensation.

Courts have applied general equitable principles upon foreclosure. These
equitable principles are generally designed to relieve the borrower from the
legal effect of defaults under the loan documents. Examples of judicial remedies
that may be fashioned include judicial requirements that the lender undertake
affirmative and expensive actions to determine the causes for the borrower's
default and the likelihood that the borrower will be able to reinstate the loan.
In some cases, courts have sustained their judgment for the lender's judgment
and have required lenders to reinstate loans or recast payment schedules to
accommodate borrowers who are suffering from temporary financial disability. In
some cases, courts have limited the right of lenders to foreclose if the default
under the mortgage instrument is not monetary, such as the borrower failing to
adequately maintain the property or the borrower executing a second mortgage or
deed of trust affecting the property. In other cases, some courts have been
faced with the issue whether federal or state constitutional provisions
reflecting due process concerns for adequate notice require that borrowers under
deeds of trust receive notices in addition to the statutorily-prescribed minimum
requirements. For the most part, these cases have upheld the notice provisions
as being reasonable or have found that the

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sale by a trustee under a deed of trust or under a mortgage having a power of
sale does not involve sufficient state action to afford constitutional
protections to the borrower.

THE CONTRACTS

As a result of the assignment of the contracts to the trustee, the trust
fund will succeed collectively to all of the rights, including the right to
receive payment on the contracts, and will assume the obligations of the obligee
under the 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 the loan. Particular
aspects of both features of the contracts are described more fully below.

The contracts generally are "chattel paper" as defined in the UCC in effect
in the states in which the manufactured homes initially were registered. Under
the UCC, the sale of chattel paper is treated in a manner similar to perfection
of a security interest in chattel paper. Under the servicing agreement, the
servicer will transfer physical possession of the contracts to the trustee or a
designated custodian or may retain possession of the contracts as custodian for
the trustee. In addition, the servicer will make an appropriate filing of a
UCC-1 financing statement in the appropriate states to give notice of the
trustee's ownership of the contracts. Unless otherwise specified in the
accompanying prospectus supplement, the contracts will not be stamped or marked
otherwise to reflect their assignment from the issuer to the trustee. Therefore,
if through negligence, fraud or otherwise, a subsequent purchaser were able to
take physical possession of the contracts without notice of the assignment, the
trustee's interest in contracts could be defeated.

Security Interests in the manufactured homes

Security interests in manufactured homes may be perfected either by
notation of the secured party's lien on the certificate of title or by delivery
of the required documents and payment of a fee to the state motor vehicle
authority, depending on state law. In some non-title states, perfection under
the provisions of the UCC is required. The servicer may effect the notation or
delivery of the required documents and fees, and obtain possession of the
certificate of title, as appropriate under the laws of the state in which any
manufactured home securing a manufactured housing conditional sales contract is
registered. In the event the servicer fails, due to clerical errors, to effect
the notation or delivery, or files the security interest under the wrong law,
the securityholders may not have a first priority security interest in the
manufactured home securing a contract. As manufactured homes have become larger
and often have been attached to their sites without any apparent intention to
move them, courts in many states have held that manufactured homes, under some
circumstances, may become subject to real estate title and recording laws. As a
result, a security interest in a manufactured home could be rendered subordinate
to the interests of other parties claiming an interest in the home under
applicable state real estate law. In order to perfect a security interest in a
manufactured home under real estate laws, the secured party must file either a
"fixture filing" under the provisions of the UCC or a real estate mortgage under
the real estate laws of the state where the home is located. These filings must
be made in the real estate records office of the county where the home is
located. Substantially all of the contracts contain provisions prohibiting the
borrower from permanently attaching the manufactured home to its site. So long
as the borrower does not violate this agreement, a security interest in the
manufactured home will be governed by the certificate of title laws or the UCC,
and the notation of the security interest on the certificate of title or the
filing of a UCC financing statement will be effective to maintain the priority
of the security interest in the manufactured home. If, however, a manufactured
home is permanently attached to its site, other parties could obtain an interest
in the manufactured home which is prior to the security interest originally
retained by the originator and transferred to the issuer. With respect to a
series of securities and if so described in the accompanying prospectus
supplement, the servicer may be required to perfect a security interest in the

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manufactured home under applicable real estate laws. The servicer will
represent that at the date of the initial issuance of the securities it has
obtained a perfected first priority security interest by proper notation or
delivery of the required documents and fees with respect to substantially all of
the manufactured homes securing the contracts.

The sponsor will cause the security interests in the manufactured homes to
be assigned to the trustee on behalf of the securityholders. Unless otherwise
specified in the accompanying prospectus supplement, neither the sponsor nor the
trustee will amend the securities of title to identify the trustee or the trust
fund as the new secured party, and neither the sponsor nor the servicer will
deliver the securities of title to the trustee or note thereon the interest of
the trustee. Accordingly, the servicer or the originator, which continue to be
named as the secured party on the securities of title relating to the
manufactured homes. In many states, the assignment is an effective conveyance of
the security interest without amendment of any lien noted on the certificate of
title and the new secured party succeeds to the issuer'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, the assignment of the security interest
in the manufactured home might not be effective or perfected or that, in the
absence of this notation or delivery to the trustee, the assignment of the
security interest in the manufactured home might not be effective against
creditors of the servicer, or the originator, or a trustee in bankruptcy of the
servicer, or the originator.

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 servicer or
the originator, on the certificate of title or delivery of the required
documents and fees will be sufficient to protect the securityholders against the
rights of subsequent purchasers of a manufactured home or subsequent lenders who
take a security interest in the manufactured home. If there are any manufactured
homes as to which the security interest assigned to the trustee is not
perfected, the security interest would be subordinate to, among others,
subsequent purchasers for value of manufactured homes and holders of perfected
security interests. There also exists a risk in not identifying the trustee as
the new secured party on the certificate of title that, through fraud or
negligence, the security interest of the securityholders could be released.

In the event that the owner of a manufactured home moves it to a state
other than the state in which the manufactured home initially is registered,
under the laws of most states the perfected security interest in the
manufactured home would continue for four months after relocation and thereafter
until the owner re-registers the manufactured home in this state. If the owner
were to relocate a manufactured home to another state and not re-register the
manufactured home in this state, and if steps are not taken to re-perfect the
trustee's security interest in this 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 the manufactured home or, in the case of manufactured homes
registered in states which provide for notation of lien, the 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. In
the ordinary course of servicing the manufactured housing conditional sales
contracts, the servicer takes steps to effect the re-perfection upon receipt of
notice of registration or information from the obligor as to relocation.
Similarly, when an obligor under a manufactured housing conditional sales
contract sells a manufactured home, the trustee or its designated custodian must
surrender possession of the certificate of title or the servicer will receive
notice as a result of its lien noted thereon and accordingly will have an

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opportunity to require satisfaction of the manufactured housing conditional
sales contract before release of the lien. Under the Servicing Agreement, the
servicer is obligated to take steps, at the 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 and liens for personal property taxes take priority over a
perfected security interest. The originator will represent in the Loan Sale
Agreement that it has no knowledge of any liens with respect to any manufactured
home securing payment on any contract. However, these liens could arise at any
time during the term of a contract. No notice will be given to the trustee or
securityholders in the event such a lien arises.

Enforcement of Security Interests in manufactured homes

The servicer on behalf of the trustee, to the extent required by the
Servicing 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 these defaulted contracts. So long as the
manufactured home has not become subject to the real estate law, a creditor can
repossess a manufactured home securing a contract by voluntary surrender, by
"self-help" repossession that is "peaceful" or, in the absence of voluntary
surrender and the ability to repossess without breach of the peace, by judicial
process. The holder of a contract must give the debtor a number of days'
notice, which varies from 10 to 30 days depending on the state, prior to
commencement of any repossession. The UCC and consumer protection laws in most
states place restrictions on repossession sales, including requiring prior
notice to the debtor and commercial reasonableness in effecting such a sale.
The law in most states also requires that the debtor be given notice of any sale
prior to resale of the unit so that the debtor may redeem at or before this
resale. In the event of a repossession and resale of a manufactured home, the
trustee would be entitled to be paid out of the sale proceeds before the
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, and in many
cases the defaulting borrower would have no assets with which to pay a judgment.

Some 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.

Consumer Protection Laws

The so-called "Holder-in-Due-Course" rule of the Federal Trade Commission
is intended to defeat the ability of the transferor of a consumer credit
contract which is the seller of goods which gave rise to the transaction, and
specified lenders and assignees, to transfer the contract free of notice of
claims by the debtor thereunder. The effect of this rule is to subject the
assignee of such a contract to all claims and defenses which the debtor could
assert against the seller of goods. Liability under this rule is limited to
amounts paid under a contract; however, the obligor also may be able to asset
the rule to set off remaining amounts due as a defense against a claim brought
by the trustee against the obligor. Numerous other federal and state consumer
protection laws impose requirements applicable to the origination and lending
under the contracts, including the Truth in Lending Act, the Federal Trade
Commission Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the
Equal Credit Opportunity Act, the Fair Debt Collection Practices Act and the

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Uniform Consumer Credit Code. In the case of some of these laws, the
failure to comply with their provisions may affect the enforceability of the
contract. Transfers of manufactured homes; Enforceability of "Due-on-Sale"
Clauses

The contracts, in general, prohibit the sale or transfer of the
manufactured homes without the consent of the servicer and permit the
acceleration of the maturity of the contracts by the servicer upon any sale or
transfer that is not consented to.

In the case of a transfer of a manufactured home after which the servicer
desires to accelerate the maturity of the contract, the servicer's ability to do
so will depend on the enforceability under state law of the "due-on-sale"
clause. The Garn Act preempts, subject to a number of exceptions and conditions,
state laws prohibiting enforcement of "due-on-sale" clauses applicable to the
manufactured homes. Consequently, in some states the servicer may be prohibited
from enforcing a "due-on-sale" clause on some manufactured homes.

Applicability of Usury Laws

Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980 provides that, subject to the following conditions, state usury
limitations shall not apply to any loan which is secured by a first lien on
particular kinds of manufactured housing. The contracts would be covered if
they satisfy a number of conditions, among other things, governing the terms of
any prepayments, late charges and deferral fees and requiring a 30-day notice
period prior to instituting any action leading to repossession of the unit.

Title V authorized any state to reimpose limitations on interest rates and
finance charges by adopting before April 1, 1983 a law or constitutional
provision which expressly rejects application of the federal law. Fifteen states
adopted such a law prior to the April 1, 1983 deadline. In addition, even where
Title V was not so rejected, and state is authorized by the law to adopt a
provision limiting discount points or other charges on loans covered by Title V.
The originator will represent that all of the contracts comply with applicable
usury law.

Formaldehyde Litigation with Respect to Contracts

A number of lawsuits have been brought in the United States alleging
personal injury from exposure to the chemical formaldehyde, which is preset in
many building materials, including the components of manufactured housing as
plywood flooring and wall paneling. Some of these lawsuits were brought against
manufacturers of manufactured housing, suppliers of component parts, and persons
in the distribution process. The sponsor is aware of a limited number of cases
in which plaintiffs have won judgments in these lawsuits.

The holder of any contract secured by a manufactured home with respect to
which a formaldehyde claim has been successfully asserted may be liable to the
obligor for the amount paid by the obligor on the contract and may be unable to
collect amounts still due under the contract. The successful assertion of the
claim constitutes a breach of a representation or warranty of the person
specified in the accompanying prospectus supplement, and the securityholders
would suffer a loss only to the extent that (i) this person breached its
obligation to repurchase the contract in the event an obligor is successful in
asserting such a claim, and (ii) this person, the servicer or the trustee were
unsuccessful in asserting any claim of contribution or subrogation on behalf of
the securityholders against the manufacturer or other persons who were directly
liable to the plaintiff for the damages. Typical products liability insurance
policies held by manufacturers and component suppliers of manufactured homes may
not cover liabilities arising from formaldehyde in manufactured housing, with
the result that recoveries from the manufacturers, suppliers or other persons
may be limited to their corporate assets without the benefit of insurance.

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INSTALLMENT CONTRACTS

The loans may also consist of installment contracts. Under an installment
contract the lender retains legal title to the property and enters into an
agreement with the borrower for the payment of the purchase price, plus
interest, over the term of the contract. Only after full performance by the
borrower of the contract is the lender obligated to convey title to the real
estate to the purchaser. As with mortgage or deed of trust financing, during
the effective period of the Installment contract, the borrower is generally
responsible for maintaining the property in good condition and for paying real
estate taxes, assessments and hazard insurance premiums associated with the
property.

The method of enforcing the rights of the lender under an installment
contract varies on a state-by-state basis depending upon the extent to which
state courts are willing, or able under state statute, to enforce the contract
strictly according to the terms. The terms of installment contracts generally
provide that upon a default by the borrower, the borrower loses his or her right
to occupy the property, the entire indebtedness is accelerated, and the buyer's
equitable interest in the property is forfeited. The lender in such a situation
does not have to foreclosure in order to obtain title to the property, although
in some cases a quiet title action is in order if the borrower has filed the
Installment contract in local land records and an ejectment action may be
necessary to recover possession. In a few states, particularly in cases of
borrower default during the early years of an installment contract, the courts
will permit ejectment of the buyer and a forfeiture of his or her interest in
the property. However, most state legislatures have enacted provisions by
analogy to mortgage law protecting borrowers under installment contracts from
the harsh consequences of forfeiture. Under these statutes, a judicial or
nonjudicial foreclosure may be required, the lender may be required to give
notice of default and the borrower may be granted some grace period during which
the contract may be reinstated upon full payment of the default amount and the
borrower may have a post-foreclosure statutory redemption right. In other
states, courts in equity may permit a borrower with significant investment in
the property under an Installment contract for the sale of real estate to share
in the proceeds of sale of the property after the indebtedness is repaid or may
otherwise refuse to enforce the forfeiture clause. Nevertheless, generally
speaking, the lender's procedures for obtaining possession and clear title under
an Installment contract for the sale of real estate in a given state are simpler
and less time-consuming and costly than are the procedures for foreclosing and
obtaining clear title to a mortgaged property.

Environmental Risks

Real property pledged for a loan as security to a lender may be subject to
unforeseen environmental risks. Of particular concern may be those mortgaged
properties which have been the site of manufacturing, industrial or disposal
activity. These environmental risks may give rise to (a) a diminution in value
of property securing any loan or the inability to foreclose against the property
or (b) in some circumstances as more fully described below, liability for
clean-up costs or other remedial actions, which liability could exceed the value
of the property or the principal balance of the loan.

Under the laws of some states, failure to perform the remediation required
or demanded by the state of any environmental condition or circumstance that

- may pose an imminent or substantial endangerment to the public health
or welfare or the environment,

- may result in a release or threatened release of any hazardous
material,

- may give rise to any environmental claim or demand, or

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- may give rise to a lien on the property to ensure the reimbursement of
remedial costs incurred by the state to remedy the environmental
condition.

In several states these liens have priority over the lien of an existing
mortgage against the property. The value of a mortgaged property as collateral
for a loan could therefore be adversely affected by the existence of any
environmental condition.

The state of the law is currently unclear as to whether and under what
circumstances clean-up costs, or the obligation to take remedial actions, could
be imposed on a secured lender such as the trust fund. Under the laws of some
states and under the CERCLA, a lender may be liable as an "owner or operator"
for costs of addressing releases or threatened releases of hazardous substances
on a mortgaged property if the lender or its agents or employees have
participated in the management of the operations of the borrower, even though
CERCLA's definition of "owner or operator," however, is a person "who without
participating in the management of the facility, holds indicia of ownership
primarily to protect his security interest". This exemption for holders of a
security interest such as a secured lender applies only when the lender seeks to
protect its security interest in the contaminated facility or property. Thus, if
a lender's activities begin to encroach on the actual management of the facility
or property, the lender faces potential liability as an "owner or operator"
under CERCLA. Similarly, when a lender forecloses and takes title to a
contaminated facility or property, whether it holds the facility or property as
an investment or leases it to a third party, the lender may incur potential
CERCLA liability.

A decision in May 1990 of the United States Court of Appeals for the
Eleventh Circuit in United States v. Fleet Factors Corp. very narrowly contained
CERCLA's secured-creditor exemption. The court held that a lender need not have
involved itself in the day-to-day operations of the facility or participated in
decisions relating to hazardous waste to be liable under CERCLA; rather,
liability could attach to a lender if its involvement with the management of the
facility is broad enough to support the inference that the lender had the
capacity to influence the borrower's treatment of hazardous waste. The court
added that a lender's capacity to influence the decisions could be inferred from
the extent of its involvement in the facility's financial management. A
subsequent decision by the United States Court of Appeals for the Ninth Circuit
in In re Bergsoe Metal Corp., disagreeing with the Fleet Factors court, held
that a secured lender had no liability absent "some actual management of the
facility" on the part of the lender. On April 29, 1992, the United States
Environmental Protection Agency issued a final rule interpreting and delineating
CERCLA's secured-creditor exemption. The final rule defines a specific the range
of permissible actions that may be undertaken by a holder of a contaminated
facility without exceeding the bounds of the secured-creditor exemption.
Issuance of this rule by the EPA under CERCLA would not necessarily affect the
potential for liability in actions by either a state or a private party under
CERCLA or in actions under other federal or state laws which may impose
liability on "owners or operators" but do not incorporate the second-creditor
exemption.

If a lender is or becomes liable for clean-up costs, it may bring an action
for contribution against the current owners or operators, the owners or
operators at the time of on-site disposal activity or any other party who
contributed to the environmental hazard, but these persons or entities may be
bankrupt or otherwise judgment proof. Furthermore, this action against the
borrower may be adversely affected by the limitations on recourse in the
documents in the loan document file. Similarly, in some states anti-deficiency
legislation and other statues requiring the lender to exhaust its security
before bringing a personal action against the borrower-trustor may curtail the
lender's ability to recover from its borrower the environmental clean-up and
other costs and liabilities by the lender. See "-Anti-Deficiency Legislation and
Other Limitations on Lenders".

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SOLDIERS' AND SAILORS' CIVIL RELIEF ACT

Generally, under the terms of the Soldiers' and Sailors' Civil Relief Act
of 1940, a borrower who enters military service after the origination of the
borrower's loan, including a borrower who is a member of the National Guard or
is in reserve status at the time of the origination of the loan and is later
called to active duty, may not be charged interest above an annual rate of 6%
during the period of the borrower's active duty status, unless a court orders
otherwise upon application of the lender. It is possible that this action could
have an effect, for an indeterminate period of time, on the ability of the
servicer to collect full amounts of interest on some of the loans in a trust
fund. Any shortfall in interest collections resulting from the application of
the Soldiers' and Sailors' Civil Relief Act could result in losses to the
holders of the securities of the series. In addition, the Soldiers' and
Sailors' Civil Relief Act imposes limitations which would impair the ability of
the servicer to foreclose on an affected loan during the borrower's period of
active duty status. Thus, in the event that such a loan goes into default,
there may be delays and losses occasioned by the inability to realize upon the
mortgaged property or manufactured home in a timely fashion.

TYPE OF MORTGAGED PROPERTY

The lender may be subject to additional risk depending upon the type and
use of the mortgaged property in question. For instance, mortgaged properties
which are hospitals, nursing homes or convalescent homes may present special
risks to lenders in large part due to significant governmental regulation of the
operation, maintenance, control and financing of health care institutions.
Mortgages on mortgaged properties which are owned by the borrower under a
condominium form of ownership are subject to the declaration, by-laws and other
rules and regulations of the condominium association. mortgaged properties
which are hotels or motels may present additional risk to the lender in that:
(x) hotels and motels are typically operated in accordance with franchise,
management and operating agreements which may be terminable by the operator; and
(y) the transferability of the hotel's operating, liquor and other licenses to
the entity acquiring the hotel either through purchase or foreclosure is subject
to the vagaries of local law requirements. In addition, mortgaged properties
which are multifamily residential properties may be subject to rent control
laws, which could impact the future cash flows of these properties. Finally,
mortgaged properties which are financed in the installment sales contract method
may leave the holder of the note exposed to tort and other claims as the true
owner of the property which could impact the availability of cash to pass
through to investors.

CERTAIN MATTERS RELATING TO INSOLVENCY

The originator, the issuer and the sponsor intend that the transfer of the
loans to the issuer constitute a sale rather for a pledge of the loans to secure
indebtedness of the originator. However, if the originator were to become a
debtor under the federal bankruptcy code or be placed in a conservatorship or
receivership under FIRREA, as the case may be, it is possible that a creditor,
receiver, conservator or trustee-in-bankruptcy of the originator may argue that
the sale of the loans by the originator is a pledge of the loans rather than a
sale. This position, if argued or accepted by a court, could result in a delay
in or reduction of distributions to the securityholders.

Under FIRREA, the FDIC as receiver or conservator of a servicer subject to
its jurisdiction may enforce a contract notwithstanding any provision of the
contract providing for termination thereof by reason of the insolvency of, or
appointment of a receiver or conservator for, the servicer. Consequently,
provisions in a Servicing Agreement providing for an Event of Default upon
specified events of insolvency, receivership or conservatorship of the servicer
may not be enforceable against the FDIC as receiver or conservator to the extent
that the exercise of these rights is based solely upon the insolvency of or

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appointment of a receiver or conservator for the servicer. In addition, the
FDIC may transfer the assets and liabilities of an institution in receivership
or conservatorship to another institution.

BANKRUPTCY LAWS

Numerous statutory provisions, including the federal bankruptcy laws and
state laws affording relief to debtors, may interfere with or affect the ability
of the secured mortgage lender to obtain payment of the loan, to realize upon
collateral and/or enforce a deficiency judgment. For example, under federal
bankruptcy law, virtually all actions, including foreclosure actions and
deficiency judgment proceedings, are automatically stayed upon the filing of the
bankruptcy petition, and, often, no interest or principal payments are made
during the course of the bankruptcy proceeding. The delay and the consequences
thereof caused by or on behalf of a junior lienor may stay the senior lender
from taking action to foreclose out the junior lien. In a case under the
Bankruptcy Code, the lender is precluded from foreclosing without authorization
from the bankruptcy court. In addition, a court with federal bankruptcy
jurisdiction may permit a debtor through his or her Chapter 11 or Chapter 13
rehabilitative plan to cure a monetary default on a mortgage loan on the
debtor's residence by paying arrearage within a reasonable time period and
reinstating the original mortgage loan payment schedule even though the lender
accelerated the mortgage loan and final judgment of foreclosure had been entered
in state court, provided no sale of the residence had yet occurred, prior to the
filing of the debtor's petition. Some courts with federal bankruptcy
jurisdiction have approved plans, based on the particular facts of the
reorganization case, that effected the curing of a mortgage loan default by
paying arrearages over a number of years.

Courts with federal bankruptcy jurisdiction have also indicated that the
terms of a mortgage loan secured by property of the debtor may be modified.
These courts have suggested that the modifications may include reducing the
amount of each monthly payment, changing the rate of interest, altering the
repayment schedule, and reducing the lender's security interest to the value of
the residence, thus leaving the lender in the position of a general unsecured
creditor for the difference between the value of the residence and the
outstanding balance of the loan.

Federal bankruptcy law may also interfere with or affect the ability of the
secured mortgage lender to enforce an assignment by a mortgagor of rent and
leases on the mortgaged property if the mortgagor is in a bankruptcy proceeding.
Under Section 362 of the Bankruptcy Code, the mortgagee will be stayed from
enforcing the assignment, and the legal proceedings necessary to resolve the
issue can be time-consuming and may result in significant delays in the receipt
of the rents. Rents may also escape an assignment thereof

- if the assignment is not fully perfected under state law prior to
commencement of the bankruptcy proceeding,

- to the extent these rents are used by the borrower to maintain the
mortgaged property, or for other court authorized expenses, or

- to the extent other collateral may be substituted for the rents.

To the extent a mortgagor's ability to make payment on a mortgage loan is
dependent on payments under a lease of the property, the ability may be impaired
by the commencement of a bankruptcy proceeding relating to a lessee under the
lease. Under the federal bankruptcy laws, the filing of a petition in
bankruptcy by or on behalf of a lessee results in a stay in bankruptcy against
the commencement or continuation of any state court proceeding for past due
rent, for accelerated rent, for damages or for a summary eviction order with
respect to a default under the lease that occurred prior to the filing of the
lessee's petition.

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In addition, federal bankruptcy law generally provides that a trustee or
debtor in possession in a bankruptcy or reorganization case under the Bankruptcy
Code may, subject to approval of the court (a) assume the lease and retain it or
assign it to a third party or (b) reject the lease. If the lease is assumed, the
trustee or debtor in possession, or assignee, if applicable, must cure any
defaults under the lease, compensate the lessor for its losses and provide the
lessor with "adequate assurance" of future performance. These remedies may be
insufficient, however, as the lessor may be forced to continue under the lease
with a lessee that is a poor credit risk or an unfamiliar tenant if the lease
was assigned, and any assurances provided to the lessor may, in fact, be
inadequate. Furthermore, there is likely to be a period of time between the date
upon which a lessee files a bankruptcy petition and the date upon which the
lease is assumed or rejected. Although the lessee is obligated to make all lease
payments currently with respect to the post-petition period, there is a risk
that the payments will not be made due to the lessee's poor financial condition.
If the lease is rejected, the lessor will be treated as an unsecured creditor
with respect to its claim for damages for termination of the lease and the
mortgagor must release the mortgage property before the flow of lease payments
will recommence. In addition, under Section 502(b)(6) of the Bankruptcy Code, a
lessor's damages for lease rejection are limited by a formula.

In a bankruptcy or similar proceeding, action may be taken seeking the
recovery as a preferential transfer to the trust fund of any payments made by
the mortgagor under the mortgage loan. Moreover, some recent court decisions
suggest that even a non-collusive, regularly conducted foreclosure sale may be
challenged in a bankruptcy proceeding as a "fraudulent conveyance," regardless
of the parties' intent, if a bankruptcy court determines that the mortgaged
property has been sold for less than fair consideration while the mortgagor was
insolvent and within one year, or within any longer state statutes of
limitations if the trustee in bankruptcy elects to proceed under state
fraudulent conveyance law, of the filing of bankruptcy.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

The following is a discussion of the material federal income tax
consequences to investors of the purchase, ownership and disposition of the
securities offered hereby. The discussion is based upon laws, regulations,
rulings and decisions now in effect, all of which are subject to change. The
discussion below does not purport to deal with all federal tax consequences
applicable to all categories of investors, some of which may be subject to
special rules. Investors are urged to consult their own tax advisors in
determining the particular federal, state and local consequences to them of the
purchase, ownership and disposition of the securities.

The following discussion addresses securities of five general types:

- Grantor Trust Securities,

- REMIC Securities,

- Debt Securities,

- Partnership Interests, and

- FASIT Securities.

The prospectus supplement for each series of securities will indicate
whether a REMIC or FASIT election(s) will be made for the trust and, if a REMIC
or FASIT election is to be made, will identify all "regular interests" and
"residual interests" in the REMIC or all "regular interests," "high-yield
interests" and the "ownership interest" in the FASIT.

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The Taxpayer Relief Act of 1997 adds provisions to the Code that require
the recognition of gain upon the "constructive sale of an appreciated financial
position." A constructive sale of an appreciated financial position occurs if a
taxpayer enters into particular transactions or series of transactions with
respect to a financial instrument that have the effect of substantially
eliminating the taxpayer's risk of loss and opportunity for gain with respect to
the financial instrument. These provisions apply only to classes of securities
that do not have a principal balance.

GRANTOR TRUST SECURITIES

With respect to each series of Grantor Trust Securities, special tax
counsel to the sponsor, will deliver its opinion to the sponsor that the trust
will be classified as a grantor trust and not as an association taxable as a
corporation. This opinion shall be attached on Form 8-K to be filed with the
Securities and Exchange Commission within fifteen days after the initial
issuance of the securities or filed with the Commission as a post-effective
amendment to the prospectus. Accordingly, each beneficial owner of a Grantor
Trust Security will generally be treated as the owner of an interest in the
loans included in the grantor trust.

Special Tax Attributes

Unless otherwise disclosed in a accompanying prospectus supplement, special
tax counsel to the sponsor, will deliver its opinion to the sponsor that (a)
Grantor Trust Fractional Interest Securities will represent interests in (x)
"loans secured by an interest in real property" within the meaning of section
7701(a)(19)(C)(v) of the Code; and (y) "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; and (b) interest on Grantor Trust Fractional Interest Securities will be
considered "interest on obligations secured by mortgages on real property or on
interests in real property" within the meaning of Section 856(c)(3)(B) of the
Code. In addition, the Grantor Trust Strip Securities will be "obligations
(including any participation or certificate of beneficial ownership therein)
principally secured by an interest in real property" within the meaning of
Section 860G(a)(3)(A) of the Code. We will file this opinion with the
Securities and Exchange Commission on Form 8-K within fifteen (15) days after
the initial issuance of the securities or as a post-effective amendment to the
prospectus.

Taxation of Beneficial Owners of Grantor Trust Securities

Beneficial owners of Grantor Trust Fractional Interest Securities generally
will be required to report on their federal income tax returns their respective
shares of the income from the loans, including amounts used to pay reasonable
servicing fees and other expenses but excluding amounts payable to beneficial
owners of any corresponding Grantor Trust Strip Securities, and, subject to the
limitations described below, will be entitled to deduct their shares of any
reasonable servicing fees and other expenses. If a beneficial owner acquires a
Grantor Trust Fractional Interest Security for an amount that differs from its
outstanding principal amount, the amount includible in income on a Grantor Trust
Fractional Interest Security may differ from the amount of interest
distributable thereon. See "-Discount and Premium," below. Individuals holding
a Grantor Trust Fractional Interest Security directly or through certain
pass-through entities will be allowed a deduction for reasonable servicing fees
and expenses only to the extent that the aggregate of the beneficial owner's
miscellaneous itemized deductions exceeds 2% of the beneficial owner's adjusted
gross income. Further, beneficial owners, other than corporations, subject to
the alternative minimum tax may not deduct miscellaneous itemized deductions in
determining alternative minimum taxable income.

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Beneficial owners of Grantor Trust Strip Securities generally will be
required to treat the securities as "stripped coupons" under Section 1286 of the
Code. Accordingly, such a beneficial owner will be required to treat the excess
of the total amount of payments on such a security over the amount paid for the
security as original issue discount and to include the discount in income as it
accrues over the life of the security. See "-Discount and Premium," below.

Grantor Trust Fractional Interest Securities may also be subject to the
coupon stripping rules if a class of Grantor Trust Strip Securities is issued as
part of the same series of securities. The consequences of the application of
the coupon stripping rules would appear to be that any discount arising upon the
purchase of such a security, and perhaps all stated interest thereon, would be
classified as original issue discount and includible in the beneficial owner's
income as it accrues, regardless of the beneficial owner's method of accounting,
as described below under "-Discount and Premium." The coupon stripping rules
will not apply, however, if (x) the pass-through rate is no more than 100 basis
points lower than the gross rate of interest payable on the underlying loans and
(y) the difference between the outstanding principal balance on the security and
the amount paid for the security is less than 0.25% of the principal balance
times the weighted average remaining maturity of the security.

Sales of Grantor Trust Securities

Any gain or loss recognized on the sale of a Grantor Trust Security, which
is equal to the difference between the amount realized on the sale and the
adjusted basis of the Grantor Trust Security, will be capital gain or loss,
except to the extent of accrued and unrecognized market discount, which will be
treated as ordinary income, and in the case of banks and other financial
institutions except as provided under Section 582(c) of the Code. The adjusted
basis of a Grantor Trust Security will generally equal its cost, increased by
any income reported by the originator, including original issue discount and
market discount income, and reduced, but not below zero, by any previously
reported losses, any amortized premium and by any distributions of principal.

Grantor Trust Reporting

The trustee will furnish to each beneficial owner of a Grantor Trust
Fractional Interest Security with each distribution a statement setting forth
the amount of the distribution allocable to principal on the underlying loans
and to interest thereon at the interest rate attributable to the security. In
addition, within a reasonable time after the end of each calendar year, based on
information provided by the servicer, the trustee will furnish to each
beneficial owner during the year such customary factual information as the
servicer deems necessary or desirable to enable beneficial owners of Grantor
Trust Securities to prepare their tax returns and will furnish comparable
information to the Internal Revenue Service as and when required to do so by
law.

REMIC SECURITIES

If provided in a accompanying prospectus supplement, an election will be
made to treat an issuer as a REMIC under the Code. Qualification as a REMIC
requires ongoing compliance with a number of conditions. With respect to each
series of securities for which such an election is made, special tax counsel to
the sponsor, will deliver its opinion to the sponsor that, assuming compliance
with the Issuing Agreement, the issuer will be treated as a REMIC for federal
income tax purposes. We will file this opinion with the Commission on Form 8-K
within fifteen days after the initial issuance of the securities or as a
post-effective amendment to the prospectus.

A REMIC Trust will not be subject to federal income tax except with respect
to income from prohibited transactions and in particular other instances
described below. See "-Taxes on a REMIC Trust." Generally, the total income from
the loans in a REMIC Trust will be taxable to the beneficial owners of the
securities of that series, as described below.

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The REMIC Regulations provide some guidance regarding the federal income
tax consequences associated with the purchase, ownership and disposition of
REMIC Securities. While a number of material provisions of the REMIC Regulations
are discussed below, investors should consult their own tax advisors regarding
the possible application of the REMIC Regulations in their specific
circumstances.

Special Tax Attributes

REMIC Regular Securities and REMIC Residual Securities will be "regular or
residual interests in a REMIC" within the meaning of Section 7701(a)(19)(C)(xi)
of the Code and "real estate assets" within the meaning of Section 856(c)(5)(A)
of the Code. If at any time during a calendar year less than 95% of the assets
of a REMIC Trust consist of "qualified mortgages", within the meaning of Section
860G(a)(3) of the Code, then the portion of the REMIC Regular Securities and
REMIC Residual Securities that are qualifying assets under those Sections during
the calendar year may be limited to the portion of the assets of the REMIC Trust
that are qualified mortgages. Similarly, income on the REMIC Regular Securities
and REMIC Residual Securities will be treated as "interest on obligations
secured by mortgages on real property" within the meaning of Section
856(c)(3)(B) of the Code, subject to the same limitation described in the
preceding sentence. For purposes of applying this limitation, a REMIC Trust
should be treated as owning the assets represented by the qualified mortgages.
The assets of the trust fund will include, in addition to the loans, payments on
the loans held pending distribution on the REMIC Regular Securities and REMIC
Residual Securities and any reinvestment income thereon. REMIC Regular
Securities and REMIC Residual Securities held by a financial institution to
which Section 585, 586 or 593 of the Code applies will be treated as evidences
of indebtedness for purposes of Section 582(c)(1) of the Code. REMIC Regular
Securities will also be qualified mortgages with respect to other REMICs and
FASITs.

Taxation of Beneficial Owners of REMIC Regular Securities

Except as indicated below in this federal income tax discussion, the REMIC
Regular Securities will be treated for federal income tax purposes as debt
instruments issued by the REMIC Trust on the Settlement Date and not as
ownership interests in the REMIC Trust or its assets. Beneficial owners of
REMIC Regular Securities that otherwise report income under a cash method of
accounting will be required to report income with respect to the securities
under an accrual method. For additional tax consequences relating to REMIC
Regular Securities purchased at a discount or with premium, see "-Discount and
Premium," below.

Taxation of Beneficial Owners of REMIC Residual Securities

Daily Portions. Except as indicated below, a beneficial owner of a REMIC
Residual Security for a REMIC Trust generally will be required to report its
daily portion of the taxable income or net loss of the REMIC Trust for each day
during a calendar quarter that the beneficial owner owned the REMIC Residual
Security. For this purpose, the daily portion shall be determined by allocating
to each day in the calendar quarter its ratable portion of the taxable income or
net loss of the REMIC Trust for the quarter and by allocating the amount so
allocated among the beneficial owners of REMIC Residual Securities on this day
in accordance with their percentage interests on this day. Any amount included
in the gross income or allowed as a loss of any beneficial owner of this REMIC
Residual Security by virtue of this paragraph will be treated as ordinary income
or loss.

The requirement that each beneficial owner of a REMIC Residual Security
report its daily portion of the taxable income or net loss of the REMIC Trust
will continue until there are no securities of any class outstanding, even
though the

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beneficial owner of the REMIC Residual Security may have received full payment
of the stated interest and principal on its REMIC Residual Security.

The trustee will provide to beneficial owners of REMIC Residual Securities
of each series of securities (x) the information as is necessary to enable them
to prepare their federal income tax returns and (y) any reports regarding the
securities of a series that may be required under the Code.

Taxable Income or Net Loss of a REMIC Trust. The taxable income or net loss
of a REMIC Trust will be the income from the qualified mortgages it holds and
any reinvestment earnings less deductions allowed to the REMIC Trust. This
taxable income or net loss for a given calendar quarter will be determined in
the same manner as for an individual having the calendar year as the taxable
year and using the accrual method of accounting, with specified modifications.
The first modification is that a deduction will be allowed for accruals of
interest, including any original issue discount, but without regard to the
investment interest limitation in Section 163(d) of the Code, on the REMIC
Regular Securities, but not the REMIC Residual Securities, even though REMIC
Regular Securities are for non-tax purposes evidences of beneficial ownership
rather than indebtedness of a REMIC Trust. Second, market discount or premium
equal to the difference between the total stated principal balances of the
qualified mortgages and the basis to the REMIC Trust in the qualified mortgages
generally will be included in income, in the case of discount, or deductible, in
the case of premium, by the REMIC Trust as it accrues under a constant yield
method, taking into account the Prepayment Assumption. See "-Discount and
Premium-Original Issue Discount," below. The basis to a REMIC Trust in the
qualified mortgages is the aggregate of the issue prices of all the REMIC
Regular Securities and REMIC Residual Securities in the REMIC Trust on the
Settlement Date. If, however, a substantial amount of a class of REMIC Regular
Securities or REMIC Residual Securities has not been sold to the public, then
the fair market value of all the REMIC Regular Securities or REMIC Residual
Securities in that class as of the date of the prospectus supplement should be
substituted for the issue price.

The third modification is that no item of income, gain, loss or deduction
allocable to a prohibited transaction will be taken into account. See "-Taxes on
a REMIC Trust-Prohibited Transactions" below. Fourth, a REMIC Trust generally
may not deduct any item that would not be allowed in calculating the taxable
income of a partnership by virtue of Section 703(a)(2) of the Code. Finally, the
limitation on miscellaneous itemized deductions imposed on individuals by
Section 67 of the Code will not be applied at the REMIC Trust level to any
servicing and guaranty fees. See, however, "-Pass-Through of Servicing and
Guaranty Fees to Individuals" below. In addition, under the REMIC Regulations,
any expenses that are incurred in connection with the formation of a REMIC Trust
and the issuance of the REMIC Regular Securities and REMIC Residual Securities
are not treated as expenses of the REMIC Trust for which a deduction is allowed.
If the deductions allowed to a REMIC Trust exceed its gross income for a
calendar quarter, the excess will be a net loss for the REMIC Trust for that
calendar quarter. The REMIC Regulations also provide that any gain or loss to a
REMIC Trust from the disposition of any asset, including a qualified mortgage or
"permitted investment", as defined in Section 860G(a)(5) of the Code, will be
treated as ordinary gain or loss.

A beneficial owner of a REMIC Residual Security may be required to
recognize taxable income without being entitled to receive a corresponding
amount of cash. This could occur, for example, if the qualified mortgages are
considered to be purchased by the REMIC Trust at a discount, some or all of the
REMIC Regular Securities are issued at a discount, and the discount included as
a result of a prepayment on a loan that is used to pay principal on the REMIC
Regular Securities exceeds the REMIC Trust's deduction for unaccrued original
issue discount relating to the REMIC Regular Securities. Taxable income may also
be

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greater in earlier years because interest expense deductions, expressed as a
percentage of the outstanding principal amount of the REMIC Regular Securities,
may increase over time as the earlier classes of REMIC Regular Securities are
paid, whereas interest income with respect to any given loan expressed as a
percentage of the outstanding principal amount of that loan, will remain
constant over time.

Basis Rules and Distributions. A beneficial owner of a REMIC Residual
Security has an initial basis in its security equal to the amount paid for the
REMIC Residual Security. This basis is increased by amounts included in the
income of the beneficial owner and decreased by distributions and by any net
loss taken into account with respect to the REMIC Residual Security. A
distribution on a REMIC Residual Security to a beneficial owner is not included
in gross income to the extent it does not exceed the beneficial owner's basis in
the REMIC Residual Security, adjusted as described above, and, to the extent it
exceeds the adjusted basis of the REMIC Residual Security, shall be treated as
gain from the sale of the REMIC Residual Security.

A beneficial owner of a REMIC Residual Security is not allowed to take into
account any net loss for any calendar quarter to the extent the net loss exceeds
the beneficial owner's adjusted basis in its REMIC Residual Security as of the
close of the calendar quarter, determined without regard to the net loss. Any
loss disallowed by reason of this limitation may be carried forward indefinitely
to future calendar quarters and, subject to the same limitation, may be used
only to offset income from the REMIC Residual Security.

Excess Inclusions. Any excess inclusions with respect to a REMIC Residual
Security are subject to a number of special tax rules. With respect to a
beneficial owner of a REMIC Residual Security, the excess inclusion for any
calendar quarter is defined as the excess, if any, of the daily portions of
taxable income over the sum of the "daily accruals" for each day during this
quarter that the REMIC Residual Security was held by the beneficial owner. The
daily accruals are determined by allocating to each day during a calendar
quarter its ratable portion of the product of the "adjusted issue price" of the
REMIC Residual Security at the beginning of the calendar quarter and 120% of the
"federal long-term rate" in effect on the Settlement Date, based on quarterly
compounding, and properly adjusted for the length of the quarter. For this
purpose, the adjusted issue price of a REMIC Residual Security as of the
beginning of any calendar quarter is equal to the issue price of the REMIC
Residual Security, increased by the amount of daily accruals for all prior
quarters and decreased by any distributions made with respect to the REMIC
Residual Security before the beginning of the quarter. The issue price of a
REMIC Residual Security is the initial offering price to the public, excluding
bond houses and brokers, at which a substantial number of the REMIC Residual
Securities was sold. The federal long-term rate is a blend of current yields on
Treasury securities having a maturity of more than nine years, computed and
published monthly by the IRS.

In general, beneficial owners of REMIC Residual Securities with excess
inclusion income cannot offset the income by losses from other activities. For
beneficial owners that are subject to tax only on unrelated business taxable
income, as defined in Section 511 of the Code, an excess inclusion of the
beneficial owner is treated as unrelated business taxable income. With respect
to variable contracts, within the meaning of Section 817 of the Code, a life
insurance company cannot adjust its reserve to the extent of any excess
inclusion, except as provided in regulations. The REMIC Regulations indicate
that if a beneficial owner of a REMIC Residual Security is a member of an
affiliated group filing a consolidated income tax return, the taxable income of
the affiliated group cannot be less than the sum of the excess inclusions
attributable to all residual interests in REMICs held by members of the
affiliated group. For a discussion of the effect of excess inclusions on
particular foreign investors that own REMIC Residual Securities, see "-Foreign
Investors" below.

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The Treasury Department also has the authority to issue regulations that
would treat all taxable income of a REMIC Trust as excess inclusions if the
REMIC Residual Security does not have "significant value." Although the Treasury
Department did not exercise this authority in the REMIC Regulations, future
regulations may contain such a rule. If such a rule were adopted, it is unclear
how significant value would be determined for these purposes. If no such rule is
applicable, excess inclusions should be calculated as discussed above.

In the case of any REMIC Residual Securities that are held by a real estate
investment trust, the aggregate excess inclusions with respect to the REMIC
Residual Securities 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 the
trust in proportion to the dividends received by the shareholders from the
trust, and any amount so allocated will be treated as an excess inclusion with
respect to a REMIC Residual Security as if held directly by the shareholder.
Similar rules will apply in the case of regulated investment companies, common
trust funds and some cooperatives that hold a REMIC Residual Security.

Pass-Through of Servicing and Guaranty Fees to Individuals. A beneficial
owner of a REMIC Residual Security who is an individual will be required to
include in income a share of any servicing and guaranty fees. A deduction for
the fees will be allowed to the beneficial owner only to the extent that the
fees, along with certain of the beneficial owner's other miscellaneous itemized
deductions exceed 2% of the beneficial owner's adjusted gross income. In
addition, a beneficial owner of a REMIC Residual Security may not be able to
deduct any portion of the fees in computing the beneficial owner's alternative
minimum tax liability. A beneficial owner's share of the fees will generally be
determined by (x) allocating the amount of the expenses for each calendar
quarter on a pro rata basis to each day in the calendar quarter and (y)
allocating the daily amount among the beneficial owners in proportion to their
respective holdings on this day.

Taxes on a REMIC Trust

Prohibited Transactions. The Code imposes a tax on a REMIC equal to 100%
of the net income derived from "prohibited transactions." In general, a
prohibited transaction means the disposition of a qualified mortgage other than
in accordance with specified exceptions, the receipt of investment income from a
source other than a loan or other permitted investments, the receipt of
compensation for services, or the disposition of an asset purchased with the
payments on the qualified mortgages for temporary investment pending
distribution on the regular and residual interests.

Contributions to a REMIC after the Startup Day. The Code imposes a tax on a
REMIC equal to 100% of the value of any property contributed to the REMIC after
the "startup day", which is generally the same as the Settlement Date.
Exceptions are provided for cash contributions to a REMIC:

- during the three month period beginning on the startup day,

- made to a qualified reserve fund by a beneficial owner of a residual
interest,

- in the nature of a guarantee,

- made to facilitate a qualified liquidation or clean-up call, and

- as otherwise permitted by Treasury regulations.

Net Income from Foreclosure Property. The Code imposes a tax on a REMIC
equal to the highest corporate rate on "net income from foreclosure property."
The terms "foreclosure property", which includes property acquired by deed in
lieu of foreclosure, and "net income from foreclosure property" are defined by

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reference to the rules applicable to real estate investment trusts. Generally,
foreclosure property would be treated as such for a period of three years, with
a possible extension. Net income from foreclosure property generally means gain
from the sale of foreclosure property that is inventory property and gross
income from foreclosure property other than qualifying rents and other
qualifying income for a real estate investment trust.

Sales of REMIC Securities

Except as provided below, if a REMIC Regular Security or REMIC Residual
Security is sold, the seller will recognize gain or loss equal to the difference
between the amount realized in the sale and its adjusted basis in the security.
The adjusted basis of a REMIC Regular Security generally will equal the cost of
the security to the seller, increased by any original issue discount or market
discount included in the seller's gross income with respect to the security and
reduced by distributions on the security previously received by the seller of
amounts included in the stated redemption price at maturity and by any premium
that has reduced the seller's interest income with respect to the security. See
"-Discount and Premium." The adjusted basis of a REMIC Residual Security is
determined as described above under "-Taxation of Beneficial Owners of REMIC
Residual Securities-Basis Rules and Distributions." Except as provided in the
following paragraph or under Section 582(c) of the Code, any gain or loss will
be capital gain or loss, provided the security is held as a "capital asset",
which is generally, property held for investment, within the meaning of Section
1221 of the Code.

Gain from the sale of a REMIC Regular Security that might otherwise be
capital gain will be treated as ordinary income to the extent that the gain does
not exceed the excess, if any, of (i) the amount that would have been includible
in the income of the beneficial owner of a REMIC Regular Security had income
accrued at a rate equal to 110% of the "applicable federal rate", generally, an
average of current yields on Treasury securities, as of the date of purchase
over (ii) the amount actually includible in the beneficial owner's income. In
addition, gain recognized on such a sale by a beneficial owner of a REMIC
Regular Security who purchased such a security at a market discount would also
be taxable as ordinary income in an amount not exceeding the portion of the
discount that accrued during the period the security was held by the beneficial
owner, reduced by any market discount includible in income under the rules
described below under "-Discount and Premium."

If a beneficial owner of a REMIC Residual Security sells its REMIC Residual
Security at a loss, the loss will not be recognized if, within six months before
or after the sale of the REMIC Residual Security, the beneficial owner purchases
another residual interest in any REMIC or any interest in a taxable mortgage
pool, as defined in Section 7701(i) of the Code, comparable to a residual
interest in a REMIC. This disallowed loss would be allowed upon the sale of the
other residual interest, or comparable interest, if the rule referred to in the
preceding sentence does not apply to that sale. While this rule may be modified
by Treasury regulations, no such regulations have yet been published.

Transfers of REMIC Residual Securities. Section 860E(e) of the Code imposes
a substantial tax, payable by the transferor, or, if a transfer is through a
broker, nominee, or other middleman as the transferee's agent, payable by that
agent, upon any transfer of a REMIC Residual Security to a disqualified
organization and upon a pass-through entity, including regulated investment
companies, real estate investment trusts, common trust funds, partnerships,
trusts, estates, some cooperatives, and nominees, that owns a REMIC Residual
Security if this pass-through entity has a disqualified organization as a
record-holder. For purposes of the preceding sentence, a transfer includes any
transfer of record or beneficial ownership, whether by a purchase, a default
under a secured lending agreement or otherwise.

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The term "disqualified organization" includes the United States, any state
or political subdivision thereof, any foreign government, any international
organization, or any agency or instrumentality of the foregoing, other than
specified taxable instrumentalities, any cooperative organization furnishing
electric energy or providing telephone service to persons in rural areas, or any
organization, other than a farmers' cooperative, that is exempt from federal
income tax, unless the organization is subject to the tax on unrelated business
income. Moreover, an entity will not qualify as a REMIC unless there are
reasonable arrangements designed to ensure that (x) residual interests in the
entity are not held by disqualified organizations and (y) information necessary
for the application of the tax described in this prospectus will be made
available. Restrictions on the transfer of a REMIC Residual Security and other
provisions that are intended to meet this requirement are described in the
Pooling and Servicing Agreement, and will be discussed more fully in the
accompanying prospectus supplement relating to the offering of any REMIC
Residual Security. In addition, a pass-through entity, including a nominee, that
holds a REMIC Residual Security may be subject to additional taxes if a
disqualified organization is a record-holder in the REMIC Residual Security. A
transferor of a REMIC Residual Security, or an agent of a transferee of a REMIC
Residual Security, as the case may be, will be relieved of the tax liability if
(a) the transferee furnishes to the transferor, or the transferee's agent, an
affidavit that the transferee is not a disqualified organization, and (b) the
transferor, or the transferee's agent, does not have actual knowledge that the
affidavit is false at the time of the transfer. Similarly, no such tax will be
imposed on a pass-through entity for a period with respect to an interest in the
REMIC Residual Security owned by a disqualified organization if (x) the
record-holder of this interest furnishes to the pass-through entity an affidavit
that it is not a disqualified organization, and (y) during the period, the
pass-through entity has no actual knowledge that the affidavit is false.

The Taxpayer Relief Act of 1997 adds provisions to the Code that will apply
to an "electing large partnership." If an electing large partnership holds a
Residual Certificate, all interests in the electing large partnership are
treated as held by disqualified organizations for purposes of the tax imposed
upon a pass-through entity by Section 860E(e) of the Code. An exception to this
tax, otherwise available to a pass-through entity that is furnished affidavits
by record holders of interests in the entity and that does not know the
affidavits are false, is not available to an electing large partnership.

Under the REMIC Regulations, a transfer of a "noneconomic residual
interest" to a U.S. Person, as defined below in "Foreign Investors-Grantor Trust
Securities and REMIC Regular Securities", will be disregarded for all federal
tax purposes unless no significant purpose of the transfer is to impede the
assessment or collection of tax. A REMIC Residual Security would be treated as
constituting a noneconomic residual interest unless, at the time of the
transfer, (x) the present value of the expected future distributions on the
REMIC Residual Security is no less than the product of the present value of the
"anticipated excess inclusions" with respect to the security and the highest
corporate rate of tax for the year in which the transfer occurs, and (y) the
transferor reasonably expects that the transferee will receive distributions
from the applicable REMIC Trust in an amount sufficient to satisfy the liability
for income tax on any "excess inclusions" at or after the time when the
liability accrues. Anticipated excess inclusions are the excess inclusions that
are anticipated to be allocated to each calendar quarter, or portion thereof,
following the transfer of a REMIC Residual Security, determined as of the date
the security is transferred and based on events that have occurred as of that
date and on the Prepayment Assumption. See "-Discount and Premium" and
"-Taxation of Beneficial Owners of REMIC Residual Securities-Excess Inclusions."

The REMIC Regulations provide that a significant purpose to impede the
assessment or collection of tax exists if, at the time of the transfer, a
transferor of a REMIC Residual Security has "improper knowledge" - i.e., either

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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 Trust. A
transferor is presumed not to have improper knowledge if (x) the transferor
conducts, at the time of a transfer, a reasonable investigation of the financial
condition of the transferee and, as a result of the investigation, the
transferor finds that the transferee has historically paid its debts as they
come due and finds no significant evidence to indicate that the transferee will
not continue to pay its debts as they come due in the future; and (y) the
transferee makes a number of representations to the transferor in the affidavit
relating to disqualified organizations discussed above. Transferors of a REMIC
Residual Security should consult with their own tax advisors for further
information regarding these transfers.

Reporting and Other Administrative Matters. For purposes of the
administrative provisions of the Code, each REMIC Trust will be treated as a
partnership and the beneficial owners of REMIC Residual Securities will be
treated as partners. The trustee will prepare, sign and file federal income tax
returns for each REMIC Trust, which returns are subject to audit by the IRS.
Moreover, within a reasonable time after the end of each calendar year, the
trustee will furnish to each beneficial owner that received a distribution
during the year a statement setting forth the portions of any distributions that
constitute interest distributions, original issue discount, and any other
information as is required by Treasury regulations and, with respect to
beneficial owners of REMIC Residual Securities in a REMIC Trust, information
necessary to compute the daily portions of the taxable income, or net loss, of
the REMIC Trust for each day during this year. The trustee will also act as the
tax matters partner for each REMIC Trust, either in its capacity as a beneficial
owner of a REMIC Residual Security or in a fiduciary capacity. Each beneficial
owner of a REMIC Residual Security, by the acceptance of its REMIC Residual
Security, agrees that the trustee will act as its fiduciary in the performance
of any duties required of it in the event that it is the tax matters partner.

Each beneficial owner of a REMIC Residual Security is required to treat
items on its return consistently with the treatment on the return of the REMIC
Trust, unless the beneficial owner either files a statement identifying the
inconsistency or establishes that the inconsistency resulted from incorrect
information received from the REMIC Trust. The IRS may assert a deficiency
resulting from a failure to comply with the consistency requirement without
instituting an administrative proceeding at the REMIC Trust level.

Termination

In general, no special tax consequences will apply to a beneficial owner of
a REMIC Regular Security upon the termination of a REMIC Trust by virtue of the
final payment or liquidation of the last loan remaining in the trust fund. If a
beneficial owner of a REMIC Residual Security's adjusted basis in its REMIC
Residual Security at the time the termination occurs exceeds the amount of cash
distributed to the beneficial owner in liquidation of its interest, although the
matter is not entirely free from doubt, it would appear that the beneficial
owner of the REMIC Residual Security is entitled to a loss equal to the amount
of this excess.

DEBT SECURITIES

With respect to each series of Debt Securities, special tax counsel to the
sponsor, will deliver its opinion to the sponsor that the securities will be
classified as debt secured by the loans. We will file this opinion with the
Securities and Exchange Commission on Form 8-K within fifteen days after the
initial issuance of the securities or as a post-effective amendment to the
prospectus. Accordingly, the Debt Securities will not be treated as ownership
interests in the loans or the issuer. Beneficial owners will be required to
report income received with respect to the Debt Securities in accordance with
their normal method of accounting. For additional tax consequences relating to

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Debt Securities purchased at a discount or with premium, see "-Discount and
Premium," below.

Special Tax Attributes

As described above, Grantor Trust Securities will possess specified special
tax attributes by virtue of their being ownership interests in the underlying
loans. Similarly, REMIC Securities will possess similar attributes by virtue of
the REMIC provisions of the Code. In general, Debt Securities will not possess
these special tax attributes. Investors to whom these attributes are important
should consult their own tax advisors regarding investment in Debt Securities.

Sale or Exchange of Debt Securities

If a beneficial owner of a Debt Security sells or exchanges the security,
the beneficial owner will recognize gain or loss equal to the difference, if
any, between the amount received and the beneficial owner's adjusted basis in
the security. The adjusted basis in the security generally will equal its
initial cost, increased by any original issue discount or market discount
previously included in the seller's gross income with respect to the security
and reduced by the payments previously received on the security, other than
payments of qualified stated interest, and by any amortized premium.

In general, except as described in "-Discount and Premium-Market Discount,"
below, except for particular financial institutions subject to Section 582(c) of
the Code, any gain or loss on the sale or exchange of a Debt Security recognized
by an investor who holds the security as a capital asset, within the meaning of
Section 1221 of the Code, will be capital gain or loss and will be long-term or
short-term depending on whether the security has been held for more than one
year.

Debt Securities Reporting

The trustee will furnish to each beneficial owner of a Debt Security with
each distribution a statement setting forth the amount of the distribution
allocable to principal on the underlying loans and to interest thereon at the
interest rate attributable to the security. In addition, within a reasonable
time after the end of each calendar year, based on information provided by the
servicer, the trustee will furnish to each beneficial owner during this year any
customary factual information as the servicer deems necessary or desirable to
enable beneficial owners of Debt Securities to prepare their tax returns and
will furnish comparable information to the IRS as and when required to do so by
law.

PARTNERSHIP INTERESTS

With respect to each series of Partnership Interests, special tax counsel
to the sponsor, will deliver its opinion to the sponsor that the issuer will be
treated as a partnership and not an association taxable as a corporation for
federal income tax purposes. We will file this opinion with the Securities and
Exchange Commission on Form 8-K within fifteen days after the initial issuance
of the securities or as a post-effective amendment to the prospectus.
Accordingly, each beneficial owner of a Partnership Interest will generally be
treated as the owner of an interest in the loans.

Special Tax Attributes

As described above, REMIC Securities will possess specified special tax
attributes by virtue of the REMIC provisions of the Code. In general,
Partnership Interests will not possess these special tax attributes. Investors
to whom these attributes are important should consult their own tax advisors
regarding investment in Partnership Interests.

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Taxation of Beneficial Owners of Partnership Interests

If the issuer is treated as a partnership for federal income tax purposes,
the issuer will not be subject to federal income tax. Instead, each beneficial
owner of a Partnership Interest will be required to separately take into account
its allocable share of income, gains, losses, deductions, credits and other tax
items of the issuer. These partnership allocations are made in accordance with
the Code, Treasury regulations and the partnership agreement or in this case,
the trust agreement or other similar agreement.

The issuer's assets will be the assets of the partnership. The issuer's
income will consist primarily of interest and finance charges earned on the
underlying loans. The issuer's deductions will consist primarily of interest
accruing with respect to any indebtedness issued by the issuer, servicing and
other fees, and losses or deductions upon collection or disposition of the
issuer's assets.

In some instances, the issuer could have an obligation to make payments of
withholding tax on behalf of a beneficial owner of a Partnership Interest. See
"-Backup Withholding" and "-Foreign Investors."

Substantially all of the taxable income allocated to a beneficial owner of
a Partnership Interest that is a pension, profit sharing or employee benefit
plan or other tax-exempt entity, including an individual retirement account,
will constitute "unrelated business taxable income" generally taxable to such a
holder under the Code.

Under Section 708 of the Code, the issuer will be deemed to terminate for
federal income tax purposes if 50% or more of the capital and profits interests
in the issuer are sold or exchanged within a 12-month period. Under Treasury
regulations issued on May 9, 1997 if such a termination occurs, the issuer is
deemed to contribute all of its assets and liabilities to a newly formed
partnership in exchange for a partnership interest. Immediately thereafter, the
terminated partnership distributes interests in the new partnership to the
purchasing partner and remaining partners in proportion to their interests in
liquidation of the terminated partnership.

Sale or Exchange of Partnership Interests

Generally, capital gain or loss will be recognized on a sale or exchange of
Partnership Interests in an amount equal to the difference between the amount
realized and the seller's tax basis in the Partnership Interests sold. A
beneficial owner's tax basis in a Partnership Interest will generally equal the
beneficial owner's cost increased by the beneficial owner's share of issuer
income and decreased by any distributions received with respect to the
Partnership Interest. In addition, both the tax basis in the Partnership
Interest and the amount realized on a sale of a Partnership Interest would take
into account the beneficial owner's share of any indebtedness of the issuer. A
beneficial owner acquiring Partnership Interests at different prices may be
required to maintain a single aggregate adjusted tax basis in the Partnership
Interest, and upon sale or other disposition of some of the Partnership
Interests, allocate a portion of the aggregate tax basis to the Partnership
Interests sold, rather than maintaining a separate tax basis in each Partnership
Interest for purposes of computing gain or loss on a sale of that Partnership
Interest.

Any gain on the sale of a Partnership Interest attributable to the
beneficial owner's share of unrecognized accrued market discount on the assets
of the issuer would generally be treated as ordinary income to the holder and
would give rise to special tax reporting requirements. If a beneficial owner of
a Partnership Interest is required to recognize an aggregate amount of income
over the life of the Partnership Interest that exceeds the aggregate cash
distributions with respect thereto, the excess will generally give rise to a
capital loss upon the retirement of the Partnership Interest. If a beneficial
owner sells its Partnership Interest at a profit or loss, the transferee will
have a higher or lower basis in the Partnership Interests than the transferor

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had. The tax basis of the issuer's assets will not be adjusted to reflect that
higher or lower basis unless the issuer files an election under Section 754 of
the Code.

Partnership Reporting

The trustee is required to

- keep complete and accurate books of the issuer,

- file a partnership information return on IRS Form 1065 with the IRS
for each taxable year of the issuer and

- report each beneficial owner's allocable share of items of issuer
income and expense to beneficial owners and the IRS on Schedule K-1.

The issuer will provide the Schedule K-1 information to nominees that fail
to provide the issuer with the information statement described below and the
nominees will be required to forward the information to the beneficial owners of
the Partnership Interests. Generally, beneficial owners of a Partnership
Interest must file tax returns that are consistent with the information return
filed by the issuer or be subject to penalties unless the beneficial owner of a
Partnership Interest notifies the IRS of all inconsistencies.

Under Section 6031 of the Code, any person that holds Partnership Interests
as a nominee at any time during a calendar year is required to furnish the
issuer with a statement containing specified information on the nominee, the
beneficial owners and the Partnership Interests so held. This information
includes

- the name, address and taxpayer identification number of the nominee
and

- as to each beneficial owner

- the name, address and identification number of this person,

- whether this person is a United States person, a tax-exempt entity or
a foreign government, an international organization, or any wholly
owned agency or instrumentality of either of the foregoing, and

- specified information on Partnership Interests that were held, bought
or sold on behalf of this person throughout the year.

In addition, brokers and financial institutions that hold Partnership
Interests through a nominee are required to furnish directly to the issuer
information as to themselves and their ownership of Partnership Interests. A
clearing agency registered under Section 17A of the Securities Exchange Act of
1934, is not required to furnish any of this information statement to the
issuer. Nominees, brokers and financial institutions that fail to provide the
issuer with the information described above may be subject to penalties.

The Code provides for administrative examination of a partnership as if the
partnership were a separate and distinct taxpayer. Generally, the statute of
limitations for partnership items does not expire before three years after the
date on which the partnership information return is filed. Any adverse
determination following an audit of the return of the issuer by the appropriate
taxing authorities could result in an adjustment of the returns of the
beneficial owner of a Partnership Interests, and, under particular
circumstances, a beneficial owner of a Partnership Interest may be precluded
from separately litigating a proposed adjustment to the items of the issuer. An
adjustment could also result in an audit of the beneficial owner of a
Partnership Interest's returns and adjustments of items note related to the
income and losses of the issuer.

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FASIT SECURITIES

If provided in a accompanying prospectus supplement, an election will be
made to treat the issuer as a FASIT within the meaning of Code Section 860L(a).
Qualification as a FASIT requires ongoing compliance with a number of
conditions. With respect to each series of securities for which an election is
made, special tax counsel to the sponsor, will deliver its opinion to the
sponsor that, assuming compliance with the Issuing Agreement, the issuer will be
treated as a FASIT for federal income tax purposes. We will file this opinion
with the securities and Exchange Commission on Form 8-K within fifteen days
after the initial issuance of the securities or as a post-effective amendment to
the prospectus.

Special Tax Attributes

FASIT Securities held by a real estate investment trust will constitute
"real estate assets" within the meaning of Code Sections 856(c)(5)(A) and
856(c)(6) and interest on the FASIT Regular Securities will be considered
"interest on obligations secured by mortgages on real property or on interests
in real property" within the meaning of Code Section 856(c)(3)(B) in the same
proportion that, for both purposes, the assets of the FASIT Trust and the income
thereon would be so treated. FASIT Regular Securities held by a domestic
building and loan association will be treated as "regular interest[s] in a
FASIT" under Code Section 7701(a)(19)(C)(xi), but only in the proportion that
the FASIT Trust holds "loans secured by an interest in real property which is
residential real property" within the meaning of Code Section 7701(a)(19)(C)(v).
If at all times 95% or more of the assets of the FASIT Trust or the income
thereon qualify for the foregoing treatments, the FASIT Regular Securities will
qualify for the corresponding status in their entirety. For purposes of Code
Section 856(c)(5)(A), payments of principal and interest on a loan that are
reinvested pending distribution to holders of FASIT Regular Securities should
qualify for this treatment. FASIT Regular Securities held by a regulated
investment company will not constitute "government securities" within the
meaning of Code Section 851(b)(4)(A)(i). FASIT Regular Securities held by
particular financial institutions will constitute an "evidence of indebtedness"
within the meaning of Code Section 582(c)(1).

Taxation of Beneficial Owners of FASIT Regular Securities

A FASIT Trust will not be subject to federal income tax except with respect
to income from prohibited transactions and in some other instances as described
below. The FASIT Regular Securities generally will be treated for federal
income tax purposes as newly-originated debt instruments. In general, interest,
original issue discount and market discount on a FASIT Regular Security will be
treated as ordinary income to the beneficial owner, and principal payments,
other than principal payments that do not exceed accrued market discount, on an
FASIT Regular Security will be treated as a return of capital to the extent of
the beneficial owner's basis allocable thereto. Beneficial owners must use the
accrual method of accounting with respect to FASIT Regular Securities,
regardless of the method of accounting otherwise used by the beneficial owners.
See "-Discount and Premium" below.

In order for the FASIT Trust to qualify as a FASIT, there must be ongoing
compliance with the requirements set forth in the Code. The FASIT must fulfill
an asset test, which requires that substantially all the assets of the FASIT, as
of the close of the third calendar month beginning after the Startup Day, and at
all times thereafter, must consist of cash or cash equivalents, particular debt
instruments, other than debt instruments issued by the owner of the FASIT or a
related party, and hedges, and contracts to acquire the same, foreclosure
property and regular interests in another FASIT or in a REMIC. Based on
identical statutory language applicable to REMICs, it appears that the
"substantially all" requirement should be met if at all times the aggregate
adjusted basis of the nonqualified assets is less than one percent of the
aggregate adjusted basis of all the FASIT's assets. The FASIT provisions of the

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Code, Sections 860H through 860L, also require the FASIT ownership interest and
particular "high-yield regular interests" to be held only by specified fully
taxable domestic corporations.

Permitted debt instruments must bear interest, if any, at a fixed or
qualified variable rate. Permitted hedges include interest rate or foreign
currency notional principal contracts, letters of credit, insurance, guarantees
of payment default and similar instruments to be provided in regulations, and
which are reasonably required to guarantee or hedge against the FASIT's risks
associated with being the obligor on interests issued by the FASIT. Foreclosure
property is real property acquired by the FASIT in connection with the default
or imminent default of a qualified mortgage, provided the issuer had no
knowledge or reason to know as of the date the asset was acquired by the FASIT
that such a default had occurred or would occur.

In addition to the foregoing requirements, the various interests in a FASIT
also must meet a number of requirements. All of the interests in a FASIT must be
either of the following: (a) one or more classes of regular interests or (b) a
single class of ownership interest. A regular interest is an interest in a FASIT
that is issued on or after the Startup Day with fixed terms, is designated as a
regular interest, and

(1) unconditionally entitles the holder to receive a specified principal
amount, or other similar amount,

(2) provides that interest payments, or other similar amounts, if any, at
or before maturity either are payable based on a fixed rate or a
qualified variable rate,

(3) has a stated maturity of not longer than 30 years,

(4) has an issue price not greater than 125% of its stated principal
amount, and

(5) has a yield to maturity not greater than five percentage points higher
than the applicable Federal rate, as defined in Code Section 1274(d).

A regular interest that is described in the preceding sentence except that
if fails to meet one or more of requirements (1), (2) (4) or (5) is a
"high-yield regular interest." A high-yield regular interest that fails
requirement (2) must consist of a specified, nonvarying portion of the interest
payments on the permitted assets, by reference to the REMIC rules. An ownership
interest is an interest in a FASIT other than a regular interest that is issued
on the Startup Day, is designated an ownership interest and is held by a single,
fully-taxable, domestic corporation. An interest in a FASIT may be treated as a
regular interest even if payments of principal with respect to this interest are
subordinated to payments on other regular interests or the ownership interest in
the FASIT, and are dependent on the absence of defaults or delinquencies on
permitted assets lower than reasonably expected returns on permitted assets,
unanticipated expenses incurred by the FASIT or prepayment interest shortfalls.

If an entity fails to comply with one or more of the ongoing requirements
of the Code for status as a FASIT during any taxable year, the Code provides
that the entity or applicable potion thereof will not be treated as a FASIT
thereafter. In this event, any entity that holds mortgage loans and is the
obligor with respect to debt obligations with two or more maturities, such as
the trust fund, may be treated as a separate association taxable as a
corporation, and the FASIT Regular Securities may be treated as equity interests
the FASIT Regular Securities. The legislative history to the FASIT Provisions
indicates, however, that an entity can continue to be a FASIT if loss of its
status was inadvertent, it takes prompt steps to requalify and other
requirements that may be provided in Treasury regulations are met. Loss of FASIT
status results in retirement of all regular interests and their reissuance. If
the resulting instruments would be treated as equity under general tax
principles, cancellation of debt income may result.

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Taxes on a FASIT Trust

Income from particular transactions by a FASIT, called prohibited
transactions, are taxable to the holder of the ownership interest in a FASIT at
a 100% rate. Prohibited transactions generally include

- the disposition of a permitted asset other than for

- foreclosure, default, or imminent default,

- bankruptcy or insolvency of the FASIT,

- a qualified or complete liquidation,

- substitution for another permitted debt instrument or distribution of
the debt instrument to the holder of the ownership interest to reduce
overcollateralization, but only if a principal purpose of acquiring
the debt instrument which is disposed of was not the recognition of
gain, or the reduction of a loss, on the withdrawn asset as a result
of an increase in the market value of the asset after its acquisition
by the FASIT or

- the retirement of a class of FASIT regular interests;

- the receipt of income from nonpermitted assets;

- the receipt of compensation for services; or

- the receipt of any income derived from a loan originated by the FASIT.

It is unclear the extent to which tax on these transactions could be
collected from the FASIT Trust directly under the applicable statutes rather
than from the holder of the FASIT Residual Security.

DUE TO THE COMPLEXITY OF THESE RULES, THE ABSENCE OF TREASURY REGULATIONS
AND THE CURRENT UNCERTAINTY AS TO THE MANNER TO THEIR APPLICATION TO THE TRUST
AND TO HOLDERS OF FASIT SECURITIES, IT IS PARTICULARLY IMPORTANT THAT POTENTIAL
INVESTORS CONSULT THEIR OWN TAX ADVISORS REGARDING THE TAX TREATMENT OF THEIR
ACQUISITION, OWNERSHIP AND DISPOSITION OF THE FASIT REGULAR SECURITIES.

DISCOUNT AND PREMIUM

A security purchased for an amount other than its outstanding principal
amount will be subject to the rules governing original issue discount, market
discount or premium. In addition, all Grantor Trust Strip Securities and some
Grantor Trust Fractional Interest Securities will be treated as having original
issue discount by virtue of the coupon stripping rules in Section 1286 of the
Code. In very general terms,

- original issue discount is treated as a form of interest and must be
included in a beneficial owner's income as it accrues, regardless of
the beneficial owner's regular method of accounting, using a constant
yield method;

- market discount is treated as ordinary income and must be included in
a beneficial owner's income as principal payments are made on the
security, or upon a sale of a security; and

- if a beneficial owner so elects, premium may be amortized over the
life of the security and offset against inclusions of interest income.

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These tax consequences are discussed in greater detail below.

Original Issue Discount

In general, a security will be considered to be issued with original issue
discount equal to the excess, if any, of its "stated redemption price at
maturity" over its "issue price." The issue price of a security is the initial
offering price to the public, excluding bond houses and brokers, at which a
substantial number of the securities were sold. The issue price also includes
any accrued interest attributable to the period between the beginning of the
first Accrual Period and the Settlement Date. The stated redemption price at
maturity of a security that has a notional principal amount or receives
principal only or that is or may be an Accrual Security is equal to the sum of
all distributions to be made under the security. The stated redemption price at
maturity of any other security is its stated principal amount, plus an amount
equal to the excess, if any, of the interest payable on the first distribution
date over the interest that accrues for the period from the Settlement Date to
the first distribution date. The trustee will supply, at the time and in the
manner required by the IRS, to beneficial owners, brokers and middlemen
information with respect to the original issue discount accruing on the
securities.

Notwithstanding the general definition, original issue discount will be
treated as zero if the discount is less than 0.25% of the stated redemption
price at maturity of the security multiplied by its weighted average life. The
weighted average life of a security is apparently computed for this purpose as
the sum, for all distributions included in the stated redemption price at
maturity, of the amounts determined by multiplying (x) the number of complete
years, rounding down for partial years, from the Settlement Date until the date
on which each distribution is expected to be made under the Prepayment
Assumption by (y) a fraction, the numerator of which is the amount of the
distribution and the denominator of which is the security's stated redemption
price at maturity. Even if original issue discount is treated as zero under this
rule, the actual amount of original issue discount must be allocated to the
principal distributions on the security and, when each distribution is received,
gain equal to the discount allocated to the distribution will be recognized.

Section 1272(a)(6) of the Code contains special original issue discount
rules directly applicable to REMIC Securities and Debt Securities. The Taxpayer
Relief Act of 1997 extends application of Section 1272(a)(6) to the Grantor
Trust Securities for tax years beginning after August 5, 1997. Under these
rules, (a) the amount and rate of accrual of original issue discount on each
series of securities will be based on (x) the Prepayment Assumption, and (y) in
the case of a security calling for a variable rate of interest, an assumption
that the value of the index upon which the variable rate is based remains equal
to the value of that rate on the Settlement Date, and (b) adjustments will be
made in the amount of discount accruing in each taxable year in which the actual
prepayment rate differs from the Prepayment Assumption.

Section 1272(a)(6)(B)(iii) of the Code requires that the prepayment
assumption used to calculate original issue discount be determined in the manner
prescribed in Treasury regulations. To date, no such regulations have been
promulgated. The legislative history of this Code provision indicates that the
assumed prepayment rate must be the rate used by the parties in pricing the
particular transaction. The sponsor anticipates that the Prepayment Assumption
for each series of securities will be consistent with this standard. The sponsor
makes no representation, however, that the loans for a given series will prepay
at the rate reflected in the Prepayment Assumption for that series or at any
other rate. Each investor must make its own decision as to the appropriate
prepayment assumption to be used in deciding whether or not to purchase any of
the securities.

Each beneficial owner must include in gross income the sum of the "daily
portions" of original issue discount on its security for each day during its
taxable year on which it held the security. For this purpose, in the case of an

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original beneficial owner, the daily portions of original issue discount will be
determined as follows. A calculation will first be made of the portion of the
original issue discount that accrued during each "accrual period." Original
issue discount calculations must be based on accrual periods of no longer than
one year either (x) beginning on a distribution date, or, in the case of the
first accrual period, the Settlement Date, and ending on the day before the next
distribution date or (y) beginning on the next day following a distribution date
and ending on the next distribution date.

Under Section 1272(a)(6) of the Code, the portion of original issue
discount treated as accruing for any accrual period will equal the excess, if
any, of (x) the sum of (A) the present values of all the distributions remaining
to be made on the security, if any, as of the end of the accrual period and (B)
the distribution made on the security during the accrual period of amounts
included in the stated redemption price at maturity, over (y) the adjusted issue
price of the security at the beginning of the accrual period. The present value
of the remaining distributions referred to in the preceding sentence will be
calculated based on

- the yield to maturity of the security, calculated as of the Settlement
Date, giving effect to the Prepayment Assumption,

- events, including actual prepayments, that have occurred prior to the
end of the accrual period,

- the Prepayment Assumption, and

- in the case of a security calling for a variable rate of interest, an
assumption that the value of the index upon which this variable rate
is based remains the same as its value on the Settlement Date over the
entire life of the security.

The adjusted issue price of a security at any time will equal the issue
price of the security, increased by the aggregate amount of previously accrued
original issue discount with respect to the security, and reduced by the amount
of any distributions made on the security as of that time of amounts included in
the stated redemption price at maturity. The original issue discount accruing
during any accrual period will then be allocated ratably to each day during the
period to determine the daily portion of original issue discount.

In the case of Grantor Trust Strip Securities and some REMIC Securities,
the calculation described in the preceding paragraph may produce a negative
amount of original issue discount for one or more accrual periods. No definitive
guidance has been issued regarding the treatment of the negative amounts. The
legislative history to Section 1272(a)(6) indicates that the negative amounts
may be used to offset subsequent positive accruals but may not offset prior
accruals and may not be allowed as a deduction item in a taxable year in which
negative accruals exceed positive accruals. Beneficial owners of the securities
should consult their own tax advisors concerning the treatment of the negative
accruals.

A subsequent purchaser of a security that purchases the security at a cost
less than its remaining stated redemption price at maturity also will be
required to include in gross income for each day on which it holds the security,
the daily portion of original issue discount with respect to the security - but
reduced, if the cost of the security to the purchaser exceeds its adjusted issue
price, by an amount equal to the product of (x) the daily portion and (y) a
constant fraction, the numerator of which is the excess and the denominator of
which is the sum of the daily portions of original issue discount on the
security for all days on or after the day of purchase.

Market Discount

A beneficial owner that purchases a security at a market discount, that is,
at a purchase price less than the remaining stated redemption price at maturity
of the security, or, in the case of a security with original issue discount, its

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adjusted issue price, will be required to allocate each principal distribution
first to accrued market discount on the security, and recognize ordinary income
to the extent the distribution does not exceed the aggregate amount of accrued
market discount on the security not previously included in income. With respect
to securities that have unaccrued original issue discount, the market discount
must be included in income in addition to any original issue discount. A
beneficial owner that incurs or continues indebtedness to acquire a security at
a market discount may also be required to defer the deduction of all or a
portion of the interest on this indebtedness until the corresponding amount of
market discount is included in income. In general terms, market discount on a
security may be treated as accruing either (x) under a constant yield method or
(y) in proportion to remaining accruals of original issue discount, if any, or
if none, in proportion to remaining distributions of interest on the security,
in any case taking into account the Prepayment Assumption. The trustee will make
available, as required by the IRS, to beneficial owners of securities
information necessary to compute the accrual of market discount.

Notwithstanding the above rules, market discount on a security will be
considered to be zero if the discount is less than 0.25% of the remaining stated
redemption price at maturity of the security multiplied by its weighted average
remaining life. Weighted average remaining life presumably would be calculated
in a manner similar to weighted average life, taking into account payments,
including prepayments, prior to the date of acquisition of the security by the
subsequent purchaser. If market discount on a security is treated as zero under
this rule, the actual amount of market discount must be allocated to the
remaining principal distributions on the security and, when each distribution is
received, gain equal to the discount allocated to the distribution will be
recognized.

Premium

A purchaser of a Premium Security need not include in income any remaining
original issue discount and may elect, under Section 171(c)(2) of the Code, to
treat the premium as "amortizable bond premium." If a beneficial owner makes
such an election, the amount of any interest payment that must be included in
the beneficial owner's income for each period ending on a distribution date will
be reduced by the portion of the premium allocable to the period based on the
Premium Security's yield to maturity. This premium amortization should be made
using constant yield principles. If the election is made by the beneficial
owner, the election will also apply to all fully taxable bonds, or bonds the
interest on which is not excludible from gross income, held by the beneficial
owner at the beginning of the first taxable year to which the election applies
and to all fully taxable bonds thereafter acquired by it, and is irrevocable
without the consent of the IRS. If this election is not made, (x) the
beneficial owner must include the full amount of each interest payment in income
as it accrues, and (y) the premium must be allocated to the principal
distributions on the Premium Security and when each distribution is received a
loss equal to the premium allocated to the distribution will be recognized. Any
tax benefit from the premium not previously recognized will be taken into
account in computing gain or loss upon the sale or disposition of the Premium
Security.

Some securities may provide for only nominal distributions of principal in
comparison to the distributions of interest thereon. It is possible that the IRS
or the Treasury Department may issue guidance excluding the securities from the
rules generally applicable to debt instruments issued at a premium. In
particular, it is possible that such a security will be treated as having
original issue discount equal to the excess of the total payments to be received
thereon over its issue price. In this event, Section 1272(a)(6) of the Code
would govern the accrual of the original issue discount, but a beneficial owner
would recognize substantially the same income in any given period as would be
recognized if an election were made under Section 171(c)(2) of the Code. Unless
and until the Treasury Department or the IRS publishes specific guidance

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relating to the tax treatment of the securities, the trustee intends to furnish
tax information to beneficial owners of the securities in accordance with the
rules described in the preceding paragraph.

Special Election

For any security acquired on or after April 4, 1994, a beneficial owner may
elect to include in gross income all "interest" that accrues on the security by
using a constant yield method. For purposes of the election, the term "interest"
includes stated interest, acquisition discount, original issue discount, de
minimis original issue discount, market discount, de minimis market discount and
unstated interest as adjusted by any amortizable bond premium or acquisition
premium. A beneficial owner should consult its own tax advisor regarding the
time and manner of making and the scope of the election and the implementation
of the constant yield method.

BACKUP WITHHOLDING

Distributions of interest and principal, as well as distributions of
proceeds from the sale of securities, may be subject to the "backup withholding
tax" under Section 3406 of the Code at a rate of 31% if recipients of the
distributions fail to furnish to the payor particular information, including
their taxpayer identification numbers, or otherwise fail to establish an
exemption from this tax. Any amounts deducted and withheld from a distribution
to a recipient would be allowed as a credit against the recipient's federal
income tax. Furthermore, penalties may be imposed by the IRS on a recipient of
distributions that is required to supply information but that does not do so in
the proper manner.

The Internal Revenue Service recently issued final "withholding
regulations", which change some of the rules relating to particular presumptions
currently available relating to information reporting and backup withholding.
The withholding regulations would provide alternative methods of satisfying the
beneficial ownership certification requirement. The withholding regulations are
effective December 31, 2000, although valid withholding certificates that are
held on December 31, 2000 remain valid until the earlier of December 31, 2000 or
the due date of expiration of the certificate under the rules as currently in
effect.

FOREIGN INVESTORS

The withholding regulations would require, in the case of securities held
by a foreign partnership, that (x) the certification described above be provided
by the partners rather than by the foreign partnership and (y) the partnership
provide specified information, including a United States taxpayer identification
number. See "-Backup Withholding" above. A look-through rule would apply in
the case of tiered partnerships. Non-U.S. Persons should consult their own tax
advisors regarding the application to them of the withholding regulations.

Grantor Trust Securities and REMIC Regular Securities

Distributions made on a Grantor Trust Security, Debt Security or a REMIC
Regular Security to, or on behalf of, a beneficial owner that is not a U.S.
Person generally will be exempt from U.S. federal income and withholding taxes.
This exemption is applicable provided

- the beneficial owner is not subject to U.S. tax as a result of a
connection to the United States other than ownership of the security,

- the beneficial owner signs a statement under penalties of perjury that
certifies that the beneficial owner is not a U.S. Person, and provides
the name and address of the beneficial owner, and

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- the last U.S. Person in the chain of payment to the beneficial owner
receives the statement from the beneficial owner or a financial
institution holding on its behalf and does not have actual knowledge
that the statement is false.

Beneficial owners should be aware that the IRS might take the position that
this exemption does not apply to a beneficial owner that also owns 10% or more
of the REMIC Residual Securities of any REMIC trust, or to a beneficial owner
that is a "controlled foreign corporation" described in Section 881(c)(3)(C) of
the Code.

REMIC Residual Securities

Amounts distributed to a beneficial owner of a REMIC Residual Security that
is a not a U.S. Person generally will be treated as interest for purposes of
applying the 30%, or lower treaty rate, withholding tax on income that is not
effectively connected with a U.S. trade or business. Temporary Treasury
Regulations clarify that amounts not constituting excess inclusions that are
distributed on a REMIC Residual Security to a beneficial owner that is not a
U.S. Person generally will be exempt from U.S. federal income and withholding
tax, subject to the same conditions applicable to distributions on Grantor Trust
Securities, Debt Securities and REMIC Regular Securities, as described above,
but only to the extent that the obligations directly underlying the REMIC Trust
that issued the REMIC Residual Security, for example, loans or regular interests
in another REMIC or FASIT, were issued after July 18, 1984. In no case will any
portion of REMIC income that constitutes an excess inclusion be entitled to any
exemption from the withholding tax or a reduced treaty rate for withholding.
See "-REMIC Securities-Taxation of Beneficial Owners of REMIC Residual
Securities-Excess Inclusions" in this prospectus.

Partnership Interests

Depending upon the particular terms of the Issuing Agreement and Loan Sale
Agreement, an issuer may be considered to be engaged in a trade or business in
the United States for purposes of federal withholding taxes with respect to
non-U.S. Persons. If the issuer is considered to be engaged in a trade or
business in the United States for these purposes and the issuer is treated as a
partnership, the income of the issuer distributable to a non-U.S. Person would
be subject to federal withholding tax. Also, in these cases, a non-U.S.
beneficial owner of a Partnership Interest that is a corporation may be subject
to the branch profits tax. If the issuer is notified that a beneficial owner of
a Partnership Interest is a foreign person, the issuer may withhold as if it
were engaged in a trade or business in the United States in order to protect the
issuer from possible adverse consequences of a failure to withhold. A foreign
holder generally would be entitled to file with the IRS a claim for refund with
respect to withheld taxes, taking the position that no taxes were due because
the issuer was not in a U.S. trade or business.

FASIT Regular Securities

Some "high-yield" FASIT Regular Securities may not be sold to or
beneficially owned by non-U.S. Persons. Any purported transfer will be null and
void and, upon the trustee's discovery of any purported transfer in violation of
this requirement and the last preceding owner of the high-yield FASIT Regular
Securities will be restored to ownership thereof as completely as possible. The
last preceding owner will, in any event, be taxable on all income with respect
to the high-yield FASIT Regular Securities for federal income tax purposes. The
Issuing Agreement will provide that, as a condition to transfer of a high-yield
FASIT Regular Security, the proposed transferee must furnish an affidavit as to
its status as a U.S. Person and otherwise as a permitted transferee.

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STATE TAX CONSIDERATIONS

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

The federal income tax discussions set forth above are included for general
information only and may not be applicable depending upon an investor's
particular tax situation. prospective purchasers should consult their tax
advisers with respect to the tax consequences to them of the purchase, ownership
and disposition of the securities, including the tax consequences under state,
local, foreign and other tax laws and the possible effects of changes in federal
or other tax laws.

ERISA CONSIDERATIONS

ERISA and Section 4975 of the Code impose a number of requirements on those
employee benefit plans to which they apply and on those persons who are
fiduciaries with respect to these plans. The following is a general discussion
of the requirements, and a number of applicable exceptions to and administrative
exemptions from the requirements.

Section 406 of ERISA and Section 4975 of the Code prohibit a pension,
profit sharing or other employee benefit plan and certain individual retirement
arrangements from engaging in specified transactions involving "plan assets"
with persons that are "parties in interest" under ERISA or "disqualified
persons" under the Code with respect to the plan, unless a statutory or
administrative exemption applies to the transaction. ERISA and the Code also
prohibit generally a number of actions involving conflicts of interest by
persons who are fiduciaries of these plans or arrangements. A violation of these
"prohibited transaction" rules may generate excise tax and other liabilities
under ERISA and the Code for these persons. In addition, investments by plans
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.
Employee benefit plans that are governmental plans, as defined in Section 3(32)
of ERISA, and some church plans, as defined in Section 3(33) of ERISA, are not
subject to ERISA requirements. Accordingly, assets of these plans may be
invested in securities without regard to the ERISA considerations discussed
below, subject to the provisions of other applicable federal, state and local
law. Any plan which is qualified and exempt from taxation under 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.

Some transactions involving the issuer might be deemed to constitute
prohibited transactions under ERISA and the Code with respect to a plan,
including an individual retirement arrangement, that purchased securities, if
the assets of the issuer were deemed to be assets of the Plan. Under a "plan
asset regulation" issued by the United States Department of Labor, the assets of
the issuer would be treated as plan assets of a plan for the purposes of ERISA
and the Code only if the plan acquired an equity interest in the issuer and none
of the exceptions contained in the plan asset regulation were applicable. An
"equity interest" is defined under the plan asset regulation as an interest
other than an instrument which is treated as indebtedness under applicable local
law and which has no substantial equity features. In addition, in John Hancock
Mutual Life Insurance Co. v. Harris Trust and Savings Bank, 510 U.S. 86 (1993),

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the United States Supreme Court ruled that assets held in an insurance company's
general account may be deemed to be "plan assets" for ERISA purposes under
particular circumstances. Therefore, in the absence of an exemption, the
purchase, sale or holding of a security by a plan, including some individual
retirement arrangements, subject to Section 406 of ERISA or Section 4975 of the
Code might result in prohibited transactions and the imposition of excise taxes
and civil penalties.

CERTIFICATES

The Department of Labor has issued to various underwriters individual
prohibited transaction exemptions, which generally exempt from the application
of the prohibited transaction provisions of Sections 406(a), 406(b)(1),
406(b)(2) and 407(a) of ERISA and the excise taxes imposed under Sections
4975(a) and (b) of the Code, particular transactions with respect to the initial
purchase, the holding and the subsequent resale by plans of certificates in
pass-through trusts that consist of secured receivables, secured loans and other
secured obligations that meet the conditions and requirements of these
underwriter exemptions. These underwriter exemptions will only be available for
securities that are certificates.

Among the conditions that must be satisfied in order for the underwriter
exemptions to apply to offered certificates are the following:

(a) the acquisition of the certificates by a plan is on terms,
including the price for the certificates, that are at least as favorable to
the plan as they would be in an arm's-length transaction with an unrelated
party;

(b) the rights and interests evidenced by the certificates acquired by
the plan are not subordinated to the rights and interests evidenced by
other certificates of the trust;

(c) the certificates acquired by the p1lan have received a rating at
the time of the acquisition that is one of the three highest generic rating
categories from Standard & Poor's Rating Services, a division of The
McGraw-Hill Companies, Moody's Investors Service, Inc., Duff & Phelps
Credit Rating Co., or Fitch IBCA, Inc.;

(d) the trustee is not an affiliate of any other member of the
Restricted Group;

(e) the sum of all payments made to and retained by the underwriters
in connection with the distribution of the certificates represents not more
than reasonable compensation for underwriting the certificates; the sum of
all payments made to and retained by the originators and the sponsor under
the assignment of the loans to the trust fund represents not more than the
fair market value of the loans; the sum of all payments made to and
retained by any servicer represents not more than reasonable compensation
for this person's services under the pooling and servicing agreement and
reimbursement of this person's reasonable expenses in connection therewith;

(f) the plan investing in the certificates is an "accredited investor"
as defined in Rule 501(a)(1) of Regulation D under the Securities Act of
1933; and

(g) in the event that all of the obligations used to fund the trust
have not been transferred to the trust on the closing date, additional
obligations of the types specified in the prospectus supplement and/or
pooling and servicing agreement having an aggregate value equal to no more
than 25% of the total principal amount of the certificates being offered by
the trust may be transferred to the trust, in exchange for amounts credited
to the account funding the additional obligations, within a funding period
of no longer than 90 days or 3 months following the closing date.

The trust fund must also meet the following requirements:

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- the corpus of the trust fund must consist solely of assets of the type
that have been included in other investment pools;

- certificates in the other investment pools must have been rated in one
of the three highest rating categories of Standard & Poor's, Moody's,
Fitch IBCA or Duff & Phelps for at least one year prior to the plan's
acquisition of certificates; and

- certificates evidencing interests in the other investment pools must
have been purchased by investors other than plans for at least one (1)
year prior to the plan's acquisition of certificates.

Moreover, the underwriter exemptions provide relief from specified
self-dealing/conflict of interest prohibited transactions that may occur when
the plan fiduciary causes a plan to acquire certificates in a trust in which the
fiduciary, or its affiliate, is an obligor on the receivables held in the trust;
provided, that, among other requirements,
- --------

(1) in the case of an acquisition in connection with the initial issuance
of certificates, at least fifty percent of each class of certificates
in which plans have invested is acquired by persons independent of the
Restricted Group and at least fifty percent of the aggregate interest
in the trust is acquired by persons independent of the Restricted
Group;

(2) 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;

(3) the plan's investment in certificates of any class does not exceed
twenty-five percent of all of the certificates of that class
outstanding at the time of the acquisition; and

(4) immediately after the acquisition, no more than twenty-five percent of
the assets of the plan with respect to which this person is a
fiduciary are invested in certificates representing an interest in one
or more trusts containing assets sold or serviced by the same entity.

The underwriter exemptions do not apply to plans sponsored by the
Restricted Group.

In addition to the underwriter exemptions, the Department of Labor has
issued PTCE 83-1 which provides an exemption for particular transactions
involving the sale or exchange of specified residential mortgage pool
pass-through certificates by plans and for transactions in connection with the
servicing and operation of the mortgage loan pool.

NOTES

The underwriter exemptions will not be available for securities which are
notes. If the notes are treated as having substantial equity features, the
purchase, holding and resale of the notes could result in a transaction that is
prohibited under ERISA or the Code. However, if the notes are treated as
indebtedness without substantial equity features, the issuer's assets would not
be deemed assets of a plan. The acquisition or holding of the notes by or on
behalf of a plan could nevertheless give rise to a prohibited transaction, if
the acquisition and holding of Notes by or on behalf of a plan were deemed to be
a prohibited loan to a party in interest with respect to this plan. Some
exemptions from the prohibited transaction rules could be applicable to the
purchase and holding of notes by a plan, depending on the type and circumstances
of the plan fiduciary making the decision to acquire the notes. Included among
these exemptions are: PTCE 84-14, regarding specified transactions effected by
"qualified professional asset managers"; PTCE 90-1, regarding specified

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transactions entered into by insurance company pooled separate accounts; PTCE
91-38, regarding specified transactions entered into by bank collective
investment funds; PTCE 95-60, regarding specified transactions entered into by
insurance company general accounts; and PTCE 96-23, regarding specified
transactions effected by "in-house asset managers". Each purchaser and each
transferee of a note that is treated as debt for purposes of the plan asset
regulation may be required to represent and warrant that its purchase and
holding of the note will be covered by one of the exemptions listed above or by
another Department of Labor class exemption.

CONSULTATION WITH COUNSEL

The prospectus supplement for each series of securities will provide
further information which plans should consider before purchasing the offered
securities. A plan fiduciary considering the purchase of securities should
consult its tax and/or legal advisors regarding whether the assets of the issuer
would be considered plan assets, the possibility of exemptive relief from the
prohibited transaction rules and other ERISA issues and their potential
consequences. Moreover, each plan fiduciary should determine whether under the
general fiduciary standards of investment prudence and diversification, an
investment in the securities is appropriate for the plan, taking into account
the overall investment policy of the plan and the composition of the plan's
investment portfolio. The sale of securities to a plan is in no respect a
representation by the sponsor, the issuer or the underwriter(s) that this
investment meets all relevant requirements with respect to investments by plans
generally or any particular plan or that this investment is appropriate for
plans generally or any particular plan.

LEGAL INVESTMENT

If specified in the accompanying prospectus supplement, the securities of
one or more classes offered by this prospectus will constitute "mortgage related
securities" for purposes of SMMEA, so long as they are rated in one of the two
highest rating categories by at least one nationally recognized statistical
rating organization. As "mortgage related securities," the securities will
constitute legal investments for persons, trusts, corporations, partnerships,
associations, business trusts and business entities, including, but not limited
to, state-chartered savings banks, commercial banks, savings and loan
associations and insurance companies, as well as trustees and state government
employee retirement systems, created in accordance with or existing under the
laws of the United States or of any state, including the District of Columbia
and Puerto Rico, whose authorized investments are subject to state regulation to
the same extent that, under applicable law, obligations issued by or guaranteed
as to principal and interest by the United States or any agency or
instrumentality thereof constitute legal investments for the entities. Under
SMMEA, a number of states enacted legislation, on or before the October 3, 1991
cutoff for the enactments, limiting to varying extends the ability of particular
entities, in particular, insurance companies, to invest in "mortgage related
securities," in most cases by requiring the affected investors to rely solely
upon existing state law, and not SMMEA. Accordingly, the investors affected by
the legislation will be authorized to invest in the securities only to the
extent provided in the legislation.

SMMEA also amended the legal investment authority of federally chartered
depository institutions as follows: federal savings and loan associations and
federal savings banks may invest in, sell or otherwise deal with mortgage
related securities without limitation as to the percentage of their assets
represented thereby, federal credit unions may invest in mortgage related
securities, and national banks may purchase mortgage related securities for
their own account without regard to the limitations generally applicable to
investment securities set forth in 12 U.S.C. 24 (Seventh), subject in each case
to the regulations as the applicable federal regulatory authority may prescribe.
In this connection, federal credit unions should review National

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Credit Union Administration Letter to Credit Unions No. 96, as modified by
Letter No. 108, which includes guidelines to assist federal credit unions in
making investment decisions for mortgage related securities. The National Credit
Union Administration has adopted rules, effective December 2, 1991, which
prohibit federal credit unions from investing in particular mortgage related
securities, including securities such as some series or classes of the
securities, except under limited circumstances.

All depository institutions considering an investment in the securities
should review the "Supervisory Policy Statement on Securities Activities" dated
January 28, 1992 of the Federal Financial Institutions Examination Council. This
Policy Statement, which has been adopted by the Board of Governors of the
Federal Reserve System, the Federal Deposit Insurance Corporation, the
Comptroller of the Currency and the Office of Thrift Supervision, effective
February 10, 1992, and by the National Credit Union Administration, with a
number of modifications, effective June 26, 1992, prohibits institutions from
investing in some "high-risk" mortgage securities, including securities such as
some classes of the securities, except under limited circumstances, and sets
forth specified investment practices deemed to be unsuitable for regulated
institutions.

Institutions whose investment activities are subject to regulation by
federal or state authorities should review rules, policies and guidelines
adopted from time to time by these authorities before purchasing any securities,
as some series or classes may be deemed unsuitable investments, or may otherwise
be restricted, under the rules, policies or guidelines, in specified instances
irrespective of SMMEA.

The foregoing does not take into consideration the applicability of
statutes, rules, regulations, orders, guidelines or agreements generally
governing investments made by a particular investor, including, but not limited
to, "prudent investor" provisions, percentage-of-assets limits, provisions which
may restrict or prohibit investment in securities which are not
"interest-bearing" or "income-paying" and, with regard to any securities issued
in book-entry form, provisions which may restrict or prohibit investment in
securities which are issued in book-entry form.

OTHER CLASSES OF SECURITIES OFFERED BY THIS PROSPECTUS WILL NOT CONSTITUTE
"MORTGAGE RELATED SECURITIES" UNDER SMMEA BECAUSE THEY WILL NOT REPRESENT
BENEFICIAL OWNERSHIP INTERESTS IN QUALIFYING MORTGAGE LOANS UNDER SMMEA. THE
APPROPRIATE CHARACTERIZATION OF THOSE SECURITIES UNDER VARIOUS LEGAL INVESTMENT
RESTRICTIONS, AND THUS THE ABILITY OF INVESTORS SUBJECT TO THESE RESTRICTIONS TO
PURCHASE THE SECURITIES, MAY BE SUBJECT TO SIGNIFICANT INTERPRETIVE
UNCERTAINTIES. ALL INVESTORS WHOSE INVESTMENT AUTHORITY IS SUBJECT TO LEGAL
RESTRICTIONS SHOULD CONSULT THEIR OWN LEGAL ADVISORS TO DETERMINE WHETHER, AND
TO WHAT EXTENT, THE SECURITIES WILL CONSTITUTE LEGAL INVESTMENTS FOR THEM.

NO REPRESENTATION IS MADE AS TO THE PROPER CHARACTERIZATION OF THE
SECURITIES FOR LEGAL INVESTMENT OR FINANCIAL INSTITUTION REGULATORY PURPOSES, OR
AS TO THE ABILITY OF PARTICULAR INVESTORS TO PURCHASE SECURITIES UNDER
APPLICABLE LEGAL INVESTMENT RESTRICTIONS. THE UNCERTAINTIES DESCRIBED ABOVE, AND
ANY UNFAVORABLE FUTURE DETERMINATIONS CONCERNING LEGAL INVESTMENT OR FINANCIAL
INSTITUTION REGULATORY CHARACTERISTICS OF THE SECURITIES, MAY ADVERSELY AFFECT
THE LIQUIDITY OF THE NON-SMMEA SECURITIES.

INVESTORS SHOULD CONSULT WITH THEIR OWN LEGAL ADVISORS IN DETERMINING
WHETHER AND TO WHAT EXTENT THE SECURITIES CONSTITUTE LEGAL INVESTMENTS FOR THESE
INVESTORS.

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PLAN OF DISTRIBUTION

The issuer may sell the securities offered hereby in series either directly
or through underwriters. The accompanying prospectus supplement or prospectus
supplements for each series will describe the terms of the offering for that
series and will state the public offering or purchase price of each class of
securities of a series, or the method by which the price is to be determined,
and the net proceeds to the issuer from the sale.

If the sale of any securities is made in accordance with an underwriting
agreement under which one or more underwriters agree to act in this capacity,
the securities will be acquired by these underwriters for their own account and
may be resold from time to time in one or more transactions, including
negotiated transactions, at a fixed public offering price or at varying prices
to be determined at the time of sale or at the time of commitment therefor. Firm
commitment underwriting and public reoffering by underwriters may be done
through underwriting syndicates or through one or more firms acting alone. The
specific managing underwriter or underwriters, if any, with respect to the offer
and sale of a particular series of securities will be printed on the cover of
the prospectus supplement for a series and the members of the underwriting
syndicate, if any, will be named in the accompanying prospectus supplement. The
prospectus supplement will describe any discounts and commissions to be allowed
or paid by the issuer to the underwriters, any other items constituting
underwriting compensation and any discounts and commissions to be allowed or
paid to the dealers. The obligations of the underwriters will be subject to a
number of conditions precedent. Unless otherwise provided in the accompanying
prospectus supplement, the underwriters with respect to a sale of any class of
securities will be obligated to purchase all of the securities if any are
purchased. In accordance with each underwriting agreement, the sponsor will
indemnity the underwriters against specified civil liabilities, including
liabilities under the Securities Act of 1933.

In connection with any offering, the underwriters may over-allot or effect
transactions which stabilize or maintain the market prices of the securities at
levels above those which might otherwise prevail in the open market. This
stabilizing, if commenced by the underwriters, may be discontinued at any time.

If any securities are offered other than through underwriters acting under
underwriting agreements, the accompanying prospectus supplement or prospectus
supplements will contain information regarding the terms of the offering and any
agreements to be entered into in connection with the offering.

Purchasers of securities, including dealers, may, depending on the facts
and circumstances of the purchases, be deemed to be "underwriters" within the
meaning of the Securities Act, in connection with reoffers and sales by them of
securities. securityholders should consult with their legal advisors in this
regard prior to any reoffer and sale.

If specified in the prospectus supplement relating to a series of
securities, the sponsor, any affiliate thereof or any other person or persons
specified in the prospectus supplement may purchase some or all of one or more
classes of securities of a series from the underwriter or underwriters or any
other person or persons specified in the accompanying prospectus supplement. The
purchaser may thereafter from time to time offer and sell, by this prospectus
and the accompanying prospectus supplement, some or all of the securities so
purchased, directly, through one or more underwriters to be designated at the
time of the offering of the securities, through dealers acting as agent and/or
principal as in any other manner as may be specified in the accompanying
prospectus supplement. The offering may be restricted in the manner specified in
the accompanying prospectus supplement. These transactions may be effected at
market prices prevailing at the time of sale, at negotiated prices or at fixed

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prices. Any underwriters and dealers participating in the purchaser's offering
of the securities may receive compensation in the form of underwriting discounts
or commissions from the purchaser and the dealers may receive commissions from
the investors purchasing the securities for whom they may act as agent, which
discounts or commissions will not exceed those customary in those types of
transactions involved. Any dealer that participates in the distribution of the
securities may be deemed to be an "underwriter" within the meaning of the
Securities Act of 1933, and any commissions and discounts received by the dealer
and any profit on the resale of the securities by the dealer might be deemed to
be underwriting discounts and commissions under the Securities Act of 1933.

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

There are incorporated in this prospectus by reference all documents and
reports filed or caused to be filed by the sponsor under Section 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934, after the date of this
prospectus and prior to the termination of any offering of securities evidencing
interests in this prospectus, including the sponsor's latest annual report on
Form 10-K. Any statement contained in a document incorporated or deemed to be
incorporated by reference in this prospectus shall be deemed to be modified or
superseded for all purposes of this prospectus to the extent that a statement
contained in this prospectus, in the accompanying prospectus supplement or in
any other subsequently filed document which also is or is deemed to be
incorporated by reference modifies or replaces the statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this prospectus.

The sponsor will provide, or cause to be provided, without charge to each
person to whom this prospectus is delivered in connection with the offering of
one or more classes of a series, a list identifying all filings with respect to
the sponsor under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act, since the latest fiscal year covered by its annual report on Form 10-K, and
a copy of any or all documents or reports incorporated in this prospectus by
reference, in each case to the extent the documents or reports relate to one or
more of classes of a series, other than the exhibits to the documents, unless
the exhibits are specifically incorporated by reference in the documents.
Requests to the sponsor should be directed to: Prudential Securities Secured
Financing Corporation, One New York Plaza, 14th Floor, New York, New York 10292,
Attention: Managing Director-Asset-Backed Finance Group, (212) 778-1000.

ADDITIONAL INFORMATION

The sponsor has filed a registration statement under the Securities Act of
1933 with the Securities and Exchange Commission with respect to the securities
offered by this prospectus. This prospectus contains, and the prospectus
supplement for each series of securities will contain, a summary of the material
terms of the documents referred to in this prospectus and in the accompanying
prospectus, but neither contains nor will contain all of the information
included in the registration statement of which this prospectus is a part. For
further information, you should read the registration statement and any
amendments thereof and exhibits thereto. You may obtain a copy of the
registration statement from the Public Reference Room of the Securities and
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549 upon payment
of the prescribed charges, or you may examine the registration statement free of
charge at the Securities and Exchange Commission's offices, 450 Fifth Street,
N.W., Washington, D.C. 20549 or at the regional offices of the Securities and
Exchange Commission located at Room 1400, 75 Park Place, New York, New York
10007 and Northwestern Atrium Center, 500 West Madison Street, Suite 400,
Chicago, Illinois 60661-2511. Information about the operation of the Public

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Reference Room may be obtained by contracting the Securities and Exchange
Commission at 1-800-SEC-0330. In addition, the Securities and Exchange
Commission maintains a site on the World Wide Web containing reports, proxy and
information statements and other items. The address of the site is
http://www.sec.gov.

Each issuer will be required to file particular reports with the Securities
and Exchange Commission in accordance with the requirements of the Securities
Exchange Act of 1934. Each issuer will suspend filing the reports if and when
the reports are no longer required under the Securities Exchange Act of 1934.

In connection with each distribution, and annually, the sponsor will cause
the servicer to furnish securityholders with statements containing information
with respect to the assets of the issuer, as described in this prospectus and in
the prospectus supplement for a series. See "Servicing of the Loans-Reports to
Securityholders." The servicer for each series will furnish periodic statements
setting forth specified information to the trustee for a series and, in
addition, annually will furnish the trustee with a statement from a firm of
independent public accounts with respect to the examination of specified
documents and records relating to the servicing of the mortgage loans and/or
manufactured housing contracts held by the issuer. See "Servicing of the
Loans-Evidence as to Compliance" in this prospectus. Copies of the monthly and
annual statements provided by the servicer to the trustee will be furnished to
securityholders of the series upon request addressed to Prudential Securities
Secured Financing Corporation, One New York Plaza, 14th Floor, New York, New
York 10292, Attention: Managing Director-Asset-Backed Finance Group, (212)
778-1000.

Copies of FHLMC's most recent Offering Circular for FHLMC securities,
FHLMCs Information Statement and the most recent Supplement to the Information
Statement and any quarterly report made available by FHLMC can be obtained by
writing or calling the Investor Inquiry Department at FHLMC at 8200 Jones Branch
Drive, McLean Virginia 22102. Outside Washington, D.C. metropolitan area,
telephone 800-336-FMPC; within Washington, D.C. metropolitan area, telephone
703-759-8160. The sponsor has not and will not participate in the preparation of
FHLMC's Offering Circulars, Information Statements or Supplements.

Copies of FNMA's most recent prospectus for FNMA securities and FNMA's
annual report and quarterly financial statements as well as other financial
information are available from the Senior Vice President for Investor Relations
of FNMA, 3900 Wisconsin Avenue, N.W., Washington, D.C. 20016 (202-752-7115). The
sponsor has not and will not participate in the preparation of FNMA's
prospectuses.

You should rely only on the information contained in this prospectus and in
the accompanying prospectus supplement. We have not authorized anyone to provide
any information that is different. This prospectus and any accompanying
prospectus supplement do not constitute an offer to sell or a solicitation of an
offer to buy any securities other than the securities offered hereby and thereby
nor an offer of the securities to any person in any state or other jurisdiction
in which the offer would be unlawful. The information included in this
prospectus speaks as of the date hereof. You should not assume that it will
remain correct after this date.

LEGAL MATTERS

A number of legal matters and tax matters will be passed upon for the
sponsor by Dewey Ballantine LLP, New York, New York and/or any other counsel as
will be named on the accompanying prospectus supplement.

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RATINGS

At the date of issuance of each series of securities, the securities
offered hereby will be rated in one of the four highest categories by at least
one nationally recognized statistical rating agency. These ratings address, in
the opinion of the rating agency, the likelihood that the issuer will be able to
make timely payment of all amounts due on the series of securities in accordance
with their terms. The ratings will neither address any prepayment or yield
considerations applicable to any securities nor constitute a recommendation to
buy, sell or hold any securities and may be subject to revision or withdrawal at
any time by the assigning rating agency. Each securities rating should be
evaluated independently of any other rating.

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GLOSSARY

The following terms have the meanings given below when used in this
prospectus or the accompanying prospectus supplement.

Accrual Securities means one or more classes of securities as to which a
portion of the accrued interest will not be distributed but rather will be added
to the principal balance of the security, or notional principal balance in the
case of accrual Securities which are also Strip Securities, on each distribution
date.

CERCLA means the federal Comprehensive Environmental Response,
Compensation, and Liability Act of 1980.

Collection Account means segregated trust account or accounts for a series,
established and maintained with the trustee, for the benefit of the
securityholders, for the deposit of collections on the underlying loans.

Credit Enhancer means the provider of any credit enhancement for a series,
including bond insurers, guarantors and letter of credit banks.

Debt Securities means securities that are intended to be treated for
federal income tax purposes as indebtedness secured by the underlying loans held
by the issuer.

Deleted Loan means a loan which breaches the representations and warranties
made by the originator in the Loan Sale Agreement and which must be repurchased
or substituted for by the originator.

Equity Participation Securities means any class of securities or interests
in the issuer which represent the right to receive the proceeds of the trust
fund after all required payments have been make to the holders of the securities
and following any required deposits to any reserve fund that may be established
for the benefit of the securities, including FASIT Ownership Securities and
REMIC Residual Securities.

FASIT Ownership Securities means securities of the one separated class of a
series which has been designated as the "ownership interest" of the FASIT Trust
in the accompanying prospectus supplement.

FASIT Regular Securities means securities of each class of a series which
has been designated as the "regular interests" or "high-yield regular interests"
of the FASIT Trust in the accompanying prospectus supplement.

FASIT Securities means securities representing interests in a trust, or a
segregated pool or pools of assets therein, which the issuer will covenant to
elect to have treated as a FASIT under Sections 860H through 860L of the Code.

FASIT Trust means an issuer for which a FASIT election is made.

FIRREA means the Financial Institutions Reform, Recovery, and Enforcement
Act of 1989.

Fixed Retained Yield means, with respect to any loan, the portion, if any,
of interest, at the loan interest rate, that is retained by the issuer or other
owner thereof and not included in the trust fund.

Garn Act means the Garn-St Germain Depository Institutions Act of 1982

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Grantor Trust Fractional Interest Security means a Grantor Trust Security
representing an undivided equitable ownership interest in the principal of the
loans constituting the grantor trust, together with interest thereon at a
pass-through rate.

Grantor Trust Securities means securities representing interests in a
grantor trust which the issuer will covenant not to elect to have treated as a
REMIC or a FASIT.

Grantor Trust Strip Security means a Grantor Trust Security representing
ownership of all or a portion of the difference between interest paid on the
loans constituting the grantor trust all interest paid to the beneficial owners
of Grantor Trust Fractional Interest Securities issued with respect to the
grantor trust.

Insurance Proceeds means all proceeds received by the servicer under any
title, hazard or other insurance policy covering any loan, other than proceeds
to be applied to the restoration or repair of the mortgaged property or
manufactured home or released to the mortgagor or obligor in accordance with the
Servicing Agreement.

Interest Rate means, with respect to each class of securities, the rate at
which interest accrues on the securities, which may be fixed rate, adjustable
rate, or rate based upon the underlying loans, as specified in the accompanying
prospectus supplement.

Issuing Agreement means, means

- with respect to each series of Grantor Trust Securities, REMIC
Securities and FASIT Securities, a pooling and servicing agreement.

- with respect to each series of Debt Securities, and indenture, and

- with respect to each series of Partnership Interests, a trust
agreement or other similar agreement.

Liquidation Proceeds means all amounts received by the servicer in
connection with the liquidation of defaulted loans or property acquired in
respect thereof, whether through foreclosure sale or otherwise, including
payments in connection with defaulted loans received from the mortgagor or
obligor other than amounts required to be paid to the mortgagor or obligor under
the terms of the applicable loan or otherwise in accordance with law.

Loan Sale Agreement means the agreement or agreement under which the issuer
obtained the loans from the originator, either directly or through a
special-purpose affiliate or the originator.

Net Insurance Proceeds means Insurance proceeds, less expenses incurred in
connection with collecting on insurance policies, less any unreimbursed advances
with respect to the loan, withdrawn from the Collection Account, any unpaid
servicing fees on the loan.

Net Liquidation Proceeds means Liquidation Proceeds, less expenses incurred
in connection with the liquidation, less other reimbursed servicing costs
associated with the mortgaged property or manufactured home, less any
unreimbursed advances with respect to the loan and, in the discretion of the
servicer, but only to the extent of the amount permitted to be withdrawn from
the Collection Account, less any unpaid servicing fees on the loans or the
mortgaged properties or manufactured homes.

Net Loan Rate means, with respect to each loan, the loan interest rate,
less the Fixed Retained Yield, if any servicing fee applicable to the loan.

92
<PAGE>
Partnership Interests means securities representing interests in a trust
that is intended to be treated as a partnership under the Code.

PCTE means a Prohibited Transaction Class Exemption issued by the
Department of Labor.

Pre-Funding Account means a segregated trust account or accounts established and
maintained with the trustee, for the benefit of the security holders, for the
deposit of funds to be used by the issuer to purchase additional loans during
the Pre-Funding Period.

Pre-Funding Period means the period stated in the accompanying prospectus
supplement during which additional loans may be purchased by the issuer with the
funds on deposit in the Pre-Funding Account.

Premium Security means a security that is purchased at a cost greater than
its remaining stated redemption price at maturity.

Prepayment Assumption means the assumption used to calculate the rate at
which the loans prepay, as specified in the accompanying prospectus supplement.

REMIC Regular Securities means the securities of each class of a series
which have been designated as "regular interests" of the REMIC Trust in the
accompanying prospectus supplement.

REMIC Regulations means the regulations issued by the Treasury Department
on December 23, 1992 with respect to REMICs.

REMIC Residual Securities means the securities of each class of a series
which have been designated as "regular interests" of the REMIC Trust in the
accompanying prospectus supplement.

REMIC Securities means securities representing interests in a trust, or a
segregated pool or pools of assets therein, which the issuer will covenant to
elect to have treated as a REMIC under Sections 860A through 860G of the Code.

REMIC Trust means an issuer for which a REMIC election is made.

Restricted Group means the sponsor, the issuer, the underwriter(s), the
trustee, the servicer, any obligor with respect to loans included in the trust
fund constituting more than five percent of the aggregate unamortized principal
balance of the assets in the trust fund, or any affiliate of these parties.

Servicing Agreement means, with respect to a series of securities, the
agreement concerning the servicing of the loans, which may be a servicing
agreement, pooling and servicing agreement, sale and servicing agreement, or
other similar agreement.

Settlement Date means, unless other wise stated in the accompanying
prospectus supplement, the date the securities are first sold to the public.

SMMEA means the Secondary Mortgage Market Enhancement Act of 1984.

Startup Day means, unless otherwise started in the accompanying prospectus
supplement, the date of the initial issuance of the FASIT Securities.

Strip Securities means securities entitled to (x) principal distributions,
with disproportionate, nominal or no interest distributions, or (y) interest
distributions, with disproportionate, nominal or no principal distributions.

U.S. Person means a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political

93
<PAGE>
Subdivision thereof, an estate that is subject to U.S. federal income tax
regardless of the source of its income, or a trust of a court within the United
States can exercise primary supervision over its administration and at least one
United States person has the authority to control all substantial decisions of
the trust.

94
<PAGE>
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the expenses in connection with the issuance
and distribution of the Securities being registered, other than underwriting
discounts and commissions. All of the amounts shown are estimates, except the
SEC registration fee.

<TABLE>
<CAPTION>
<S> <C>
SEC registration fee $ 417,000
Legal fees and expenses 200,000
Accounting fees and expenses 120,000
Blue Sky fees and expenses 60,000
Rating Agency fees 100,000
Owner Trustee fees and expenses 60,000
Indenture Trustee fees and expenses 120,000
Credit Enhancer 200,000
Printing and engraving 150,000
Miscellaneous 200,000
----------
Total $1,627,000
----------
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the Delaware General Corporation Law provides that a
Delaware corporation may indemnify any persons, including officers and
directors, who are, or are threatened to be made, parties to any threatened,
pending or completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person was an officer or director
of such corporation, or is or was serving at the request of such corporation as
a director, officer, employee or agent of another corporation or enterprise.
The indemnity may include expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by such person
in connection with such action, suit or proceeding, provided such officer or
director acted in good faith and in a manner he reasonably believed to be in or
not opposed to the corporation's best interests and, for criminal proceedings,
had no reasonable cause to believe that his conduct was illegal. A Delaware
corporation may indemnify officers and directors in an action by or in the right
of the corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to be
liable to the corporation. Where an officer or director is successful on the
merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses which such officer of
director actually and reasonably incurred.

The agreements which the Registrant will enter into for each series of
Securities will provide that the Registrant and any director, officer, employee
or agent of the Registrant will be entitled to indemnification by the Trust Fund
and will be held harmless against any loss, liability or expense incurred in
connection with any legal action relating to such agreements or the Securities,
other than any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or negligence in the performance of his or its duties
thereunder or by reason of reckless disregard of his or its obligations and
duties thereunder.

Section 8 of the form of underwriting agreements filed as a part of Exhibit
1 to this Registration Statement provides for indemnification of directors and
officers who sign the Registration Statement and controlling persons of the
Registrant by the underwriters, and for indemnification of each underwriter and
its controlling person by the Registrant, against certain liabilities.

II-1
<PAGE>
ITEM 16. EXHIBITS.

<TABLE>
<CAPTION>
Exhibit
- -------
<C> <S>
1.1* Form of Underwriting Agreement.
4.1* Form of Pooling and Servicing Agreement, including form of Certificates.
4.2* Form of Indenture, including form of Notes and certain other related agreements as Exhibits thereto.
4.3* Form of Trust Agreement.
4.4* Form of Securitization Sponsorship Agreement.
5.1* Opinion of Dewey Ballantine LLP regarding legality.
8.1* Opinion of Dewey Ballantine LLP regarding tax matters.
10.1* Form of Loan Sale Agreement.
10.2* Form of Sale and Servicing Agreement.
23.1* Consent of Dewey Ballantine LLP (included as part of Exhibits 5.1 and 8.1).
24.1* Power of Attorney (included as part of the signature page to Form S-3).
25.1* Statement of Eligibility and Qualification of the Indenture Trustee (Form T-1).

___________________
* Previously filed.
</TABLE>

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes:

(a) (1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which is registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement;

(iii)To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;

provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
-------- -------
the Registration Statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the Registration Statement.

II-2
<PAGE>

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the Securities being registered which remain unsold at the termination of
the offering.

(b) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in this Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the provisions referred to in Item 15 of this
Registration Statement, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the Securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be governed by the
final adjudication of such issue.

(d) That,

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

(e) To file an application for the purpose of determining the eligibility
of the trustee to act under subsection (a) of Section 310 of the Trust Indenture
Act in accordance with the rules and regulations prescribed by the Commission
under Section 305(b)(2) of the Trust Indenture Act.

II-3
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Amendment
No.2 to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of New York, State of New York on the 9th day of June, 1999.

PRUDENTIAL SECURITIES SECURED FINANCING
CORPORATION

By /s/ Vincent T. Pica, II
---------------------------
Vincent T. Pica, II
President and Director

Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 2 has been signed below by the following persons in the capacities
and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------ --------------------------------------- ------------
<S> <C> <C>

/s/ Vincent T. Pica, II President (Principal Executive Officer)
- ------------------------------------
Vincent T. Pica, II and Director June 9, 1999

*
- ------------------------------------
P. Carter Rise Director June 9, 1999

*
- ------------------------------------
Martin Pfinsgraff Director June 9, 1999

*
- ------------------------------------
Leland B. Paton Director June 9, 1999
Chief Financial Officer (Principal

* Financial Officer and Principal
- ------------------------------------
William J. Horan Accounting Officer) June 9, 1999

By: /s/ Vincent T. Pica, II
- ------------------------------------
Attorney-in-Fact June 9, 1999
</TABLE>

II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX

Exhibit Description of Document
- ------- --------------------------------------------------------------------------------------------------------
<C> <S>
1.1* Form of Underwriting Agreement.
4.1* Form of Pooling and Servicing Agreement, including form of Certificates.
4.2* Form of Indenture, including form of Notes and certain other related agreements as Exhibits thereto.
4.3* Form of Trust Agreement.
4.4* Form of Securitization Sponsorship Agreement.
5.1* Opinion of Dewey Ballantine LLP regarding legality.
8.1* Opinion of Dewey Ballantine LLP regarding tax matters.
10.1* Form of Loan Sale Agreement.
10.2* Form of Sale and Servicing Agreement.
23.1* Consent of Dewey Ballantine LLP (included as part of Exhibits 5.1 and 8.1).
24.1* Power of Attorney (included as part of the signature page to Form S-3).
25.1* Statement of Eligibility and Qualification of the Indenture Trustee (Form T-1).

___________________
* Previously filed.
</TABLE>