RESIDENTIAL ASSET SECURITIES CORP, 424B3, 1996-05-21

RESIDENTIAL ASSET SECURITIES CORP
424B3, 1996-05-21
ASSET-BACKED SECURITIES

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<PAGE>

RULE NO. 424(b)(3)
REGISTRATION NO. 33-56893

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. THESE +
+SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED WITHOUT THE +
+DELIVERY OF A FINAL PROSPECTUS SUPPLEMENT AND PROSPECTUS. THIS PROSPECTUS +
+SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO +
+SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF +
+THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD +
+BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS +
+OF ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MAY 17, 1996

PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MAY , 1996)
$95,439,541
RESIDENTIAL ASSET SECURITIES CORPORATION
COMPANY
RESIDENTIAL FUNDING CORPORATION
MASTER SERVICER
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1996-KS2

$ % Class A-1 Certificates $ % Class A-4 Certificates
$ % Class A-2 Certificates $ 0.00%(1) Class A-5 Certificates
$ % Class A-3 Certificates $100 % Class R-I Certificates
$100 % Class R-II Certificates

- -----
(1) The Class A-5 Certificates will be Principal Only Certificates and will not
be entitled to receive distributions of interest.
----------

The Series 1996-KS2 Mortgage Pass-Through Certificates will include the
following seven classes (the "Senior Certificates"): (i) Class A-1
Certificates, Class A-2 Certificates, Class A-3 Certificates and Class A-4
Certificates; (ii) Class A-5 Certificates (the "Principal Only Certificates");
and (iii) Class R-I Certificates and Class R-II Certificates (together, the
"Residual Certificates"). In addition to the Senior Certificates, the Series
1996-KS2 Mortgage Pass-Through Certificates will also include three classes of
subordinate certificates which are designated as the Class B-1 Certificates,
Class B-2 Certificates and Class B-3 Certificates (collectively, the "Class B
Certificates" and, together with the Senior Certificates, the "Certificates").
Only the Senior Certificates (the "Offered Certificates") are offered hereby.
See "Index of Principal Definitions" in the Prospectus for the meanings of
capitalized terms and acronyms not otherwise defined herein.

The Senior Certificates in the aggregate will evidence initial undivided
interests of approximately 95.0% in the Trust Fund consisting primarily of a
pool of conventional, fixed-rate, one- to four-family first mortgage loans with
terms to maturity of not more than 30 years (the "Mortgage Loans"), to be
deposited by Residential Asset Securities Corporation (the "Company") into the
Trust Fund for the benefit of the Certificateholders. The Mortgage Loans have
been originated using underwriting standards that are less stringent than the
underwriting standards applied by other first mortgage loan purchase programs
such as those run by Fannie Mae or Freddie Mac. See "Risk Factors--Risks
Associated with the Mortgage Loans" herein. The characteristics of the Mortgage
Loans are described herein under "Description of the Mortgage Pool."

The Senior Certificates will be entitled to the benefit of a certificate
guaranty insurance policy (the "Policy") to be issued by Financial Security
Assurance Inc. (the "Insurer"), pursuant to which it will guarantee certain
payments to the Senior Certificateholders as described herein. See "Description
of the Certificates--Certificate Guaranty Insurance Policy" herein.
(Continued on following page)

[FSA LOGO]

----------

PROCEEDS OF THE ASSETS IN THE TRUST FUND AND PROCEEDS FROM THE POLICY (AS
DESCRIBED HEREIN) ARE THE SOLE SOURCE OF PAYMENTS ON THE OFFERED CERTIFICATES.
THE OFFERED CERTIFICATES DO NOT REPRESENT AN INTEREST IN OR OBLIGATION OF THE
COMPANY, THE MASTER SERVICER, GMAC MORTGAGE CORPORATION OR ANY OF THEIR
AFFILIATES. NEITHER THE OFFERED CERTIFICATES NOR THE MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY OR BY
THE COMPANY, THE MASTER SERVICER, GMAC MORTGAGE CORPORATION OR ANY OF THEIR
AFFILIATES.

----------

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

----------

FOR A DISCUSSION OF SIGNIFICANT MATTERS AFFECTING INVESTMENTS IN THE OFFERED
CERTIFICATES, SEE "RISK FACTORS" COMMENCING ON PAGE S-11 HEREIN AND "RISK
FACTORS" IN THE PROSPECTUS COMMENCING ON PAGE 11.

There is currently no secondary market for the Offered Certificates. Merrill
Lynch, Pierce, Fenner & Smith Incorporated (the "Underwriter") intends to make
a secondary market in the Senior Certificates other than the Principal Only
Certificates and Residual Certificates (the "Underwritten Certificates"), but
is not obligated to do so. There can be no assurance that a secondary market
for the Offered Certificates will develop or, if it does develop, that it will
continue. The Offered Certificates will not be listed on any securities
exchange.

The Underwritten Certificates will be purchased from the Company by the
Underwriter and will be offered by the Underwriter from time to time to the
public in negotiated transactions or otherwise at varying prices to be
determined at the time of sale. The proceeds to the Company from the sale of
the Underwritten Certificates, before deducting expenses payable by the
Company, will be equal to approximately % of the initial aggregate principal
balance of the Underwritten Certificates, plus accrued interest thereon from
May 1, 1996 (the "Cut-off Date"). The Underwritten Certificates are offered by
the Underwriter subject to prior sale, when, as and if delivered to and
accepted by the Underwriter and subject to certain other conditions. The
Underwriter reserves the right to withdraw, cancel or modify such offer and to
reject any order in whole or in part. It is expected that delivery of the
Underwriter Underwritten Certificates will be made only in book-entry form
through the Same Day Funds Settlement System of DTC as discussed herein, on or
about May 30, 1996, against payment therefor in immediately available funds.

The Principal Only Certificates and Residual Certificates may be offered by
the Company from time to time to the public, directly or through an underwriter
or agent, in negotiated transactions or otherwise at varying prices to be
determined at the time of sale. Proceeds to the Company from any sale of the
Principal Only Certificates and Residual Certificates will be equal to the
purchase price paid by the purchaser thereof, net of any expenses payable by
the Company and any compensation payable to any such underwriter or agent.

Upon receipt of a request by an investor who previously received an
electronic Prospectus Supplement from the Underwriter or a request by such
investor's representative within the period during which there is an obligation
to deliver a Prospectus Supplement, the Underwriter will promptly deliver, or
cause to be delivered, without charge, a paper copy of the Prospectus
Supplement.

----------
MERRILL LYNCH & CO.

----------

THE DATE OF THIS PROSPECTUS SUPPLEMENT IS MAY , 1996.
<PAGE>

(Continued from previous page)

It is a condition of the issuance of the Senior Certificates (other than the
Principal Only Certificates) that they be rated "AAA" by Standard & Poor's
Ratings Services ("Standard & Poor's") and "Aaa" by Moody's Investors Service,
Inc. ("Moody's"). It is a condition of the issuance of the Principal Only
Certificates that they be rated "AAAr" by Standard & Poor's and "Aaa" by
Moody's.

The Class A-1 Certificates, Class A-2 Certificates, Class A-3 Certificates
and Class A-4 Certificates (collectively, the "DTC Registered Certificates")
initially will be represented by certificates registered in the name of Cede &
Co., as nominee of DTC, as further described herein. The interests of
beneficial owners of the DTC Registered Certificates will be represented by
book entries on the records of participating members of DTC. Definitive
certificates will be available for the DTC Registered Certificates only under
the limited circumstances described herein. See "Description of the
Certificates--Book- Entry Registration of Certain of the Senior Certificates"
herein.

As described herein, two separate REMIC elections will be made in connection
with the Trust Fund for federal income tax purposes. The Offered Certificates
(other than the Residual Certificates), Class B Certificates and rights to the
ownership of the Excess Spread (as defined herein) will represent ownership of
"regular interests" in the related REMIC and each class of Residual
Certificates will constitute the sole class of "residual interests" in the
related REMIC. See "Certain Federal Income Tax Consequences" herein and in the
Prospectus. Transfer of the Residual Certificates will be prohibited to any
non-United States person, and will be subject to certain additional transfer
restrictions described under "Certain Federal Income Tax Consequences--Special
Tax Considerations Applicable to Residual Certificates" herein and in the
Prospectus under "Certain Federal Income Tax Consequences--REMICs--Tax on
Transfers of REMIC Residual Certificates to Certain Organizations" and "--
Taxation of Owners of REMIC Residual Certificates--Noneconomic REMIC Residual
Certificates."

Distributions on the Offered Certificates will be made on the 25th day of
each month or, if such day is not a business day, then on the next business
day, commencing in June 1996 (each, a "Distribution Date"). As described
herein, interest distributions on the Offered Certificates (other than the
Principal Only Certificates) will be based on the Certificate Principal
Balance thereof and the then-applicable Pass-Through Rate thereof, which will
be fixed for all classes of Certificates entitled to distributions of
interest, in each case as reduced by certain interest shortfalls to the extent
not covered by the Policy. Distributions in respect of principal of the
Offered Certificates will be allocated among the various classes of the
Offered Certificates as described herein under "Description of the
Certificates--Principal Distributions on the Senior Certificates."

THE YIELD TO MATURITY ON THE OFFERED CERTIFICATES WILL DEPEND ON THE RATE
AND TIMING OF PRINCIPAL PAYMENTS (INCLUDING PREPAYMENTS, DEFAULTS AND
LIQUIDATIONS) ON THE MORTGAGE LOANS. THE MORTGAGE LOANS GENERALLY MAY BE
PREPAID IN FULL OR IN PART AT ANY TIME; HOWEVER, PREPAYMENT MAY SUBJECT THE
MORTGAGOR TO A PREPAYMENT CHARGE. THE YIELD TO INVESTORS ON THE OFFERED
CERTIFICATES (OTHER THAN THE PRINCIPAL ONLY CERTIFICATES) MAY BE ADVERSELY
AFFECTED BY ANY SHORTFALLS IN INTEREST COLLECTED ON THE MORTGAGE LOANS DUE TO
PREPAYMENTS, LIQUIDATIONS OR OTHERWISE. SHORTFALLS IN INTEREST COLLECTED ON
THE MORTGAGE LOANS DUE TO PREPAYMENTS IN FULL WILL BE OFFSET BY THE MASTER
SERVICER TO THE EXTENT DESCRIBED HEREIN. BECAUSE AMOUNTS PAYABLE WITH RESPECT
TO THE PRINCIPAL ONLY CERTIFICATES DERIVE ONLY FROM PRINCIPAL PAYMENTS ON THE
MORTGAGE LOANS WITH NET MORTGAGE RATES THAT ARE LOWER THAN %, THE YIELD ON
THE PRINCIPAL ONLY CERTIFICATES WILL BE ADVERSELY AFFECTED BY SLOWER THAN
EXPECTED PAYMENTS OF PRINCIPAL ON SUCH MORTGAGE LOANS. SEE "SUMMARY--SPECIAL
PREPAYMENT CONSIDERATIONS," "--SPECIAL YIELD CONSIDERATIONS" AND "CERTAIN
YIELD AND PREPAYMENT CONSIDERATIONS" HEREIN AND "YIELD CONSIDERATIONS" IN THE
PROSPECTUS.

AS PROVIDED HEREIN UNDER "THE INSURER--INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE," THE COMPANY WILL PROVIDE WITHOUT CHARGE TO ANY PERSON TO WHOM THIS
PROSPECTUS SUPPLEMENT IS DELIVERED, UPON ORAL OR WRITTEN REQUEST OF SUCH
PERSON, A COPY OF ANY OR ALL FINANCIAL STATEMENTS INCORPORATED HEREIN BY
REFERENCE. REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED AS PROVIDED UNDER "THE
INSURER--INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE" HEREIN.

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

THE OFFERED CERTIFICATES OFFERED BY THIS PROSPECTUS SUPPLEMENT CONSTITUTE
PART OF A SEPARATE SERIES OF CERTIFICATES ISSUED BY THE COMPANY AND ARE BEING
OFFERED PURSUANT TO ITS PROSPECTUS DATED MAY , 1996, OF WHICH THIS
PROSPECTUS SUPPLEMENT IS A PART AND WHICH ACCOMPANIES THIS PROSPECTUS
SUPPLEMENT. THE PROSPECTUS CONTAINS IMPORTANT INFORMATION REGARDING THIS
OFFERING WHICH IS NOT CONTAINED HEREIN, AND PROSPECTIVE INVESTORS ARE URGED TO
READ THE PROSPECTUS AND THIS PROSPECTUS SUPPLEMENT IN FULL. SALES OF THE
OFFERED CERTIFICATES MAY NOT BE CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED
BOTH THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.

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

UNTIL NINETY DAYS AFTER THE DATE OF THIS PROSPECTUS SUPPLEMENT, ALL DEALERS
EFFECTING TRANSACTIONS IN THE OFFERED CERTIFICATES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS TO WHICH IT RELATES. THIS DELIVERY REQUIREMENT
IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS SUPPLEMENT
AND PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.

S-2
<PAGE>

SUMMARY

The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere herein and in the Prospectus.
Capitalized terms used herein and not otherwise defined herein have the
meanings assigned in the Prospectus.

Title of Securities......... Mortgage Pass-Through Certificates, Series 1996-
KS2.

Company..................... Residential Asset Securities Corporation, an
affiliate of Residential Funding Corporation. See
"The Company" in the Prospectus.

Master Servicer............. Residential Funding Corporation. See "Pooling and
Servicing Agreement--The Master Servicer" herein
and "Residential Funding Corporation" in the
Prospectus.

Trustee..................... The First National Bank of Chicago, a national
banking association.

Cut-off Date................ May 1, 1996.

Delivery Date............... On or about May 30, 1996.

The Mortgage Pool........... The Mortgage Pool will consist of a pool of
conventional, fixed-rate, fully-amortizing and
balloon payment mortgage loans (the "Mortgage
Loans"), with an aggregate principal balance as
of the Cut-off Date of $100,462,676. The Mortgage
Loans are secured by first liens on fee simple
interests in one- to four-family residential real
properties (each, a "Mortgaged Property") having
individual principal balances at origination of
at least $10,000 but not more than $650,000 with
an average principal balance at origination of
approximately $103,712. The Mortgage Loans have
terms to maturity from the date of origination or
modification of not more than 30 years and a
weighted average remaining term to stated
maturity of approximately 297 months as of the
Cut-off Date. 61.7% of the Mortgage Loans will be
refinanced mortgage loans. 23.9% of the Mortgage
Loans (by aggregate principal balance as of the
Cut-off Date) require monthly payments of
principal based on 30-year amortization schedules
and have scheduled maturity dates of 15 years
from the due date of the first monthly payment
(each such Mortgage Loan, a "Balloon Mortgage
Loan"), in each case leaving a substantial
portion of the original principal amount due and
payable on the respective scheduled maturity
date. All percentages of the Mortgage Loans
described herein are approximate percentages
(except as otherwise indicated) by aggregate
principal balance of the Mortgage Loans (except
as otherwise indicated) as of the Cut-off Date.

For a further description of the Mortgage Loans,
see "Description of the Mortgage Pool" herein.
The Mortgage Loans have been originated using
underwriting standards that are less stringent
than the underwriting standards applied by other
first mortgage loan purchase programs such as
those run by Fannie Mae or by Freddie

S-3
<PAGE>

Mac or the Company's affiliate, Residential
Funding, for the purpose of collateralizing
securities issued by Residential Funding Mortgage
Securities I, Inc. and Residential Accredit
Loans, Inc. See "Risk Factors--Risks Associated
with the Mortgage Loans" herein.

The Offered Certificates.... The Offered Certificates will be issued pursuant
to a Pooling and Servicing Agreement, to be dated
as of the Cut-off Date, among the Company, the
Master Servicer and the Trustee. The Offered
Certificates will have the following Pass-Through
Rates, Certificate Principal Balances and other
features as of the Cut-off Date:

<TABLE>
<S> <C> <C> <C>
Class A-1Certificates % $ Senior
Class A-2Certificates % $ Senior
Class A-3Certificates % $ Senior
Class A-4Certificates % $ Senior
Class A-5Certificates 0.00% $ Principal Only/Senior
Class R-ICertificates % $100 Residual/Senior
Class R-IICertificates % $100 Residual/Senior
</TABLE>

The Offered Certificates are subject to
priorities for payment of interest and principal
as described herein. For a description of the
allocation of interest and principal
distributions to the Offered Certificates see
"Summary--Interest Distributions," and "--
Principal Distributions," "Description of the
Certificates--Interest Distributions," and "--
Principal Distributions on the Senior
Certificates" herein.

Certificate Registration.... The DTC Registered Certificates will be issued,
maintained and transferred on the book-entry
records of DTC and its Participants. The DTC
Registered Certificates will be represented by
one or more certificates registered in the name
of Cede & Co., as nominee of DTC. No Beneficial
Owner will be entitled to receive a Certificate
of such class in fully registered, certificated
form (a "Definitive Certificate"), except under
the limited circumstances described herein. The
Principal Only Certificates and Residual
Certificates will be offered in fully registered,
certificated form. For denomination amounts and
further registration information, see
"Description of the Certificates--General" and
"--Book-Entry Registration of Certain of the
Senior Certificates" herein.

Interest Distributions...... Holders of each class of Offered Certificates
(other than the Principal Only Certificates) will
be entitled to receive interest distributions in
an amount equal to the Accrued Certificate
Interest (as defined herein) on such class on
each Distribution Date.

S-4
<PAGE>

Principal Balance of the Certificates of such
class at the related Pass-Through Rate on such
class for such Distribution Date, in each case
subject to reduction only in the event of
shortfalls caused by the Relief Act and any
Prepayment Interest Shortfalls (as defined
herein) to the extent not covered by the Master
Servicer allocated as described herein. The
Interest Accrual Period for all classes of
Certificates entitled to receive distributions of
interest is the calendar month preceding the
month in which the Distribution Date occurs.
Notwithstanding the foregoing, if payments were
not made as required under the Policy, interest
shortfalls may be allocated to the Senior
Certificates, as described herein. The Principal
Only Certificates are not entitled to receive
distributions in respect of interest. See
"Description of the Certificates--Interest
Distributions" herein.

The Pass-Through Rates on all classes of the
Offered Certificates (other than the Principal
Only Certificates) are fixed and are set forth on
the cover hereof.

See "Description of the Certificates--Interest
Distributions" herein.

Principal Distributions..... Holders of the Senior Certificates (other than
the Principal Only Certificates) will be entitled
to receive a distribution of principal on each
Distribution Date, in the manner and priority set
forth herein, to the extent of the portion of the
Available Distribution Amount (as defined herein)
remaining after the Senior Interest Distribution
Amount and Class A-5 Principal Distribution
Amount (each, as defined herein) are distributed.
Holders of the Principal Only Certificates will
be entitled to receive a distribution of
principal on each Distribution Date, in the
manner and priority set forth herein, to the
extent of the excess of the Available
Distribution Amount over the Senior Interest
Distribution Amount. Holders of the Principal
Only Certificates are generally entitled to
receive principal payments only with respect to
the Discount Mortgage Loans (as defined herein).
See "Description of the Certificates--Principal
Distributions on the Senior Certificates."

The Insurer................. Financial Security Assurance Inc. is a New York
monoline insurance company engaged in the
business of writing financial guaranty insurance,
principally in respect of securities offered in
domestic and foreign markets. The Insurer's
claims-paying ability is rated "Aaa" by Moody's
and "AAA" by Standard and Poor's, Nippon
Investors Service, Inc. and Standard & Poor's
(Australia) Pty. Ltd. See "Description of the
Certificates--The Certificate Guaranty Insurance
Policy" and "The Insurer" herein.

Certificate Guaranty The Insurer will issue the Policy as a means of
Insurance Policy........... providing additional credit enhancement to the
Senior Certificates. Under the Policy, the
Insurer will, subject to the terms of the Policy,
pay the Trustee, for the benefit of the holders
of the Senior Certificates, on each Distribution
Date, as further described herein, an amount that
will

S-5
<PAGE>

cover any interest shortfalls (except for
shortfalls in respect of the Relief Act or any
Prepayment Interest Shortfalls) allocated to the
Senior Certificates plus the principal portion of
any Realized Losses allocated to the Senior
Certificates. A payment by the Insurer under the
Policy is referred to herein as an "Insured
Payment."

So long as there does not exist an Insurer
Default (as defined herein), the Insurer shall
have the right to exercise all rights of the
holders of the Senior Certificates under the
Pooling and Servicing Agreement without any
consent of such holders, and such holders may
exercise such rights only with the prior written
consent of the Insurer except as provided in the
Pooling and Servicing Agreement. In addition, the
Insurer will be entitled to reimbursement for all
Insured Payments, except as otherwise described
herein. See "Description of the Certificates--
Certificate Guaranty Insurance Policy" herein.

Advances.................... The Master Servicer is required to make Advances
in respect of delinquent payments of principal
and interest on the Mortgage Loans, subject to
the limitations described herein. See
"Description of the Certificates--Advances"
herein and in the Prospectus.

Allocation of Losses; Except as otherwise described herein, Realized
Subordination.............. Losses will be allocated first to the Class B
Certificates until the Certificate Principal
Balances thereof have been reduced to zero and
second to the Senior Certificates to the extent
described in "Description of the Certificates--
Allocation of Losses; Subordination" herein.
Subject to the terms of the Policy, all Realized
Losses allocated to the Class A Certificates will
be covered by the Policy. See "Description of the
Certificates--Certificate Guaranty Insurance
Policy" herein.

Neither the Offered Certificates nor the Mortgage
Loans are insured or guaranteed by any
governmental agency or instrumentality or by the
Company, the Master Servicer, the Trustee, GMAC
Mortgage or any affiliate thereof.

Class B Certificates........ The Class B-1 Certificates, Class B-2
Certificates and Class B-3 Certificates will have
a Pass-Through Rate of % per annum and initial
Certificate Principal Balances of $ , $ , and
$ , respectively, and will evidence initial
undivided interests of approximately %, % and
%, respectively in the Trust Fund. The Class B
Certificates are not being offered hereby.

Optional Termination........ At its option, on any Distribution Date when the
aggregate Stated Principal Balance of the
Mortgage Loans is less than 10% of the aggregate
principal balance of the Mortgage Loans as of the
Cut-off Date, the Master Servicer or the Company
may (i) purchase from the Trust Fund all
remaining Mortgage Loans and other assets
thereof, and thereby effect early retirement of
the Certificates or (ii) purchase in whole, but
not in part, the Certificates. See "Pooling and
Servicing Agreement--Termination" herein and "The
Pooling and Servicing Agreement--Termination;
Retirement of Certificates" in the Prospectus.

S-6
<PAGE>

Special Prepayment The rate and timing of principal payments on the
Considerations............. Offered Certificates will depend on, among other
things, the rate and timing of principal payments
(including prepayments, defaults, liquidations
and purchases of Mortgage Loans due to a breach
of a representation and warranty) on the Mortgage
Loans. As is the case with mortgage-backed
securities generally, the Offered Certificates
are subject to substantial inherent cash flow
uncertainties because the Mortgage Loans may be
prepaid at any time. Generally, when prevailing
interest rates increase, prepayment rates on
mortgage loans tend to decrease, resulting in a
slower return of principal to investors at a time
when reinvestment at such higher prevailing rates
would be desirable. Conversely, when prevailing
interest rates decline, prepayment rates on
mortgage loans tend to increase, resulting in a
faster return of principal to investors at a time
when reinvestment at comparable yields may not be
possible. In addition, a substantial portion of
the Mortgage Loans provide for a prepayment
charge. Typically, the Mortgage Loans with a
prepayment charge provision provide for a
prepayment charge for partial prepayments and
full prepayments made within approximately five
years of the origination of such Mortgage Loan.
Such prepayment charges may reduce the rate of
prepayment on the Mortgage Loans.

All classes of Senior Certificates entitled to
payments of principal are subject to various
priorities for payment of principal as described
herein. Distributions of principal on classes
having an earlier priority of payment will be
affected by the rates of prepayments of the
Mortgage Loans early in the life of the Mortgage
Pool. The timing of commencement of principal
distributions and the weighted average lives of
classes of Certificates with a later priority of
payment will be affected by the rates of
prepayments experienced both before and after the
commencement of principal distributions on such
classes.

See "Description of the Certificates--Principal
Distributions on the Senior Certificates" and
"Certain Yield and Prepayment Considerations"
herein and "Maturity and Prepayment
Considerations" in the Prospectus. For further
information regarding the effect of principal
prepayments on the weighted average life of the
Senior Certificates, see the table entitled
"Percent of Initial Certificate Principal Balance
Outstanding at the Following Percentages of CPM"
herein.

Special Yield The yield to maturity on each class of the
Considerations............. Offered Certificates will depend on, among other
things, the rate and timing of principal payments
(including prepayments, defaults, liquidations
and purchases of Mortgage Loans due to a breach
of a representation and warranty) on the Mortgage
Loans and the allocation thereof to reduce the
Certificate Principal Balance of such class. The
yield to maturity on each class of the Offered
Certificates will also depend on the Pass-Through
Rate (as applicable) and the purchase price for

S-7
<PAGE>

such Certificates. The yield to investors on any
class of Offered Certificates (other than the
Principal Only Certificates) will be adversely
affected by any allocation thereto of Prepayment
Interest Shortfalls on the Mortgage Loans, which
are expected to result from the distribution of
interest only to the date of prepayment (rather
than a full month's interest) in connection with
prepayments in full and the lack of any
distribution of interest on the amount of any
partial prepayments. Prepayment Interest
Shortfalls resulting from principal prepayments
in full in any calendar month will not adversely
affect the yield to investors in the Offered
Certificates to the extent such Prepayment
Interest Shortfalls are offset by the Master
Servicer. See "Description of the Certificates--
Interest Distributions" herein.

In general, if a class of Offered Certificates is
purchased at a premium and principal
distributions to such class occur at a rate
faster than assumed at the time of purchase, the
investor's actual yield to maturity will be lower
than that anticipated at the time of purchase.
Conversely, if a class of Offered Certificates is
purchased at a discount and principal
distributions to such class occur at a rate
slower than that assumed at the time of purchase,
the investor's actual yield to maturity will be
lower than anticipated at the time of purchase.
The Offered Certificates were structured
assuming, among other things, a prepayment
assumption of 100% CPM (as defined herein) and
corresponding weighted average lives as described
herein. The prepayment, yield and other
assumptions to be used for pricing purposes for
the respective classes that are to be offered
hereunder may vary as determined at the time of
sale. The multiple class structure of the Offered
Certificates causes the yield of certain classes
to be particularly sensitive to changes in the
rates of prepayment of the Mortgage Loans and
other factors, as follows:

Principal Only Certificates: The amounts payable
with respect to the Principal Only Certificates
derive only from principal payments on the
Discount Mortgage Loans. As a result, the yield
on the Principal Only Certificates will be
adversely affected by slower than expected
payments of principal (including prepayments,
defaults, liquidations and purchases of Mortgage
Loans due to a breach of a representation and
warranty) on the Discount Mortgage Loans. Because
the Discount Mortgage Loans have lower Net
Mortgage Rates than the Non-Discount Mortgage
Loans, and because the Mortgage Loans with lower
Net Mortgage Rates are likely to have lower
Mortgage Rates, the Discount Mortgage Loans are
generally likely to prepay at a slower rate than
the Non-Discount Mortgage Loans. See "Certain
Yield and Prepayment Considerations," especially
"--Principal Only Certificate Yield
Considerations" herein.

Residual Certificates: Holders of the Residual
Certificates are entitled to receive
distributions of principal and interest as
described

S-8
<PAGE>

herein; however, holders of such Certificates may
have tax liabilities with respect to their
Certificates during the early years of the term
of the related REMIC that substantially exceed
the principal and interest payable thereon during
such periods. See "Certain Yield and Prepayment
Considerations," especially "--Additional Yield
Considerations Applicable Solely to the Residual
Certificates" herein, "Certain Federal Income Tax
Consequences" herein and in the Prospectus and
"Yield Considerations" in the Prospectus.

Certain Federal Income Tax
Consequences...............
Two separate REMIC elections will be made with
respect to the Trust Fund for federal income tax
purposes. Upon the issuance of the Offered
Certificates, Thacher Proffitt & Wood, counsel to
the Company, will deliver its opinion generally
to the effect that, assuming compliance with all
provisions of the Pooling and Servicing
Agreement, for federal income tax purposes, REMIC
I and REMIC II (as such terms are defined below)
will each qualify as a REMIC under Sections 860A
through 860G of the Code.

The assets of "REMIC I" will consist of the
Mortgage Loans, any REO Properties, such assets
as from time to time are deposited in respect of
the Mortgage Loans in the Custodial Account and
in the Certificate Account, any hazard or other
insurance policies with respect to the Mortgage
Loans and any proceeds of such policies. For
federal income tax purposes, (a) the separate
non-certificated regular interests in REMIC I
will be the "regular interests" in REMIC I and
will constitute the assets of "REMIC II," (b) the
Class R-I Certificates will be the sole class of
"residual interests" in REMIC I, (c) the Senior
Certificates (other than the Residual
Certificates), the Class B Certificates and the
rights to the ownership of the Excess Spread will
represent ownership of "regular interests" in
REMIC II and will generally be treated as debt
instruments of REMIC II and (d) the Class R-II
Certificates will constitute the sole class of
"residual interests" in REMIC II.

Under the REMIC Regulations, the Residual
Certificates will not be regarded as having
"significant value" for purposes of applying the
rules relating to "excess inclusions." In
addition, the Residual Certificates may
constitute "noneconomic" residual interests for
purposes of the REMIC Regulations. Transfers of
the Residual Certificates will be restricted in a
manner designed to prevent a transfer of a
noneconomic residual interest from being
disregarded under the REMIC Regulations. See
"Certain Federal Income Tax Consequences--Special
Tax Considerations Applicable to Residual
Certificates" herein and "Certain Federal Income
Tax Consequences--REMICs--Taxation of Owners of
REMIC Residual Certificates--Excess Inclusions"
and "--Noneconomic REMIC Residual Certificates"
in the Prospectus.

The Residual Certificateholders may be required
to report an amount of taxable income with
respect to the early years of the related

S-9
<PAGE>

REMIC's term that significantly exceeds
distributions on the Residual Certificates during
such years, with corresponding tax deductions or
losses deferred until the later years of the
related REMIC's term. Accordingly, on a present
value basis, the tax detriments occurring in the
earlier years may substantially exceed the sum of
any tax benefits in the later years. As a result,
the Residual Certificateholders' after-tax rate
of return may be zero or negative, even if their
pre-tax rate of return is positive. See "Certain
Yield and Prepayment Considerations," especially
"--Additional Yield Considerations Applicable
Solely to the Residual Certificates" and "Certain
Federal Income Tax Consequences--Special Tax
Considerations Applicable to Residual
Certificates" herein.

For further information regarding the federal
income tax consequences of investing in the
Offered Certificates, see "Certain Federal Income
Tax Consequences" herein and in the Prospectus.

Legal Investment............ The Senior Certificates will constitute "mortgage
related securities" for purposes of SMMEA for so
long as they are rated in one of the two highest
rating categories by at least one of the Rating
Agencies. Institutions whose investment
activities are subject to legal investment laws
and regulations, regulatory capital requirements
or review by regulatory authorities may be
subject to restrictions on investment in the
Offered Certificates and should consult with
their legal advisors. See "Legal Investment"
herein and "Legal Investment Matters" in the
Prospectus.

Ratings..................... It is a condition to the issuance of the Senior
Certificates (other than the Principal Only
Certificates) that they be rated "AAA" by
Standard & Poor's and "Aaa" by Moody's. It is a
condition to the issuance of the Principal Only
Certificates that they be rated "AAAr" by
Standard & Poor's and "Aaa" by Moody's. A
security rating is not a recommendation to buy,
sell or hold securities and may be subject to
revision or withdrawal at any time by the
assigning rating organization. A security rating
does not address the frequency of prepayments of
Mortgage Loans, or the corresponding effect on
yield to investors. See "Certain Yield and
Prepayment Considerations" and "Ratings" herein
and "Yield Considerations" in the Prospectus.

S-10
<PAGE>

RISK FACTORS

In addition to the matters described elsewhere in this Prospectus Supplement
and the Prospectus, prospective investors should carefully consider, among
other things, the following factors in connection with the purchase of the
Offered Certificates:

RISKS ASSOCIATED WITH THE MORTGAGE LOANS

The Mortgage Loans have been originated using underwriting standards that
are less stringent than the underwriting standards applied by other first
mortgage loan purchase programs such as those run by Fannie Mae or by Freddie
Mac or by the Company's affiliate, Residential Funding, for the purpose of
collateralizing securities issued by Residential Funding Mortgage Securities
I, Inc. and Residential Accredit Loans, Inc. For example, the Mortgage Loans
may have been made to Mortgagors having imperfect credit histories, ranging
from minor delinquencies to bankruptcies, or Mortgagors with higher ratios of
monthly mortgage payments to income or higher ratios of total monthly credit
payments to income. As a result of the underwriting standards, the Mortgage
Loans are likely to experience rates of delinquency, foreclosure and
bankruptcy that are higher, and that may be substantially higher, than those
experienced by mortgage loans underwritten in a more traditional manner. As of
the Cut-off Date, none of the Mortgage Loans are one or more months delinquent
in payment of principal or interest. See "Description of the Mortgage Pool--
Mortgage Pool Characteristics" and "--Underwriting Standards" herein. The
Mortgage Loans with higher loan-to-value ratios (each, a "Loan-to-Value
Ratio") may also present a greater risk of loss. In particular, of the 19.2%
Mortgage Loans that are mortgage loans with a Loan-to-Value Ratio at
origination in excess of 80%, 76.9% of such Mortgage Loans are not insured by
a Primary Insurance Policy that might otherwise protect against such greater
risk of loss.

1.0% of the Mortgage Loans have been originated approximately two or more
years prior to the Closing Date. Such seasoned Mortgage Loans may have higher
current Loan-to-Value Ratios than at origination if the value of the related
Mortgaged Property has declined. No assurance can be given that values of the
Mortgaged Properties have remained or will remain at the levels existing on
the dates of origination of the related Mortgage Loans. If a residential real
estate market should experience an overall decline in property values, or if
the Mortgagors of such seasoned Mortgage Loans have lower incomes or poorer
credit histories than at the time of origination of the related Mortgage Loan,
the actual rates of delinquencies, foreclosures and losses could be higher
than the rates otherwise expected by an investor in the Offered Certificates.
24.1% of the Mortgage Loans are secured by Mortgaged Properties located in the
State of California. If the California residential real estate market should
experience an overall decline in property values after the dates of
origination of the Mortgage Loans, the rates of delinquencies, foreclosures,
bankruptcies and losses on the Mortgage Loans may be expected to increase, and
may increase substantially.

23.9% of the Mortgage Loans may not be fully amortizing over their terms to
maturity and, thus, will require substantial principal payments (i.e., a
Balloon Payment, as defined herein) at their stated maturity. Mortgage loans
with Balloon Payments involve a greater degree of risk because the ability of
a mortgagor to make a Balloon Payment typically will depend upon its ability
either to timely refinance the loan or to timely sell the related Mortgaged
Property. See "Description of the Mortgage Pool--Balloon Mortgage Loans"
herein.

LIMITED OBLIGATIONS

The Certificates will not represent an interest in or obligation of the
Company, the Master Servicer, the Mortgage Collateral Sellers (as defined
herein), GMAC Mortgage or any of their affiliates. The only obligations of the
foregoing entities with respect to the Certificates or any Mortgage Loan will
be the obligations (if any) of the Company, the Mortgage Collateral Sellers
and the Master Servicer pursuant to certain limited representations and
warranties made with respect to the Mortgage Loans and the Master Servicer's
servicing obligations under the Pooling and Servicing Agreement (including the
Master Servicer's limited obligation to make certain Advances). Neither the
Certificates nor the underlying Mortgage Loans will be guaranteed or insured
by any governmental agency or instrumentality, or by the Company, the Master
Servicer, the Mortgage Collateral Sellers, GMAC Mortgage or any of their
affiliates. The Senior Certificates are covered by the Policy, as and to

S-11
<PAGE>

the extent described herein under the caption "Description of the
Certificates--Certificate Guaranty Insurance Policy" herein. Proceeds of the
assets included in the Trust Fund (including the Mortgage Loans) and the
Policy will be the sole source of payments on the Certificates, and there will
be no recourse to the Company, the Master Servicer, the Mortgage Collateral
Sellers, GMAC Mortgage or any other entity in the event that such proceeds are
insufficient or otherwise unavailable to make all payments provided for under
the Certificates. None of the Company, the Master Servicer, the Mortgage
Collateral Sellers, GMAC Mortgage nor any of their affiliates will have any
obligation to replace or supplement the Policy, or to take any other action to
maintain any rating of the Offered Certificates.

DESCRIPTION OF THE MORTGAGE POOL

GENERAL

The Mortgage Pool will consist of Mortgage Loans with an aggregate principal
balance outstanding as of the Cut-off Date, after deducting payments of
principal due on such date, of $100,462,676. The Mortgage Pool will consist of
conventional, fixed-rate, fully-amortizing and balloon payment, first Mortgage
Loans with terms to maturity of not more than 30 years from the date of
origination or modification. With respect to Mortgage Loans which have been
modified, references herein to the date of origination shall be deemed to be
the date of the most recent modification. All percentages of the Mortgage
Loans described herein are approximate percentages (except as otherwise
indicated) by aggregate principal balance of the Mortgage Loans (except as
otherwise indicated) as of the Cut-off Date.

The Mortgage Loans were purchased by the Company through its affiliate
Residential Funding from mortgage collateral sellers (each a "Mortgage
Collateral Seller") and assigned to the Company by Residential Funding. Such
purchases occurred by (i) direct purchases from Mortgage Collateral Sellers
and (ii) purchases through the AlterNet Mortgage Program. Except for 8.9% of
the Mortgage Loans which were purchased from National Mortgage Corporation,
all of the Mortgage Loans were purchased through the AlterNet Program. 12.7%
of the Mortgage Loans will have been purchased from First Franklin Financial
Corporation. Except as described above, no Mortgage Collateral Seller sold
more than 9.5% of the Mortgage Loans to Residential Funding. See "--The
AlterNet Program" below. For a description of the underwriting criteria
applicable to the Mortgage Loans, see "--Underwriting Standards" below.

The Company and Residential Funding will make certain limited
representations and warranties regarding the Mortgage Loans as of the date of
issuance of the Certificates. The Company and Residential Funding will be
required to repurchase or substitute for any Mortgage Loan as to which a
breach of its representations and warranties with respect to such Mortgage
Loan occurs if such breach materially and adversely affects the interests of
the Certificateholders in any such Mortgage Loan and the Mortgage Loan is not
otherwise repurchased by the related Mortgage Collateral Seller in accordance
with the terms of the Pooling and Servicing Agreement. The Company, as
assignee of Residential Funding, will also assign to the Trustee for the
benefit of the Certificateholders certain of its rights, title and interest in
any agreement relating to the transfer and assignment of the Mortgage Loans to
the Company by Residential Funding, including certain representations and
warranties made by the Mortgage Collateral Sellers. Insofar as any such
agreement relates to the representations and warranties made by the related
Mortgage Collateral Seller in respect of such Mortgage Loan and any remedies
provided thereunder for any breach of such representations and warranties,
such right, title and interest may be enforced by the Master Servicer on
behalf of the Trustee and the Certificateholders. However, neither the Company
nor Residential Funding will be required to repurchase or substitute for any
Mortgage Loan in the event of a breach of its representations and warranties
with respect to such Mortgage Loan if the substance of any such breach also
constitutes fraud in the origination of such affected Mortgage Loan. A limited
amount of losses on Mortgage Loans as to which there was fraud in the
origination of such Mortgage Loans will be covered by the Subordination (as
defined herein) provided by the Class B Certificates as described herein under
"Description of the Certificates--Allocation of Losses; Subordination."
Subject to the terms of the Policy, certain fraud losses will be covered by
the Policy as described herein.

S-12
<PAGE>

BALLOON MORTGAGE LOANS

23.9% of the Mortgage Loans require monthly payments of principal based on
30 year amortization schedules and have scheduled maturity dates of 15 years
from the due date of the first monthly payment (each such Mortgage Loan, a
"Balloon Mortgage Loan"), in each case leaving a substantial portion of the
original principal amount due and payable on the respective scheduled maturity
date (a "Balloon Payment"). The existence of a Balloon Payment generally will
require the related mortgagor to refinance such Mortgage Loan or to sell the
Mortgaged Property on or prior to the scheduled maturity date. The ability of
a mortgagor to accomplish either of these goals will be affected by a number
of factors, including the level of available mortgage rates at the time of
sale or refinancing, the mortgagor's equity in the related Mortgaged Property,
the financial condition of the mortgagor, tax laws and prevailing general
economic conditions. None of the Company, the Master Servicer or the Trustee
is obligated to refinance any Balloon Mortgage Loan. Subject to the terms of
the Policy, the Policy will provide coverage on any losses incurred upon
liquidation of a Balloon Mortgage Loan arising out of or in connection with
the failure of a mortgagor to make its Balloon Payment.

MORTGAGE POOL CHARACTERISTICS

None of the Mortgage Loans will have been originated prior to October 4,
1974 or will have a maturity date later than May 1, 2026. No Mortgage Loan
will have a remaining term to maturity as of the Cut-off Date of less than 89
months. The weighted average remaining term to stated maturity of the Mortgage
Loans as of the Cut-off Date will be 297 months. The weighted average original
term to maturity of the Mortgage Loans as of the Cut-off Date will be 302
months.

68.0% of the Mortgage Loans will have original terms to maturity of greater
than 15 but not more than 30 years, with a weighted average remaining term to
maturity of such Mortgage Loans of 354 months. 8.1% of the fully amortizing
Mortgage Loans will have original terms to maturity of not more than 15 years,
with a weighted average remaining term to maturity of such Mortgage Loans of
174 months. The Balloon Mortgage Loans will have original terms to maturity of
not more than 15 years based on 30 year amortization schedules, with a
weighted average remaining term to stated maturity of 176 months.

None of the Mortgage Loans are one or more months delinquent in payment of
principal and interest.

A substantial portion of the Mortgage Loans provide for payment of a
prepayment charge. As to each such Mortgage Loan, the prepayment charge
provisions typically provide for payment of a prepayment charge for partial
prepayments and full prepayments made within approximately five years of the
origination of such Mortgage Loan, in an amount equal to six months' advance
interest on the amount of the prepayment that, when added to all other amounts
prepaid during the twelve-month period immediately preceding the date of the
prepayment, exceeds twenty percent (20%) of the original principal amount of
the Mortgage Loan. Prepayment charges received on the Mortgage Loans will not
be available for distribution on the Certificates.

As of the Cut-off Date, 1.9% of the Mortgage Loans were High Cost Loans.

No Mortgage Loan provides for deferred interest or negative amortization.

None of the Mortgage Loans will be Buydown Mortgage Loans.

S-13
<PAGE>

Set forth below is a description of certain additional characteristics of
the Mortgage Loans as of the Cut-off Date (except as otherwise indicated).
Unless otherwise specified, all principal balances of the Mortgage Loans are
as of the Cut-off Date and are rounded to the nearest dollar.

MORTGAGE RATES

<TABLE>
<CAPTION>
NUMBER OF
MORTGAGE PRINCIPAL PERCENT OF
MORTGAGE RATES (%) LOANS BALANCE MORTGAGE POOL
- ------------------ --------- ------------ -------------
<S> <C> <C> <C>
7.000- 7.499.............................. 1 $ 49,078 0.05%
7.500- 7.999.............................. 10 1,426,329 1.42
8.000- 8.499.............................. 25 3,954,102 3.94
8.500- 8.999.............................. 102 12,361,491 12.30
9.000- 9.499.............................. 154 16,447,150 16.37
9.500- 9.999.............................. 192 22,247,674 22.15
10.000-10.499.............................. 136 14,420,864 14.35
10.500-10.999.............................. 131 12,756,832 12.70
11.000-11.499.............................. 75 6,488,361 6.46
11.500-11.999.............................. 57 3,930,616 3.91
12.000-12.499.............................. 33 3,176,848 3.16
12.500-12.999.............................. 20 1,330,211 1.32
13.000-13.499.............................. 16 1,014,070 1.01
13.500-13.999.............................. 10 390,513 0.39
14.000-14.499.............................. 5 248,707 0.25
14.500-14.999.............................. 4 144,228 0.14
15.000-15.499.............................. 1 24,978 0.02
15.500-15.999.............................. 1 50,623 0.05
--- ------------ ------
Total.................................... 973 $100,462,676 100.00%
=== ============ ======
</TABLE>

As of the Cut-Off Date, the weighted average Mortgage Rate of the Mortgage
Loans will be approximately 9.9740% per annum.

ORIGINAL MORTGAGE LOAN PRINCIPAL BALANCES

<TABLE>
<CAPTION>
NUMBER OF
ORGINAL MORTGAGEI MORTGAGE PERCENT OF
LOAN BALANCE LOANS PRINCIPAL BALANCE MORTGAGE POOL
- ----------------- --------- ----------------- -------------
<S> <C> <C> <C>
$ 0-100,000..................... 586 $ 35,895,886 35.73%
100,001-200,000..................... 300 40,264,663 40.08
200,001-300,000..................... 63 15,195,269 15.13
300,001-400,000..................... 18 6,216,556 6.19
400,001-500,000..................... 4 1,683,426 1.68
500,001-600,000..................... 1 557,571 0.56
600,001-700,000..................... 1 649,305 0.65
--- ------------ ------
Total.............................. 973 $100,462,676 100.00%
=== ============ ======
</TABLE>

As of the Cut-Off Date, the average unpaid principal balance of the Mortgage
Loans will be approximately $103,250.

S-14
<PAGE>

ORIGINAL LOAN-TO-VALUE RATIOS

<TABLE>
<CAPTION>
ORIGINAL NUMBER OF
LOAN-TO- MORTGAGE PRINCIPAL PERCENT OF
VALUE RATIO (%) LOANS BALANCE MORTGAGE POOL
--------------- --------- ------------ -------------
<S> <C> <C> <C>
0.01-50.00............................... 91 $ 6,607,340 6.58%
50.01-55.00............................... 35 3,217,591 3.20
55.01-60.00............................... 62 5,852,147 5.83
60.01-65.00............................... 77 6,472,538 6.44
65.01-70.00............................... 152 14,464,533 14.40
70.01-75.00............................... 185 19,234,586 19.15
75.01-80.00............................... 218 25,350,353 25.23
80.01-85.00............................... 60 6,854,134 6.82
85.01-90.00............................... 89 11,753,678 11.70
90.01-95.00............................... 4 655,774 0.65
--- ------------ ------
Total................................... 973 $100,462,676 100.00%
=== ============ ======
</TABLE>

The weighted average Loan-to-Value Ratio at origination of the Mortgage
Loans will be approximately 73.11%.

GEOGRAPHIC DISTRIBUTION OF MORTGAGED PROPERTIES

<TABLE>
<CAPTION>
NUMBER OF
MORTGAGE PRINCIPAL PERCENT OF
STATE LOANS BALANCE MORTGAGE POOL
- ----- --------- ------------ -------------
<S> <C> <C> <C>
California................................. 193 $ 24,182,567 24.07%
Florida.................................... 85 8,659,433 8.62
New York................................... 50 6,745,189 6.71
Georgia.................................... 59 6,715,118 6.68
New Jersey................................. 53 6,464,195 6.43
Colorado................................... 58 5,716,010 5.69
Utah....................................... 43 3,992,203 3.97
Oregon..................................... 37 3,752,808 3.74
Illinois................................... 37 3,116,369 3.10
Washington................................. 34 3,070,620 3.06
Other (1).................................. 324 28,048,166 27.92
--- ------------ ------
Total.................................... 973 $100,462,676 100.00%
=== ============ ======
</TABLE>
- --------
(1) Other includes states and the District of Columbia with under 3%
concentrations individually.

No more than 0.7% of the Mortgage Loans will be secured by Mortgaged
Properties located in any one zip code area in California and no more than
0.7% of the Mortgage Loans will be secured by Mortgaged Properties located in
any one zip code area outside California.

MORTGAGE LOAN PURPOSE

<TABLE>
<CAPTION>
NUMBER OF
MORTGAGE PRINCIPAL PERCENT OF
LOAN PURPOSE LOANS BALANCE MORTGAGE POOL
- ------------ --------- ------------ -------------
<S> <C> <C> <C>
Purchase................................... 332 $ 38,472,032 38.29%
Rate/Term Refinance........................ 174 18,545,241 18.46
Equity Refinance........................... 467 43,445,403 43.25
--- ------------ ------
Total.................................... 973 $100,462,676 100.00%
=== ============ ======
</TABLE>

The weighted average Loan-to-Value Ratio at origination of rate and term
refinance Mortgage Loans will be 74.89%. The weighted average Loan-to-Value
Ratio at origination of equity refinance Mortgage Loans will be 68.15%.

S-15
<PAGE>

MORTGAGE LOAN DOCUMENTATION TYPES

<TABLE>
<CAPTION>
NUMBER OF
MORTGAGE PRINCIPAL PERCENT OF
DOCUMENTATION TYPE LOANS BALANCE MORTGAGE POOL
- ------------------ --------- ------------ -------------
<S> <C> <C> <C>
Full Documentation......................... 757 $ 75,814,987 75.47%
Reduced Documentation...................... 216 24,647,689 24.53
--- ------------ ------
Total.................................... 973 $100,462,676 100.00%
=== ============ ======
</TABLE>

The weighted average Loan-to-Value Ratio at origination of the Mortgage Loans
which were underwritten under a reduced loan documentation program will be
67.72%. No more than 19.6% of such reduced loan documentation Mortgage Loans
will be secured by Mortgaged Properties located in California.

OCCUPANCY TYPES

<TABLE>
<CAPTION>
NUMBER OF
MORTGAGE PRINCIPAL PERCENT OF
OCCUPANCY LOANS BALANCE MORTGAGE POOL
- --------- --------- ------------ -------------
<S> <C> <C> <C>
Primary Residence.......................... 853 $ 91,184,343 90.76%
Second/Vacation............................ 14 1,492,307 1.49
Non Owner-occupied......................... 106 7,786,025 7.75
--- ------------ ------
Total.................................... 973 $100,462,676 100.00%
=== ============ ======
</TABLE>

MORTGAGED PROPERTY TYPES

<TABLE>
<CAPTION>
NUMBER OF
MORTGAGE PRINCIPAL PERCENT OF
PROPERTY TYPE LOANS BALANCE MORTGAGE POOL
- ------------- --------- ------------ -------------
<S> <C> <C> <C>
Single-family detached..................... 810 $ 82,971,703 82.59%
Planned Unit Developments (detached)....... 43 6,980,898 6.95
Two- to four-family units.................. 72 6,447,944 6.42
Condo Low-Rise (less than 5 stories)....... 29 2,317,792 2.31
Condo Mid-Rise (5 to 8 stories)............ 1 67,223 0.07
Condo High-Rise (9 stories or more)........ 3 279,363 0.28
Townhouse.................................. 9 736,348 0.73
Planned Unit Developments (attached)....... 5 312,193 0.31
Modular.................................... 1 349,213 0.35
--- ------------ ------
Total.................................... 973 $100,462,676 100.00%
=== ============ ======
</TABLE>
RISK GRADES

<TABLE>
<CAPTION>
NUMBER OF
MORTGAGE PRINCIPAL PERCENT OF
RISK GRADE LOANS BALANCE MORTGAGE POOL
- ---------- --------- ------------ -------------
<S> <C> <C> <C>
Category 1A................................ 283 $ 30,616,513 30.48%
Category 1................................. 445 49,448,228 49.22
Category 2................................. 131 12,102,273 12.05
Category 3................................. 85 6,511,339 6.48
Category 4................................. 29 1,784,323 1.78
--- ------------ ------
Total.................................... 973 $100,462,676 100.00%
=== ============ ======
</TABLE>

S-16
<PAGE>

NET MORTGAGE RATES OF DISCOUNT MORTGAGE LOANS

<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
NET MORTGAGE RATES (%) MORTGAGE LOANS PRINCIPAL BALANCE MORTGAGE POOL
- ---------------------- -------------- ----------------- -------------
<S> <C> <C> <C>
................................ $ %
................................
................................
................................
................................
................................
................................
................................
................................
--- ---- ---
Total........................ $ %
=== ==== ===
</TABLE>

As of the Cut-off Date, the weighted average of the Discount Fractions (as
defined herein) of the Discount Mortgage Loans was approximately %.

STANDARD HAZARD INSURANCE AND PRIMARY MORTGAGE INSURANCE

Each Mortgage Loan is required to be covered by a standard hazard insurance
policy. In addition, to the best of the Company's knowledge, 35 Mortgage Loans
with a Loan-to-Value Ratio at origination in excess of 80%, representing 4.4%
of the Mortgage Loans (and, representing 23.1% of such Mortgage Loans with
Loan-to-Value Ratios in excess of 80%) will be insured by a Primary Insurance
Policy covering the amount of such Mortgage Loan in excess of 75% of the value
of the related Mortgaged Property used in determining such Loan-to-Value Ratio
(the "Appraised Value"). An additional 14.7% of the Mortgage Loans are
mortgage loans with a Loan-to-Value Ratio at origination in excess of 80% that
are not insured by a Primary Insurance Policy. Substantially all of such
Primary Insurance Policies were issued by General Electric Mortgage Insurance
Corporation, Commonwealth Mortgage Assurance Company, Mortgage Guaranty
Insurance Corporation, PMI Mortgage Insurance Company, Republic Mortgage
Insurance Company and United Guaranty Residential Insurance Company
(collectively, the "Primary Insurers"). Each Primary Insurer has a claims-
paying ability currently acceptable to the Rating Agencies that have been
requested to rate the Certificates; however, there is no assurance as to the
actual ability of any Primary Insurer to pay claims. See "Insurance Policies
on Mortgage Loans or Contracts--Standard Hazard Insurance on Mortgaged
Properties" and "--Primary Mortgage Insurance Policies" in the Prospectus.

UNDERWRITING STANDARDS

Prior to assignment to the Company, Residential Funding reviewed the
underwriting for each Mortgage Loan and purchased the Mortgage Loans from
Mortgage Collateral Sellers who participated in or whose loans were in
substantial conformity with the standards set forth in Residential Funding's
AlterNet Program, and from National Mortgage Corporation, which had developed
its own guidelines and network of sellers with respect to the Mortgage Loans
it funded and subsequently sold to Residential Funding.

All of the Mortgage Loans including those acquired from National Mortgage
Corporation had features which generally distinguish such loans from the more
stringent underwriting requirements used as standards for Fannie Mae and
Freddie Mac, and moreover, from the more stringent underwriting standards set
forth in Residential Funding's Seller Guide for Mortgage Loan collateral that
does not present significant special risk features (which generally provides
the basis for underwriting Mortgage Loans that serve as the assets for
securities issued by Residential Funding's affiliates, Residential Funding
Mortgage Securities I, Inc. and Residential Accredit Loans, Inc.). Residential
Funding established risk categories by which it could aggregate acceptable
loans into groupings considered to have progressively greater risk
characteristics. A more detailed description of those risk categories is set
forth below.

S-17
<PAGE>

Residential Funding's underwriting of the Mortgage Loans generally consisted
of analyzing the creditworthiness of a mortgagor, the income sufficiency of a
mortgagor's projected family income relative to the mortgage payment and to
other fixed obligations (including in certain instances rental income from
investment property), and the adequacy of the mortgaged property (expressed in
terms of Loan-to-Value Ratio) to serve as the collateral for a mortgage loan.

Generally, each mortgagor would have been required to complete an
application designed to provide to the original lender pertinent credit
information concerning the mortgagor. As part of the description of the
mortgagor's financial condition, each mortgagor furnished information (which
may have been supplied solely in such application) with respect to its assets,
liabilities, income, credit history, employment history and personal
information, and furnished an authorization to apply for a credit report which
summarized the borrower's credit history with local merchants and lenders and
any record of bankruptcy. The mortgagor may also have been required to
authorize verifications of deposits at financial institutions where the
mortgagor had demand or savings accounts. In the case of investment
properties, income derived from the mortgaged property may have been
considered for underwriting purposes. With respect to mortgaged property
consisting of vacation or second homes, generally no income derived from the
property was considered for underwriting purposes.

Based on the data provided in the application, certain verifications (if
required by the originator of the mortgage loan) and the appraisal or other
valuation of the mortgaged property, a determination was made by the original
lender that the mortgagor's monthly income would be sufficient to enable the
mortgagor to meet its monthly obligations on the mortgage loan and other
expenses related to the property (such as property taxes, utility costs,
standard hazard insurance and other fixed obligations other than housing
expenses). The originator's guidelines for mortgage loans generally specify
that scheduled payments on a mortgage loan during the first year of its term
plus taxes and insurance and all scheduled payments on obligations that extend
beyond ten months (including those mentioned above and other fixed
obligations) equal no more than specified percentages of the prospective
mortgagor's gross income. The originator may also have considered the amount
of liquid assets available to the mortgagor after origination.

Certain of the Mortgage Loans have been originated under "limited
documentation" programs which require less documentation and verification than
do traditional "full documentation" programs. Generally, under such a program,
minimal investigation into a mortgagor's credit history and income profile
would have been undertaken by the originator and the underwriting for such
mortgage loans will place a greater emphasis on the value of the mortgaged
property. As used in this section, "Loan-to-Value Ratio" shall generally mean
that ratio, expressed as a percentage of (a) the principal amount of the
Mortgage Loan at origination, over (b) the lesser of the sales price or the
appraised value of the related Mortgaged Property at origination, or in the
case of a refinanced or modified Mortgage Loan, either the appraised value
determined at origination or, if applicable, at the time of the refinancing or
modification.

The adequacy of a mortgaged property as security for repayment of the
related mortgage loan generally has been determined by an appraisal in
accordance with pre-established appraisal procedure guidelines for appraisals
established by or acceptable to the originator. Appraisers were either staff
appraisers employed by the originator or independent appraisers selected in
accordance with pre-established guidelines established by the originator. The
appraisal procedure guidelines generally will have required the appraiser or
an agent on its behalf to personally inspect the property and to verify
whether the property was in good condition and that construction, if new, had
been substantially completed. The appraisal would have considered a market
data analysis of recent sales of comparable properties and, when deemed
applicable, an analysis based on income generated from the property or
replacement cost analysis based on the current cost of constructing or
purchasing a similar property. In certain instances, the Loan-to-Value Ratio
was based on the appraised value as indicated on a review appraisal conducted
by the Mortgage Collateral Seller or originator.

Generally, the Mortgage Loans were either originated and underwritten in
accordance with Residential Funding's AlterNet Program, as discussed below, or
acquired from a Mortgage Collateral Seller and reviewed by Residential Funding
to determine acceptability and risk category classification. However, in the
case of

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<PAGE>

National Mortgage Corporation, Residential Funding agreed to re-underwrite the
Mortgage Loans purchased from National Mortgage Corporation in accordance with
the stated underwriting standards of National Mortgage Corporation, but made
its own determination as to the risk category classification assigned to each
of such Mortgage Loans.

The risk categories established by Residential Funding and applicable to all
of the Mortgage Loans, including those acquired from National Mortgage
Corporation, are expressed herein as Risk Categories 1A, 1, 2, 3 and 4.

Risk Category 1A: Under Risk Category 1A, the prospective mortgagor must
have repaid installment or revolving debt according to its terms. A maximum of
one 30-day late payment, and no 60-day or 90-day late payments, within the
last 12 months is acceptable on an existing mortgage loan. Minor derogatory
items are allowed as to non-mortgage credit (provided, open collections and
charge-offs in excess of $200 must be paid down to zero at closing). As to
each mortgagor in this Risk Category, no bankruptcies were filed during the
two-year period prior to the date the mortgage loan was made and there was
evidence that the mortgagor had re-established its credit to an acceptable
level. The mortgaged property must be in average to good condition. A maximum
Loan-to-Value Ratio of 90% is permitted (except in the case of three Mortgage
Loans for which a Loan-to-Value Ratio of 95% was allowed) for a mortgage loan
on a single family owner-occupied property (or 80% for a mortgage loan
originated under a limited documentation program). A maximum Loan-to-Value
Ratio of 90% (or 65% for mortgage loans originated under the limited
documentation program) is permitted for a mortgage loan on a non-owner
occupied property. The mortgagor's debt service-to-income ratio generally is
50% or less.

Risk Category 1: Under Risk Category 1, the prospective mortgagor is
required to have generally repaid all previous or existing installment or
revolving debt according to its terms. A maximum of two 30-day late payments,
and no 60-day or 90-day late payments, within the last 12 months is acceptable
on an existing mortgage loan. As to non-mortgage credit, some prior defaults
may have occurred (provided, open collections and charge-offs in excess of
$200 must be paid down to zero at closing). No bankruptcies were filed during
the two-year period prior to the date the mortgage loan was made and there was
evidence that the Mortgagor had re-established its credit to an acceptable
level. The mortgaged property must be in average to good condition. A maximum
Loan-to-Value Ratio of 90% (or 80% for mortgage loans originated under a
limited documentation program) is permitted for a mortgage loan on an owner-
occupied property (except in the case of one Mortgage Loan for which a Loan-
to-Value Ratio of 95% was allowed). A maximum Loan-to-Value Ratio of 75% (or
70% for mortgage loans originated under a limited documentation program) is
permitted for a mortgage loan on a non-owner-occupied property. The debt
service-to-income ratio generally is 50% or less.

Risk Category 2: Under Risk Category 2, the prospective mortgagor may not
have paid all previous or existing installment or revolving debt according to
its terms, and may have some charge-offs. A maximum of six 30-day late
payments, and one 60-day but no 90-day late payments, within the last 12
months is acceptable on an existing mortgage loan. As to non-mortgage credit,
some prior defaults may have occurred (provided, open collections and charge-
offs must be paid down to an amount not in excess of $500 at closing). No
bankruptcies were filed during the eighteen-month period prior to the date the
mortgage loan was made and there was evidence that the Mortgagor had re-
established its credit to an acceptable level. The applicant must have also
established some good credit since any bankruptcy proceedings. The mortgaged
property must be in average to good condition. A maximum Loan-to-Value Ratio
of 90% (or 80% for mortgage loans originated under a limited documentation
program) is permitted for a mortgage loan on an owner-occupied property. A
maximum Loan-to-Value Ratio of 85% (or 70% for mortgage loans originated under
a limited documentation program) is permitted for a mortgage loan on a non-
owner-occupied property. The debt service-to-income ratio generally is 50% or
less.

Risk Category 3: Under Risk Category 3, the prospective mortgagor may have
experienced significant credit problems in the past. A maximum of six 30-day
late payments, two 60-day late payments and one 90-day

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<PAGE>

late payment, within the last 12 months is acceptable on an existing mortgage
loan, provided that if there are no 60-day or 90-days late payments, a
mortgagor may be permitted to have more than six 30-day late payments. As to
non-mortgage credit, significant prior defaults may have occurred (provided,
open collections and charge-offs must be paid down to an amount not in excess
of $1,000 at closing). No bankruptcies were filed during the 12-month period
prior to the date the mortgage loan was made. The mortgaged property must be
in average to good condition. A maximum Loan-to-Value Ratio of 70% is
permitted for mortgage loans originated under a full or limited documentation
program on an owner-occupied property. A maximum Loan-to-Value Ratio of 70%
(or 60% for mortgage loans originated under a limited documentation program)
is permitted for a mortgage loan on a non-owner-occupied property. The debt
service-to-income ratio generally is 55% or less.

Risk Category 4: Under Risk Category 4, the prospective mortgagor may have
experienced substantial credit problems in the past. As to the mortgaged
credit, the mortgagor may have had a history of being generally 30 to 60 days
delinquent, and a maximum of two 90-day late payments within the last 12
months is acceptable on an existing mortgage loan. The prospective mortgagor's
credit history is poor and a notice of default may have been filed. As to non-
mortgage credit, significant prior defaults may have occurred and any open
collections and charge-offs may not have been paid off prior to closing. A
bankruptcy filing by the mortgagor is permitted if it is discharged at
closing. The mortgaged property must be in average to good condition. A
maximum Loan-to-Value Ratio of 70% for mortgage loans originated under a full
or limited documentation program is permitted for a mortgage loan on an owner-
occupied property. A maximum Loan-to-Value Ratio of 65% for mortgage loans
originated under a full or limited documentation program is permitted for a
mortgage loan on a non-owner-occupied property. The debt service-to-income
ratio generally is 60% or less.

As described above, the indicated underwriting standards applicable to the
Mortgage Loans include the foregoing categories and characteristics as
guidelines only. On a case-by-case basis, the underwriting process may
determine that the prospective mortgagor warrants a risk category upgrade
based on compensating factors. The underwriting standards applicable for Risk
Categories 1A, 1 and 2 may include debt service-to-income ratios up to 5%
higher for mortgage loans which have Loan-to-Value Ratios of 70% or less. An
additional 5% variance for mortgage loans which have Loan-to-Value Ratios of
65% or less may also have been permitted. Similar variance adjustments of up
to 5% may have been allowed for Risk Category 3 for mortgage loans which have
Loan-to-Value Ratios of less than 65%.

The foregoing risk grade classifications are based on factors which are
exclusive of the additional protection against loss which primary mortgage
insurance customarily provides on loans which have Loan-to-Value Ratios in
excess of 80%. Substantially all of the Mortgage Loans with Loan-to-Value
Ratios in excess of 80% do not have such coverage. See "Risk Factors--Risks
Associated with the Mortgage Loans" herein.

Based on the indicated underwriting standards, and in particular the
underwriting standards for mortgage loans in Risk Categories 3 and 4 as
described herein, such mortgage loans are likely to experience greater rates
of delinquency, foreclosure and loss, and may experience substantially greater
rates of delinquency, foreclosure and loss than mortgage loans underwritten
under more stringent underwriting standards.

THE ALTERNET PROGRAM

Residential Funding has established a program (the "AlterNet Program")
primarily for the purchase of mortgage loans that are made to borrowers that
may have imperfect credit histories, higher debt to income ratios or mortgage
loans that present certain other risks to investors. The Mortgage Collateral
Sellers that participate in the AlterNet Mortgage Program (each, an "AlterNet
Program Seller") have been selected by Residential Funding on the basis of
criteria set forth in Residential Funding's AlterNet Seller Guide (the
"AlterNet Seller Guide"). For those Mortgage Loans which Residential Funding
purchased from AlterNet Program Sellers, each Mortgage Loan determined by
Residential Funding to be acceptable for purchase would have been originated
in accordance with or would have been determined to be generally consistent
with the provisions of the AlterNet

S-20
<PAGE>

Seller Guide. Each AlterNet Program Seller is a HUD-approved mortgagee (or
otherwise originates loans on behalf of a HUD-approved mortgagee) or a
financial institution supervised by a federal or state authority and has had a
minimum of two years' experience (which may be through a predecessor entity)
in originating mortgage loans. If an AlterNet Program Seller becomes the
subject of a receivership, conservatorship or other insolvency or bankruptcy
proceeding or if an AlterNet Program Seller's net worth, financial performance
or delinquency and foreclosure rates are adversely impacted, such institution
may continue to be treated as an AlterNet Program Seller.

RESIDENTIAL FUNDING

Residential Funding will be responsible for master servicing the Mortgage
Loans. Such responsibilities will include the receipt of funds from
Subservicers, the reconciliation of servicing activity with respect to the
Mortgage Loans, investor reporting, remittances to the Trustee to accommodate
distributions to Certificateholders, follow-up with Subservicers with respect
to Mortgage Loans that are delinquent or for which servicing decisions may
need to be made, REO management and liquidation of REO Properties, notices and
other responsibilities as detailed in the Pooling and Servicing Agreement.

Residential Funding and its affiliates are active purchasers of non-
conforming mortgage loans and have sold a substantial amount of mortgage loans
that do not present certain of the special risk factors presented by the
Mortgage Loans as described herein. Residential Funding serves as the master
servicer for transactions backed by such higher quality mortgage loans and, as
of March 31, 1996, Residential Funding was master servicing approximately
120,195 of such mortgage loans, totaling approximately $28.9 billion. As a
result of the underwriting standards of the Mortgage Loans, however, the
Mortgage Loans are likely to experience rates of delinquency, foreclosure and
loss that are higher, and that may be substantially higher, than those
experienced by other pools of mortgage loans for which Residential Funding
acts as master servicer. Residential Funding has not had sufficient experience
master servicing the types of mortgage loans comprising the Mortgage Pool to
provide meaningful disclosure of its delinquency and loss experience with
respect to such mortgage loans.

THE SERVICERS

Primary servicing will be provided by LSI Financial Group on a contract
basis for 69.7% of the Mortgage Loans. The remainder of the Mortgage Loans
will be serviced by various Mortgage Collateral Sellers.

LSI Financial Group is a privately held Arkansas corporation which is
actively engaged in the servicing of various financial instruments, including
auto receivables, and second and first mortgage loans. It has entered into an
agreement by which it will provide the primary servicing for various risk
featured mortgage loans which had been acquired by Residential Funding. LSI
Financial Group is an approved HUD Title I and Title II servicer. LSI services
several securitized and whole loan portfolios comprised of single-family
mortgage products. LSI's corporate offices are located at 415 North McKinley
Street, Suite 1250, Little Rock, Arkansas 72205. LSI commenced mortgage
servicing operations in 1990 and since then has managed and serviced sub-prime
conduit programs, distressed RTC portfolios, and third-party mortgage loan
portfolios. The data presented below was provided by LSI Financial Group as
representative servicing information for sub-prime credit quality mortgage
loans, including mortgage loans it services on behalf of Residential Funding,
and is presented for informational purposes only. Neither the Company or the
Master Servicer make any representation or warranties as to the accuracy or
completeness of such information.

S-21
<PAGE>

LSI MORTGAGE PORTFOLIO DELINQUENCY HISTORY

<TABLE>
<CAPTION>
OCTOBER 31, 1995 APRIL 30, 1996
---------------- ---------------
<S> <C> <C>
Total Number of Loans........................ 2,434 7,723
Total Dollar Amount of Loans................. $220,594,759.59 $672,649,926.28
Weighted Average Maturity.................... 312.60 294.62
Weighted Average Coupon Rate................. 10.59% 10.46%
</TABLE>

<TABLE>
<CAPTION>
OCTOBER 31, 1995 APRIL 30, 1996
----------------------------- -----------------------------
PERCENTAGE PERCENTAGE
BY BY
PRINCIPAL PRINCIPAL PRINCIPAL PRINCIPAL
NUMBER BALANCE BALANCE NUMBER BALANCE BALANCE
------ ----------- ---------- ------ ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
DELINQUENCY SUMMARY(1)
30-59 days.............. 241 $24,894,345 11.29% 40 $ 2,274,400 0.34%
60-89 days.............. 39 3,769,241 1.71% 94 8,809,103 1.31%
90-119 days............. 9 1,163,886 0.53% 3 139,481 0.02%
Over 120 days........... 22 2,780,863 1.26% 77 9,311,439 1.38%
Total Delinquent Loans.. 311 32,608,335 14.78% 214 20,534,424 3.05%
Loans in Foreclosure.... 1 $ 315,000 0.14% 6 $ 821,944 0.12%
</TABLE>
- --------
(1) Loss information for the mortgage loans included in the table is not
provided because a substantial number of clients for whom LSI Financial
Group services engage directly in the liquidation of REO Property.

The above information is for sub prime credit mortgage loans for which LSI
has been serving as the primary servicer. The mortgage loans were originated
and underwritten according to standards judged to be similar to the Mortgage
Loans. There is no certainty that past history is indicative of future
results. The information in the above table may vary for similar types of
mortgage loans due to various factors including differing underwriting
guidelines and economic conditions of the originating area.

It is unlikely that the delinquency experience of the Mortgage Loans
comprising the Mortgage Pool will correspond to the delinquency experience of
the mortgage portfolio set forth in the foregoing table. The statistics shown
above represent the delinquency experience for the indicated mortgage
servicing portfolio only for the periods presented, whereas the aggregate
delinquency experience on the Mortgage Loans comprising the Mortgage Pool will
depend on the results obtained over the life of the Mortgage Pool. The
mortgage servicing portfolio set forth above include mortgage loans that were
originated using a variety of different underwriting procedures and standards
which may have been more selective. They include mortgage loans with a variety
of payment and other characteristics (including geographic location) which are
not necessarily representative of the payment and other characteristics of the
Mortgage Loans comprising the Mortgage Pool. It should be noted that if the
residential real estate market should experience an overall decline in
property values, the actual rates of delinquencies and foreclosures could be
higher than those previously experienced by the Servicers. In addition,
adverse economic conditions may affect the timely payment by Mortgagors of
scheduled payments of principal and interest on the Mortgage Loans and,
accordingly, the actual rates of delinquencies and foreclosures with respect
to the Mortgage Pool.

ADDITIONAL INFORMATION

The description in this Prospectus Supplement of the Mortgage Pool and the
Mortgaged Properties is based upon the Mortgage Pool as constituted at the
close of business on the Cut-off Date, as adjusted for the scheduled principal
payments due on or before such date. Prior to the issuance of the Offered
Certificates, Mortgage Loans may be removed from the Mortgage Pool as a result
of incomplete documentation or otherwise, if the Company deems such removal
necessary or appropriate. A limited number of other mortgage loans may be
included in the Mortgage Pool prior to the issuance of the Offered
Certificates. The Company believes that the information set forth herein will
be substantially representative of the characteristics of the Mortgage Pool as
it will be constituted at the time the Offered Certificates are issued
although the range of Mortgage Rates and maturities and certain other
characteristics of the Mortgage Loans in the Mortgage Pool may vary.

S-22
<PAGE>

A Current Report on Form 8-K will be available to purchasers of the Offered
Certificates and, together with the Pooling and Servicing Agreement, will be
filed with the Securities and Exchange Commission within fifteen days after
the initial issuance of the Offered Certificates. In the event Mortgage Loans
are removed from or added to the Mortgage Pool as set forth in the preceding
paragraph, such removal or addition will be noted in the Current Report on
Form 8-K.

DESCRIPTION OF THE CERTIFICATES

GENERAL

The Certificates, together with the rights to the ownership of the Excess
Spread, will evidence the entire beneficial ownership interest in the Trust
Fund. The Trust Fund will consist of: (i) the Mortgage Loans; (ii) such assets
as from time to time are identified as deposited in respect of the Mortgage
Loans in the Custodial Account and in the Certificate Account and belonging to
the Trust Fund; (iii) property acquired by foreclosure of such Mortgage Loans
or deed in lieu of foreclosure; and (iv) any applicable Primary Insurance
Policies and Primary Hazard Insurance Policies and all proceeds thereof. The
Senior Certificates will be entitled to the benefit of a certificate guaranty
insurance policy (the "Policy") to be issued by the Insurer, which will,
subject to its terms, protect the holders of the Senior Certificates against
any interest shortfalls (except as described herein) allocated to the Senior
Certificates and the principal portion of any Realized Losses allocated to the
Senior Certificates. The Policy is not part of the Trust Fund. See
"Description of the Certificates--Certificate Guaranty Insurance Policy."

The Principal Only Certificates will be entitled to payments based on the
Discount Fraction of the Discount Mortgage Loans. A Discount Mortgage Loan is
any Mortgage Loan with a Net Mortgage Rate less than %. With respect to each
Discount Mortgage Loan, the Discount Fraction is equal to a fraction,
expressed as a percentage, the numerator of which is % minus the Net Mortgage
Rate for such Discount Mortgage Loan and the denominator of which is %. The
Mortgage Loans other than the Discount Mortgage Loans are referred to herein
as the Non-Discount Mortgage Loans.

The DTC Registered Certificates will be issued, maintained and transferred
on the book-entry records of DTC and its Participants. The DTC Registered
Certificates will be issued in minimum denominations of $25,000 and integral
multiples of $1 in excess thereof. The Principal Only Certificates will be
issued in registered, certificated form in minimum denominations of $25,000
and integral multiples of $1,000 in excess thereof, except for one Principal
Only Certificate evidencing the sum of an authorized denomination thereof and
the remainder of the aggregate initial Certificate Principal Balance of such
class of Certificates. The Residual Certificates will be issued in registered,
certificated form in minimum denominations of a 20% Percentage Interest,
except as otherwise set forth herein under "Certain Federal Income Tax
Consequences."

The DTC Registered Certificates will be represented by one or more
certificates registered in the name of the nominee of DTC. The Company has
been informed by DTC that DTC's nominee will be Cede & Co. ("Cede"). No
Beneficial Owner will be entitled to receive a Definitive Certificate, except
as set forth below under "--Book-Entry Registration of Certain of the Senior
Certificates--Definitive Certificates." Unless and until Definitive
Certificates are issued for the DTC Registered Certificates under the limited
circumstances described herein, all references to actions by
Certificateholders with respect to the DTC Registered Certificates shall refer
to actions taken by DTC upon instructions from its Participants, and all
references herein to

S-23
<PAGE>

distributions, notices, reports and statements to Certificateholders with
respect to the DTC Registered Certificates shall refer to distributions,
notices, reports and statements to DTC or Cede, as the registered holder of
the DTC Registered Certificates, for distribution to Beneficial Owners by DTC
in accordance with DTC procedures.

BOOK-ENTRY REGISTRATION OF CERTAIN OF THE SENIOR CERTIFICATES

General. Beneficial Owners that are not Participants or Intermediaries but
desire to purchase, sell or otherwise transfer ownership of, or other
interests in, the DTC Registered Certificates may do so only through
Participants and Intermediaries. In addition, Beneficial Owners will receive
all distributions of principal of and interest on the DTC Registered
Certificates from the Paying Agent through DTC and Participants. Accordingly,
Beneficial Owners may experience delays in their receipt of payments. Unless
and until Definitive Certificates are issued for the DTC Registered
Certificates, it is anticipated that the only registered Certificateholder of
the DTC Registered Certificates will be Cede, as nominee of DTC. Beneficial
Owners will not be recognized by the Trustee or the Master Servicer as
Certificateholders, as such term is used in the Pooling and Servicing
Agreement, and Beneficial Owners will be permitted to receive information
furnished to Certificateholders and to exercise the rights of
Certificateholders only indirectly through DTC, its Participants and
Intermediaries.

Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers of
DTC Registered Certificates among Participants and to receive and transmit
distributions of principal of, and interest on, such DTC Registered
Certificates. Participants and Intermediaries with which Beneficial Owners
have accounts with respect to such DTC Registered Certificates similarly are
required to make book-entry transfers and receive and transmit such
distributions on behalf of their respective Beneficial Owners. Accordingly,
although Beneficial Owners will not possess physical certificates evidencing
their interests in the DTC Registered Certificates, the Rules provide a
mechanism by which Beneficial Owners, through their Participants and
Intermediaries, will receive distributions and will be able to transfer their
interests in the DTC Registered Certificates.

None of the Company, the Master Servicer or the Trustee will have any
liability for any actions taken by DTC or its nominee, including, without
limitation, actions for any aspect of the records relating to or payments made
on account of beneficial ownership interests in the DTC Registered
Certificates held by Cede, as nominee for DTC, or for maintaining, supervising
or reviewing any records relating to such beneficial ownership interests.

Definitive Certificates. Definitive Certificates will be issued to
Beneficial Owners or their nominees, respectively, rather than to DTC or its
nominee, only under the limited conditions set forth in the Prospectus under
"Description of the Certificates--Form of Certificates."

Upon the occurrence of an event described in the Prospectus in the third
paragraph under "Description of the Certificates--Form of Certificates," the
Trustee is required to notify, through DTC, Participants who have ownership of
DTC Registered Certificates as indicated on the records of DTC of the
availability of Definitive Certificates for their DTC Registered Certificates.
Upon surrender by DTC of the definitive certificates representing the DTC
Registered Certificates and upon receipt of instructions from DTC for re-
registration, the Trustee will reissue the DTC Registered Certificates as
Definitive Certificates issued in the respective principal amounts owned by
individual Beneficial Owners, and thereafter the Trustee and the Master
Servicer will recognize the holders of such Definitive Certificates as
Certificateholders under the Pooling and Servicing Agreement.

For additional information regarding DTC and the DTC Registered
Certificates, see "Description of the Certificates--Form of Certificates" in
the Prospectus.

AVAILABLE DISTRIBUTION AMOUNT

The "Available Distribution Amount" for any Distribution Date is equal to
the sum of (i) the aggregate amount of scheduled payments on the Mortgage
Loans due on the related Due Date and received on or prior to the related
Determination Date, after deduction of the master servicing fee, the
subservicing fees and the premium payable with respect to the Policy, (ii)
certain unscheduled payments, including Mortgagor prepayments

S-24
<PAGE>

on the Mortgage Loans, Insurance Proceeds, Liquidation Proceeds and proceeds
from repurchases of and substitutions for the Mortgage Loans occurring during
the preceding calendar month, and (iii) all Advances made for such
Distribution Date, in each case net of amounts reimbursable therefrom to the
Master Servicer and any Subservicer. With respect to any Distribution Date,
(i) the Due Date is the first day of the month in which such Distribution Date
occurs, and (ii) the Determination Date is the 20th day of the month in which
such Distribution Date occurs or, if such day is not a business day, the
immediately succeeding business day.

The Master Servicer may elect to treat Insurance Proceeds, Liquidation
Proceeds and other unscheduled collections (not including prepayments by the
Mortgagors) received in any calendar month as included in the Available
Distribution Amount for the Distribution Date in the month of receipt, but is
not obligated to do so. If the Master Servicer so elects, such amounts will be
deemed to have been received (and any related Realized Loss shall be deemed to
have occurred) on the last day of the month prior to the receipt thereof.

INTEREST DISTRIBUTIONS

Holders of each class of Senior Certificates (other than the Principal Only
Certificates) will be entitled to receive interest distributions in an amount
equal to the Accrued Certificate Interest on such class on each Distribution
Date, concurrently with distributions of the Excess Spread to the owner
thereof. As described below, Accrued Certificate Interest on the Senior
Certificates is subject to reduction in the event of certain interest
shortfalls allocable thereto. However, in the event that any such shortfall is
allocated to the Senior Certificates, subject to the terms of the Policy, the
amount of such allocated shortfall will be drawn under the Policy and
distributed to the holders of the Senior Certificates; provided that no such
draw will be made in respect of any such shortfall caused by the Relief Act
and any Prepayment Interest Shortfalls. Notwithstanding the foregoing, if
payments are not made as required under the Policy, any interest shortfalls
may be allocated to the Senior Certificates as described below. See
"Description of the Certificates--Certificate Guaranty Insurance Policy."

With respect to any Distribution Date, Accrued Certificate Interest in
respect of each class of Offered Certificates (other than the Principal Only
Certificates) will be equal to one month's interest accrued on the Certificate
Principal Balance of the Certificates of such class immediately prior to such
Distribution Date at the related Pass-Through Rate; in each case less interest
shortfalls, if any, allocated thereto for such Distribution Date to the extent
not covered with respect to the Senior Certificates by the Subordination
provided by the Class B Certificates, including in each case (i) any
Prepayment Interest Shortfall to the extent not covered by the Master Servicer
as described below, (ii) the interest portions of Realized Losses (including
Special Hazard Losses in excess of the Special Hazard Amount ("Excess Special
Hazard Losses"), Fraud Losses in excess of the Fraud Loss Amount ("Excess
Fraud Losses"), Bankruptcy Losses in excess of the Bankruptcy Loss Amount
("Excess Bankruptcy Losses") and losses occasioned by war, civil insurrection,
certain governmental actions, nuclear reaction and certain other risks
("Extraordinary Losses")) not allocated through Subordination, (iii) the
interest portion of any Advances that were made with respect to delinquencies
that were ultimately determined to be Excess Special Hazard Losses, Excess
Fraud Losses, Excess Bankruptcy Losses or Extraordinary Losses, and (iv) any
other interest shortfalls not covered by Subordination, including interest
shortfalls relating to the Relief Act (as defined in the Prospectus) or
similar legislation or regulations, all allocated as described below.
Distributions of Excess Spread to the owner thereof on each Distribution Date
will also be reduced by interest shortfalls not covered by Subordination, if
any. Such reductions will be allocated among the holders of all classes of
Certificates and to the owner of the Excess Spread in proportion to the
respective amounts of Accrued Certificate Interest and the amount of Excess
Spread which would have been payable on such Distribution Date absent such
reductions. Accrued Certificate Interest is calculated on the basis of a 360-
day year consisting of twelve 30-day months.

The Prepayment Interest Shortfall for any Distribution Date is equal to the
aggregate shortfall, if any, in collections of interest (adjusted to the
related Net Mortgage Rates) resulting from Mortgagor prepayments on the
Mortgage Loans during the preceding calendar month. Such shortfalls will
result because interest on prepayments in full is distributed only to the date
of prepayment, and because no interest is distributed on prepayments in part,
as such prepayments in part are applied to reduce the outstanding principal
balance of the related Mortgage Loans as of the Due Date in the month of
prepayment. However, with respect to any Distribution Date, any

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<PAGE>

Prepayment Interest Shortfalls resulting from prepayments in full during the
preceding calendar month will be offset by the Master Servicer, but only to
the extent such Prepayment Interest Shortfalls do not exceed an amount equal
to the lesser of (a) one-twelfth of 0.125% of the Stated Principal Balance (as
defined herein) of the Mortgage Loans immediately preceding such Distribution
Date and (b) the sum of the master servicing fee payable to the Master
Servicer in respect of its master servicing activities and reinvestment income
received by the Master Servicer on amounts payable with respect to such
Distribution Date. Prepayment Interest Shortfalls resulting from partial
prepayments will not be offset by the Master Servicer from master servicing
compensation or otherwise. No assurance can be given that the master servicing
compensation available to cover Prepayment Interest Shortfalls will be
sufficient therefor. See "Pooling and Servicing Agreement--Servicing and Other
Compensation and Payment of Expenses" herein.

If on any Distribution Date the Available Distribution Amount is less than
Accrued Certificate Interest on the Senior Certificates and the amount of the
Excess Spread for such Distribution Date, the shortfall will be allocated
among the holders of all classes of Senior Certificates and the owner of the
Excess Spread in proportion to the respective amounts of Accrued Certificate
Interest and the amount of Excess Spread for such Distribution Date. In
addition, the amount of any interest shortfalls that are covered by
Subordination (specifically, interest shortfalls not described in clauses (i)
through (iv) in the second preceding paragraph) will be unpaid Accrued
Certificate Interest and will be distributable to holders of the Certificates
of such classes, and the owner of the Excess Spread, entitled to such amounts
on subsequent Distribution Dates, to the extent of available funds after
interest distributions as required herein. Such shortfalls could occur, for
example, if delinquencies on the Mortgage Loans were exceptionally high and
were concentrated in a particular month and Advances by the Master Servicer
did not cover the shortfall. Any such amounts so carried forward will not bear
interest. Any interest shortfalls will not be offset by a reduction in the
servicing compensation of the Master Servicer or otherwise, except to the
limited extent described in the preceding paragraph with respect to Prepayment
Interest Shortfalls resulting from prepayments in full.

The Pass-Through Rates on all classes of Offered Certificates (other than
the Principal Only Certificates) are fixed and are set forth on the cover
hereof. Pursuant to the terms of the Pooling and Servicing Agreement, the
Master Servicer will be obligated to remit to Residential Funding the Excess
Spread. With respect to each Distribution Date, the Excess Spread is equal to
the product of (x) the weighted average of the Strip Rates on the Certificates
(other than the Principal Only Certificates) and (y) the aggregate Certificate
Principal Balances of such classes of Certificates immediately prior to such
Distribution Date, divided by twelve. The Strip Rate on each such class of
Certificates is equal to the weighted average of the Net Mortgage Rates on the
outstanding Mortgage Loans minus the related Pass-Through Rate. The Net
Mortgage Rate on each Mortgage Loan is equal to the Mortgage Rate thereon
minus the rate per annum at which the related master servicing and
subservicing fees accrue (the "Servicing Fee Rate") and the per annum rate at
which the Premium Fee accrues. The initial Strip Rates on the Class A-1, Class
A-2, Class A-3, Class A-4, Class R-II, Class B-1, Class B-2, and Class B-3
Certificates are equal to %, %, %, %, %, %, % and % per annum,
respectively. The initial weighted average of the Strip Rates is approximately
% per annum. On any Distribution Date, the amount of the premium (the
"Premium Fee") payable to the Insurer with respect to the Policy is equal to
one-twelfth of the product of a percentage specified in the Pooling and
Servicing Agreement and the Certificate Principal Balance of the Senior
Certificates.

As described herein, the Accrued Certificate Interest allocable to each
class of Offered Certificates (other than the Principal Only Certificates) is
based on the Certificate Principal Balance thereof. The Certificate Principal
Balance of any Offered Certificate as of any date of determination is equal to
the initial Certificate Principal Balance thereof, reduced by the aggregate of
(a) all amounts allocable to principal previously distributed with respect to
such Certificate and (b) any reductions in the Certificate Principal Balance
thereof deemed to have occurred in connection with allocations of Realized
Losses in the manner described herein.

PRINCIPAL DISTRIBUTIONS ON THE SENIOR CERTIFICATES

Holders of the Senior Certificates (other than the Principal Only
Certificates) will be entitled to receive on each Distribution Date, to the
extent of the portion of the Available Distribution Amount remaining after the

S-26
<PAGE>

aggregate amount of Accrued Certificate Interest to be distributed to the
holders of the Senior Certificates and the amount of the Excess Spread to be
distributed for such Distribution Date (such amount in the aggregate the
"Senior Interest Distribution Amount") and the Class A-5 Principal
Distribution Amount (as defined below) are distributed, a distribution
allocable to principal equal to the sum of the following:

(i) the product of (A) the then-applicable Senior Percentage and (B) the
aggregate of the following amounts:

(1) the principal portion of all scheduled monthly payments on the
Mortgage Loans (other than the related Discount Fraction of the
principal portion of such payments, with respect to each Discount
Mortgage Loan) due on the related Due Date, whether or not received on
or prior to the related Determination Date, less the principal portion
of Debt Service Reductions, as defined below, (other than the related
Discount Fraction of the principal portion of such Debt Service
Reductions with respect to each Discount Mortgage Loan) which together
with other Bankruptcy Losses are in excess of the Bankruptcy Amount;

(2) the principal portion of all proceeds of the repurchase of a
Mortgage Loan (or, in the case of a substitution, certain amounts
representing a principal adjustment) (other than the related Discount
Fraction of the principal portion of such proceeds, with respect to
each Discount Mortgage Loan) as required by the Pooling and Servicing
Agreement during the preceding calendar month; and

(3) the principal portion of all other unscheduled collections
received during the preceding calendar month (other than full and
partial Principal Prepayments made by the respective Mortgagors and any
amounts received in connection with a Final Disposition (as defined
below) of a Mortgage Loan described in clause (ii) below), to the
extent applied as recoveries of principal (other than the related
Discount Fraction of the principal portion of such unscheduled
collections, with respect to each Discount Mortgage Loan);

(ii) in connection with the Final Disposition of a Mortgage Loan (x) that
occurred in the preceding calendar month and (y) that did not result in any
Excess Special Hazard Losses, Excess Fraud Losses, Excess Bankruptcy Losses
or Extraordinary Losses, an amount equal to the lesser of (a) the then-
applicable Senior Percentage of the Stated Principal Balance of such
Mortgage Loan (other than the related Discount Fraction of such Stated
Principal Balance, with respect to a Discount Mortgage Loan) and (b) the
then-applicable Senior Accelerated Distribution Percentage (as defined
below) of the related unscheduled collections, including Insurance Proceeds
and Liquidation Proceeds, to the extent applied as recoveries of principal
(in each case other than the portion of such collection, with respect to a
Discount Mortgage Loan included in clause (iii) of the definition of "Class
A-5 Principal Distribution Amount" below);

(iii) the then-applicable Senior Accelerated Distribution Percentage of
the aggregate of all full and partial Principal Prepayments made by the
respective Mortgagors of the Mortgage Loans (other than the related
Discount Fraction of such Principal Prepayments, with respect to each
Discount Mortgage Loan) during the preceding calendar month;

(iv) any Excess Subordinate Principal Amount (as defined below) for such
Distribution Date; and

(v) any amounts allocable to principal for any previous Distribution Date
(calculated pursuant to clauses (i) through (iii) above) that remain
undistributed to the extent that any such amounts are not attributable to
Realized Losses which were allocated to the Class B Certificates.

With respect to any Distribution Date, the lesser of (a) the balance of the
Available Distribution Amount remaining after the Senior Interest Distribution
Amount and the Class A-5 Principal Distribution Amount have been distributed
and (b) the sum of the amounts described in clauses (i) through (v) of the
immediately preceding paragraph is hereinafter referred to as the "Senior
Principal Distribution Amount." With respect to any Distribution Date on which
the Certificate Principal Balance of the most subordinate class or classes of
Certificates then outstanding is to be reduced to zero and on which Realized
Losses are to be allocated to such class or classes, the "Excess Subordinate
Principal Amount" is equal to the amount, if any, by which (i) the amount that
would otherwise be distributable in respect of principal on such class or
classes of Certificates on

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<PAGE>

such Distribution Date is greater than (ii) the excess, if any, of the
aggregate of the Certificate Principal Balance of such class or classes of
Certificates immediately prior to such Distribution Date over the aggregate
amount of Realized Losses to be allocated to such class or classes of
Certificates on such Distribution Date, as reduced by any amount calculated
pursuant to clause (v) of the definition of "Class A-5 Principal Distribution
Amount".

Holders of the Principal Only Certificates will be entitled to receive on
each Distribution Date, to the extent of the excess, if any, of the Available
Distribution Amount over the Senior Interest Distribution Amount, a
distribution allocable to principal equal to the Class A-5 Principal
Distribution Amount. The "Class A-5 Principal Distribution Amount" is equal to
the aggregate of:

(i) the related Discount Fraction of the principal portion of the
scheduled monthly payment on each Discount Mortgage Loan due on the related
Due Date, whether or not received on or prior to the related Determination
Date, less the Discount Fraction of the principal portion of any related
Debt Service Reductions which together with other Bankruptcy Losses are in
excess of the Bankruptcy Amount;

(ii) the related Discount Fraction of the principal portion of all
unscheduled collections on each Discount Mortgage Loan received during the
preceding calendar month (other than amounts received in connection with a
Final Disposition of a Discount Mortgage Loan described in clause (iii)
below), including full and partial Principal Prepayments, repurchases of
Discount Mortgage Loans (or, in the case of a substitution, certain amounts
representing a principal adjustment) as required by the Pooling and
Servicing Agreement, Liquidation Proceeds and Insurance Proceeds, to the
extent applied as recoveries of principal;

(iii) in connection with the Final Disposition of a Discount Mortgage
Loan that did not result in any Excess Special Hazard Losses, Excess Fraud
Losses, Excess Bankruptcy Losses or Extraordinary Losses, an amount equal
to the lesser of (a) the applicable Discount Fraction of the Stated
Principal Balance of such Discount Mortgage Loan immediately prior to such
Distribution Date and (b) the aggregate amount of collections on such
Discount Mortgage Loan to the extent applied as recoveries of principal;

(iv) any amounts allocable to principal for any previous Distribution
Date (calculated pursuant to clauses (i) through (iii) above) that remain
undistributed; and

(v) with respect to each Final Disposition of a Discount Mortgage Loan in
connection with such Distribution Date or any prior Distribution Date, to
the extent that the amount included under clause (iii) above for such
Distribution Date was less than the amount described in (a) under clause
(iii) above (each such shortfall, a "Class A-5 Collection Shortfall"), an
amount equal to the aggregate of the Class A-5 Collection Shortfalls, less
any amounts paid pursuant to this clause on a prior Distribution Date,
until paid in full; provided, that distributions pursuant to this clause
(v) shall only be made to the extent of Eligible Funds (as described below)
on any Distribution Date.

In addition, on each Distribution Date, funds received as a result of a
claim under the Policy in respect of Realized Losses allocated to Senior
Certificates will be distributed by or on behalf of the Trustee to the holders
of such Class of Senior Certificates. See "Description of the Certificates--
Certificate Guaranty Insurance Policy" herein.

A "Final Disposition" of a defaulted Mortgage Loan is deemed to have
occurred upon a determination by the Master Servicer that it has received all
Insurance Proceeds, Liquidation Proceeds and other payments or cash recoveries
which the Master Servicer reasonably and in good faith expects to be finally
recoverable with respect to such Mortgage Loan.

"Eligible Funds" on any Distribution Date means the portion, if any, of the
Available Distribution Amount remaining after reduction by the sum of the
Senior Interest Distribution Amount, the Senior Principal Distribution Amount
(determined without regard to clause (iv) thereof), the Class A-5 Principal
Distribution Amount (determined without regard to clause (v) thereof) and the
aggregate amount of Accrued Certificate Interest on the Class B Certificates.
Notwithstanding any other provision hereof, any distribution in respect of any
Class A-5 Collection Shortfall, to the extent not covered by any amounts
otherwise distributable to the Class B-3 Certificates, shall result in a
reduction of the amount of principal distributions on such Distribution Date
on the Class B-1 Certificates and Class B-2 Certificates, in each case in
reverse order of their payment priority.

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<PAGE>

The Senior Percentage, which initially will equal approximately 95.0% and
will in no event exceed 100%, will be adjusted for each Distribution Date to
be the percentage equal to the aggregate Certificate Principal Balance of the
Senior Certificates (other than the Principal Only Certificates) immediately
prior to such Distribution Date divided by the aggregate Stated Principal
Balance of all of the Mortgage Loans (other than the Discount Fraction of the
Discount Mortgage Loans) immediately prior to such Distribution Date. The
Subordinate Percentage as of any date of determination is equal to 100% minus
the Senior Percentage as of such date. The initial Senior Percentage is less
than the initial percentage interest in the Trust Fund evidenced by the Senior
Certificates (including the Principal Only Certificates) in the aggregate,
because the Senior Percentage is calculated without regard to either the
Certificate Principal Balance of the Principal Only Certificates or the
Discount Fraction of the Stated Principal Balance of each Discount Mortgage
Loan.

The Senior Accelerated Distribution Percentage for any Distribution Date
occurring prior to the Distribution Date in June 2001 will equal 100%. The
Senior Accelerated Distribution Percentage for any Distribution Date occurring
after the first five years following the Delivery Date will be as follows: for
any Distribution Date during the sixth year after the Delivery Date, the
Senior Percentage for such Distribution Date plus 70% of the Subordinate
Percentage for such Distribution Date; for any Distribution Date during the
seventh year after the Delivery Date, the Senior Percentage for such
Distribution Date plus 60% of the Subordinate Percentage for such Distribution
Date; for any Distribution Date during the eighth year after the Delivery
Date, the Senior Percentage for such Distribution Date plus 40% of the
Subordinate Percentage for such Distribution Date; for any Distribution Date
during the ninth year after the Delivery Date, the Senior Percentage for such
Distribution Date plus 20% of the Subordinate Percentage for such Distribution
Date; and for any Distribution Date thereafter, the Senior Percentage for such
Distribution Date (unless on any such Distribution Date the Senior Percentage
exceeds the initial Senior Percentage, in which case the Senior Accelerated
Distribution Percentage for such Distribution Date will once again equal
100%). Any scheduled reduction to the Senior Accelerated Distribution
Percentage described above shall not be made as of any Distribution Date
unless either (a)(i) the outstanding principal balance of Mortgage Loans
delinquent 60 days or more averaged over the last six months, as a percentage
of the aggregate outstanding principal balance of all Mortgage Loans averaged
over the last six months, does not exceed 2% and (ii) Realized Losses on the
Mortgage Loans to date for such Distribution Date, if occurring during the
sixth, seventh, eighth, ninth or tenth year (or any year thereafter) after the
Delivery Date, are less than 30%, 35%, 40%, 45% or 50%, respectively, of the
sum of the initial Certificate Principal Balances of the Class B Certificates
or (b)(i) the outstanding principal balance of Mortgage Loans delinquent 60
days or more averaged over the last six months, as a percentage of the
aggregate outstanding principal balance of all Mortgage Loans averaged over
the last six months, does not exceed 4% and (ii) Realized Losses on the
Mortgage Loans to date for such Distribution Date are less than 10% of the sum
of the initial Certificate Principal Balances of the Class B Certificates.

Notwithstanding the foregoing, upon reduction of the Certificate Principal
Balances of the Senior Certificates (other than the Principal Only
Certificates) to zero, the Senior Accelerated Distribution Percentage will
equal 0%. See "Subordination" in the Prospectus.

Distributions of principal on the Senior Certificates on each Distribution
Date will be made (after distribution of the Senior Interest Distribution
Amount as described under "--Interest Distributions"), as follows:

(a) Prior to the occurrence of the Credit Support Depletion Date (as
defined below),

(i) the Class A-5 Principal Distribution Amount shall be distributed to
the Principal Only Certificates, in reduction of the Certificate Principal
Balance thereof, until such Certificate Principal Balance is reduced to
zero;

(ii) the Senior Principal Distribution Amount shall be distributed to the
Class R-I Certificates and Class R-II Certificates, concurrently, with the
amount to be distributed allocated to the Class R-I Certificates and Class
R-II Certificates on a pro rata basis in proportion to their respective
Certificate Principal Balances, in reduction of the Certificate Principal
Balances of such Certificates, until their respective Certificate Principal
Balances are reduced to zero; and

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<PAGE>

(iii) the balance of the Senior Principal Distribution Amount remaining
after the distribution, if any, described in clause (ii) above shall be
distributed as follows:

(A) first, to the Class A-1 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero;

(B) second, to the Class A-2 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero;

(D) fourth, to the Class A-4 Certificates, until the Certificate
Principal Balance thereof has been reduced to zero.

(b) On or after the occurrence of the Credit Support Depletion Date, all
priorities relating to distributions as described above in respect of
principal among the Senior Certificates (other than the Principal Only
Certificates) will be disregarded and an amount equal to the Discount
Fraction of the principal portion of scheduled or unscheduled payments
received or advanced in respect of Discount Mortgage Loans will be
distributed to the Principal Only Certificates, and the Senior Principal
Distribution Amount will be distributed to the Senior Certificates (other
than the Principal Only Certificates) pro rata in accordance with their
respective outstanding Certificate Principal Balances and the Senior
Interest Distribution Amount will be distributed as described under "--
Interest Distributions."

(c) After reduction of the Certificate Principal Balances of the Senior
Certificates (other than the Principal Only Certificates) to zero but prior
to the occurrence of the Credit Support Depletion Date, the Senior
Certificates (other than the Principal Only Certificates) will be entitled
to no further distributions of principal thereon and the Available
Distribution Amount will be paid solely to the holders of the Principal
Only and Class B Certificates, in each case as described herein.

The "Credit Support Depletion Date" is the first Distribution Date on which
the Senior Percentage equals 100% and an Insurer Default exists.

The Master Servicer may elect to treat Insurance Proceeds, Liquidation
Proceeds and other unscheduled collections (not including prepayments by the
Mortgagors) received in any calendar month as included in the Available
Distribution Amount and the Senior Principal Distribution Amount for the
Distribution Date in the month of receipt, but is not obligated to do so. If
the Master Servicer so elects, such amounts will be deemed to have been
received (and any related Realized Loss shall be deemed to have occurred) on
the last day of the month prior to the receipt thereof.

CERTIFICATE GUARANTY INSURANCE POLICY

The following summary of the terms of the Policy does not purport to be
complete and is qualified in its entirety by reference to the Policy. A form
of the Policy is included as an exhibit to the Pooling and Servicing
Agreement.

Simultaneously with the issuance of the Senior Certificates, the Insurer
will deliver the Policy to the Trustee for the benefit of the Senior
Certificateholders. Under the Policy, the Insurer will irrevocably and
unconditionally guarantee payment on each Distribution Date to the Trustee for
the benefit of the holders of the Senior Certificates the full and complete
payment of Insured Payments (as defined below) with respect to the Senior
Certificates. "Insured Payments" shall mean with respect to the Senior
Certificates as of any Distribution Date (i) any shortfall in amounts
available in the Certificate Account to pay one full month's interest on the
Certificate Principal Balances of the Senior Certificates (other than the
Principal Only Certificates) at the related Pass-Through Rate, net of any
Prepayment Interest Shortfalls and any interest shortfalls relating to the
Relief Act and allocated to the Senior Certificates, (ii) the principal
portion of any Realized Loss allocated to the Senior Certificates and (iii)
the Certificate Principal Balance of each class of the Senior Certificates to
the extent unpaid

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<PAGE>

on the final Distribution Date for the related class or earlier termination of
the Trust Fund pursuant to the terms of the Agreement. In addition, with
respect to any Distribution Date occurring on a date on which a claim has been
previously made under the Policy which has not been reimbursed for six months,
the Insurer at its sole option may pay any or all of the outstanding
Certificate Principal Balances of the Senior Certificates.

Payment of claims under the Policy will be made by the Insurer following
Receipt by the 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 such notice for payment, and (b) 12:00 noon, New York
City time, on the relevant Distribution Date.

The terms "Receipt" and "Received," with respect to the Policy, means actual
delivery to the Insurer and to its fiscal agent appointed by the 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 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 Insurer or
the fiscal agent shall promptly so advise the Trustee and the Trustee may
submit an amended notice.

Under the Policy, "Business Day" means any day other than (i) a Saturday or
Sunday or (ii) a day on which banking institutions in the City of New York,
New York, the State of New York or in the city in which the corporate trust
office of the Trustee is located, are authorized or obligated by law or
executive order to be closed. The Insurer's obligations under the Policy to
make Insured Payments shall be discharged to the extent funds are transferred
to the Trustee as provided in the Policy, whether or not such funds are
properly applied by the Trustee.

"Term of the Policy" means the period from and including the date of
issuance of the Policy to and including the date on which the Certificate
Principal Balances of the Senior Certificates is zero.

The Insurer shall be subrogated to the rights of the Senior
Certificateholders to receive payments of principal and interest, as
applicable, with respect to distributions on the Senior Certificates to the
extent of any payment by the Insurer under the Policy. To the extent the
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee), to the Senior Certificateholders, the Insurer will be
subrogated to the rights of the Senior Certificateholders, as applicable, with
respect to such Insured Payment and shall be deemed to the extent of the
payments so made to be a registered Senior Certificateholder for purposes of
payment.

Claims under the Policy constitute direct unsecured and unsubordinated
obligations of the Insurer, and will rank equally with any other unsecured and
unsubordinated indebtedness of the Insurer for borrowed money. Claims against
the Insurer under the Policy and claims against the Insurer under each other
financial guaranty insurance policy issued by it constitute equal claims
against the general assets of the Insurer. The terms of the Policy cannot be
modified, altered or affected by any other agreement or instrument, or by the
merger, consolidation or dissolution of the Company. The Policy by its terms
may not be cancelled or revoked. The Policy is governed by the laws of the
State of New York. The 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 Insurer agrees under
the Policy not to assert, and waives, for the benefit of each Senior
Certificateholder, all its rights (whether by counterclaim, setoff or
otherwise) and defense (including, without limitation, the defense of fraud),
whether acquired by subrogation, assignment or otherwise, to the extent that
such rights and defenses may be available to the Insurer to avoid payment of
its obligations under the Policy in accordance with the express provisions of
the Policy.

Pursuant to the terms of the Pooling and Servicing Agreement, unless the
Insurer fails to make a required payment under the Policy or certain events of
insolvency in respect of the Insurer exist (either, an "Insurer Default"), the
Insurer will be entitled to exercise, among others, the following rights of
the Senior

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<PAGE>

Certificateholders, without the consent of such Certificateholders, and the
Senior Certificateholders may exercise such rights only with the prior written
consent of the Insurer: (i) the right to direct the Trustee to terminate the
rights and obligations of the Master Servicer under the Pooling and Servicing
Agreement upon the occurrence of an Event of Default by the Master Servicer
and (ii) the right to consent to or direct any waiver of an Event of Default
by the Master Servicer. In addition, unless an Insurer Default exists, the
Insurer's consent will be required prior to, among other things, (i) the
removal of the Trustee, (ii) the termination by the Trustee of the rights and
obligations of the Master Servicer under the Pooling and Servicing Agreement
upon the occurrence of an Event of Default by the Master Servicer, (iii) the
appointment of any successor Trustee or Master Servicer or (iv) any amendment
to the Pooling and Servicing Agreement.

The Company, Residential Funding and the Insurer will enter into an
Insurance and Indemnity Agreement (the "Insurance Agreement") pursuant to
which the Company will agree to reimburse, with interest, the Insurer for
amounts paid pursuant to claims under the Policy. The Company will further
agree to pay the Insurer all reasonable charges and expenses which the Insurer
may pay or incur relative to any amounts paid under the Policy or otherwise in
connection with the transaction and to indemnify the Insurer against certain
liabilities. Except to the extent provided therein, amounts owing under the
Insurance Agreement will be payable solely from the Trust Fund.

ALLOCATION OF LOSSES; SUBORDINATION

To the extent provided in the Policy, the Policy will cover all Realized
Losses allocated to the Senior Certificates. Notwithstanding the foregoing, if
payments are not made as required under the Policy, Realized Losses will be
allocable to the Certificates based on the following priorities.

The Subordination provided to the Senior Certificates by the Class B
Certificates will cover Realized Losses on the Mortgage Loans that are
Defaulted Mortgage Losses, Fraud Losses, Bankruptcy Losses and Special Hazard
Losses (as defined herein). Any Realized Losses which are not Excess Special
Hazard Losses, Excess Fraud Losses, Excess Bankruptcy Losses or Extraordinary
Losses will be allocated first, to the Class B Certificates until the
Certificate Principal Balance of the Class B Certificates has been reduced to
zero; and thereafter, if any such Realized Loss is on a Discount Mortgage
Loan, to the Principal Only Certificates in an amount equal to the related
Discount Fraction of the principal portion of such Realized Loss, and the
remainder of such Realized Losses and the entire amount of such Realized
Losses on Non-Discount Mortgage Loans among all the remaining classes of
Senior Certificates (and the Excess Spread in the case of the interest portion
of a Realized Loss) on a pro rata basis. Any allocation of a Realized Loss
(other than a Debt Service Reduction) to a Certificate will be made by
reducing the Certificate Principal Balance thereof, in the case of the
principal portion of such Realized Loss, and the Accrued Certificate Interest
thereon and the amount of the Excess Spread, in the case of the interest
portion of such Realized Loss, by the amount so allocated as of the
Distribution Date occurring in the month following the calendar month in which
such Realized Loss was incurred. As used herein, "Debt Service Reduction"
means a reduction in the amount of the monthly payment due to certain
bankruptcy proceedings, but does not include any permanent forgiveness of
principal. As used herein, "Subordination" refers to the provisions discussed
above for the allocation of Realized Losses among the various classes, as well
as all provisions effecting such allocations including the priorities for
distribution of cash flows in the amounts described herein.

Allocations of the principal portion of Debt Service Reductions to each
class of Class B Certificates will result from the priority of distributions
of the Available Distribution Amount as described herein, which distributions
shall be made first to the Senior Certificates. An allocation of the interest
portion of a Realized Loss as well as the principal portion of Debt Service
Reductions will not reduce the level of Subordination, as such term is defined
herein, until an amount in respect thereof has been actually disbursed to the
Senior Certificateholders. The holders of the Offered Certificates will not be
entitled to any additional payments with respect to Realized Losses from
amounts otherwise distributable on any classes of Certificates subordinate
thereto (except in limited circumstances in respect of any Excess Subordinate
Principal Amount, or in the case of Class A-5 Collection Shortfalls, to the
extent of Eligible Funds). Accordingly, the Subordination provided to

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the Senior Certificates (other than the Principal Only Certificates) with
respect to Realized Losses allocated on any Distribution Date will be effected
primarily by increasing the Senior Percentage of future distributions of
principal of the remaining Mortgage Loans. Because the Discount Fraction of
the Discount Mortgage Loans will not change over time, the protection from
losses provided to the Principal Only Certificates by the Class B Certificates
is limited to the prior right of the Principal Only Certificates to receive
distributions in respect of principal as described herein. Furthermore,
principal losses on the Mortgage Loans that are not covered by Subordination
will be allocated to the Principal Only Certificates only to the extent they
occur on a Discount Mortgage Loan and only to the extent of the related
Discount Fraction of such losses. Such allocation of principal losses on the
Discount Mortgage Loans may result in such losses being allocated in an amount
that is greater or less than would have been the case had such losses been
allocated in proportion to the Certificate Principal Balance of the Principal
Only Certificates. Thus, the Senior Certificates (other than the Principal
Only Certificates) will bear the entire amount of losses that are not
allocated to the Class B Certificates other than the amount allocable to the
Principal Only Certificates), which losses will be allocated among all classes
of Senior Certificates (other than the Principal Only Certificates) on a pro
rata basis in proportion to their respective Certificate Principal Balances.

Any Excess Special Hazard Losses, Excess Fraud Losses, Excess Bankruptcy
Losses, Extraordinary Losses or other losses of a type not covered by
Subordination on Non-Discount Mortgage Loans will be allocated on a pro rata
basis among the Senior Certificates (other than the Principal Only
Certificates), the Excess Spread (in the case of the interest portion of any
such Realized Losses), and Class B Certificates (any such Realized Losses so
allocated to the Senior Certificates will be allocated without priority among
the various classes of Senior Certificates (other than the Principal Only
Certificates)). The principal portion of such losses on Discount Mortgage
Loans will be allocated to the Principal Only Certificates in an amount equal
to the related Discount Fraction thereof, and the remainder of such losses on
Discount Mortgage Loans will be allocated among the remaining Certificates
(and the Excess Spread in the case of the interest portion of such losses) on
a pro rata basis. An allocation of a Realized Loss on a "pro rata basis" among
two or more classes of Certificates or the Excess Spread means an allocation
to each such class of Certificates on the basis of its then outstanding
Certificate Principal Balance prior to giving effect to distributions to be
made on such Distribution Date in the case of an allocation of the principal
portion of a Realized Loss or based on the Accrued Certificate Interest
thereon and the amount of the Excess Spread in respect of such Distribution
Date in the case of an allocation of the interest portion of a Realized Loss.

With respect to any defaulted Mortgage Loan that is finally liquidated,
through foreclosure sale, disposition of the related Mortgaged Property if
acquired on behalf of the Certificateholders by deed in lieu of foreclosure,
or otherwise, the amount of loss realized, if any, will equal the portion of
the Stated Principal Balance remaining, if any, plus interest thereon through
the last day of the month in which such Mortgage Loan was finally liquidated,
after application of all amounts recovered (net of amounts reimbursable to the
Master Servicer or the Subservicer for Advances and expenses, including
attorneys' fees) towards interest and principal owing on the Mortgage Loan.
Such amount of loss realized and any Special Hazard Losses, Fraud Losses and
Bankruptcy Losses are referred to herein as "Realized Losses."

In order to maximize the likelihood of distribution in full of the Senior
Interest Distribution Amount, the Class A-5 Principal Distribution Amount and
the Senior Principal Distribution Amount, on each Distribution Date, holders
of Senior Certificates and the owner of the Excess Spread have a right to
distributions of the Available Distribution Amount that is prior to the rights
of the holders of the Class B Certificates, to the extent necessary to satisfy
the Senior Interest Distribution Amount, the Class A-5 Principal Distribution
Amount and the Senior Principal Distribution Amount.

The application of the Senior Accelerated Distribution Percentage (when it
exceeds the Senior Percentage) to determine the Senior Principal Distribution
Amount will accelerate the amortization of the Senior Certificates (other than
the Principal Only Certificates) relative to the actual amortization of the
Mortgage Loans. The Principal Only Certificates will not receive more than the
Discount Fraction of any unscheduled payment relating to a Discount Mortgage
Loan. To the extent that the Senior Certificates (other than the Principal
Only

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<PAGE>

Certificates) are amortized faster than the Mortgage Loans, in the absence of
offsetting Realized Losses allocated to the Class B Certificates, the
percentage interest evidenced by such Senior Certificates in the Trust Fund
will be decreased (with a corresponding increase in the interest in the Trust
Fund evidenced by the Class B Certificates), thereby increasing, relative to
their respective Certificate Principal Balances, the Subordination afforded
the Senior Certificates by the Class B Certificates. In addition, if losses on
the Mortgage Loans exceed the amounts described above under "--Principal
Distributions on the Senior Certificates," 100% of the Senior Accelerated
Distribution Percentage of full and partial principal prepayments will be
allocated to the Senior Certificates, thereby accelerating the amortization of
the Senior Certificates relative to the Class B Certificates.

The aggregate amount of Realized Losses which may be allocated in connection
with Special Hazard Losses (the "Special Hazard Amount") through Subordination
shall initially be equal to $ . As of any date of determination following
the Cut-off Date, the Special Hazard Amount shall equal $ less the sum of
(A) any amounts allocated through Subordination in respect of Special Hazard
Losses and (B) the Adjustment Amount. The Adjustment Amount will be equal to
an amount calculated pursuant to the terms of the Pooling and Servicing
Agreement. As used in this Prospectus Supplement, "Special Hazard Losses" has
the same meaning set forth in the Prospectus, except that Special Hazard
Losses will not include and Subordination will not cover Extraordinary Losses,
and Special Hazard Losses will not exceed the lesser of the cost of repair or
replacement of the related Mortgaged Properties.

The aggregate amount of Realized Losses which may be allocated in connection
with Fraud Losses (the "Fraud Loss Amount") through Subordination shall
initially be equal to $ . As of any date of determination after the Cut-off
Date, the Fraud Loss Amount shall equal (X) prior to the first anniversary of
the Cut-off Date an amount equal to 3.00% of the aggregate principal balance
of all of the Mortgage Loans as of the Cut-off Date minus the aggregate
amounts allocated through Subordination with respect to Fraud Losses up to
such date of determination; (Y) from the first to the second anniversary of
the Cut-off Date, an amount equal to (1) the lesser of (a) the Fraud Loss
Amount as of the most recent anniversary of the Cut-off Date and (b) 2.00% of
the aggregate principal balance of all of the Mortgage Loans as of the most
recent anniversary of the Cut-off Date minus (2) the aggregate amount
allocated through Subordination with respect to Fraud Losses since the most
recent anniversary of the Cut-off Date up to such date of determination; and
(Z) from the second to the fifth anniversary of the Cut-off Date, an amount
equal to (1) the lesser of (a) the Fraud Loss Amount as of the most recent
anniversary of the Cut-off Date and (b) 1.00% of the aggregate principal
balance of all of the Mortgage Loans as of the most recent anniversary of the
Cut-off Date minus (2) the aggregate amount allocated through Subordination
with respect to Fraud Losses since the most recent anniversary of the Cut-off
Date up to such date of determination. On and after the fifth anniversary of
the Cut-off Date the Fraud Loss Amount shall be zero and Fraud Losses shall
not be allocated through Subordination.

The aggregate amount of Realized Losses which may be allocated in connection
with Bankruptcy Losses (the "Bankruptcy Amount") through Subordination will
initially be equal to $100,000. As of any date of determination, the
Bankruptcy Amount shall equal $100,000 less the sum of any amounts allocated
through Subordination for such losses up to such date of determination.

Notwithstanding the foregoing, the provisions relating to Subordination will
not be applicable in connection with a Bankruptcy Loss so long as the Master
Servicer has notified the Trustee in writing that the Master Servicer is
diligently pursuing any remedies that may exist in connection with the
representations and warranties made regarding the related Mortgage Loan and
either (A) the related Mortgage Loan is not in default with regard to payments
due thereunder or (B) delinquent payments of principal and interest under the
related Mortgage Loan and any premiums on any applicable Primary Hazard
Insurance Policy and any related escrow payments in respect of such Mortgage
Loan are being advanced on a current basis by the Master Servicer or a
Subservicer.

The Special Hazard Amount, Fraud Amount and Bankruptcy Amount are subject to
further reduction as described in the Prospectus under "Subordination."

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<PAGE>

ADVANCES

Prior to each Distribution Date, the Master Servicer is required to make
Advances with respect to any payments of principal and interest (net of the
Servicing Fee Rate) which were due on the Mortgage Loans on the immediately
preceding Due Date and delinquent on the business day next preceding the
related Determination Date.

Such Advances are required to be made only to the extent they are deemed by
the Master Servicer to be recoverable from related late collections, Insurance
Proceeds, or Liquidation Proceeds or amounts otherwise payable to the holders
of the Class B Certificates. The purpose of making such Advances is to
maintain a regular cash flow to the Certificateholders, rather than to
guarantee or insure against losses. The Master Servicer will not be required
to make any Advances with respect to reductions in the amount of the monthly
payments on the Mortgage Loans due to Debt Service Reductions or the
application of the Relief Act or similar legislation or regulations. Any
failure by the Master Servicer to make an Advance as required under the
Pooling and Servicing Agreement will constitute an Event of Default
thereunder, in which case the Trustee, as successor Master Servicer, will be
obligated to make any such Advance, in accordance with the terms of the
Pooling and Servicing Agreement.

All Advances will be reimbursable to the Master Servicer on a first priority
basis from either (a) late collections, Insurance Proceeds or Liquidation
Proceeds from the Mortgage Loan as to which such unreimbursed Advance was made
or (b) as to any Advance that remains unreimbursed in whole or in part
following the final liquidation of the related Mortgage Loan, from any amounts
otherwise distributable on any of the Class B Certificates; provided, however,
that any such Advances that were made with respect to delinquencies which
ultimately were determined to be Excess Special Hazard Losses, Excess Fraud
Losses, Excess Bankruptcy Losses or Extraordinary Losses are reimbursable to
the Master Servicer out of any funds in the Custodial Account prior to
distributions on any of the Certificates and the amount of such losses will be
allocated as described herein. In addition, if the Certificate Principal
Balances of the Class B Certificates have been reduced to zero, any Advances
previously made which are deemed by the Master Servicer to be nonrecoverable
from related late collections, Insurance Proceeds and Liquidation Proceeds may
be reimbursed to the Master Servicer out of any funds in the Custodial Account
prior to distributions on the Senior Certificates.

THE INSURER

The following information has been obtained from the Insurer and has not
been verified by the Company. No representation is made by the Company or any
of its affiliates as to the accuracy and completeness of such information.

GENERAL

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

The 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. The Insurer and its
subsidiaries principally insure asset-backed, collateralized and municipal
securities. Asset-backed securities are generally supported by residential
mortgage loans, consumer or trade receivables, securities or other assets
having an ascertainable cash flow or market value. Collateralized securities
include public utility first mortgage bonds and sale/leaseback obligation
bonds. Municipal securities consist largely of general obligation bonds,
special revenue bonds and other special obligations of state and local
governments. The Insurer

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<PAGE>

insures both newly-issued securities sold in the primary market and
outstanding securities sold in the secondary market that satisfy the Insurer's
underwriting criteria.

The Insurer is a wholly-owned subsidiary of Financial Security Assurance
Holdings Ltd. ("Holdings"), a New York Stock Exchange Listed company. Major
shareholders of Holdings include Fund American Enterprises Holdings, Inc., U S
West Capital Corporation and The Tokio Marine and Fire Insurance Co., Ltd. No
shareholder of Holdings is obligated to pay any debt of the Insurer or any
claim under any insurance policy issued by the Insurer or to make any
additional contribution to the capital of the Insurer.

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

REINSURANCE

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

RATINGS OF CLAIMS-PAYING ABILITY

The Insurer's claims-paying ability is rated "Aaa" by Moody's and "AAA" by
each of Standard & Poor's, Nippon Investors Service, Inc. and Standard &
Poor's (Australia) Pty. Ltd. Such 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 such
rating agencies. See "Ratings".

CAPITALIZATION

The following table sets forth the capitalization of the Certificate Insurer
and its wholly-owned subsidiaries on the basis of generally accepted
accounting principles as of March 31, 1996 (in thousands):

<TABLE>
<CAPTION>
MARCH 31,
1996
(UNAUDITED)
-----------
<S> <C>
Unearned Premium Reserve (net of prepaid reinsurance premi-
ums)........................................................ $ 340,226
Stockholder's Equity:
Common Stock............................................... 15,000
Additional Paid-In Capital................................. 681,470
Unrealized Loss on Investments (net of deferred income tax-
es)....................................................... (737)
Accumulated Earnings....................................... 83,444
----------
Total Shareholder's Equity................................... 779,177
----------
Total Unearned Premium Reserve and Shareholder's Equity...... $1,119,403
==========
</TABLE>

For further information concerning the Insurer, see the Consolidated
Financial Statement of the Insurer and its subsidiaries, and the notes
thereto, incorporated by reference herein. Copies of the statutory quarterly
and annual financial statements filed with the State of New York Insurance
Department by the Insurer are available upon request to the State of New York
Insurance Department.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

In addition to the documents described under "Incorporation of Certain
Information by Reference" in the Prospectus, the consolidated financial
statements of the Insurer and subsidiaries included in, or as exhibits to, the
following documents which have been filed with the Securities and Exchange
Commission by Holdings, are

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<PAGE>

hereby incorporated by reference in the Registration Statement, of which the
Prospectus and this Prospectus Supplement form a part:

(a) Annual Report on Form 10-K for the period ended December 31, 1995;
and

(b) Quarterly Report on Form 10-Q for the period ended March 31, 1996.

All financial statements of the Insurer and subsidiaries included in
documents filed by Holdings pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934, as amended, subsequent to the date of
this Prospectus Supplement and prior to the termination of the offering of the
Certificates shall be deemed to be incorporated by reference into this
Prospectus Supplement and to be a part hereof from the respective dates of
filing such documents.

The Company will provide without charge to any person to whom this
Prospectus Supplement is delivered, upon oral or written request of such
person, a copy of any or all of the foregoing financial statements
incorporated by reference. Requests for such copies should be directed to its
principal executive office at 8400 Normandale Lake Boulevard, Minneapolis,
Minnesota 55437 or by telephone at (612) 832-7000.

INSURANCE REGULATION

The Insurer is licensed and subject to regulation as a financial guaranty
insurance corporation under the laws of the State of New York, its state of
domicile. In addition, the Insurer and its insurance subsidiaries are subject
to regulation by insurance laws of the various other jurisdictions in which
they are licensed to do business. As a financial guaranty insurance
corporation licensed to do business in the State of New York, the Insurer is
subject to Article 69 of the New York 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
New York Insurance Law, applicable to non-life insurance companies such as the
Insurer, regulate, among other things, permitted investments, payment of
dividends, transactions with affiliates, mergers, consolidations, acquisitions
or sales of assets and incurrence of liability for borrowings.

CERTAIN YIELD AND PREPAYMENT CONSIDERATIONS

GENERAL

The yield to maturity and the aggregate amount of distributions on the
Offered Certificates will be affected by the rate and timing of principal
payments on the Mortgage Loans and the amount and timing of Mortgagor defaults
resulting in Realized Losses. Such yield may be adversely affected by a higher
or lower than anticipated rate of principal payments on the Mortgage Loans in
the Trust Fund. The rate of principal payments on such Mortgage Loans will in
turn be affected by the amortization schedules of the Mortgage Loans, the rate
and timing of principal prepayments thereon by the Mortgagors, liquidations of
defaulted Mortgage Loans and purchases of Mortgage Loans due to certain
breaches of representations and warranties. The timing of changes in the rate
of prepayments, liquidations and repurchases of the Mortgage Loans may, and
the timing of Realized Losses will, significantly affect the yield to an
investor, even if the average rate of principal payments experienced over time
is consistent with an investor's expectation. Since the rate and timing of
principal payments on the Mortgage Loans will depend on future events and on a
variety of factors (as described more fully herein and in the Prospectus under
"Yield Considerations" and "Maturity and Prepayment Considerations"), no
assurance can be given as to such rate or the timing of principal payments on
the Offered Certificates.

The Mortgage Loans generally may be prepaid by the Mortgagors at any time;
however, in certain circumstances, the Mortgage Loans will be subject to a
prepayment charge for prepayments. The Mortgage Loans generally contain due-
on-sale clauses. As described under "Description of the Certificates--
Principal Distributions on the Senior Certificates" herein, during certain
periods all or a disproportionately large percentage of principal prepayments
on the Mortgage Loans will be allocated among the Senior Certificates

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<PAGE>

(other than the Principal Only Certificates). Prepayments, liquidations and
purchases of the Mortgage Loans will result in distributions to holders of the
Offered Certificates of principal amounts which would otherwise be distributed
over the remaining terms of the Mortgage Loans. Factors affecting prepayment
(including defaults and liquidations) of mortgage loans include changes in
mortgagors' housing needs, job transfers, unemployment, mortgagors' net equity
in the mortgaged properties, changes in the value of the mortgaged properties,
mortgage market interest rates and servicing decisions. In addition, if
prevailing mortgage rates fell significantly below the Mortgage Rates on the
Mortgage Loans, the rate of prepayments (including refinancings) would be
expected to increase. Conversely, if prevailing mortgage rates rose
significantly above the Mortgage Rates on the Mortgage Loans, the rate of
prepayments on the Mortgage Loans would be expected to decrease.

The rate of defaults on the Mortgage Loans will also affect the rate and
timing of principal payments on the Mortgage Loans. In general, defaults on
mortgage loans are expected to occur with greater frequency in their early
years. The rate of default on Mortgage Loans which are refinance or limited
documentation mortgage loans, and on Mortgage Loans with high Loan-to-Value
Ratios, may be higher than for other types of Mortgage Loans. As a result of
the underwriting standards applicable to the Mortgage Loans, the Mortgage
Loans are likely to experience rates of delinquency, foreclosure, bankruptcy
and loss that are higher, and that may be substantially higher, than those
experienced by mortgage loans underwritten in accordance with the standards
applied by Fannie Mae and Freddie Mac first mortgage loan purchase programs,
or by Residential Funding for the purpose of acquiring mortgage loans to
collateralize securities issued by Residential Funding Mortgage Securities I,
Inc. and Residential Accredit Loans, Inc. See "Description of the Mortgage
Pool--Underwriting Standards." In addition, because of such underwriting
criteria and their likely effect on the delinquency, foreclosure, bankruptcy
and loss experience of the Mortgage Loans, the Mortgage Loans will generally
be serviced in a manner intended to result in a faster exercise of remedies,
which may include foreclosure, in the event Mortgage Loan delinquencies and
defaults occur, than would be the case if the Mortgage Loans were serviced in
accordance with such other programs. Furthermore, the rate and timing of
prepayments, defaults and liquidations on the Mortgage Loans will be affected
by the general economic condition of the region of the country in which the
related Mortgaged Properties are located. The risk of delinquencies and loss
is greater and prepayments are less likely in regions where a weak or
deteriorating economy exists, as may be evidenced by, among other factors,
increasing unemployment or falling property values. See "Maturity and
Prepayment Considerations" in the Prospectus.

Because the Mortgage Rates on the Mortgage Loans and the Pass-Through Rates
on the Offered Certificates (other than the Principal Only Certificates) are
fixed, such rates will not change in response to changes in market interest
rates.

The amount of interest otherwise payable to holders of the Senior
Certificates will be reduced by any interest shortfalls to the extent not
covered by the Policy or by the Master Servicer as described herein. If
payments were not made as required under the Policy, interest shortfalls not
allocable to the Class B Certificates and not covered by the Master Servicer
would be allocated to the Senior Certificates as described herein. See "Yield
Considerations" in the Prospectus and "Description of the Certificates--
Interest Distributions" herein for a discussion of the effect of principal
prepayments on the Mortgage Loans on the yield to maturity of the Senior
Certificates and certain possible shortfalls in the collection of interest.

In addition, the yield to maturity on each class of the Offered Certificates
will depend on, among other things, the price paid by the holders of the
Offered Certificates and the related Pass-Through Rate. The extent to which
the yield to maturity of an Offered Certificate is sensitive to prepayments
will depend, in part, upon the degree to which it is purchased at a discount
or premium. In general, if a class of Offered Certificates is purchased at a
premium and principal distributions thereon occur at a rate faster than
assumed at the time of purchase, the investor's actual yield to maturity will
be lower than that anticipated at the time of purchase. Conversely, if a class
of Offered Certificates is purchased at a discount and principal distributions
thereon occur at a rate slower than that assumed at the time of purchase, the
investor's actual yield to maturity will be lower than that anticipated at the
time of purchase. For additional considerations relating to the yield on the
Certificates, see "Yield Considerations" and "Maturity and Prepayment
Considerations" in the Prospectus.

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<PAGE>

Assumed Final Distribution Date: The assumed final Distribution Date with
respect to the Class A-1 Certificates, Class A-2 Certificates and Class A-3
Certificates is , and , respectively. The assumed final
Distribution Date with respect to all other classes of Offered Certificates is
, which is the Distribution Date immediately following the latest
scheduled maturity date for any Mortgage Loan. Such assumed final Distribution
Dates with respect to the Class A-1, Class A-2, Class A-3, Class A-4 and Class
A-5 Certificates are based on an assumption 0% CPM. In addition, all such
assumed final Distribution Dates are based on the assumptions described in
clauses (i) through (ix) in the third paragraph preceding the table entitled
"Percent of Initial Certificate Principal Balance Outstanding at the Following
Percentages of CPM" herein, except (a) with respect to the Non-Discount
Mortgage Loans with original terms to maturity of less than or equal to 15
years, each such Mortgage Loan has a Mortgage Rate of % per annum and a
remaining term to maturity of 180 months, and (b) with respect to the Non-
Discount Mortgage Loans with original terms to maturity of more than 15 years
but less than or equal to 30 years, each such Mortgage Loan has a Mortgage
Rate of % per annum and a remaining term to maturity of 360 months. No
event of default, change in the priorities for distribution among the various
classes or other provisions under the Pooling and Servicing Agreement will
arise or become applicable solely by reason of the failure to retire the
entire Certificate Principal Balance of any class of Certificates on or before
its assumed final Distribution Date.

Weighted Average Life: Weighted average life refers to the average amount of
time that will elapse from the date of issuance of a security to the date of
distribution to the investor of each dollar distributed in reduction of
principal of such security (assuming no losses). The weighted average life of
the Offered Certificates will be influenced by, among other things, the rate
at which principal of the Mortgage Loans is paid, which may be in the form of
scheduled amortization, prepayments or liquidations.

Prepayments on mortgage loans are commonly measured relative to a prepayment
standard or model. The prepayment model used in this Prospectus Supplement
(the "CPM") represents an assumed rate of prepayment each month relative to
the then outstanding principal balance of a pool of mortgage loans. 100% CPM
assumes a Constant Prepayment Rate ("CPR") of 4% per annum of the then
outstanding principal balance of such mortgage loans in the first month of the
life of the mortgage loans and an additional 1.818181% (precisely 20/11%) per
annum in each month thereafter until the twelfth month. Beginning in the
twelfth month and in each month thereafter during the life of the mortgage
loans, 100% CPM assumes a CPR of 24% per annum each month. As used in the
table below, 50% CPM assumes prepayment rates equal to 50% of the CPM.
Correspondingly, 200% CPM assumes prepayment rates equal to 200% of the CPM,
and so forth. The CPM 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 table set forth below has been prepared on the basis of certain
assumptions as described below regarding the weighted average characteristics
of the Mortgage Loans that are expected to be included in the Trust Fund as
described under "Description of the Mortgage Pool" herein and the performance
thereof. The table assumes, among other things, that: (i) as of the date of
issuance of the Offered Certificates, (a) with respect to the Discount
Mortgage Loans with original terms to maturity of more than 15 years but less
than or equal to 30 years, the aggregate principal balance of such Discount
Mortgage Loans is $ and each such Discount Mortgage Loan has a Mortgage
Rate of % per annum, an original term to maturity of months, a
remaining term to maturity of months and an aggregate Servicing Fee Rate
and premium rate on the Policy of % per annum, (b) with respect to the
Non-Discount Mortgage Loans with original terms to maturity of more than 15
years but less than or equal to 30 years, the aggregate principal balance of
such Non-Discount Mortgage Loans is $ and each such Non-Discount
Mortgage Loan has a Mortgage Rate of % per annum, an original term to
maturity of months, a remaining term to maturity of months and an
aggregate Servicing Fee Rate and premium rate on the Policy of % per
annum, (c) with respect to the Discount Mortgage Loans with original terms to
maturity of less than or equal to 15 years, the aggregate principal balance of
such Discount Mortgage Loans is $ and each such Discount Mortgage Loan
has a Mortgage Rate of % per annum, an original term to maturity of
months, a remaining term to maturity of months and an aggregate Servicing
Fee Rate and premium rate on the Policy of % per annum, (d) with respect
to the Non-Discount Mortgage Loans with original terms to maturity of less
than or equal to 15 years, the aggregate principal

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<PAGE>

balance of such Non-Discount Mortgage Loans is $ and each such Non-
Discount Mortgage Loan has a Mortgage Rate of % per annum, an original
term to maturity of months, a remaining term to maturity of months and
an aggregate Servicing Fee Rate and premium rate on the Policy of % per
annum, (e) with respect to the Discount Mortgage Loans with a balloon feature,
the aggregate principal balance of such Discount Mortgage Loans is $ and
each such Discount Mortgage Loan has a Mortgage Rate of % per annum, an
original term to maturity of months, a remaining term to maturity of
months, a remaining term to stated maturity of months and an aggregate
Servicing Fee Rate and premium rate on the Policy of % per annum and (f)
with respect to the Non-Discount Mortgage Loans with a balloon feature, the
aggregate principal balance of such Non-Discount Mortgage Loans is $ and
each such Non-Discount Mortgage Loan has a Mortgage Rate of % per annum, an
original term to maturity of months, a remaining term to maturity of
months, a remaining term to stated maturity of months and an aggregate
Servicing Fee Rate and premium rate on the Policy of % per annum; (ii) the
scheduled monthly payment for each Mortgage Loan has been based on its
outstanding balance, interest rate and remaining term to maturity, such that
the Mortgage Loan will amortize in amounts sufficient for repayment thereof
over its remaining term to maturity; (iii) none of the Mortgage Collateral
Sellers, the Master Servicer or the Company will repurchase any Mortgage Loan,
as described under "Description of the Mortgage Pool" herein, and neither the
Master Servicer nor the Company exercises any option to purchase the Mortgage
Loans and thereby cause a termination of the Trust Fund; (iv) there are no
delinquencies or Realized Losses on the Mortgage Loans, and principal payments
on the Mortgage Loans will be timely received together with prepayments, if
any, at the respective constant percentages of CPM set forth in the table; (v)
there is no Prepayment Interest Shortfall or any other interest shortfall in
any month; (vi) payments on the Certificates will be received on the 25th day
of each month, commencing June 25, 1996; (vii) payments on the Mortgage Loans
earn no reinvestment return; (viii) there are no additional ongoing Trust Fund
expenses payable out of the Trust Fund; and (ix) the Certificates will be
purchased on May 30, 1996.

The actual characteristics and performance of the Mortgage Loans will differ
from the assumptions used in constructing the table set forth below, which is
hypothetical in nature and is provided only to give a general sense of how the
principal cash flows might behave under varying prepayment scenarios. For
example, it is very unlikely that the Mortgage Loans will prepay at a constant
level of CPM until maturity or that all of the Mortgage Loans will prepay at
the same level of CPM. Moreover, the diverse remaining terms to maturity of
the Mortgage Loans could produce slower or faster principal distributions than
indicated in the table at the various constant percentages of CPM specified,
even if the weighted average remaining term to maturity of the Mortgage Loans
is as assumed. Any difference between such assumptions and the actual
characteristics and performance of the Mortgage Loans, or actual prepayment or
loss experience, will affect the percentages of initial Certificate Principal
Balances outstanding over time and the weighted average lives of the classes
of Offered Certificates.

Subject to the foregoing discussion and assumptions, the following table
indicates the weighted average life of each class of Offered Certificates
(other than the Residual Certificates), and sets forth the percentages of the
initial Certificate Principal Balance of each such class of Offered
Certificates that would be outstanding after each of the dates shown at
various percentages of CPM.

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<PAGE>

PERCENT OF INITIAL CERTIFICATE PRINCIPAL BALANCE OUTSTANDING AT THE FOLLOWING
PERCENTAGES OF CPM
<TABLE>
<CAPTION>
CLASS A-1 CLASSES A-2 CLASS A-3 CLASS A-4
---------------------- ---------------------- ---------------------- ----------------------
DISTRIBUTION
DATE 0% 50% 100% 150% 200% 0% 50% 100% 150% 200% 0% 50% 100% 150% 200% 0% 50% 100% 150% 200%
- ------------ --- --- ---- ---- ---- --- --- ---- ---- ---- --- --- ---- ---- ---- --- --- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Initial
Percentage...... 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
May 25, 1997....
May 25, 1998....
May 25, 1999....
May 25, 2000....
May 25, 2001....
May 25, 2002....
May 25, 2003....
May 25, 2004....
May 25, 2005....
May 25, 2006....
May 25, 2007....
May 25, 2008....
May 25, 2009....
May 25, 2010....
May 25, 2011....
May 25, 2012....
May 25, 2013....
May 25, 2014....
May 25, 2015....
May 25, 2016....
May 25, 2017....
May 25, 2018....
May 25, 2019....
May 25, 2020....
May 25, 2021....
May 25, 2022....
May 25, 2023....
May 25, 2024....
May 25, 2025....
May 25, 2026....
Weighted Average
Life in Years**.
<CAPTION>
CLASS A-5
----------------------
DISTRIBUTION
DATE 0% 50% 100% 150% 200%
- ------------ --- --- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Initial
Percentage...... 100 100 100 100 100
May 25, 1997....
May 25, 1998....
May 25, 1999....
May 25, 2000....
May 25, 2001....
May 25, 2002....
May 25, 2003....
May 25, 2004....
May 25, 2005....
May 25, 2006....
May 25, 2007....
May 25, 2008....
May 25, 2009....
May 25, 2010....
May 25, 2011....
May 25, 2012....
May 25, 2013....
May 25, 2014....
May 25, 2015....
May 25, 2016....
May 25, 2017....
May 25, 2018....
May 25, 2019....
May 25, 2020....
May 25, 2021....
May 25, 2022....
May 25, 2023....
May 25, 2024....
May 25, 2025....
May 25, 2026....
Weighted Average
Life in Years**.
</TABLE>
- ----
(*) Indicates a number that is greater than zero but less than 0.5%.
(**) The weighted average life of a Certificate of any class is determined by
(i) multiplying the net reduction, if any, of Certificate Principal
Balance by the number of years from the date of issuance of the
Certificate to the related Distribution Date, (ii) adding the results,
and (iii) dividing the sum by the aggregate of the net reductions of
initial Certificate Principal Balance described in (i) above.

THIS TABLE HAS BEEN PREPARED BASED ON THE ASSUMPTIONS DESCRIBED IN THE THIRD
PARAGRAPH PRECEDING THIS TABLE (INCLUDING THE ASSUMPTIONS REGARDING THE
CHARACTERISTICS AND PERFORMANCE OF THE MORTGAGE LOANS WHICH DIFFER FROM THE
ACTUAL CHARACTERISTICS AND PERFORMANCE THEREOF) AND SHOULD BE READ IN
CONJUNCTION THEREWITH.

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<PAGE>

PRINCIPAL ONLY CERTIFICATES YIELD CONSIDERATIONS

The amounts payable with respect to the Principal Only Certificates derive
only from principal payments on the Discount Mortgage Loans. As a result, the
yield on the Principal Only Certificates will be adversely affected by slower
than expected payments of principal (including prepayments, defaults,
liquidations and purchases of Mortgage Loans due to a breach of a
representation and warranty) on the Discount Mortgage Loans.

The following table indicates the sensitivity of the pre-tax yield to
maturity on the Principal Only Certificates to various constant rates of
prepayment on the Mortgage Loans by projecting the monthly aggregate payments
on the Principal Only Certificates and computing the corresponding pre-tax
yields to maturity on a corporate bond equivalent basis, based on the
assumptions described in clauses (i) through (x) in the third paragraph
preceding the table entitled "Percent of Initial Certificate Principal Balance
Outstanding at the Following Percentages of CPM" under the heading "Certain
Yield and Prepayment Considerations--General" herein, including the
assumptions regarding the characteristics and performance of the Mortgage
Loans which differ from the actual characteristics and performance thereof and
assuming the aggregate purchase price set forth below. Any differences between
such assumptions and the actual characteristics and performance of the
Mortgage Loans and of the Certificates may result in yields being different
from those shown in such table. Discrepancies between assumed and actual
characteristics and performance underscore the hypothetical nature of the
table, which is provided only to give a general sense of the sensitivity of
yields in varying prepayment scenarios.

PRE-TAX YIELD TO MATURITY OF THE PRINCIPAL ONLY
CERTIFICATES AT THE FOLLOWING PERCENTAGES OF CPM

<TABLE>
<CAPTION>
ASSUMED PURCHASE PRICE 0% 50% 100% 150% 200%
---------------------- --- --- ---- ---- ----
<S> <C> <C> <C> <C> <C>
$ ............................................... % % % % %
</TABLE>

Each pre-tax yield to maturity set forth in the preceding table was
calculated by determining the monthly discount rate which, when applied to the
assumed stream of cash flows to be paid on the Principal Only Certificates
would cause the discounted present value of such assumed stream of cash flows
to equal the assumed purchase price listed in the table. These yields do not
take into account the different interest rates at which investors may be able
to reinvest funds received by them as distributions on the Principal Only
Certificates and thus do not reflect the return on any investment in the
Principal Only Certificates when any reinvestment rates other than the
discount rates set forth in the preceding table are considered.

Notwithstanding the assumed prepayment rates reflected in the preceding
table, it is highly unlikely that the Mortgage Loans will be prepaid according
to one particular pattern. For this reason, and because the timing of cash
flows is critical to determining yields, the pre-tax yield to maturity on the
Principal Only Certificates is likely to differ from those shown in the table,
even if the average prepayment rate on all of the Mortgage Loans equals the
constant percentages of CPM indicated in the table above over any given time
period or over the entire life of the Certificates. A lower than assumed rate
of principal prepayments on the Discount Mortgage Loans will have a material
adverse effect on the yield to maturity of the Principal Only Certificates.
The rate and timing of principal prepayments on the Discount Mortgage Loans
may differ from the rate and timing of principal prepayments on the Mortgage
Pool. In addition, because the Discount Mortgage Loans have Net Mortgage Rates
that are lower than the Net Mortgage Rates of the Non-Discount Mortgage Loans,
and because Mortgage Loans with lower Net Mortgage Rates are likely to have
lower Mortgage Rates, the Discount Mortgage Loans are generally likely to
prepay under most circumstances at a lower rate than the Non-Discount Mortgage
Loans.

There can be no assurance that the Mortgage Loans will prepay at any
particular rate or that the yield on the Principal Only Certificates will
conform to the yields described herein. Moreover, the various remaining terms
to maturity of the Mortgage Loans could produce slower or faster principal
distributions than indicated in the preceding table at the various constant
percentages of CPM specified, even if the weighted average remaining term to
maturity of the Mortgage Loans is as assumed.

S-42
<PAGE>

Investors are urged to make their investment decisions based on their
determinations as to anticipated rates of prepayment under a variety of
scenarios.

For additional considerations relating to the yield on the Certificates, see
"Yield Considerations" and "Maturity and Prepayment Considerations" in the
Prospectus.

ADDITIONAL YIELD CONSIDERATIONS APPLICABLE SOLELY TO THE RESIDUAL CERTIFICATES

The Residual Certificateholders' after-tax rate of return on their Residual
Certificates will reflect their pre-tax rate of return, reduced by the taxes
required to be paid with respect to the Residual Certificates. Holders of
Residual Certificates may have tax liabilities with respect to their Residual
Certificates during the early years of the related REMIC's term that
substantially exceed any distributions payable thereon during any such period.
In addition, holders of Residual Certificates may have tax liabilities with
respect to their Residual Certificates the present value of which
substantially exceeds the present value of distributions payable thereon and
of any tax benefits that may arise with respect thereto. Accordingly, the
after-tax rate of return on the Residual Certificates may be negative or may
otherwise be significantly adversely affected. The timing and amount of
taxable income attributable to the Residual Certificates will depend on, among
other things, the timing and amounts of prepayments and losses experienced
with respect to the Mortgage Pool.

The Residual Certificateholders should consult their tax advisors as to the
effect of taxes and the receipt of any payments made to such holders in
connection with the purchase of the Residual Certificates on after-tax rates
of return on the Residual Certificates. See "Certain Federal Income Tax
Consequences" herein and in the Prospectus.

POOLING AND SERVICING AGREEMENT

GENERAL

The Certificates will be issued pursuant to a Pooling and Servicing
Agreement dated as of May 1, 1996, among the Company, the Master Servicer, and
The First National Bank of Chicago, as Trustee. Reference is made to the
Prospectus for important information in addition to that set forth herein
regarding the terms and conditions of the Pooling and Servicing Agreement and
the Offered Certificates. The Trustee, or any of its affiliates, in its
individual or any other capacity, may become the owner or pledgee of
Certificates with the same rights as it would have if it were not Trustee. The
Trustee will appoint Norwest Bank Minnesota, National Association to serve as
Custodian in connection with the Certificates. The Offered Certificates will
be transferable and exchangeable at the corporate trust office of the Trustee,
which will serve as Certificate Registrar and Paying Agent. The Company will
provide a prospective or actual Certificateholder, without charge, on written
request, a copy (without exhibits) of the Pooling and Servicing Agreement.
Requests should be addressed to the President, Residential Asset Securities
Corporation, 8400 Normandale Lake Boulevard, Suite 700, Minneapolis, Minnesota
55437. In addition to the circumstances described in the Prospectus, the
Company may terminate the Trustee for cause under certain circumstances. See
"The Pooling and Servicing Agreement--The Trustee" in the Prospectus.

THE MASTER SERVICER

Residential Funding, an indirect wholly-owned subsidiary of GMAC Mortgage
and an affiliate of the Company, will act as master servicer for the
Certificates pursuant to the Pooling and Servicing Agreement. For a general
description of Residential Funding and its activities, see "Residential
Funding Corporation" in the Prospectus and "The Mortgage Pool--Residential
Funding" herein.

TRIGGER EVENTS; REMOVAL OF MASTER SERVICER

Upon determination by the Insurer that a Trigger Event (as defined in the
Pooling and Servicing Agreement) has occurred due to the delinquency and loss
performance of the Mortgage Pool, the Insurer will notify the

S-43
<PAGE>

Master Servicer, the Company, the Trustee and the Rating Agencies. At any
time, after the occurrence of such event the Insurer may direct the Trustee to
remove the Master Servicer. In the absence of such direction, the Master
Servicer covenants and agrees to act as the Master Servicer for a term from
the occurrence of the Trigger Event to the end of the calendar quarter in
which such Trigger Event occurs, which term will be extendable by the Insurer
by notice to the Trustee for successive terms of three (3) calendar months
each, until the termination of the Trust Fund. The Master Servicer will, upon
its receipt of each such notice of extension (a "Servicer Extension Notice")
become bound for the duration of the term covered by such Servicer Extension
Notice to continue as the Master Servicer subject to and in accordance with
the other provisions of the Pooling and Servicing Agreement. If as of the
fifteenth (15th) day prior to the last day of any term of the Master Servicer
the Trustee shall not have received any Servicer Extension Notice from the
Insurer, the Trustee will, within five (5) days thereafter, give written
notice of such non-receipt to the Insurer and the Master Servicer. In addition
to the items specified in the Prospectus, an Event of Default under the
Pooling and Servicing Agreement will occur in the event that any claim is made
under the Policy and the Insurer is not fully reimbursed with respect thereto,
and to any subsequent claims, within six months.

SERVICING AND OTHER COMPENSATION AND PAYMENT OF EXPENSES

The Servicing Fee for each Mortgage Loan is payable out of the interest
payments on such Mortgage Loan. The Servicing Fee Rate in respect of each
Mortgage Loan will be at least 0.25% per annum and not more than 0.58% per
annum of the outstanding principal balance of such Mortgage Loan. The
Servicing Fee consists of (a) servicing compensation payable to the Master
Servicer in respect of its master servicing activities, and (b) subservicing
and other related compensation payable to the Subservicer (including such
compensation paid to the Master Servicer as the direct servicer of a Mortgage
Loan for which there is no Subservicer). The primary compensation to be paid
to the Master Servicer in respect of its master servicing activities will be
0.08% per annum of the outstanding principal balance of each Mortgage Loan,
except for 0.7% of the Mortgage Loans, as to which the Master Servicer is
entitled to 0.25% per annum. The Subservicer is entitled to servicing
compensation in a minimum amount equal to at least 0.17% per annum and not
more than 0.50% per annum of the outstanding principal balance of each
Mortgage Loan serviced by it. As of the Cut-off Date, the weighted average of
the Servicing Fee Rates for the Mortgage Loans is approximately 0.5618% per
annum. The Master Servicer is obligated to pay certain ongoing expenses
associated with the Trust Fund and incurred by the Master Servicer in
connection with its responsibilities under the Pooling and Servicing
Agreement. See "Description of the Certificates--Spread," and "--Withdrawals
from the Custodial Account" in the Prospectus for information regarding other
possible compensation to the Master Servicer and the Subservicer and for
information regarding expenses payable by the Master Servicer.

VOTING RIGHTS

Certain actions specified in the Prospectus that may be taken by holders of
Certificates evidencing a specified percentage of all undivided interests in
the Trust Fund may be taken by holders of Certificates entitled in the
aggregate to such percentage of the Voting Rights. 98% of all Voting Rights
will be allocated among all holders of the Certificates (other than the
Residual Certificates) in proportion to their then outstanding Certificate
Principal Balances, 1% of all Voting Rights will be allocated to the owner of
Excess Spread, and 0.5% and 0.5% of all Voting Rights will be allocated among
holders of the Class R-I Certificates and Class R-II Certificates in
proportion to the Percentage Interests (as defined in the Prospectus)
evidenced by their respective Certificates. The Pooling and Servicing
Agreement will be subject to amendment without the consent of the holders of
the Residual Certificates in certain circumstances. The Insurer will be
entitled to exercise certain rights with respect to any amendment of the
Pooling and Servicing Agreement.

Notwithstanding the foregoing, so long as there does not exist a failure by
the Insurer to make a required payment under the Policy, the Insurer shall
have the right to exercise all rights of the holders of the Senior
Certificates under the Pooling and Servicing Agreement without any consent of
such holders, and such holders may exercise such rights only with the prior
written consent of the Insurer except as provided in the Pooling and Servicing
Agreement.

S-44
<PAGE>

TERMINATION

The circumstances under which the obligations created by the Pooling and
Servicing Agreement will terminate in respect of the Offered Certificates are
described in "The Pooling and Servicing Agreement--Termination; Retirement of
Certificates" in the Prospectus. The Master Servicer or the Company will have
the option, on any Distribution Date on which the aggregate Stated Principal
Balance of the Mortgage Loans is less than 10% of the aggregate principal
balance of the Mortgage Loans as of the Cut-off Date, (i) to purchase all
remaining Mortgage Loans and other assets in the Trust Fund, thereby effecting
early retirement of the Offered Certificates, or (ii) to purchase in whole,
but not in part, the Certificates. Any such purchase of Mortgage Loans and
other assets of the Trust Fund shall be made at a price equal to the sum of
(a) 100% of the unpaid principal balance of each Mortgage Loan (or, if less
than such unpaid principal balance, the fair market appraised value of the
related underlying Mortgaged Properties with respect to Mortgage Loans as to
which title to such underlying Mortgaged Properties has been acquired) (net of
any unreimbursed Advance attributable to principal) as of the date of
repurchase plus (b) accrued interest thereon at the Net Mortgage Rate to, but
not including, the first day of the month in which such repurchase price is
distributed and (c) any amounts due to the Insurer pursuant to the Insurance
Agreement. Distributions on the Certificates in respect of any such optional
termination will be paid, first, to the Senior Certificates and the owner of
the Excess Spread and second, except as set forth in the Pooling and Servicing
Agreement, to the Class B Certificates. The proceeds of any such distribution
may not be sufficient to distribute the full amount to each class of
Certificates if the purchase price is based in part on the fair market
appraised value of any underlying Mortgaged Property and such appraised value
is less than 100% of the unpaid principal balance of the related Mortgage
Loan; provided, however, with respect to the Senior Certificates, if such
amount is an Insured Payment, such amount will be paid under the Policy
subject to the terms thereof. Any such purchase of Mortgage Loans and
termination of the Trust Fund requires the consent of the Insurer if it would
result in a draw on the Policy. Any such purchase of the Certificates will be
made at a price equal to 100% of the Certificate Principal Balance thereof
plus (except with respect to the Principal Only Certificates) the sum of one
month's interest accrued thereon at the applicable Pass-Through Rate and any
previously unpaid Accrued Certificate Interest. Upon the purchase of the
Certificates or at any time thereafter, at the option of the Master Servicer
or the Company, the Mortgage Loans may be sold, thereby effecting a retirement
of the Certificates and the termination of the Trust Fund, or the Certificates
so purchased may be held or resold by the Master Servicer or the Company.

Upon presentation and surrender of the Offered Certificates in connection
with the termination of the Trust Fund or a purchase of Certificates, the
holders of the Offered Certificates will receive an amount equal to the
Certificate Principal Balance of such class plus (except with respect to the
Principal Only Certificates) one month's interest accrued thereon at the then-
applicable Pass-Through Rate, plus any previously unpaid Accrued Certificate
Interest.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

Upon the issuance of the Offered Certificates, Thacher Proffitt & Wood,
counsel to the Company, will deliver its opinion generally to the effect that,
assuming compliance with all provisions of the Pooling and Servicing
Agreement, for federal income tax purposes, REMIC I and REMIC II will each
qualify as a REMIC under the Code.

For federal income tax purposes, the Class R-I Certificates will constitute
the sole class of "residual interests" in REMIC I, each class of Offered
Certificates (other than the Residual Certificates), the Class B Certificates
and the rights to the ownership of the Excess Spread will represent ownership
of "regular interests" in REMIC II and will generally be treated as debt
instruments of REMIC II and the Class R-II Certificates will constitute the
sole class of "residual interests" in REMIC II. See "Certain Federal Income
Tax Consequences--REMICs" in the Prospectus.

For federal income tax reporting purposes, the Class Certificates will not
be treated as having been issued with original issue discount. The Class
Certificates will be treated as having been issued with original issue

S-45
<PAGE>

discount for federal income tax reporting purposes. The prepayment assumption
that will be used in determining the rate of accrual of original issue
discount, market discount and premium, if any, for federal income tax purposes
will be based on the assumption that, subsequent to the date of any
determination the Mortgage Loans will prepay at a rate equal to 100% CPM. No
representation is made that the Mortgage Loans will prepay at that rate or at
any other rate. See "Certain Federal Income Tax Consequences--General" and "--
REMICs --Taxation of Owners of REMIC Regular Certificates--Original Issue
Discount" in the Prospectus.

In certain circumstances the OID Regulations permit the holder of a debt
instrument to recognize original issue discount under a method that differs
from that used by the issuer. Accordingly, it is possible that the holder of a
Certificate may be able to select a method for recognizing original issue
discount that differs from that used by the Master Servicer in preparing
reports to the Certificateholders and the IRS.

Certain classes of the Offered Certificates (other than the Residual
Certificates) may be treated for federal income tax purposes as having been
issued at a premium. Whether any holder of such a class of Certificates will
be treated as holding a certificate with amortizable bond premium will depend
on such Certificateholder's purchase price and the distributions remaining to
be made on such Certificate at the time of its acquisition by such
Certificateholder. Holders of such classes of Certificates should consult
their tax advisors regarding the possibility of making an election to amortize
such premium. See "Certain Federal Income Tax Consequences--REMICs--Taxation
of Owners of REMIC Regular Certificates" and "--Premium" in the Prospectus.

The Offered Certificates will be treated as "qualifying real property loans"
under Section 593(d) of the Code, assets described in Section 7701(a)(19)(C)
of the Code and "real estate assets" under Section 856(c)(5)(A) of the Code
generally in the same proportion that the assets of the Trust Fund would be so
treated. In addition, interest on the Offered Certificates will be treated as
"interest on obligations secured by mortgages on real property" under Section
856(c)(3)(B) of the Code generally to the extent that such Offered
Certificates are treated as "real estate assets" under Section 856(c)(5)(A) of
the Code. Moreover, the Offered Certificates (other than the Residual
Certificates) will be "qualified mortgages" within the meaning of Section
860G(a)(3) of the Code if transferred to another REMIC on its startup day in
exchange for a regular or residual interest therein. However, prospective
investors in Offered Certificates that will be generally treated as assets
described in Section 860G(a)(3) of the Code should note that, notwithstanding
such treatment, any repurchase of such a Certificate pursuant to the right of
the Master Servicer or the Company to repurchase such Offered Certificates may
adversely affect any REMIC that holds such Offered Certificates if such
repurchase is made under circumstances giving rise to a Prohibited Transaction
Tax. See "The Pooling and Servicing Agreement --Termination" herein and
"Certain Federal Income Tax Consequences--REMICs--Characterization of
Investments in REMIC Certificates" in the Prospectus.

For further information regarding federal income tax consequences of
investing in the Offered Certificates, see "Certain Federal Income Tax
Consequences--REMICs" in the Prospectus.

SPECIAL TAX CONSIDERATIONS APPLICABLE TO RESIDUAL CERTIFICATES

The IRS has issued REMIC Regulations under the provisions of the Code
related to REMICs that significantly affect holders of Residual Certificates.
The REMIC Regulations impose restrictions on the transfer or acquisition of
certain residual interests, including the Residual Certificates. In addition,
the REMIC Regulations contain restrictions that apply to: (i) thrift
institutions holding residual interests lacking "significant value" and (ii)
the transfer of "noneconomic" residual interests to United States persons.
Pursuant to the Pooling and Servicing Agreement, the Residual Certificates may
not be transferred to Non-United States persons.

The REMIC Regulations provide for the determination of whether a residual
interest has "significant value" for purposes of applying the rules relating
to "excess inclusions" with respect to residual interests. Based on the REMIC
Regulations, the Residual Certificates do not have significant value and,
accordingly, thrift institutions and their affiliates will be prevented from
using their unrelated losses or loss carryovers to offset any

S-46
<PAGE>

excess inclusions with respect to the Residual Certificates, which will be in
an amount equal to all or virtually all of the taxable income includible by
holders of the Residual Certificates. See "Certain Federal Income Tax
Consequences--REMICs--Taxation of Owners of REMIC Residual Certificates--
Excess Inclusions" in the Prospectus.

The REMIC Regulations also provide that a transfer to a United States person
of "noneconomic" residual interests will be disregarded for all federal income
tax purposes, and that the purported transferor of "noneconomic" residual
interests will continue to remain liable for any taxes due with respect to the
income on such residual interests, unless "no significant purpose of the
transfer was to impede the assessment or collection of tax." Based on the
REMIC Regulations, the Residual Certificates may constitute noneconomic
residual interests during some or all of their terms for purposes of the REMIC
Regulations and, accordingly, unless no significant purpose of a transfer is
to impede the assessment or collection of tax, transfers of the Residual
Certificates may be disregarded and purported transferors may remain liable
for any taxes due with respect to the income on the Residual Certificates. All
transfers of the Residual Certificates will be subject to certain restrictions
under the terms of the Pooling and Servicing Agreement that are intended to
reduce the possibility of any such transfer being disregarded to the extent
that the Residual Certificates constitute noneconomic residual interests. See
"Certain Federal Income Tax Consequences--REMICs--Taxation of Owners of REMIC
Residual Certificates--Noneconomic REMIC Residual Certificates" in the
Prospectus.

The Class R-II Certificateholders may be required to report an amount of
taxable income with respect to the earlier accrual periods of the term of
REMIC II that significantly exceeds the amount of cash distributions received
by such Class R-II Certificateholders from REMIC II with respect to such
periods. Furthermore, the tax on such income may exceed the cash distributions
with respect to such periods. Consequently, Class R-II Certificateholders
should have other sources of funds sufficient to pay any federal income taxes
due in the earlier years of the term of REMIC II as a result of their
ownership of the Class R-II Certificates. In addition, the required inclusion
of this amount of taxable income during the earlier accrual periods of REMIC
II and the deferral of corresponding tax losses or deductions until later
accrual periods or until the ultimate sale or disposition of a Class R-II
Certificate (or possibly later under the "wash sale" rules of Section 1091 of
the Code) may cause the Class R-II Certificateholders' after-tax rate of
return to be zero or negative even if the Class R-II Certificateholders' pre-
tax rate of return is positive. That is, on a present value basis, the Class
R-II Certificateholders' resulting tax liabilities could substantially exceed
the sum of any tax benefits and the amount of any cash distributions on such
Class R-II Certificates over their life.

An individual, trust or estate that holds (whether directly or indirectly
through certain pass-through entities) a Residual Certificate, particularly a
Class R-I Certificate, may have significant additional gross income with
respect to, but may be subject to limitations on the deductibility of,
servicing and trustee's fees and other administrative expenses properly
allocable to the related REMIC in computing such Certificateholder's regular
tax liability and will not be able to deduct such fees or expenses to any
extent in computing such Certificateholder's alternative minimum tax
liability. Such expenses will be allocated for federal income tax information
reporting purposes entirely to the Class R-I Certificates and not to the Class
R-II Certificates. However, it is possible that the IRS may require all or
some portion of such fees and expenses to be allocable to the Class R-II
Certificates. See "Certain Federal Income Tax Consequences--REMICs--Taxation
of Owners of REMIC Residual Certificates--Possible Pass-Through of
Miscellaneous Itemized Deductions" in the Prospectus.

Residential Funding will be designated as the "tax matters person" with
respect to REMIC I and REMIC II as defined in the REMIC Provisions (as defined
in the Prospectus), and in connection therewith will be required to hold not
less than 0.01% of each of the Class R-I Certificates and the Class R-II
Certificates.

Purchasers of the Residual Certificates are strongly advised to consult
their tax advisors as to the economic and tax consequences of investment in
such Residual Certificates.

For further information regarding the federal income tax consequences of
investing in the Residual Certificates, see "Certain Yield and Prepayment
Considerations--Additional Yield Considerations Applicable

S-47
<PAGE>

Solely to the Residual Certificates" herein and "Certain Federal Income Tax
Consequences--REMICs--Taxation of Owners of REMIC Residual Certificates" in
the Prospectus.

METHOD OF DISTRIBUTION

Subject to the terms and conditions set forth in an Underwriting Agreement,
dated May , 1996 (the "Underwriting Agreement"), the Underwriter has agreed
to purchase and the Company has agreed to sell to the Underwriter the
Underwritten Certificates. It is expected that delivery of the Class A-1
Certificates, Class A-2 Certificates, Class A-3 Certificates and Class A-4
Certificates will be made only in book-entry form through the Same Day Funds
Settlement System of DTC on or about May 30, 1996, against payment therefor in
immediately available funds.

The Underwriting Agreement provides that the obligation of the Underwriter
to pay for and accept delivery of the Underwritten Certificates is subject to,
among other things, the receipt of certain legal opinions and to the
conditions, among others, that no stop order suspending the effectiveness of
the Company's Registration Statement shall be in effect, and that no
proceedings for such purpose shall be pending before or threatened by the
Securities and Exchange Commission.

The distribution of the Underwritten Certificates by the Underwriter may be
effected from time to time in one or more negotiated transactions, or
otherwise, at varying prices to be determined at the time of sale. Proceeds to
the Company from the sale of the Underwritten Certificates, before deducting
expenses payable by the Company, will be approximately % of the aggregate
Certificate Principal Balance of the Underwritten Certificates plus accrued
interest thereon from the Cut-off Date. The Underwriter may effect such
transactions by selling their respective Certificates to or through dealers,
and such dealers may receive compensation in the form of underwriting
discounts, concessions or commissions from the related Underwriter for whom
they act as agent. In connection with the sale of its Underwritten
Certificates, the Underwriter may be deemed to have received compensation from
the Company in the form of underwriting compensation. The Underwriter and any
dealers that participate with the Underwriter in the distribution of the
Underwritten Certificates may be deemed to be underwriters and any profit on
the resale of the Underwritten Certificates positioned by them may be deemed
to be underwriting discounts and commissions under the Securities Act of 1933.

The Underwriting Agreement provides that the Company will indemnify the
Underwriter, and that under limited circumstances the Underwriter will
indemnify the Company, against certain civil liabilities under the Securities
Act of 1933, or contribute to payments required to be made in respect thereof.

The Principal Only Certificates and Residual Certificates may be offered by
the Company from time to time directly or through an underwriter or agent in
one or more negotiated transactions, or otherwise, at varying prices to be
determined at the time of sale. Proceeds to the Company from any sale of the
Principal Only Certificates and Residual Certificates will equal the purchase
price paid by the purchaser thereof, net of any expenses payable by the
Company and any compensation payable to any such underwriter or agent.

There can be no assurance that a secondary market for the Offered
Certificates will develop or, if it does develop, that it will continue. The
primary source of information available to investors concerning the Offered
Certificates will be the monthly statements discussed in the Prospectus under
"Description of the Certificates--Reports to Certificateholders," which will
include information as to the outstanding principal balance of the Offered
Certificates. There can be no assurance that any additional information
regarding the Offered Certificates will be available through any other source.
In addition, the Company is not aware of any source through which price
information about the Offered Certificates will be generally available on an
ongoing basis. The limited nature of such information regarding the Offered
Certificates may adversely affect the liquidity of the Offered Certificates,
even if a secondary market for the Offered Certificates becomes available.

S-48
<PAGE>

LEGAL OPINIONS

Certain legal matters relating to the Certificates will be passed upon for
the Company by Thacher Proffitt & Wood, New York, New York, and for the
Underwriter by Brown & Wood, New York, New York.

EXPERTS

The consolidated balance sheets of the Insurer and Subsidiaries as of
December 31, 1995 and 1994 and the related consolidated statements of income,
changes in shareholder's equity, and cash flows for each of the three years in
the period ended December 31, 1995, incorporated by reference in this
Prospectus Supplement, have been incorporated herein in reliance on the report
of Coopers & Lybrand L.L.P., independent accountants, given on the authority
of that firm as experts in accounting and auditing.

RATINGS

It is a condition of the issuance of the Senior Certificates (other than the
Principal Only Certificates) that they be rated "AAA" by Standard & Poor's and
"Aaa" by Moody's. It is a condition of the issuance of the Principal Only
Certificates that they be rated "AAAr" by Standard & Poor's and "Aaa" by
Moody's.

Standard & Poor's ratings on mortgage pass-through certificates address the
likelihood of the receipt by Certificateholders of payments required under the
Pooling and Servicing Agreement. Standard & Poor's ratings take into
consideration the credit quality of the mortgage pool, structural and legal
aspects associated with the Certificates, and the extent to which the payment
stream in the mortgage pool is adequate to make payments required under the
Certificates. Standard & Poor's rating on the Senior Certificates is based on
the claims-paying ability of the Insurer. Standard & Poor's rating on the
Senior Certificates does not, however, constitute a statement regarding
frequency of prepayments on the mortgages. See "Certain Yield and Prepayment
Considerations" herein. The "r" of the "AAAr" rating of the Principal Only
Certificates by Standard & Poor's is attached to highlight derivative, hybrid,
and certain other obligations that Standard & Poor's believes may experience
high volatility or high variability in expected returns due to non-credit
risks. Examples of such obligations are: securities whose principal or
interest return is indexed to equities, commodities, or currencies; certain
swaps and options; and interest only and principal only mortgage securities.
The absence of an "r" symbol should not be taken as an indication that an
obligation will exhibit no volatility or variability in total return.

The rating assigned by Moody's to the Senior Certificates is based on the
claims-paying ability of the Insurer. Ratings by Moody's address the
structural, legal and issuer-related aspects associated with the Certificates,
including the nature and quality of the underlying mortgage loans. Such
ratings do not represent any assessment of the likelihood of principal
prepayments by mortgagors or of the degree by which such prepayments might
differ from those originally anticipated. The ratings do not address the
possibility that Certificateholders might suffer a lower than anticipated
yield.

The Company has not requested a rating on the Senior Certificates by any
rating agency other than Standard & Poor's and Moody's. However, there can be
no assurance as to whether any other rating agency will rate the Senior
Certificates, or, if it does, what rating would be assigned by any such other
rating agency. A rating on the Certificates by another rating agency, if
assigned at all, may be lower than the ratings assigned to the Senior
Certificates by Standard & Poor's and Moody's.

A security rating is not a recommendation to buy, sell or hold securities
and may be subject to revision or withdrawal at any time by the assigning
rating organization. Each security rating should be evaluated

S-49
<PAGE>

independently of any other security rating. In the event that the ratings
initially assigned to the Senior Certificates are subsequently lowered for any
reason, no person or entity is obligated to provide any additional support or
credit enhancement with respect to the Senior Certificates.

LEGAL INVESTMENT

The Senior Certificates will constitute "mortgage related securities" for
purposes of SMMEA so long as they are rated in at least the second highest
rating category by one of the Rating Agencies, and, as such, are legal
investments for certain entities to the extent provided in SMMEA. SMMEA,
however, provides that states could override its provisions on legal
investment and restrict or condition investment in mortgage related securities
by taking statutory action on or prior to October 3, 1991. Certain states have
enacted legislation which overrides the preemption provisions of SMMEA.

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

See "Legal Investment Matters" in the Prospectus.

ERISA CONSIDERATIONS

A fiduciary of any employee benefit plan or other plan or arrangement
subject to ERISA, or Section 4975 of the Code (a "Plan") or any insurance
company (whether through its general or separate accounts) or other person
investing "plan assets" of any Plan should carefully review with its legal
advisors whether the purchase or holding of Senior Certificates could give
rise to a transaction prohibited or not otherwise permissible under ERISA or
Section 4975 of the Code. It is not clear whether the exemptive relief
afforded by the Exemption, as described under "ERISA Considerations--
Prohibited Transaction Exemptions" in the Prospectus, will apply to the
purchase, sale or holding of the Residual Certificates. The purchase or
holding of the Senior Certificates (other than the Residual Certificates) by,
on behalf of, or with "plan assets" of, a Plan may qualify for exemptive
relief under the Exemption; however, the Exemption contains a number of
conditions including the requirement that any such Plan must be an "accredited
investor" as defined in Rule 501(a)(1) of Regulation D of the Securities and
Exchange Commission under the Securities Act of 1933, as amended. In addition,
because it is not clear that the Residual Certificates will qualify for
exemptive relief under the Exemption, the similar exemption issued to Merrill
Lynch or PTE 83-1, purchases of such Certificates by, on behalf of or with
"plan assets" of any Plan are not to be registered unless the transferee
provides an opinion of counsel satisfactory to the Master Servicer, the
Company and the Trustee that the purchase of any such Certificate by, on
behalf of or with "plan assets" of any Plan is permissible under applicable
law, will not result in any non-exempt prohibited transaction under ERISA or
Section 4975 of the Code and will not subject the Master Servicer, the Company
or the Trustee to any obligation in addition to those undertaken in the
Pooling and Servicing Agreement. See "ERISA Considerations" in the Prospectus.

S-50

Subject to completion, Dated May , 1996

Information contained herein is subject to completion
or amendment.
A registration statement relating to these securities
has been filed with the Securities and Exchange
Commission. These securities may not be sold nor may
offers to buy be accepted without the delivery of final
prospectus supplement and accompanying prospectus.
This prospectus shall not constitute an offer to sell
or the solicitation of an offer to buy nor shall there
be any sale of these securities in any State in which
such offer, solicitation or sale would be unlawful
prior to registration or qualification under the
securities laws of any such State.

Mortgage and Manufactured Housing Contract Pass-Through
Certificates Residential Asset Securities Corporation
Depositor

The Mortgage and Manufactured Housing Contract
Pass-Through
Certificates (the "Certificates") offered hereby
may be sold from time to time in series, as described
in the
related Prospectus Supplement. Each series of
Certificates will represent in the aggregate the entire
beneficial ownership interest, excluding any interest
retained by Residential Asset Securities Corporation
(the
"Company") or any other entity specified in the related
Prospectus Supplement, in a trust fund consisting
primarily of a
segregated pool of one- to four-family,
residential first or junior lien closed-end mortgage
loans (the
"Mortgage Loans"), manufactured housing
conditional sales contracts and installment loan
agreements (the
"Contracts") or interests therein (which may
include Agency Securities, as defined herein)
(collectively with
the Mortgage Loans and Contracts, the
"Mortgage Collateral"), acquired by the Company from
one or more
affiliated or unaffiliated institutions. See
"The Trust Funds." See "Index of Principal Definitions"
for the
meanings of capitalized terms and acronyms.

The Mortgage Collateral and certain other assets
described herein
under "The Trust Funds" and in the related
Prospectus Supplement will be held in trust
(collectively, a
"Trust Fund") for the benefit of the holders of the
related series of Certificates pursuant to a pooling
and
servicing agreement (each, a "Pooling and Servicing
Agreement") or a trust agreement (each, a "Trust
Agreement") as
described herein under "The Trust Funds" and
in the related Prospectus Supplement. Each Trust Fund
will
consist of one or more types of the various types of
Mortgage Collateral described under "The Trust Funds."
Information regarding each class of Certificates of a
series, and the general characteristics of the Mortgage
Collateral to be evidenced by such Certificates, will
be
set forth in the related Prospectus Supplement.

Each series of Certificates will include one or more
classes.
Each class of Certificates of any series will represent
the right, which right may be senior or subordinate to
the rights
of one or more of the other classes of the
Certificates, to receive a specified portion of
payments of
principal or interest (or both) on the Mortgage
Collateral in the related Trust Fund in the manner
described
herein and in the related Prospectus Supplement.
See "Description of the Certificates Distributions." A
series may
include one or more classes of Certificates
entitled to principal distributions, with
disproportionate,
nominal or no interest distributions, or to interest
distributions, with disproportionate, nominal or no
principal
distributions. A series may include two or more
classes of Certificates which differ as to the timing,
sequential
order, priority of payment, pass-through rate or
amount of distributions of principal or interest or
both.

The Company's only obligations with respect to a series
of
Certificates will be pursuant to certain limited
representations and warranties made by the Company or
as
otherwise described in the related Prospectus
Supplement. The related Prospectus Supplement may
identify one or
more entities as servicers (each, a
"Servicer") for a series of Certificates secured by
Mortgage
Loans or Contracts or, if specified in the
related Prospectus Supplement, an entity may act as
master
servicer with respect to the Certificates (the
"Master Servicer"). If specified in the related
Prospectus
Supplement, a series of Certificates may have
a certificate administrator (the "Certificate
Administrator") in
addition to, or in lieu of, a Servicer or a
Master Servicer. The principal obligations of a
Servicer or the
Master Servicer, if any, will be its
contractual servicing obligations (which may include
its limited
obligation to make certain advances in
the event of delinquencies in payments on the Mortgage
Loans or
Contracts). The principal obligations
of the Certificate Administrator, if any, will be to
perform
certain obligations with respect to the
Certificates under the terms of the Pooling and
Servicing
Agreement or Trust Agreement, as applicable.
See "Description of the Certificates."

If so specified in the related Prospectus Supplement,
the Trust
Fund for a series of Certificates may include any
one or any combination of a mortgage pool insurance
policy,
letter of credit, bankruptcy bond, special hazard
insurance policy, reserve fund, certificate insurance
policy,
surety bond or other form of credit support. In
addition to or in lieu of the foregoing, credit
enhancement may
be provided by means of subordination. See
"Description of Credit Enhancement."

The rate of payment of principal of each class of
Certificates
entitled to a portion of principal payments on the
Mortgage Collateral will depend on the priority of
payment of
such class and the rate and timing of principal
payments (including prepayments, defaults, liquidations
and
repurchases) on the Mortgage Collateral. A rate of
principal payment lower or higher than that anticipated
may
affect the yield on each class of Certificates in the
manner described herein and in the related Prospectus
Supplement.
See "Yield Considerations."

For a discussion of significant matters affecting
investments in
the Certificates, see "Risk Factors"
commencing herein on page 12.

One or more separate elections may be made to treat a
Trust Fund
as a "real estate mortgage investment conduit"
(a "REMIC") for federal income tax purposes. The
Prospectus
Supplement for a series of Certificates will specify
which class or classes of the related series of
Certificates will
be considered to be regular interests in the related
REMIC and which class of Certificates or other
interests will be
designated as the residual interest in the related
REMIC, if applicable. See "Certain Federal Income Tax
Consequences."

PROCEEDS OF THE ASSETS IN THE TRUST FUND ARE THE SOLE
SOURCE OF
PAYMENTS ON
THE CERTIFICATES. THE CERTIFICATES DO NOT REPRESENT AN
INTEREST
IN OR
OBLIGATION OF THE COMPANY, THE MASTER SERVICER, THE
CERTIFICATE
ADMINISTRATOR, GMAC MORTGAGE CORPORATION ("GMAC
MORTGAGE") OR ANY
OF
THEIR AFFILIATES. NEITHER THE CERTIFICATES NOR THE
MORTGAGE
COLLATERAL
WILL BE GUARANTEED OR INSURED BY ANY GOVERNMENTAL
AGENCY OR
INSTRUMENTALITY (EXCEPT IN THE CASE OF FHA LOANS, FHA
CONTRACTS,
VA LOANS,
VA CONTRACTS AND GINNIE MAE SECURITIES) OR BY THE
COMPANY, THE
MASTER
SERVICER, THE CERTIFICATE ADMINISTRATOR, GMAC MORTGAGE
OR ANY OF
THEIR
AFFILIATES.

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

Offers of the Certificates may be made through one or
more
different methods, including offerings through
underwriters, as described under "Methods of
Distribution" and in
the related Prospectus Supplement.

There will be no secondary market for any series of
Certificates
prior to the offering thereof. There can be no
assurance that a secondary market for any of the
Certificates
will develop or, if it does develop, that it will
continue. The Certificates will not be listed on any
securities
exchange.

Retain this Prospectus for future reference. This
Prospectus may
not be used to consummate sales of securities
offered hereby unless accompanied by a Prospectus
Supplement.
____________________________
The date of this Prospectus is May , 1996.
ADDITIONAL INFORMATION

The Company has filed with the Commission a
Registration
Statement under the
Securities Act of 1933, as amended, with respect to the
Certificates (the "Registration
Statement"). The Company is also subject to certain of
the
information requirements of the
Securities Exchange Act of 1934, as amended (the
"Exchange Act"),
and, accordingly, will
file reports thereunder with the Commission. The
Registration
Statement and the exhibits
thereto, and reports and other information filed by the
Company
pursuant to the Exchange
Act can be inspected and copied at the public reference
facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, and
at certain of its
Regional Offices located as follows: Chicago Regional
Office,
Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois
60661-2511; and New
York Regional Office,
7 World Trade Center, Suite 1300, New York, New York
10048.
Copies of such material
can also be obtained from the Public Reference Section
of the
Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates.

Copies of Ginnie Mae's information statement and
annual
report can be obtained
by writing or calling the United States Department of
Housing and
Urban Development,
451-7th Street S.W., Room 6210, Washington, D.C.
20410-9000
(202-708-3649). Copies
of Freddie Mac's most recent offering circular for
Freddie Mac
Certificates, Freddie Mac's
information statement and most recent supplement to
such
information statement and any
quarterly report made available by Freddie Mac can be
obtained by
writing or calling the
Investor Relations Department of Freddie Mac at Post
Office Box
4112, Reston, Virginia
22090 (outside the Washington, D.C. metropolitan area,
telephone
800-424-5401, ext. 8160;
within the Washington, D.C. metropolitan area,
telephone
703-759-8160). Copies of Fannie
Mae's most recent prospectus for Fannie Mae
Certificates and
Fannie Mae's annual report
and quarterly financial statements, as well as other
financial
information, are available from
the Director of Investor Relations of Fannie Mae, 3900
Wisconsin
Avenue, N.W.,
Washington, D.C. 20016 (202-537-7115). The Company does
not, and
will not, participate
in the preparation of Ginnie Mae's information
statements or
annual reports, Freddie Mac's
offering circulars, information statements or any
supplements
thereto or any of its quarterly
reports or Fannie Mae's prospectuses or any of its
reports,
financial statements or other
information and, accordingly, makes no representations
as to the
accuracy or completeness
of the information set forth therein.

REPORTS TO CERTIFICATEHOLDERS

Monthly reports which contain information
concerning the
Trust Fund for a series
of Certificates will be sent by the Master Servicer or
Certificate Administrator, as
applicable, to each holder of record of the
Certificates of the
related Series. See "Description
of the Certificates Reports to Certificateholders." The
Company
will file with the
Commission such periodic reports with respect to the
Trust Fund
for a series of Certificates
as are required under the Exchange Act, and the rules
and
regulations of the Commission
thereunder.

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

With respect to each series of Certificates offered
hereby,
there are incorporated
herein and in the related Prospectus Supplement by
reference all
documents and report filed
or caused to be filed by the Company pursuant to
Section 13(a),
13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, prior to the
termination of the
offering of the related series
of Certificates, that relate specifically to such
related series
of Certificates. The Company
will provide or cause to be provided without charge to
each
person to whom this Prospectus
and related Prospectus Supplement is delivered in
connection with
the offering of one or
more classes of such series of Certificates, upon
written or oral
request of such person, a
copy of any or all such reports incorporated herein by
reference,
in each case to the extent
such reports relate to one or more of such classes of
such series
of Certificates, other than
the exhibits to such documents, unless such exhibits
are
specifically incorporated by
reference in such documents. Requests should be
directed in
writing to Residential Asset
Securities Corporation, 8400 Normandale Lake Boulevard,
Suite
700, Minnesota 55437, or
by telephone at (612) 832-7000.

No dealer, salesman, or any other person has been
authorized
to give any
information, or to make any representations, other than
those
contained in this Prospectus
or the related Prospectus Supplement and, if given or
made, such
information or
representations must not be relied upon as having been
authorized
by the Company or any
dealer, salesman, or any other person. Neither the
delivery of
this Prospectus or the related
Prospectus Supplement nor any sale made hereunder or
thereunder
shall under any
circumstances create an implication that there has been
no change
in the information herein
or therein since the date hereof. This Prospectus and
the related
Prospectus Supplement are
not an offer to sell or a solicitation of an offer to
buy any
security in any jurisdiction in
which it is unlawful to make such offer or
solicitation.
TABLE OF CONTENTS

Caption Page

ADDITIONAL INFORMATION . . . . . . . . . . . . . 2

REPORTS TO CERTIFICATEHOLDERS. . . . . . . . . . 2

INCORPORATION OF CERTAIN INFORMATION
BY REFERENCE. . . . . . . . . . . . . . . . . . 2

SUMMARY OF PROSPECTUS. . . . . . . . . . . . . . 6

RISK FACTORS . . . . . . . . . . . . . . . . . . 13
Risks Associated with the Mortgage
Collateral . . . . . . . . . . . . . . . . 13
Yield and Prepayment
Considerations . . . . . . . . . . . . . . 15
Limited Representations and
Warranties . . . . . . . . . . . . . . . . 15
Limited Liquidity . . . . . . . . . . . . . 15
Limited Obligations . . . . . . . . . . . . 16
Limitations, Reduction and
Substitution of Credit
Enhancement. . . . . . . . . . . . . . . . 16

THE TRUST FUNDS. . . . . . . . . . . . . . . . . 17
General . . . . . . . . . . . . . . . . . . 17
The Mortgage Loans. . . . . . . . . . . . . 18
The Contracts . . . . . . . . . . . . . . . 24
The Agency Securities . . . . . . . . . . . 25
Mortgage Collateral Sellers . . . . . . . . 27
Representations with Respect to
Mortgage Collateral. . . . . . . . . . . . 27
Repurchases of Mortgage Collateral. . . . . 29
Limited Right of Substitution . . . . . . . 30

DESCRIPTION OF THE CERTIFICATES. . . . . . . . . 31
General . . . . . . . . . . . . . . . . . . 31
Form of Certificates. . . . . . . . . . . . 31
Assignment of Mortgage Loans. . . . . . . . 34
Assignment of Contracts . . . . . . . . . . 35
Review of Mortgage Loan or
Contract Documents . . . . . . . . . . . . 35
Assignment of Agency Securities . . . . . . 36
Spread. . . . . . . . . . . . . . . . . . . 36
Payments on Mortgage Collateral . . . . . . 36
Withdrawals from the Custodial
Account. . . . . . . . . . . . . . . . . . 39
Distributions . . . . . . . . . . . . . . . 40
Advances. . . . . . . . . . . . . . . . . . 42
Prepayment Interest Shortfalls. . . . . . . 43
Reports to Certificateholders . . . . . . . 44
Servicing and Administration of
Mortgage Collateral. . . . . . . . . . . . 45
Realization Upon Defaulted
Property . . . . . . . . . . . . . . . . . 49

SUBORDINATION. . . . . . . . . . . . . . . . . . 51

DESCRIPTION OF CREDIT ENHANCEMENT. . . . . . . . 53
General . . . . . . . . . . . . . . . . . . 53
Letters of Credit . . . . . . . . . . . . . 54
Mortgage Pool Insurance Policies. . . . . . 54

Special Hazard Insurance Policies. . . . . . . . 56
Bankruptcy Bonds . . . . . . . . . . . . . . . . 57
Reserve Funds. . . . . . . . . . . . . . . . . . 57
Certificate Insurance Policies . . . . . . . . . 58
Surety Bonds . . . . . . . . . . . . . . . . . . 58
Maintenance of Credit Enhancement. . . . . . . . 58
Reduction or Substitution of Credit Enhancement. 59

INSURANCE POLICIES ON MORTGAGE LOANS OR CONTRACTS. . 60
Primary Mortgage Insurance Policies. . . . . . . 60
Standard Hazard Insurance on Mortgaged Properties
61
Standard Hazard Insurance on Manufactured Homes. 62
FHA Mortgage Insurance . . . . . . . . . . . . . 62
VA Mortgage Guaranty . . . . . . . . . . . . . . 63

THE COMPANY. . . . . . . . . . . . . . . . . . . . . 63

RESIDENTIAL FUNDING CORPORATION. . . . . . . . . . . 64

THE POOLING AND SERVICING AGREEMENT. . . . . . . . . 64
Servicing and Administration . . . . . . . . . . 64
Events of Default. . . . . . . . . . . . . . . . 64
Rights Upon Event of Default . . . . . . . . . . 65
Amendment. . . . . . . . . . . . . . . . . . . . 66
Termination; Retirement of Certificates. . . . . 67
The Trustee. . . . . . . . . . . . . . . . . . . 67

YIELD CONSIDERATIONS . . . . . . . . . . . . . . . . 68

MATURITY AND PREPAYMENT CONSIDERATIONS . . . . . . . 71

CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS AND CONTRACTS
74
The Mortgage Loans . . . . . . . . . . . . . . . 74
The Contracts. . . . . . . . . . . . . . . . . . 82
Environmental Legislation. . . . . . . . . . . . 85
Soldiers' and Sailors' Civil Relief Act of 1940. 86

Default Interest and Limitations on Prepayments. 86
Forfeitures in Drug and RICO Proceedings . . . . 86

CERTAIN FEDERAL INCOME TAX CONSEQUENCES. . . . . . . 87
General. . . . . . . . . . . . . . . . . . . . . 87
REMICs . . . . . . . . . . . . . . . . . . . . . 88

STATE AND OTHER TAX CONSEQUENCES . . . . . . . . . .104

ERISA CONSIDERATIONS . . . . . . . . . . . . . . . .105
Plan Asset Regulations . . . . . . . . . . . . .105
Prohibited Transaction Exemption . . . . . . . .106
Tax-Exempt Investors . . . . . . . . . . . . . .108
Consultation with Counsel. . . . . . . . . . . .108

LEGAL INVESTMENT MATTERS . . . . . . . . . . . . . .109

USE OF PROCEEDS. . . . . . . . . . . . . . . . . . .110

METHODS OF DISTRIBUTION. . . . . . . . . . . . . . .110

LEGAL MATTERS. . . . . . . . . . . . . . . . . . . .111
FINANCIAL INFORMATION. . . . . . . . . . . . . . . .112

INDEX OF PRINCIPAL DEFINITIONS . . . . . . . . . . .113

SUMMARY OF PROSPECTUS

The following summary is qualified in its entirety by
reference
to the detailed
information appearing elsewhere in this Prospectus and
by
reference to the information with
respect to each series of Certificates contained in the
Prospectus Supplement to be prepared
and delivered in connection with the offering of such
series.
Capitalized terms used in this
summary that are not otherwise defined shall have the
meanings
ascribed thereto in this
Prospectus. An index indicating where certain terms
used herein
are defined appears at the
end of this Prospectus.

Securities Offered . . . Mortgage and Manufactured
Housing
Contract
Pass-Through Certificates.

Company. . . . . . . . . Residential Asset Securities
Corporation. See
"The Company."

Servicer or Master Servicer. . . The related
Prospectus

Supplement may
identify
one or more
entities as

Servicers for a
series of
Certificates
evidencing

interests in
Mortgage
Loans or Contracts
or an

entity may act as
Master
Servicer. The
Master

Servicer may be
Residential
Funding
Corporation, an

affiliate of the
Company
("Residential
Funding"). See
"Residential
Funding
Corporation" and

"Description of
the
Certificates
Servicing and

Administration of
Mortgage
Collateral."

Certificate Administrator . An entity may be named
as the

Certificate
Administrator in the
related

Prospectus
Supplement, if required
in

addition to or in lieu
of
the Master Servicer or
Servicer

for a series of
Certificates. The
Certificate

Administrator may be
Residential Funding.
See

"Residential Funding
Corporation" and
"Description of

the
Certificates Servicing
and

Administration of
Mortgage Collateral."

Trustee The Trustee for each series
of

Certificates will be
specified in the related
Prospectus

Supplement.

Certificates . . . . . . Each series of Certificates
will

represent in the
aggregate the entire
beneficial

ownership interest,
excluding any interest
retained by the
Company or
any other entity specified
in the

related Prospectus
Supplement, in a Trust Fund
consisting
primarily
of the Mortgage Collateral
acquired by
the
Company from one or more
affiliated or
unaffiliated institutions.
Each series
of
Certificates will be issued
pursuant

to a Pooling
and Servicing Agreement or a
Trust

Agreement
among the Company, the
Trustee and one

or more
of any Servicer, the Master
Servicer

and the
Certificate Administrator.

As specified in the related
Prospectus
Supplement, each series of
Certificates,
or class of
Certificates in the case of a
series

consisting of
two or more classes, may have a
stated

principal
balance, no stated principal
balance or a
notional
amount and may be entitled to

distributions of
interest based on a specified
interest

rate or rates
(each, a "Pass-Through Rate").
Each

series or
class of Certificates may have
a
different Pass-Through Rate, which may be a fixed,
variable or
adjustable Pass-Through Rate,
or any

combination
of two or more of such
Pass-Through

Rates. The
related Prospectus Supplement
will

specify the
Pass-Through Rate or Rates for
each

series or
class of Certificates, or the
initial

Pass-Through
Rate or Rates and the method
for

determining
subsequent changes to the
Pass-Through

Rate or
Rates.

A series may include one or
more classes

of
Certificates (each, a "Strip

Certificate") entitled to
(i) principal distributions,
with

disproportionate,
nominal or no interest
distributions, or
(ii) interest
distributions, with
disproportionate,

nominal or no
principal distributions. In
addition, a

series may
include classes of Certificates
which

differ as to
timing, sequential order,
priority of

payment,
Pass-Through Rate or amount of

distributions of
principal or interest or both,
or as to

which
distributions of principal or
interest or
both on any
class may be made upon the
occurrence of
specified events, in accordance
with a

schedule or
formula, or on the basis of
collections

from
designated portions of the
Trust Fund. In
addition,
a series may include one or
more classes
of
Certificates ("Accrual
Certificates"), as
to which
certain accrued interest will
not be

distributed but
rather will be added to the
principal

balance
thereof in the manner described
in the

related
Prospectus Supplement. One or
more

classes of
Certificates in a series may be
entitled

to receive
principal payments pursuant to
an

amortization
schedule under the
circumstances

described in the
related Prospectus Supplement.

If so specified in the related
Prospectus
Supplement, a series of
Certificates may
include
one or more classes of
Certificates

(collectively,
the "Senior Certificates")
which are

senior to one
or more classes of Certificates

(collectively, the
"Subordinate Certificates") in
respect of
certain
distributions of principal and
interest

and
allocations of losses on the
Mortgage

Collateral.
See "Subordination." If so
specified in

the related
Prospectus Supplement, a series
of

Certificates
may include one or more classes
of

Certificates
(collectively, the "Mezzanine

Certificates") which
are Subordinate Certificates
but which

are senior
to other classes of Subordinate

Certificates in
respect of such distributions
or losses.
In addition,
certain classes of Senior
Certificates

may be
senior to other classes of
Senior

Certificates in
respect of such distributions
or losses.

The
Certificates will be issued in

fully-registered
certificated or book-entry form
in the

authorized
denominations specified in the
related

Prospectus
Supplement. See "Description of
the

Certificates."

Neither the Certificates nor
the

underlying
Mortgage Collateral will be
guaranteed or
insured
by any governmental agency or

instrumentality
(except in the case of FHA
Loans, FHA

Contracts,
VA Loans, VA Contracts and
Ginnie Mae
Securities (each as defined
herein)) or

by the
Company, the Master Servicer,
any

Servicer, the
Mortgage Collateral Seller, the

Certificate
Administrator, GMAC Mortgage or
any of

their
affiliates. See "Risk Factors
Limited
Obligations."

Interest Distributions . Except as otherwise
specified herein

or in the
related Prospectus
Supplement,

interest on each
class of Certificates of
each series,
other than
Strip Certificates or
Accrual

Certificates (prior to
the time when accrued
interest becomes
payable
thereon), will be remitted
at the
applicable Pass-Through Rate on the outstanding
principal
balance of such class, on
the 25th day
(or, if such
day is not a business day,
the next

business day)
of each month, commencing
with the

month
following the month in which
the

Cut-off Date (as
defined in the applicable
Prospectus

Supplement)
occurs (each, a
"Distribution Date").
If the
Prospectus Supplement so
specifies,

interest
distributions on any class
of

Certificates may be
reduced on account of
negative

amortization on
the Mortgage Collateral,
with the

Deferred
Interest (as defined herein)
allocable
to such class
added to the principal
balance

thereof, which
Deferred Interest will
thereafter bear
interest at
the applicable Pass-Through
Rate.

Distributions,
if any, with respect to
interest on

Strip Certificates
will be made on each
Distribution Date

as
described herein and in the
related

Prospectus
Supplement. See "Description
of the
Certificates Distributions."
Strip

Certificates
that are entitled to
distributions of
principal only
will not receive
distributions in

respect of interest.
Interest that has accrued
but is not

yet payable on
any Accrual Certificates
will be added
to the
principal balance of such
class on the
related
Distribution Date, and will
thereafter
bear interest
at the applicable
Pass-Through Rate.

Unless
otherwise specified in the
related

Prospectus
Supplement, distributions of
interest
with respect
to any series of
Certificates (or

accruals thereof in
the case of Accrual
Certificates), or
with respect
to one or more classes
included

therein, may be
reduced to the extent of
interest

shortfalls not
covered by advances or the
applicable
form of
credit support, including
any

Prepayment Interest
Shortfalls. See "Description
of the

Certificates"
and "Maturity and Prepayment

Considerations."

Principal Distributions. Except as otherwise
specified in the

related
Prospectus Supplement,
principal

distributions on
the Certificates of each
series will

be payable on
each Distribution Date,
commencing

with the
Distribution Date in the
month

following the
month in which the Cut-off
Date

occurs, to the
holders of the Certificates
of such

series, or of the
class or classes of
Certificates then

entitled
thereto, on a pro rata basis
among all
such
Certificates or among the
Certificates
of any such
class, in proportion to
their

respective outstanding
principal balances or the
percentage

interests
represented by such class,
in the

priority and
manner specified in the
related

Prospectus
Supplement. Strip
Certificates with no
principal
balance will not receive
distributions
in respect of
principal. Distributions of
principal

with respect
to any class of Certificates
may be

reduced to the
extent of certain
delinquencies not

covered by
advances or losses not
covered by the
applicable
form of credit enhancement.
See "The

Trust
Funds," "Maturity and
Prepayment
Considerations" and
"Description of

the
Certificates."

Trust Fund . . . . . . . The Trust Fund for a series
of

Certificates will
consist primarily of
Mortgage Loans,

Contracts,
whole or partial
participations in

Mortgage Loans
or Contracts and/or Agency
Securities,
together
with certain accounts,
reserve funds,
insurance
policies and related
agreements

specified in the
related Prospectus
Supplement. The

Trust Fund
for a series of Certificates
will also
include the
Certificate Account and a
Collection

Account, if
applicable, and may include
various

forms of
credit enhancement, all as
specified

in the related
Prospectus Supplement. See
"The Trust
Funds"
and "Description of Credit

Enhancement."

The Mortgage Collateral will be
purchased
by the
Company directly or indirectly
(through
Residential Funding or other
affiliates)
from
affiliates, including GMAC
Mortgage

Corporation
of PA, an indirect parent of
the Company,

or
directly or indirectly from
sellers

unaffiliated with
the Company (each, a "Mortgage
Collateral
Seller"). See "The Trust Funds
Mortgage
Collateral Sellers."

Mortgage Loans . . . . . The Trust Fund for a series
of

Certificates may
include a pool of Mortgage
Loans, or

whole or
partial participations in
Mortgage

Loans (a
"Mortgage Pool"), secured by
first or
junior liens
on one- to four-family
residential

properties
(each, a "Mortgaged
Property"). Such

Mortgage
Loans may, as specified in
the related
Prospectus
Supplement, include
conventional

loans, FHA
Loans, VA Loans, Balloon
Loans, GPM

Loans,
Buy-Down Loans, Bi-Weekly
Loans or

Mortgage
Loans having other special
payment

features, as
described herein and in the
related

Prospectus
Supplement. See "The Trust
Funds The
Mortgage Loans." The
Mortgage Loans

may have
fixed or adjustable interest
rates. A
Mortgage Pool
may include Mortgage Loans
that have

been
modified prior to their
inclusion in a
Trust Fund.
The Mortgage Loans may
include either
(i)
Mortgage Loans secured by
mortgages,

deeds of
trust or other security
instruments

creating a first
or junior lien on the
Mortgaged

Properties or (ii)
loans secured by an
assignment by the

borrower
of a security interest in
shares

issued by a private
cooperative housing
association and

the related
proprietary lease or
occupancy

agreement on a
cooperative dwelling, which
constitute
first or
junior liens on such
property

("Cooperative
Loans"). The Mortgaged
Properties may
be owner
occupied or non-owner
occupied and may
include
vacation and second homes.
See "The

Trust
Funds The Mortgage Loans."

Contracts. . . . . . . . The Trust Fund for a series
of

Certificates may
include a pool of Contracts,
or whole
or partial
participations in Contracts
(a

"Contract Pool")
originated by one or more
manufactured
housing
dealers, or such other
entity or

entities described
in the related Prospectus
Supplement.
The
Contracts may be
conventional

manufactured
housing contracts or
contracts insured
by the FHA
or partially guaranteed by
the VA.

Each Contract
will be secured by a
manufactured home
(each, a
"Manufactured Home," which
shall also
be
included in the term
"Mortgaged

Property").
Generally, the Contracts
will be

fully-amortizing
and will bear interest at a
fixed rate
unless
otherwise specified in the
related

Prospectus
Supplement. See "The Trust
Funds The
Contracts."

Agency Securities. . . . The Trust Fund for a series
of

Certificates may
include a pool of Freddie
Mac

Securities, Fannie
Mae Securities or Ginnie Mae

Securities
(collectively, the "Agency

Securities"), or a
combination of Agency
Securities. Such
Agency
Securities may represent
whole or

partial interests
in pools of (1) Mortgage
Loans or

Contracts or (2)
Agency Securities. Unless
otherwise

set forth in
the related Prospectus
Supplement, all

Ginnie
Mae Securities will be
backed by the

full faith and
credit of the United States.
None of

the Freddie
Mac Securities or Fannie Mae

Securities will be
backed, directly or
indirectly, by the
full faith and
credit of the United States.
Agency

Securities may
be backed by fixed or
adjustable rate
Mortgage
Loans or other types of
Mortgage Loans
or
Contracts specified in the
related

Prospectus
Supplement. See "The Trust
Funds The

Agency
Securities."

Yield and Prepayment
Considerations . . . . The Mortgage Collateral
supporting a

series of
Certificates will have
unique

characteristics that
will affect the yield to
maturity and
the rate of
payment of principal on such

Certificates. See
"Yield Considerations" and
"Maturity

and
Prepayment Considerations"
herein and
in the
related Prospectus
Supplement.

Credit Enhancement . . . If so specified in the
related

Prospectus
Supplement, the Trust Fund
with

respect to any
series of Certificates may
include any
one or any
combination of a letter of
credit,

mortgage pool
insurance policy, special
hazard

insurance policy,
bankruptcy bond, reserve
fund,

certificate
insurance policy, surety
bond or other

type of
credit support to provide
partial

coverage for
certain defaults and losses
relating

to the
Mortgage Loans. Credit
support also

may be
provided in the form of
subordination
of one or
more classes of Certificates
in a

series under
which losses are first
allocated to

any Subordinate
Certificates up to a
specified limit.
Any form of

credit enhancement typically
will have

certain
limitations and exclusions
from

coverage
thereunder, which will be
described in
the related
Prospectus Supplement.
Losses not

covered by
any form of credit
enhancement will be

borne by
the holders of the related

Certificates (or certain
classes thereof). To the
extent not

set forth herein,
the amount and types of
coverage, the
identification of any entity
providing
the
coverage, the terms of any

subordination and
related information will be
set forth
in the
Prospectus Supplement
relating to a

series of
Certificates. See
"Description of

Credit
Enhancement" and
"Subordination."

Advances . . . . . . . . Unless otherwise specified
in the

related
Prospectus Supplement, the
Master

Servicer (or,
if there is no Master
Servicer for

such series, the
related Servicer) will be
obligated to
make certain
advances with respect to
delinquent

scheduled
payments on the Mortgage
Loans or

Contracts,
but only to the extent that
the Master
Servicer or
a Servicer believes that
such amounts
will be
recoverable by it. Any
advance made by
the
Master Servicer or a
Servicer with

respect to a
Mortgage Loan or a Contract
is

recoverable by it
as provided herein under
"Description
of the
Certificates Advances"
either from

recoveries
on the specific Mortgage
Loan or

Contract or,
with respect to any advance

subsequently
determined to be
nonrecoverable, out

of funds
otherwise distributable to
the holders
of the
related series of
Certificates.

Optional Termination . . The Master Servicer, the
Certificate
Administrator, the Company,
a Servicer
or, if
specified in the related
Prospectus

Supplement,
the holder of the residual
interest in
a REMIC
may at its option either (i)
effect

early retirement
of a series of Certificates
through

the purchase of
the assets in the related
Trust Fund

or (ii)
purchase, in whole but not
in part,

the Certificates
specified in the related
Prospectus

Supplement; in
each case under the
circumstances and
in the
manner set forth herein
under "The

Pooling and
Servicing Agreement
Termination;

Retirement
of Certificates" and in the
related

Prospectus Supplement.

Rating . . . . . . . . . At the date of issuance, as
to each

series, each
class of Certificates
offered hereby

will be rated,
at the request of the
Company, in one
of the four
highest rating categories by
one or

more
nationally recognized
statistical

rating agencies
(each, a "Rating Agency").
See

"Ratings" in the
related Prospectus
Supplement.

Legal Investment . . . . Unless otherwise specified
in the

related
Prospectus Supplement and
except with
respect to
any class of Certificates
that will

evidence an
interest in Mortgages
secured by

second or more
junior liens, each class of

Certificates offered
hereby and by the related
Prospectus

Supplement
that is rated in one of the
two

highest rating
categories by at least one
Rating

Agency will
constitute "mortgage related

securities" for
purposes of the Secondary
Mortgage

Market
Enhancement Act of 1984, as
amended
("SMMEA"), for so long as it
sustains
such a
rating. See "Legal
Investment

Matters."

ERISA Considerations . . A fiduciary of an employee
benefit

plan and
certain other retirement
plans and

arrangements,
including individual
retirement

accounts and
annuities, Keogh plans, and
collective

investment
funds and separate accounts
in which

such plans,
accounts, annuities or
arrangements

are invested, which is
subject to the
Employee Retirement
Income Security Act of 1974,
as

amended
("ERISA"), or Section 4975
of the

Internal
Revenue Code of 1986 (the
"Code"), and
any
other person contemplating
purchasing

a
Certificate with Plan Assets
(as

defined herein),
should carefully review with
its legal
counsel
whether the purchase or
holding of

Certificates
could give rise to a
transaction that
is prohibited
or is not otherwise
permissible either
under
ERISA or Section 4975 of the
Code. See
"ERISA
Considerations" herein and
in the

related
Prospectus Supplement.

Certain Federal Income Tax
Consequences . . . . . Certificates of each series
offered

hereby will
constitute "regular
interests" or

"residual
interests" in a Trust Fund,
or a

portion thereof,
treated as a REMIC under
Sections 860A
through
860G of the Code, unless
otherwise

specified in
the related Prospectus
Supplement. See
"Certain
Federal Income Tax
Consequences"

herein and in

the related Prospectus
Supplement.

RISK FACTORS

Investors should consider, among other things, the
following
factors in connection
with the purchase of the Certificates:

Risks Associated with the Mortgage Collateral

The primary assets underlying a series of
Certificates will
be the Mortgage Loans
or Contracts (or interests therein) in the related
Trust Fund or
the Mortgage Loans or
Contracts that underlie the Agency Securities in a
Trust Fund.
Defaults on mortgage loans
and contracts may occur because of changes in the
economic status
of the related borrower
or because of increases in the monthly payment for such
mortgage
loan or contract or
decreases in the related borrower's equity in the
related
Mortgaged Property. Losses upon
the foreclosure of a mortgage loan or contract may
occur because
the value of the related
Mortgaged Property is insufficient to recover the
outstanding
principal balance of the
mortgage loan or contract. Factors which may affect the
value of
the related Mortgaged
Property include declines in real estate values and
adverse
economic conditions either
generally or in the particular geographic area in which
the
related Mortgaged Property is
located. See "Yield Considerations." Losses may also
result from
fraud in the origination
of a mortgage loan or contract.

Mortgage Loans or Contracts may have been
originated using
underwriting
standards that are less stringent than the underwriting
standards
applied by other mortgage
loan purchase programs such as those run by Fannie Mae
or Freddie
Mac or by the
Company's affiliate, Residential Funding, for the
purpose of
collateralizing securities issued
by Residential Funding Mortgage Securities I, Inc. For
example,
the Mortgage Loans or
Contracts may have been made to borrowers (the
"Mortgagors")
having imperfect credit
histories, ranging from minor delinquencies to
bankruptcies, or
Mortgagors with generally
higher ratios of monthly mortgage payments to income or
higher
ratios of total monthly
credit payments to income. Mortgage Loans or Contracts
in a Trust
Fund may also present
a greater risk of loss due to higher Loan-to-Value
Ratios or
lesser amounts of primary
mortgage insurance than such other lending programs.

Mortgage Loans or Contracts may have been
originated one or
more years prior to
the Closing Date for the related Certificates. Such
seasoned
Mortgage Collateral may have
higher current loan-to-value ratios than at origination
if the
value of the related Mortgaged
Property has declined. No assurance can be given that
values of
the Mortgaged Properties
have remained or will remain at the levels existing on
the dates
of origination of the related
Mortgage Loans or Contracts. If a residential real
estate market
should experience an overall
decline in property values, or if the Mortgagors on
such seasoned
Mortgage Collateral have
lower incomes or poorer credit histories than at the
time of
origination of the related
Mortgage Loan or Contract, the actual rates of
delinquencies,
foreclosures and losses could
be higher than the rates otherwise expected by an
investor in the
Certificates.

In addition, in the case of Mortgage Loans or
Contracts that
are subject to negative
amortization due to the addition to the related
principal balance
of Deferred Interest, the
principal balances of such Mortgage Loans or Contracts
could be
increased to an amount
equal to or in excess of the value of the underlying
Mortgaged
Properties, thereby increasing
the likelihood of default by the Mortgagors which may
result in
losses on such Mortgage
Loans or Contracts. Certain other Mortgage Loans or
Contracts may
provide for escalating
or variable payments by the Mortgagor, as to which the
Mortgagor
is generally qualified on
the basis of the initial payment amount. Some of the
Mortgage
Loans or Contracts may be
Balloon Loans and the ability of a Mortgagor to pay the
related
Balloon Amount may
depend on the Mortgagor's ability to refinance the
Mortgage Loan
or Contract. In some
instances, the Mortgagors may not be able to make their
loan
payments as such payments
increase and thus the likelihood of default will
increase.

The Mortgage Loans may be secured by junior liens
on the
related Mortgaged
Properties ("Junior Mortgage Loans") that will be
subordinate to
the rights of the mortgagee
under the related senior mortgage or mortgages.
Accordingly, the
holder of a Junior
Mortgage Loan will be subject to a loss of its mortgage
if the
holder of a senior mortgage
is successful in foreclosure of its mortgage since no
junior
liens or encumbrances survive
such a foreclosure. Also, due to the priority of the
senior
mortgage, the holder of a Junior
Mortgage Loan may not be able to control the timing,
method or
procedure of any
foreclosure action relating to the Mortgaged Property.
Investors
should be aware that any
liquidation, insurance or condemnation proceeds
received in
respect of such Junior
Mortgage Loans will be available to satisfy the
outstanding
balance of such Mortgage Loans
only to the extent that the claims of such senior
mortgages have
been satisfied in full,
including any related foreclosure costs. For Mortgage
Loans
secured by junior liens that
have low Junior Mortgage Ratios, foreclosure costs may
be
substantial relative to the
outstanding balance of the Mortgage Loan upon default,
and
therefore the amount of any
liquidation proceeds available to Certificateholders
may be
smaller as a percentage of the
outstanding balance of the Mortgage Loan than would be
the case
in a typical pool of first
lien residential loans. In addition, the holder of a
Junior
Mortgage Loan may only foreclose
on the related Mortgaged Property subject to any senior
mortgages, in which case such
holder must either pay the entire amount due on the
senior
mortgages to the senior
mortgagees at or prior to the foreclosure sale or
undertake the
obligation to make payments
on the senior mortgages. The Trust Fund will not have
any source
of funds to satisfy the
senior mortgages or make payments due to the senior
mortgagees,
although the Master
Servicer or Subservicer may, at its option, advance
such amounts
to the extent deemed
recoverable and prudent. In the event that proceeds
from a
foreclosure or similar sale of the
related Mortgaged Property are insufficient to satisfy
all senior
liens and the Mortgage Loan
in the aggregate, the Trust Fund, as the holder of the
junior
lien, and, accordingly, Holders
of one or more classes of the Certificates, are likely
to (i)
incur losses in jurisdictions in
which a deficiency judgment against the borrower is not
available, and (ii) incur losses if
any deficiency judgment obtained is not realized upon.
In the
event that such proceeds are
insufficient to satisfy all senior liens and to
reimburse the
Master Servicer or Subservicer
for any advances made in respect thereof, such losses
could
exceed the amount of the Junior
Mortgage Loan.

Some Mortgage Loans or Contracts may be one or more
months
delinquent with
regard to payment of principal or interest at the time
of their
deposit into a Trust Fund.
Certain Mortgage Loans or Contracts may have incomplete
legal
files that, as of the time
of deposit into a Trust Fund, may be missing such
documents as a
note, a copy of the
Mortgage or a title insurance policy, or may contain
documents
that are defective because
they are incomplete, contain incorrect information, are
unsigned
by the appropriate parties
or have other defects.

In addition to the foregoing, from time to time
certain
geographic regions will
experience weaker regional economic conditions and
housing
markets and, consequently,
may experience higher rates of loss and delinquency
than will be
experienced on mortgage
loans or contracts generally. For example, a region's
economic
condition and housing
market may be directly, or indirectly, adversely
affected by
natural disasters or civil
disturbances such as earthquakes, hurricanes, floods,
eruptions
or riots. The economic
impact of any of these types of events may also be felt
in areas
beyond the region
immediately affected by the disaster or disturbance.
The Mortgage
Loans or Contracts in
the Trust Fund for a series of Certificates may be
concentrated
in these regions, and such
concentration may present risks in addition to those
generally
present for similar mortgage-backed securities without
such
concentration.

With respect to Junior Mortgage Loans in general,
and in
particular those having
high Combined Loan-to-Value Ratios or low Junior
Mortgage Ratios,
the foregoing
considerations may result in circumstances under which
it would
be uneconomical to
foreclose on the related Mortgaged Property in the
event of a
default. The actual Junior
Mortgage Ratio at any time may be lower than indicated
in the
Prospectus Supplement as
a result of any reductions in the Stated Principal
Balance
thereof. In addition, the actual
Combined Loan-to-Value Ratio at any time may be higher
than
indicated in the Prospectus
Supplement if the Junior Mortgage Loan or any senior
mortgage
loan is subject to negative
amortization. In such circumstances, repayment of the
Junior
Mortgage Loan would depend
solely on the credit of the Mortgagor, and the ability
to obtain
repayment of the Mortgage
Loan may be generally similar to that which would be
experienced
if the Mortgage Loan
were an unsecured consumer loan. Moreover, while in
most
jurisdictions a mortgagee
would be permitted to elect to either foreclose or sue
to collect
the debt evidenced by the
Mortgage Note, in some jurisdictions suits to collect
the debt
are prohibited until the
mortgagee has sought to foreclose against the security,
so that
the mortgagee may be forced
to foreclose first and thereafter obtain a deficiency
judgment.
In addition, in some
jurisdictions, where the mortgagee has chosen to sue on
the debt
in lieu of foreclosure, the
mortgagee will be barred from foreclosing against the
security.

To the extent that losses on any item of Mortgage
Collateral
are not covered by any
credit enhancement, the related Certificateholders (or
specific
classes thereof) will bear all
risk of loss resulting from default by the Mortgagors,
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 Mortgage Loans or Contracts.
Specific
risks, if any, associated with
the Mortgage Collateral underlying a particular series
of
Certificates will be discussed in
the related Prospectus Supplement. See "Risk Factors,"
if any, in
the related Prospectus
Supplement.

Yield and Prepayment Considerations

The yield to maturity of the Certificates of each
series will
depend on the rate and
timing of principal payments (including prepayments,
liquidations
due to defaults, and
repurchases due to conversion of ARM Loans to fixed
interest rate
loans or breaches of
representations and warranties) on the Mortgage Loans
or
Contracts and the price paid by
Certificateholders. Such yield may be adversely
affected by a
higher or lower than
anticipated rate of prepayments on the related Mortgage
Collateral. The yield to maturity
on Strip Certificates will be extremely sensitive to
the rate of
prepayments on the related
Mortgage Collateral. In addition, the yield to maturity
on
certain other types of classes of
Certificates, including Accrual Certificates,
Certificates with a
Pass-Through Rate that
fluctuates inversely with an index or certain other
classes, may
be relatively more sensitive
to the rate of prepayment on the related Mortgage
Collateral than
other classes of
Certificates. Prepayments are influenced by a number of
factors,
including prevailing
mortgage market interest rates, local and regional
economic
conditions and homeowner
mobility. See "Yield Considerations" and "Maturity and
Prepayment
Considerations."

Limited Representations and Warranties

Certain Mortgage Collateral Sellers may make more
limited
representations and
warranties with respect to the Mortgage Loans or
Contracts that
have been acquired by the
Company than would be required by Fannie Mae or Freddie
Mac in
connection with their
first mortgage loan purchase programs. In addition, any
item of
Mortgage Collateral for
which a breach of a representation or warranty exists
will remain
in the related Trust Fund
in the event that a Mortgage Collateral Seller is
unable, or
disputes its obligation, to
repurchase such Mortgage Collateral and such a breach
does not
also constitute a breach of
a representation made by Residential Funding, the
Company or the
Master Servicer. In
either event, any resulting losses will be borne by the
related
form of credit enhancement,
to the extent available, and otherwise by the holders
of one or
more classes of Certificates.
See "The Trust Funds Representations with Respect to
Mortgage
Collateral."

Limited Liquidity

There can be no assurance that a secondary market
for the
Certificates of any series
will develop or, if it does develop, that it will
provide
Certificateholders with liquidity of
investment or that it will continue for the life of the
Certificates of any series. The
Prospectus Supplement for any series of Certificates
may indicate
that an underwriter
specified therein intends to establish a secondary
market in such
Certificates, however no
underwriter will be obligated to do so. The
Certificates will not
be listed on any securities
exchange.

Limited Obligations

The Certificates will not represent an interest in
or
obligation of the Company, the
Master Servicer, any Servicer, the Mortgage Collateral
Seller,
the Certificate Administrator,
GMAC Mortgage or any of their affiliates. The only
obligations of
the foregoing entities
with respect to the Certificates or any Mortgage
Collateral will
be the obligations (if any)
of the Company, the related Servicer, if applicable,
the Mortgage
Collateral Seller, and the
Master Servicer pursuant to certain limited
representations and
warranties made with respect
to the Mortgage Collateral, the Master Servicer's or
the
applicable Servicer's servicing
obligations under the related Pooling and Servicing
Agreement
(including such entity's
limited obligation to make certain Advances) and
pursuant to the
terms of any Agency
Securities, the Certificate Administrator's (if any)
administrative obligations under the
Pooling and Servicing Agreement or the Trust Agreement,
and, if
and to the extent
expressly described in the related Prospectus
Supplement, certain
limited obligations of the
Master Servicer or the related Servicer in connection
with an
agreement to purchase a
Convertible Mortgage Loan upon conversion to a fixed
rate.
Neither the Certificates nor the
underlying Mortgage Collateral will be guaranteed or
insured by
any governmental agency
or instrumentality (except in the case of FHA Loans,
FHA
Contracts, VA Loans, VA
Contracts or Ginnie Mae Securities), or by the Company,
the
Master Servicer, any Servicer,
the Mortgage Collateral Seller, the Certificate
Administrator,
GMAC Mortgage or any of
their affiliates. Proceeds of the assets included in
the related
Trust Fund (including the
Mortgage Collateral and any form of credit enhancement)
will be
the sole source of
payments on the Certificates, and there will be no
recourse to
the Company, the Master
Servicer, any Servicer, the Mortgage Collateral Seller,
the
Certificate Administrator, GMAC
Mortgage or any other entity in the event that such
proceeds are
insufficient or otherwise
unavailable to make all payments provided for under the
Certificates.

Limitations, Reduction and Substitution of Credit
Enhancement

With respect to each series of Certificates, credit
enhancement may be provided in
limited amounts to cover certain types of losses on the
underlying Mortgage Collateral.
Credit enhancement will be provided in one or more of
the forms
referred to herein,
including, but not limited to: subordination of other
classes of
Certificates of the same
series; a Letter of Credit; a Mortgage Pool Insurance
Policy; a
Special Hazard Insurance
Policy; a Bankruptcy Bond; a Reserve Fund; a
Certificate
Insurance Policy; a Surety Bond;
or any combination thereof. See "Subordination" and
"Description
of Credit Enhancement"
herein. Regardless of the form of credit enhancement
provided,
the amount of coverage will
be limited in amount and in most cases will be subject
to
periodic reduction in accordance
with a schedule or formula. Furthermore, such credit
enhancement
may provide only very
limited coverage as to certain types of losses or
risks, and may
provide no coverage as to
certain other types of losses or risks. In the event
losses
exceed the amount of coverage
provided by any credit enhancement or losses of a type
not
covered by any credit
enhancement occur, such losses will be borne by the
holders of
the related Certificates (or
certain classes thereof). The Master Servicer or the
Certificate
Administrator, as applicable,
will generally be permitted to reduce, terminate or
substitute
all or a portion of the credit
enhancement for any series of Certificates, if each
Rating Agency
indicates that the then-current rating thereof will not
be
adversely affected. The rating of any series of Certificates
by any Rating Agency may be lowered following the
initial
issuance thereof as a result of
the downgrading of the obligations of any applicable
credit
support provider, or as a result
of losses on the related Mortgage Collateral in excess
of the
levels contemplated by such
Rating Agency at the time of its initial rating
analysis. None of
the Company, the Master
Servicer, any Servicer, the Mortgage Collateral Seller,
the
Certificate Administrator, GMAC
Mortgage nor any of their affiliates will have any
obligation to
replace or supplement any
credit enhancement, or to take any other action to
maintain any
rating of any series of
Certificates. See "Description of Credit Enhancement
Reduction or
Substitution of Credit
Enhancement."

THE TRUST FUNDS

General

A Trust Fund for a series of Certificates may
include
Mortgage Collateral that
consists of one or more of the following: (1) Mortgage
Loans, or
whole or partial
participations in Mortgage Loans, which are one- to
four-family
residential mortgage loans,
including loans secured by first or junior mortgages or
leases on
cooperative apartment units
and loans to cooperative associations, and which are
closed-end
loans that do not permit
revolving debt; (2) Contracts, or whole or partial
participations
in Contracts; (3) Agency
Securities which are mortgage pass-through certificates
(including those representing whole
or partial interests in pools of Mortgage Loans,
Contracts or
Agency Securities (a)
guaranteed and/or issued by the Government National
Mortgage
Association ("Ginnie Mae"
and such securities, "Ginnie Mae Securities"), (b)
issued by the
Federal Home Loan
Mortgage Corporation ("Freddie Mac" and such
securities, "Freddie
Mac Securities") or (c)
issued by the Federal National Mortgage Association
("Fannie Mae"
and such securities,
"Fannie Mae Securities"); and (4) certain other related
property
conveyed by the Company.
Each Trust Fund may also include (i) the amounts
required to be
held from time to time in
a trust account (the "Certificate Account"), into which
payments
in respect of the Mortgage
Collateral may be deposited, maintained by the Master
Servicer, a
Servicer, the Trustee or
the Certificate Administrator, as the case may be,
pursuant to
the Pooling and Servicing
Agreement or Trust Agreement, (ii) if so specified in
the related
Prospectus Supplement,
a trust account (the "Custodial Account") into which
amounts to
be deposited in the
Certificate Account may be deposited on a periodic
basis prior to
deposit in the Certificate
Account, (iii) any Mortgaged Property which initially
secured a
Mortgage Loan or Contract
and that is acquired by foreclosure or deed in lieu of
foreclosure and (iv) if so specified in
the related Prospectus Supplement, one or more other
cash
accounts, insurance policies or
other forms of credit enhancement with respect to the
Certificates, the Mortgage Collateral
or all or any part of the Trust Fund, required to be
maintained
pursuant to the related
Pooling and Servicing Agreement or Trust Agreement. See
"Description of Credit
Enhancement."

Each Certificate will evidence the interest
specified in the
related Prospectus
Supplement in a Trust Fund, containing a Mortgage Pool,
a
Contract Pool or a pool of
Agency Securities (an "Agency Securities Pool") having
the
aggregate principal balance as
of the date (the "Cut-off Date") specified in the
related
Prospectus Supplement.
Certificateholders of a series will have interests only
in such
Mortgage Pool, Contract Pool
or Agency Securities Pool and will have no interest in
the
Mortgage Pool, Contract Pool or
Agency Securities Pool created with respect to any
other series
of Certificates.

The related Prospectus Supplement may identify one
or more
entities as Servicers
for a series of Certificates evidencing interests in
Mortgage
Loans or Contracts or, if so
provided in the related Prospectus Supplement, an
entity may act
as Master Servicer with
respect to a series of Certificates. The Master
Servicer or any
Servicer, as applicable, may
service the Mortgage Loans or Contracts through one or
more
Sub-Servicers. See
"Description of the Certificates Servicing and
Administration of
Mortgage Collateral." In
addition to or in lieu of the Master Servicer or
Servicer for a
series of Certificates, the
related Prospectus Supplement may identify a
Certificate
Administrator for the Trust Fund.
The related Prospectus Supplement will identify an
entity that
will serve as trustee (the
"Trustee") for a series of Certificates. The Trustee
will be
authorized to appoint a custodian
(a "Custodian") pursuant to a custodial agreement to
maintain
possession of and review
documents relating to the Mortgage Collateral as the
agent of the
Trustee. The identity of
such Custodian, if any, will be set forth in the
related
Prospectus Supplement.

The following is a brief description of the
Mortgage
Collateral expected to be
included in the Trust Funds. If specific information
respecting
the Mortgage Collateral is
not known to the Company at the time Certificates are
initially
offered, more general
information of the nature described below will be
provided in the
Prospectus Supplement,
and specific information will be set forth in a Current
Report on
Form 8-K (a "Form 8-K")
to be filed with the Securities and Exchange Commission
(the
"Commission") within fifteen
days after the initial issuance of such Certificates. A
copy of
the Pooling and Servicing
Agreement or Trust Agreement, as applicable, with
respect to each
series will be an exhibit
to the Form 8-K. A schedule of Mortgage Collateral will
be an
exhibit to the related Pooling
and Servicing Agreement or Trust Agreement.

The Mortgage Loans

Unless otherwise stated in the related Prospectus
Supplement,
the Mortgage Loans
included in a Trust Fund for a series will have been
originated
by or on behalf of either (i)
savings and loan associations, savings banks,
commercial banks,
credit unions, insurance
companies or similar institutions which are supervised
and/or
examined by a federal or state
authority, or (ii) HUD-approved mortgagees. Each
Mortgage Loan
will be selected by the
Company for inclusion in a Mortgage Pool from those
purchased by
the Company from
Affiliated Sellers or, either directly or through its
affiliates,
including GMAC Mortgage and
Residential Funding, from Unaffiliated Sellers, all as
described
in the related Prospectus
Supplement. If a Mortgage Pool is composed of Mortgage
Loans
acquired by the Company
directly from Unaffiliated Sellers, the related
Prospectus
Supplement will specify the extent
of Mortgage Loans so acquired. The characteristics of
the
Mortgage Loans will be as
described in the related Prospectus Supplement. The
Mortgage
Loans purchased by the
Company from a Mortgage Collateral Seller will be
selected by the
Company. Other
mortgage loans available for purchase by the Company
may have had
characteristics which
would have made them eligible for inclusion in a
Mortgage Pool,
but were not selected by
the Company for inclusion in such Mortgage Pool.

If so stated in the related Prospectus Supplement,
all or a
portion of the Mortgage
Loans that underlie a series of Certificates may have
been
purchased by the Company, either
directly, or indirectly through Residential Funding or
other
affiliates, from Mortgage
Collateral Sellers under the AlterNet mortgage loan
origination
program (the "AlterNet
Mortgage Program") as described below (such Mortgage
Loans, the
"AlterNet Loans").

The Mortgage Loans may include mortgage loans
insured by the
Federal Housing
Administration (the "FHA" and such loans, "FHA Loans"),
a
division of the United States
Department of Housing and Urban Development ("HUD"),
mortgage
loans partially
guaranteed by the Veterans Administration (the "VA" and
such
loans, "VA Loans") and
mortgage loans not insured or guaranteed by the FHA or
VA
("Conventional Loans"). The
Mortgage Loans may have fixed interest rates or
adjustable
interest rates ("Mortgage
Rates") and may provide for fixed level payments or may
be
Mortgage Loans pursuant to
which the monthly payments by the Mortgagor during the
early
years of the related
Mortgage are less than the amount of interest that
would
otherwise be payable thereon, with
the interest not so paid added to the outstanding
principal
balance of such Mortgage Loan
("GPM Loans"), Mortgage Loans subject to temporary
buy-down plans
("Buy-Down
Loans"), pursuant to which the monthly payments made by
the
Mortgagor during the early
years of the Mortgage Loan will be less than the
scheduled
monthly payments on the
Mortgage Loan, Mortgage Loans that provide for payment
every
other week during the term
thereof ("Bi-Weekly Loans"), Mortgage Loans that
experience
negative amortization,
Mortgage Loans that require a larger payment of
principal upon
maturity (a "Balloon
Amount") that may be all or a portion of the principal
thereof
("Balloon Loans"), or
Mortgage Loans with other payment characteristics as
described
below or in the related
Prospectus Supplement. The Mortgage Loans may be
secured by
mortgages or deeds of
trust, deeds to secure debt or other similar security
instruments
(collectively, "Mortgages")
creating a first or junior lien on the related
Mortgaged
Properties. The Mortgage Loans may
also include Cooperative Loans evidenced by promissory
notes
secured by a first or junior
lien on the shares issued by private, non-profit,
cooperative
housing corporations
("Cooperatives") and on the related proprietary leases
or
occupancy agreements granting
exclusive rights to occupy specific units within a
Cooperative
("Cooperative Dwellings").

If so specified in the related Prospectus
Supplement, a
Mortgage Pool may include
Mortgage Loans that have been modified (each, a
"Modified
Mortgage Loan"). Such
modifications may include conversions from an
adjustable to a
fixed Mortgage Rate
(discussed below) or other changes in the related
mortgage note.
If a Mortgage Loan is a
Modified Mortgage Loan, references to origination
generally shall
be deemed to be
references to the date of modification.

The Mortgaged Properties may consist of detached
individual
dwellings, individual
condominiums, townhouses, duplexes, row houses,
individual units
in planned unit
developments, two- to four-family dwellings and other
attached
dwelling units. Each
Mortgaged Property will be located on land owned in fee
simple by
the Mortgagor or, if
specified in the related Prospectus Supplement, land
leased by
the Mortgagor. Attached
dwellings may include structures where each Mortgagor
owns the
land upon which the unit
is built, with the remaining adjacent land owned in
common or
dwelling units subject to a
proprietary lease or occupancy agreement in a
Cooperative. The
proprietary lease or
occupancy agreement securing a Cooperative Loan is
generally
subordinate to any blanket
mortgage on the related cooperative apartment building
or on the
underlying land.
Additionally, in the case of a Cooperative Loan, 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 such tenant-stockholder. See
"Certain Legal
Aspects of Mortgage Loans
and Contracts."

The percentage of Mortgage Loans that are
owner-occupied will
be disclosed in the
related Prospectus Supplement. The basis for any
statement that a
given percentage of the
Mortgage Loans are secured by Mortgaged Properties that
are
owner-occupied will be one
or more of the following: (i) the making of a
representation by
the Mortgagor at origination
of a Mortgage Loan that the Mortgagor intends to use
the
Mortgaged Property as a primary
residence for at least the first six months of
occupancy, (ii) a
representation by the originator
of the Mortgage Loan (which representation may be based
solely on
(i) above) or (iii) the
fact that the mailing address for the Mortgagor is the
same as
the address of the Mortgaged
Property, and any representation and warranty in the
related
Pooling and Servicing
Agreement to such effect may be qualified similarly. To
the
extent specified in the related
Prospectus Supplement, the Mortgaged Properties may
include
vacation homes, second
homes and non-owner-occupied investment properties.
Mortgage
Loans secured by
investment properties (including two- to four-unit
dwellings) may
also be secured by an
assignment of leases and rents and operating or other
cash flow
guarantees relating to the
Mortgage Loans.

Certain information, including information
regarding
loan-to-value ratios (each, a
"Loan-to-Value Ratio") at origination (unless otherwise
specified
in the related Prospectus
Supplement) of the Mortgage Loans underlying each
series of
Certificates, will be supplied
in the related Prospectus Supplement. In the case of
most
Mortgage Loans, the Loan-to-Value Ratio is defined
generally as
the ratio, expressed as a percentage, of the principal
amount of the Mortgage Loan at origination to the
lesser of (1)
the appraised value
determined in an appraisal obtained at origination of
such
Mortgage Loan and (2) the sales
price for the related Mortgaged Property. In the case
of certain
refinanced, modified or
converted Mortgage Loans, the Loan-to-Value Ratio at
origination
is defined as the ratio,
expressed as a percentage, of the principal amount of
such
Mortgage Loan to either the
appraised value determined in an appraisal obtained at
the time
of refinancing, modification
or conversion or, if no such appraisal has been
obtained, to the
lesser of (1) the appraised
value of the related Mortgaged Property determined at
origination
of the loan to be
refinanced, modified or converted and (2) the sales
price of the
related Mortgaged Property.
The denominator of the ratio described in the preceding
sentence
or the second preceding
sentence, as the case may be, is hereinafter referred
to as the
"Appraised Value." Certain
Mortgage Loans which are subject to negative
amortization will
have Loan-to-Value Ratios
which will increase after origination as a result of
such
negative amortization. In the case
of seasoned Mortgage Loans, the appraisals upon which
Loan-to-Value Ratios have been
calculated may no longer be accurate valuations of the
Mortgaged
Properties. Certain
Mortgaged Properties may be located in regions where
property
values have declined
significantly since the time of origination.

With respect to any Junior Mortgage Loan, the
"Combined
Loan-to-Value Ratio"
generally will be the ratio, expressed as a percentage,
of the
sum of (i) the Cut-off Date
Principal Balance of such Junior Mortgage Loan and (ii)
the
principal balance of any related
mortgage loans that constitute liens senior to the lien
of the
Junior Mortgage Loan on the
related Mortgaged Property, at the time of the
origination of
such Junior Mortgage Loan (or,
if appropriate, at the time of an appraisal subsequent
to
origination), to the lesser of (A) the
appraised value of the related Mortgaged Property
determined in
the appraisal used in the
origination of such Junior Mortgage Loan (or, if
appropriate, the
value determined in an
appraisal obtained subsequent to origination) and (B)
if
applicable under the corresponding
program, the sales price of each Mortgaged Property.
With
respect to each Junior Mortgage
Loan, the "Junior Mortgage Ratio" generally will be the
ratio,
expressed as a percentage, of
the Cut-off Date Principal Balance of such Junior
Mortgage Loan
to the sum of (i) the Cut-off Date Principal Balance of
such
Junior Mortgage Loan and (ii) the principal balance of
any mortgage loans senior to the Junior Mortgage Loan
at the time
of the origination of such
Junior Mortgage Loan.

The Mortgage Loans may be "equity refinance"
Mortgage Loans,
as to which a
portion of the proceeds are used to refinance an
existing
mortgage loan, and the remaining
proceeds may be retained by the Mortgagor or used for
purposes
unrelated to the Mortgaged
Property. Alternatively, the Mortgage Loans may be
"rate and term
refinance" Mortgage
Loans, as to which substantially all of the proceeds
(net of
related costs incurred by the
Mortgagor) are used to refinance an existing mortgage
loan or
loans (which may include a
junior lien) primarily in order to change the interest
rate or
other terms thereof. The
Mortgage Loans may be mortgage loans that have been
consolidated
and/or have had
various terms changed, mortgage loans that have been
converted
from adjustable rate
mortgage loans to fixed rate mortgage loans, or
construction
loans which have been
converted to permanent mortgage loans. In addition, a
Mortgaged
Property may be subject
to secondary financing at the time of origination of
the Mortgage
Loan or thereafter.

Mortgage Loans that have adjustable Mortgage Rates
("ARM
Loans") generally will
provide for a fixed initial Mortgage Rate until the
first date on
which such Mortgage Rate
is to be adjusted. Thereafter, the Mortgage Rate is
subject to
periodic adjustment as
described in the related Prospectus Supplement, subject
to the
applicable limitations, based
on changes in the relevant index (the "Index")
described in the
applicable Prospectus
Supplement, to a rate equal to the Index plus a fixed
percentage
spread over the Index
established contractually for each ARM Loan at the time
of its
origination (the "Gross
Margin"). The initial Mortgage Rate on an ARM Loan may
be lower
than the sum of the
then-applicable Index and the Gross Margin for such ARM
Loan.

ARM Loans have features that provide different
investment
considerations than
fixed-rate mortgage loans. In particular, adjustable
mortgage
rates can cause payment
increases that may exceed some Mortgagors' capacity to
cover such
payments. However,
to the extent specified in the related Prospectus
Supplement, an
ARM Loan may provide
that its Mortgage Rate may not be adjusted to a rate
above the
applicable maximum
Mortgage Rate (the "Maximum Mortgage Rate") or below
the
applicable minimum
Mortgage Rate (the "Minimum Mortgage Rate"), if any,
for such ARM
Loan. In addition,
to the extent specified in the related Prospectus
Supplement,
certain of the ARM Loans may
provide for limitations on the maximum amount by which
their
mortgage rates may adjust
for any single adjustment period (the "Periodic Cap").
Some ARM
Loans provide for
limitations on the amount of scheduled payments of
principal and
interest.

Certain ARM Loans may be subject to negative
amortization
from time to time prior
to their maturity (such ARM Loans, "Neg-Am ARM Loans").
Such
negative amortization
may result from either the adjustment of the Mortgage
Rate on a
more frequent basis than
the adjustment of the scheduled payment or the
application of a
cap on the size of the
scheduled payment. In the first case, negative
amortization
results if an increase in the
Mortgage Rate occurs prior to an adjustment of the
scheduled
payment on the related
Mortgage Loan and such increase causes accrued monthly
interest
on the Mortgage Loan
to exceed the scheduled payment. In the second case,
negative
amortization results if an
increase in the Mortgage Rate causes accrued monthly
interest on
a Mortgage Loan to
exceed the limit on the size of the scheduled payment
on such
Mortgage Loan. In the event
that the scheduled payment is not sufficient to pay the
accrued
monthly interest on a Neg-Am ARM Loan, the amount of
accrued
monthly interest that exceeds the scheduled payment
on such Mortgage Loans (the "Deferred Interest") is
added to the
principal balance of such
ARM Loan and is to be repaid from future scheduled
payments.
Neg-Am ARM Loans do
not provide for the extension of their original stated
maturity
to accommodate changes in
their Mortgage Rate. Investors should be aware that a
Junior
Mortgage Loan may be
subordinate to a negatively amortizing senior mortgage
loan. An
increase in the principal
balance of such senior mortgage loan may cause the sum
of the
outstanding principal
balance of the senior mortgage loan and the outstanding
principal
balance of the Junior
Mortgage Loan to exceed the sum of such principal
balances at the
time of origination of
the Junior Mortgage Loan. The related Prospectus
Supplement will
specify whether the
ARM Loans underlying a series are Neg-Am ARM Loans and
the
percentage of any Junior
Mortgage Loans that are subordinate to any related
senior
mortgage loan that is negatively
amortizing.

A Mortgage Pool may contain ARM Loans which allow
the
Mortgagors to convert
the adjustable rates on such Mortgage Loans to a fixed
rate at
one or more specified periods
during the life of such Mortgage Loans (each, a
"Convertible
Mortgage Loan"), generally
not later than ten years subsequent to the date of
origination.
If specified in the related
Prospectus Supplement, upon any conversion, the Company
will
repurchase or Residential
Funding, the applicable Servicer or Sub-Servicer or a
third party
will purchase the converted
Mortgage Loan as and to the extent set forth in the
related
Prospectus Supplement.
Alternatively, if specified in the related Prospectus
Supplement,
the Company or Residential
Funding (or another party specified therein) may agree
to act as
remarketing agent with
respect to such converted Mortgage Loans and, in such
capacity,
to use its best efforts to
arrange for the sale of converted Mortgage Loans under
specified
conditions. Upon the
failure of any party so obligated to purchase any such
converted
Mortgage Loan, the
inability of any remarketing agent to arrange for the
sale of the
converted Mortgage Loan
and the unwillingness of such remarketing agent to
exercise any
election to purchase the
converted Mortgage Loan for its own account, the
related Mortgage
Pool will thereafter
include both fixed rate and adjustable rate Mortgage
Loans.

If specified in the related Prospectus Supplement,
certain of
the Mortgage Loans
may be Buy-Down Loans pursuant to which the monthly
payments made
by the Mortgagor
during the early years of the Mortgage Loan (the
"Buy-Down
Period") will be less than the
scheduled monthly payments on the Mortgage Loan, the
resulting
difference to be made up
from (i) an amount (such amount, exclusive of
investment earnings
thereon, being
hereinafter referred to as "Buy-Down Funds")
contributed by the
seller of the Mortgaged
Property or another source and placed in an escrow
account, (ii)
if the Buy-Down Funds are
contributed on a present value basis, investment
earnings on such
Buy-Down Funds or (iii)
additional buydown funds to be contributed over time by
the
Mortgagor's employer or
another source.

The related Prospectus Supplement will provide
material
information concerning
the types and characteristics of the Mortgage Loans
included in a
Trust Fund as of the
related Cut-off Date. In the event that Mortgage Loans
are added
to or deleted from the
Trust Fund after the date of the related Prospectus
Supplement
and prior to the Closing Date
for the related series of Certificates, the final
characteristics
of the Mortgage Pool will be
noted in the Form 8-K.

Certain Mortgage Pools may include Mortgage Loans
that are
one or more months
delinquent with regard to payment of principal or
interest at the
time of their deposit into
a Trust Fund. The related Prospectus Supplement will
set forth
the percentage of Mortgage
Loans that are so delinquent. In addition, the related
Prospectus
Supplement will set forth
the percentage of Mortgage Loans that have been
delinquent more
than once during the
preceding twelve months. Delinquent Mortgage Loans are
more
likely to result in losses
than Mortgage Loans that have a current payment status.

Under the Pooling and Servicing Agreement for each
series of
Certificates, the
Company will cause the Mortgage Loans constituting each
Mortgage
Pool to be assigned
to the Trustee for such series of Certificates, for the
benefit
of the holders of all such
Certificates. Such assignment of the Mortgage Loans to
the
Trustee will be without
recourse. See "Description of the Certificates
Assignment of
Mortgage Loans."

Underwriting Policies

The Company generally expects that the originator
of each of
the Mortgage Loans
will have applied, consistent with applicable federal
and state
laws and regulations,
underwriting procedures intended to evaluate the
borrower's
credit standing and repayment
ability and/or the value and adequacy of the related
property as
collateral. If so specified in
the related Prospectus Supplement, all or a portion of
the
Mortgage Loans constituting the
Mortgage Pool for a series of Certificates may have
been acquired
either directly or
indirectly by the Company through the AlterNet Mortgage
Program.
Any FHA Loans or VA
Loans will have been originated in compliance with the
underwriting policies of the FHA
or VA, respectively. The underwriting criteria applied
by the
originators of the Mortgage
Loans included in a Mortgage Pool may vary
significantly among
Mortgage Collateral
Sellers. The related Prospectus Supplement will
describe
generally certain underwriting
criteria, to the extent known by the Company, that were
applied
by the originators of such
Mortgage Loans. The Company generally will have less
detailed
information concerning
the origination of seasoned Mortgage Loans than it will
have
concerning newly-originated
Mortgage Loans.

General Standards. Generally, each Mortgagor will
have been
required to complete
an application designed to provide to the original
lender
pertinent credit information
concerning the Mortgagor. As part of the description of
the
Mortgagor's financial condition,
such Mortgagor will have furnished information (which
may be
supplied solely in such
application) with respect to its assets, liabilities,
income,
credit history, employment history
and personal information, and furnished an
authorization to apply
for a credit report which
summarizes the borrower's credit history with local
merchants and
lenders and any record
of bankruptcy. The Mortgagor may also have been
required to
authorize verifications of
deposits at financial institutions where the Mortgagor
had demand
or savings accounts. In
the case of investment properties, only income derived
from the
Mortgaged Property may
have been considered for underwriting purposes, rather
than the
income of the Mortgagor
from other sources. With respect to Mortgaged Property
consisting
of vacation or second
homes, no income derived from the property generally
will have
been considered for
underwriting purposes.

As described in the related Prospectus Supplement,
certain
Mortgage Loans may
have been originated under "limited documentation" or
"no
documentation" programs which
require less documentation and verification than do
traditional
"full documentation"
programs. Generally, under such a program, minimal
investigation
into the Mortgagor's
credit history and income profile is undertaken by the
originator
and such underwriting may
be based primarily or entirely on an appraisal of the
Mortgaged
Property and the Loan-to-Value Ratio at origination.

The adequacy of the Mortgaged Property as security
for
repayment of the related
Mortgage Loan will generally have been determined by
appraisal in
accordance with pre-established appraisal procedure
guidelines
for appraisals established by or acceptable to the
originator. Appraisers may be staff appraisers employed
by the
originator or independent
appraisers selected in accordance with pre-established
guidelines
established by the
originator. The appraisal procedure guidelines
generally will
have required the appraiser or
an agent on its behalf to personally inspect the
property and to
verify whether the property
was in good condition and that construction, if new,
had been
substantially completed. The
appraisal generally will have been based upon a market
data
analysis of recent sales of
comparable properties and, when deemed applicable, an
analysis
based on income generated
from the property or a replacement cost analysis based
on the
current cost of constructing
or purchasing a similar property.

The underwriting standards applied by an originator
generally
require that the
underwriting officers be satisfied that the value of
the property
being financed, as indicated
by an appraisal or other acceptable valuation method,
currently
supports and is anticipated
to support in the future the outstanding loan balance.
In fact,
certain states where the
Mortgaged Properties may be located have
"anti-deficiency" laws
requiring, in general, that
lenders providing credit on single family property look
solely to
the property for repayment
in the event of foreclosure. See "Certain Legal Aspects
of
Mortgage Loans and Contracts."
Any of these factors could change nationwide or merely
could
affect a locality or region in
which all or some of the Mortgaged Properties are
located.
However, declining values of
real estate, as experienced recently in certain
regions, or
increases in the principal balances
of certain Mortgage Loans, such as GPM Loans and Neg-Am
ARM
Loans, could cause the
principal balance of some or all of the Mortgage Loans
to exceed
the value of the
Mortgaged Properties.

Based on the data provided in the application,
certain
verifications (if required by
the originator of the Mortgage Loan) and the appraisal
or other
valuation of the Mortgaged
Property, a determination will have been made by the
original
lender that the Mortgagor's
monthly income would be sufficient to enable the
Mortgagor to
meet its monthly obligations
on the Mortgage Loan and other expenses related to the
property
(such as property taxes,
utility costs, standard hazard and primary mortgage
insurance
and, if applicable,
maintenance fees and other levies assessed by a
Cooperative) and
other fixed obligations
other than housing expenses including, in the case of
Junior
Mortgage Loans, payments
required to be made on any senior mortgage. The
originator's
guidelines for Mortgage Loans
generally will specify that scheduled payments on a
Mortgage Loan
during the first year of
its term plus taxes and insurance (including primary
mortgage
insurance) and all scheduled
payments on obligations that extend beyond one year
(including
those mentioned above and
other fixed obligations) would equal no more than
specified
percentages of the prospective
Mortgagor's gross income. The originator may also
consider the
amount of liquid assets
available to the Mortgagor after origination.

The level of review by Residential Funding, if any,
will vary
depending on a
number of factors. Residential Funding, on behalf of
the Company,
generally will review
a portion of the Mortgage Loans constituting the
Mortgage Pool
for a series of Certificates
for conformity with the applicable underwriting
standards and to
assess the likelihood of
repayment of the Mortgage Loan from the various sources
for such
repayment, including
the Mortgagor, the Mortgaged Property, and primary
mortgage
insurance, if any. In
reviewing seasoned Mortgage Loans (those which have
been
outstanding for more than 12
months), Residential Funding may also take into
consideration the
Mortgagor's actual
payment history in assessing a Mortgagor's current
ability to
make payments on the
Mortgage Loan. In addition, Residential Funding may
conduct
additional procedures to
assess the current value of the Mortgaged Properties.
Such
procedures may consist of drive
by appraisals or real estate broker's price opinions.
The Company
may also consider a
specific area's housing value trends. These alternative
valuation
methods are not generally
as reliable as the type of mortgagor financial
information or
appraisals that are generally
obtained at origination. In its underwriting analysis,
Residential Funding may also consider
the applicable credit score of the related Mortgagor
used in
connection with the origination
of the Mortgage Loan (as determined based on a credit
scoring
model acceptable to the
Company.)

The Company anticipates that Mortgage Loans
included in
Mortgage Pools for
certain series of Certificates will have been
originated based on
underwriting standards that
are less stringent than for other mortgage loan lending
programs.
In such cases, borrowers
may have credit histories that contain delinquencies on
mortgage
and/or consumer debts.
In addition, some borrowers may have filed bankruptcy
within a
few years of the time of
origination of the related Mortgage Loan. Likewise,
Mortgage
Loans included in a Trust
Fund may have been originated in connection with a
governmental
program under which
underwriting standards were significantly less
stringent and
designed to promote home
ownership or the availability of affordable residential
rental
property notwithstanding higher
risks of default and losses. As discussed above, in
evaluating
seasoned mortgage loans, the
Company may place greater weight on payment history or
market and
other economic trends
and less weight on underwriting factors generally
applied to
newly originated mortgage
loans.

With respect to the Company's underwriting
standards, as well
as any other
underwriting standards that may be applicable to any
Mortgage
Loans, such underwriting
standards generally include a set of specific criteria
pursuant
to which the underwriting
evaluation is made. However, the application of such
underwriting standards does not imply
that each specific criterion was satisfied
individually. Rather,
a Mortgage Loan will be
considered to be originated in accordance with a given
set of
underwriting standards if,
based on an overall qualitative evaluation, the loan is
in
substantial compliance with such
underwriting standards. For example, a Mortgage Loan
may be
considered to comply with
a set of underwriting standards, even if one or more
specific
criteria included in such
underwriting standards were not satisfied, if other
factors
compensated for the criteria that
were not satisfied or if the Mortgage Loan is
considered to be in
substantial compliance with
the underwriting standards.

The AlterNet Program. The underwriting standards
with
respect to AlterNet Loans
will generally conform to those published in the
AlterNet Seller
Guide (the "AlterNet Seller
Guide"), as modified from time to time. The AlterNet
Seller Guide
will set forth general
underwriting standards relating to mortgage loans made
to
borrowers having a range of
imperfect credit histories, ranging from minor
delinquencies to
borrower bankruptcies. The
underwriting standards set forth in the AlterNet Seller
Guide are
revised based on changing
conditions in the residential mortgage market and the
market for
the Company's mortgage
pass-through certificates and may also be waived by
Residential
Funding from time to time.
The Prospectus Supplement for each series of
Certificates secured
by AlterNet Loans will
set forth the general underwriting criteria applicable
to such
Mortgage Loans.

A portion of AlterNet Loans generally will be
reviewed by
Residential Funding or
by a designated third party for compliance with
applicable
underwriting criteria. Certain of
the AlterNet Loans may be purchased in negotiated
transactions
(which may be governed
by agreements relating to ongoing purchases of AlterNet
Loans by
Residential Funding)
("Master Commitments"), from AlterNet Program Sellers
who will
represent that AlterNet
Loans have been originated in accordance with
underwriting
standards agreed to by
Residential Funding. Certain other AlterNet Loans will
be
purchased from AlterNet
Program Sellers who will represent that AlterNet Loans
were
originated pursuant to
underwriting standards determined by a mortgage
insurance company
acceptable to
Residential Funding. Residential Funding may accept a
certification from such insurance
company as to an AlterNet Loan's insurability in a
mortgage pool
as of the date of
certification as evidence of an AlterNet Loan
conforming to
applicable underwriting
standards. Such certifications will likely have been
issued
before the purchase of the
AlterNet Loan by Residential Funding or the Company.

FHA and VA Programs. With respect to FHA Loans and
VA Loans,
traditional
underwriting guidelines used by the FHA and the VA, as
the case
may be, which were in
effect at the time of origination of each such Mortgage
Loan will
have generally been
applied.

The Contracts

General

The Trust Fund for a series may include a Contract
Pool
evidencing interests in
Contracts originated by one or more manufactured
housing dealers,
or such other entity or
entities described in the related Prospectus
Supplement. The
Contracts may be conventional
Contracts or Contracts insured by the FHA ("FHA
Contracts") or
partially guaranteed by
the VA ("VA Contracts"). Each Contract will be secured
by a
Manufactured Home. Unless
otherwise specified in the related Prospectus
Supplement, the
Contracts will be fully
amortizing.

The Manufactured Homes securing the Contracts will
consist of
"manufactured
homes" within the meaning of 42 U.S.C. (S) 5402(6)
which are
treated as "single family
residences" for the purposes of the REMIC provisions of
the Code.
Accordingly, a
Manufactured Home will be a structure built on a
permanent
chassis, which is transportable
in one or more sections and customarily used at a fixed
location,
has a minimum of 400
square feet of living space and minimum width in excess
of 81/2
feet and is 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.

The related Prospectus Supplement will provide
information
concerning the types
or characteristics of the Contracts included in a Trust
Fund as
of the related Cut-off Date.
In the event that Contracts are added to or deleted
from the
Trust Fund after the date of the
related Prospectus Supplement, the final
characteristics of the
Contract Pool will be noted
in the Form 8-K.

Certain Contract Pools may include Contracts that
are one or
more months
delinquent with regard to payment of principal or
interest at the
time of their deposit into
a Trust Fund. The related Prospectus Supplement will
set forth
the percentage of Contracts
that are delinquent and whether such Contracts have
been so
delinquent more than once
during the preceding twelve months. Contract Pools that
contain
delinquent Contracts are
more likely to sustain losses than are Contract Pools
that
contain Contracts that have a
current payment status.

Underwriting Policies

Conventional Contracts will comply with the
underwriting
policies of the applicable
originator or Mortgage Collateral Seller, which will be
described
in the related Prospectus
Supplement. With respect to FHA Contracts and VA
Contracts,
traditional underwriting
guidelines used by the FHA and the VA, as the case may
be, which
were in effect at the time
of origination of each such Contract will generally
have been
applied.

With respect to a Contract made in connection with
the
Mortgagor's purchase of a
Manufactured Home, the "Appraised Value" is generally
the sales
price of the Manufactured
Home or the amount determined by a professional
appraiser. The
appraiser must personally
inspect the Manufactured Home and prepare a report
which includes
market data based on
recent sales of comparable Manufactured Homes and, when
deemed
applicable, a
replacement cost analysis based on the current cost of
a similar
Manufactured Home. The
Loan-to-Value Ratio for a Contract generally will be
equal to the
original principal amount
of the Contract divided by the lesser of the Appraised
Value or
the sales price for the
Manufactured Home; however, unless otherwise specified
in the
related Prospectus
Supplement, an appraisal of the Manufactured Home will
not be
required.

The Agency Securities

Government National Mortgage Association

Ginnie Mae is a wholly-owned corporate
instrumentality of the
United States within
HUD. Section 306(g) of Title III of the National
Housing Act of
1934, as amended (the
"Housing Act"), authorizes Ginnie Mae to guarantee the
timely
payment of the principal of
and interest on certificates representing interests in
a pool of
mortgages (i) insured by the
FHA, under the Housing Act or under Title V of the
Housing Act of
1949, or (ii) partially
guaranteed by the VA under the Servicemen's
Readjustment Act of
1944, as amended, or
under Chapter 37 of Title 38, United States Code.

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

Ginnie Mae Securities

Unless otherwise specified in the related
Prospectus
Supplement, each Ginnie Mae
Security relating to a series (which may be a "Ginnie
Mae I
Certificate" or a "Ginnie Mae
II Certificate" as referred to by Ginnie Mae) will be a
"fully
modified pass-through"
mortgage-backed certificate issued and serviced by a
mortgage
banking company or other
financial concern approved by Ginnie Mae, except with
respect to
any stripped mortgage
backed securities guaranteed by Ginnie Mae or any REMIC
securities issued by Ginnie
Mae. The characteristics of any Ginnie Mae Securities
included in
the Trust Fund for a
series of Certificates will be set forth in the related
Prospectus Supplement.

Federal Home Loan Mortgage Corporation

Freddie Mac is a corporate instrumentality of the
United
States created pursuant to
Title III of the Emergency Home Finance Act of 1970, as
amended
(the "Freddie Mac Act").
Freddie Mac was established primarily for the purpose
of
increasing the availability of
mortgage credit for the financing of needed housing.
The
principal activity of Freddie Mac
currently consists of purchasing first-lien,
conventional,
residential mortgage loans or
participation interests in such mortgage loans and
reselling the
mortgage loans so purchased
in the form of guaranteed mortgage securities,
primarily Freddie
Mac Securities. In 1981,
Freddie Mac initiated its Home Mortgage Guaranty
Program under
which it purchases
mortgage loans from sellers with Freddie Mac Securities
representing interests in the
mortgage loans so purchased. All mortgage loans
purchased by
Freddie Mac must meet
certain standards set forth in the Freddie Mac Act.
Freddie Mac
is confined to purchasing,
so far as practicable, mortgage loans that it deems to
be of such
quality and type as to meet
generally the purchase standards imposed by private
institutional
mortgage investors. See
"Additional Information" for the availability of
further
information regarding Freddie Mac
and Freddie Mac Securities. Neither the United States
nor any
agency thereof is obligated
to finance Freddie Mac's operations or to assist
Freddie Mac in
any other manner.

Freddie Mac Securities

Unless otherwise specified in the related
Prospectus
Supplement, each Freddie Mac
Security relating to a series will represent an
undivided
interest in a pool of mortgage loans
that typically consists of conventional loans (but may
include
FHA Loans and VA Loans)
purchased by Freddie Mac, except with respect to any
stripped
mortgage backed securities
issued by Freddie Mac. Each such pool will consist of
mortgage
loans (i) substantially all
of which are secured by one- to four-family residential
properties or (ii) if specified in the
related Prospectus Supplement, are secured by five or
more family
residential properties.
The characteristics of any Freddie Mac Securities
included in the
Trust Fund for a series of
Certificates will be set forth in the related
Prospectus
Supplement.

Federal National Mortgage Association

Fannie Mae is a federally chartered and privately
owned
corporation organized and
existing under the Federal National Mortgage
Association Charter
Act (12 U.S.C. (S) 1716
et seq.). It is the nation's largest supplier of
residential
mortgage funds. Fannie Mae was
originally established in 1938 as a United States
government
agency to provide
supplemental liquidity to the mortgage market and was
transformed
into a stockholder-owned and privately managed
corporation by
legislation enacted in 1968. Fannie Mae
provides funds to the mortgage market primarily by
purchasing
home mortgage loans from
local lenders, thereby replenishing their funds for
additional
lending. See "Additional
Information" for the availability of further
information
respecting Fannie Mae and Fannie
Mae Securities. Although the Secretary of the Treasury
of the
United States has authority
to lend Fannie Mae up to $2.25 billion outstanding at
any time,
neither the United States nor
any agency thereof is obligated to finance Fannie Mae's
operations or to assist Fannie Mae
in any other manner.

Fannie Mae Securities

Unless otherwise specified in the related
Prospectus
Supplement, each Fannie Mae
Security relating to a series will represent a
fractional
undivided interest in a pool of
mortgage loans formed by Fannie Mae, except with
respect to any
stripped mortgage backed
securities issued by Fannie Mae. Mortgage loans
underlying Fannie
Mae Securities will
consist of (i) fixed, variable or adjustable rate
conventional
mortgage loans or (ii) fixed-rate
FHA Loans or VA Loans. Such mortgage loans may be
secured by
either one- to four-family or multi-family residential
properties. The characteristics of any Fannie Mae
Securities included in the Trust Fund for a series of
Certificates will be set forth in the
related Prospectus Supplement.

Mortgage Collateral Sellers

The Mortgage Collateral to be included in a Trust
Fund will
be purchased by the
Company directly or indirectly (through Residential
Funding or
other affiliates) from
Mortgage Collateral Sellers that may be (a) banks,
savings and
loan associations, mortgage
bankers, investment banking firms, insurance companies,
the
Federal Deposit Insurance
Corporation (the "FDIC") and other mortgage loan
originators or
sellers not affiliated with
the Company (each, an "Unaffiliated Seller") or (b)
GMAC
Mortgage, the indirect parent
of the Company, and its affiliates (each, an
"Affiliated
Seller"). Such purchases may occur
by one or more of the following methods: (i) one or
more direct
or indirect purchases from
Unaffiliated Sellers, which may occur simultaneously
with the
issuance of the Certificates
or which may occur over an extended period of time;
(ii) multiple
direct or indirect
purchases through the AlterNet Mortgage Program; or
(iii) one or
more purchases from
Affiliated Sellers. The Prospectus Supplement for a
series of
Certificates will disclose the
method or methods used to acquire the Mortgage
Collateral for
such series. The Company
may issue one or more classes of Certificates to a
Mortgage
Collateral Seller as
consideration for the purchase of the Mortgage
Collateral
securing such series of
Certificates, if so described in the related Prospectus
Supplement.

The Mortgage Collateral Sellers that participate in
the
AlterNet Mortgage Program
(each, an "AlterNet Program Seller") will have been
selected by
Residential Funding on the
basis of criteria set forth in the AlterNet Seller
Guide. An
AlterNet Program Seller may be
an affiliate of the Company and the Company presently
anticipates
that GMAC Mortgage
Corporation of PA, an affiliate of the Company, will be
an
AlterNet Program Seller. Except
in the case of the FDIC and investment banking firms,
unless
otherwise specified in the
related Prospectus Supplement, each AlterNet Program
Seller will
have been a HUD-approved mortgagee or a financial
institution
supervised by a federal or state authority and
will have had generally a minimum of two years'
experience (which
may be through a
predecessor entity) in originating mortgage loans. If
an AlterNet
Program Seller becomes
subject to the direct or indirect control of the FDIC
or if an
AlterNet Program Seller's net
worth, financial performance or delinquency and
foreclosure rates
are adversely impacted,
such institution may continue to be treated as an
AlterNet
Program Seller. Any such event
may adversely affect the ability of any such AlterNet
Program
Seller to repurchase
Mortgage Collateral in the event of a breach of a
representation
or warranty which has not
been cured. See " Repurchases of Mortgage Collateral"
below.

Representations with Respect to Mortgage Collateral

Mortgage Collateral Sellers generally will make
certain
limited representations and
warranties with respect to the Mortgage Collateral that
they
sell. However, Mortgage
Collateral purchased from certain Unaffiliated Sellers
may be
purchased with very limited
representations and warranties. The Company will assign
to the
Trustee for the benefit of
the related Certificateholders all of its right, title
and
interest in each agreement pursuant
to which it purchased any item of Mortgage Collateral
from a
Mortgage Collateral Seller,
to the extent such agreement relates to (i) the
representations
and warranties made by a
Mortgage Collateral Seller or Residential Funding, as
the case
may be, in respect of such
item of Mortgage Collateral and (ii) any remedies
provided for
any breach of such
representations and warranties.

With respect to any Mortgage Loan (including
AlterNet Loans)
or Contract
constituting a part of the Trust Fund, unless otherwise
disclosed
in the related Prospectus
Supplement, Residential Funding generally will
represent and
warrant that: (i) as of the Cut-off Date, the
information set
forth in a listing of the related Mortgage Loan or
Contract was
true and correct in all material respects; (ii) except
in the
case of Cooperative Loans, a
policy of title insurance was effective or attorney's
certificate
was received at origination,
and each policy remained in full force and effect on
the date of
sale of the related Mortgage
Loan or Contract to the Company; (iii) to the best of
Residential
Funding's knowledge, if
required by applicable underwriting standards, the
Mortgage Loan
or Contract is the subject
of a Primary Insurance Policy; (iv) Residential Funding
had good
title to the Mortgage Loan
or Contract and the Mortgage Loan or Contract is not
subject to
offsets, defenses or
counterclaims except as may be provided under the
Relief Act and
except with respect to
any buydown agreement for a Buy-Down Loan; (v) each
Mortgaged
Property is free of
material damage and in good repair; (vi) the Mortgage
Loan or
Contract was not one month
or more delinquent in payment of principal and interest
as of the
related Cut-off Date and
was not so delinquent more than once during the
twelve-month
period prior to the Cut-off
Date; and (vii) there is no delinquent tax or
assessment lien
against the related Mortgaged
Property.

In the event of a breach of a representation or
warranty made
by Residential
Funding that materially adversely affects the interests
of the
Certificateholders in the
Mortgage Loan or Contract, Residential Funding will be
obligated
to repurchase any such
Mortgage Loan or Contract or substitute for such
Mortgage Loan or
Contract as described
below. In addition, unless otherwise specified in the
related
Prospectus Supplement,
Residential Funding will be obligated to repurchase or
substitute
for any Mortgage Loan as
to which it is discovered that the related Mortgage
does not
create a valid lien having at least
the priority represented and warranted in the related
Pooling and
Servicing Agreement or,
in the case of a Contract a perfected security interest
in, the
related Mortgaged Property,
subject only to (a) liens of real property taxes and
assessments
not yet due and payable, (b)
covenants, conditions and restrictions, rights of way,
easements
and other matters of public
record as of the date of recording of such Mortgage and
certain
other permissible title
exceptions, (c) liens of any senior mortgages, in the
case of
Junior Mortgage Loans and (d)
other encumbrances to which like properties are
commonly subject
which do not materially
adversely affect the value, use, enjoyment or
marketability of
the Mortgaged Property. In
addition, unless otherwise specified in the related
Prospectus
Supplement, with respect to
any Mortgage Loan or Contract as to which the Company
delivers to
the Trustee an affidavit
certifying that the original Mortgage Note or Contract
has been
lost or destroyed, if such
Mortgage Loan or Contract subsequently is in default
and the
enforcement thereof or of the
related Mortgage or Contract is materially adversely
affected by
the absence of the original
Mortgage Note or Contract, Residential Funding will be
obligated
to repurchase or
substitute for such Mortgage Loan or Contract in the
manner
described below. However,
unless otherwise set forth in the related Prospectus
Supplement,
Residential Funding will
not be required to repurchase or substitute for any
Mortgage Loan
or Contract if the
circumstances giving rise to such requirement also
constitute
fraud in the origination of the
related Mortgage Loan or Contract. Furthermore, because
the
listing of the related Mortgage
Collateral generally contains information with respect
to the
Mortgage Collateral as of the
Cut-off Date, prepayments and, in certain limited
circumstances,
modifications to the
interest rate and principal and interest payments may
have been
made with respect to one
or more of the related items of Mortgage Collateral
between the
Cut-off Date and the
Closing Date. Neither Residential Funding nor any
Seller will be
required to repurchase or
substitute for any item of Mortgage Collateral as a
result of any
such prepayment or
modification.

All of the representations and warranties of a
Mortgage
Collateral Seller in respect
of an item of Mortgage Collateral will have been made
as of the
date on which such
Mortgage Collateral Seller sold the Mortgage Collateral
to the
Company or Residential
Funding or one of their affiliates. The date as of
which such
representations and warranties
were made generally will be a date prior to the date of
issuance
of the related series of
Certificates. A substantial period of time may elapse
between the
date as of which the
representations and warranties were made and the date
of issuance
of the related series of
Certificates. The Mortgage Collateral Seller's
repurchase
obligation (or, if specified in the
related Prospectus Supplement, limited substitution
option) will
not arise if, after the sale
of the related Mortgage Collateral, an event occurs
that would
have given rise to such an
obligation had the event occurred prior to such period.

Repurchases of Mortgage Collateral

If a Mortgage Collateral Seller or Residential
Funding, as
the case may be, cannot
cure a breach of any representation or warranty made by
it in
respect of an item of Mortgage
Collateral within 90 days after notice from the Master
Servicer,
the Servicer, the Certificate
Administrator or the Trustee, and such breach
materially and
adversely affects the interests
of the Certificateholders in such item of Mortgage
Collateral,
such Mortgage Collateral
Seller or Residential Funding, as the case may be, will
be
obligated to purchase such item
of Mortgage Collateral at a price set forth in the
related
Pooling and Servicing Agreement
or Trust Agreement. Likewise, as described under
"Description of
the Certificates Review
of Mortgage Loan or Contract Documents," if the Company
or the
Mortgage Collateral
Seller, as applicable, cannot cure certain documentary
defects
with respect to a Mortgage
Loan or Contract, the Company or the Mortgage
Collateral Seller,
as applicable, will be
required to repurchase such item of Mortgage
Collateral. Unless
otherwise specified in the
related Prospectus Supplement, the "Purchase Price" for
any such
item of Mortgage
Collateral will be equal to the principal balance
thereof as of
the date of purchase plus
accrued and unpaid interest to the first day of the
month
following the month of repurchase
(less the amount, expressed as a percentage per annum,
payable in
respect of servicing or
administrative compensation and the Spread, if any). In
certain
limited cases, a substitution
may be made in lieu of such repurchase obligation. See
" Limited
Right of Substitution"
below.

The Master Servicer, the Servicer or the
Certificate
Administrator, as applicable,
will be required under the applicable Pooling and
Servicing
Agreement or Trust Agreement
to enforce this repurchase obligation, or the
substitution right
described below, for the
benefit of the Trustee and the Certificateholders,
using
practices it would employ in its good
faith business judgment and which are normal and usual
in its
general mortgage servicing
activities. If, as a result of a breach of
representation or
warranty, a Mortgage Collateral
Seller is required, but fails, to repurchase the
related Mortgage
Collateral, the Company or
Residential Funding will only be required to repurchase
such
Mortgage Collateral if the
Company or Residential Funding has assumed such
representations
and warranties.
Consequently, such Mortgage Collateral will remain in
the related
Trust Fund and any
related losses not borne by any applicable credit
enhancement
will be borne by
Certificateholders. If the Mortgage Collateral Seller
fails to
honor its repurchase or
substitution obligation, such obligation will not
become an
obligation of Residential
Funding, the Master Servicer or Servicer (although
Residential
Funding, the Master Servicer
or Servicer may have an independent obligation to
repurchase or
substitute for such
Mortgage Collateral). In instances where a Mortgage
Collateral
Seller is unable or disputes
its obligation to repurchase affected Mortgage
Collateral, the
Master Servicer or Servicer,
using practices it would employ in its good faith
business
judgment and which are normal
and usual in its general mortgage servicing activities,
may
negotiate and enter into
settlement agreements with such Mortgage Collateral
Seller that
could provide for, among
other things, the repurchase of only a portion of the
affected
Mortgage Collateral. Any such
settlement could lead to losses on the Mortgage
Collateral which
would be borne by the
related Certificateholders. In accordance with the
above
described practices, the Master
Servicer or Servicer will not be required to enforce
any purchase
obligation of a Mortgage
Collateral Seller arising from any misrepresentation by
the
Mortgage Collateral Seller, if
the Master Servicer or Servicer determines in the
reasonable
exercise of its business
judgment that the matters related to such
misrepresentation did
not directly cause or are not
likely to directly cause a loss on the related Mortgage
Collateral. Unless otherwise specified
in the related Prospectus Supplement, the foregoing
repurchase
obligations and the limited
right of substitution (described below) will constitute
the sole
remedies available to
Certificateholders or the Trustee for a breach of any
representation by a Mortgage Collateral
Seller in its capacity as a seller of Mortgage
Collateral, or for
any other event giving rise to
such obligations as described above.

The Company and Residential Funding generally
monitor which
Mortgage
Collateral Sellers are under the control of the FDIC,
or are
insolvent, otherwise in
receivership or conservatorship or financially
distressed. Such
Mortgage Collateral Sellers
may not be able or permitted to repurchase Mortgage
Collateral
for which there has been
a breach of representation or warranty. Moreover, any
such
Mortgage Collateral Seller may
make no representations or warranties with respect to
Mortgage
Collateral sold by it. The
FDIC (either in its corporate capacity or as receiver
for a
depository institution), may also
be a Mortgage Collateral Seller, in which event neither
the FDIC
nor the related depository
institution may make representations or warranties with
respect
to the Mortgage Collateral
sold, or only limited representations or warranties may
be made
(for example, that the
related legal documents are enforceable). The FDIC may
have no
obligation to repurchase
any Mortgage Collateral for a breach of a
representation or
warranty.

Limited Right of Substitution

In the case of a Mortgage Loan or Contract required
to be
repurchased from the
Trust Fund (a "Repurchased Mortgage Loan" or a
"Repurchased
Contract," respectively) the
related Mortgage Collateral Seller or Residential
Funding, as
applicable, may substitute a
new Mortgage Loan or Contract (a "Qualified Substitute
Mortgage
Loan" or a "Qualified
Substitute Contract," respectively) for the Repurchased
Mortgage
Loan or Contract that was
removed from the Trust Fund, during the limited time
period
described below. Any such
substitution must be effected within 120 days of the
date of the
issuance of the Certificates
with respect to a Trust Fund for which no REMIC
election is to be
made. With respect to
a Trust Fund for which a REMIC election is to be made,
except as
otherwise provided in the
related Prospectus Supplement, such substitution must
be effected
within two years of the
date of the issuance of the Certificates, and may not
be made if
such substitution would
cause the Trust Fund to fail to qualify as a REMIC or
result in a
prohibited transaction tax
under the Code.

Except as otherwise provided in the related
Prospectus
Supplement, any Qualified
Substitute Mortgage Loan or Qualified Substitute
Contract
generally will, on the date of
substitution: (i) have an outstanding principal
balance, after
deduction of the principal
portion of the monthly payment due in the month of
substitution,
not in excess of the
outstanding principal balance of the Repurchased
Mortgage Loan or
Repurchased Contract;
(ii) have a Mortgage Rate and a Net Mortgage Rate not
less than
(and not more than one
percentage point greater than) the Mortgage Rate and
Net Mortgage
Rate, respectively, of
the Repurchased Mortgage Loan or Repurchased Contract
as of the
date of substitution; (iii)
have a Loan-to-Value Ratio at the time of substitution
no higher
than that of the
Repurchased Mortgage Loan or Repurchased Contract; (iv)
have a
remaining term to
maturity not greater than (and not more than one year
less than)
that of the Repurchased
Mortgage Loan or Repurchased Contract; and (v) comply
with all of
the representations and
warranties set forth in the related Pooling and
Servicing
Agreement as of the date of
substitution. In the event the outstanding principal
balance of a
Qualified Substitute
Mortgage Loan or Qualified Substitute Contract is less
than the
outstanding principal
balance of the related Repurchased Mortgage Loan or
Repurchased
Contract, the amount
of such shortfall shall be deposited into the Custodial
Account
in the month of substitution
for distribution to the related Certificateholders. The
related
Pooling and Servicing
Agreement may include additional requirements relating
to ARM
Loans or other specific
types of Mortgage Loans or Contracts, or additional
provisions
relating to meeting the
foregoing requirements on an aggregate basis where a
number of
substitutions occur
contemporaneously. Unless otherwise specified in the
related
Prospectus Supplement, a
Mortgage Collateral Seller will have no option to
substitute for
a Mortgage Loan or Contract
that it is obligated to repurchase in connection with a
breach of
a representation and
warranty.

DESCRIPTION OF THE CERTIFICATES

General

The Certificates will be issued in series. Each
series of
Certificates (or, in certain
instances, two or more series of Certificates) will be
issued
pursuant to a Pooling and
Servicing Agreement or, in the case of Certificates
backed by
Agency Securities, a Trust
Agreement, similar to one of the forms filed as an
exhibit to the
Registration Statement of
which this Prospectus is a part. Each Pooling and
Servicing
Agreement or Trust Agreement
will be filed with the Commission as an exhibit to a
Form 8-K.
The following summaries
(together with additional summaries under "The Pooling
and
Servicing Agreement" below)
describe certain provisions relating to the
Certificates common
to each Pooling and
Servicing Agreement or Trust Agreement. All references
herein to
a "Pooling and Servicing
Agreement" and any discussion of the provisions thereof
will also
apply to Trust
Agreements. The summaries do not purport to be complete
and are
subject to, and are
qualified in their entirety by reference to, all of the
provisions of the Pooling and Servicing
Agreement for each Trust Fund and the related
Prospectus
Supplement.

Each series of Certificates may consist of any one
or a
combination of the
following: (i) a single class of Certificates; (ii) two
or more
classes of Certificates, one or
more classes of which may be Senior Certificates that
are senior
in right of payment to any
class or classes of Mezzanine Certificates and to any
other class
or classes of Subordinate
Certificates, and as to which certain classes of Senior
Certificates may be senior to other
classes of Senior Certificates, as described in the
respective
Prospectus Supplement (any
such series, a "Senior/Subordinate Series"); (iii) one
or more
classes of Strip Certificates
which will be entitled to (a) principal distributions,
with
disproportionate, nominal or no
interest distributions or (b) interest distributions,
with
disproportionate, nominal or no
principal distributions; (iv) two or more classes of
Certificates
which differ as to the timing,
sequential order, rate, pass-through rate or amount of
distributions of principal or interest
or both, or as to which distributions of principal or
interest or
both on any class may be
made upon the occurrence of specified events, in
accordance with
a schedule or formula
(including "planned amortization classes" and "targeted
amortization classes"), or on the
basis of collections from designated portions of the
Mortgage
Pool or Contract Pool, which
series may include one or more classes of Accrual
Certificates
with respect to which certain
accrued interest will not be distributed but rather
will be added
to the principal balance
thereof on each Distribution Date for the period
described in the
related Prospectus
Supplement; or (v) other types of classes of
Certificates, as
described in the related
Prospectus Supplement. Credit support for each series
of
Certificates will be provided by
a Mortgage Pool Insurance Policy, Special Hazard
Insurance
Policy, Bankruptcy Bond,
Letter of Credit, Reserve Fund, Certificate Insurance
Policy or
other credit enhancement as
described under "Description of Credit Enhancement," or
by the
subordination of one or
more classes of Certificates as described under
"Subordination"
or by any combination of
the foregoing.

Form of Certificates

As specified in the related Prospectus Supplement,
the
Certificates of each series
will be issued either as physical certificates or in
book-entry
form. If issued as physical
certificates, the Certificates will be in fully
registered form
only in the denominations
specified in the related Prospectus Supplement, and
will be
transferrable and exchangeable
at the corporate trust office of the person appointed
under the
related Pooling and Servicing
Agreement to register the Certificates (the
"Certificate
Registrar"). No service charge will
be made for any registration of exchange or transfer of
Certificates, but the Trustee may
require payment of a sum sufficient to cover any tax or
other
governmental charge. The
term "Certificateholder" as used herein refers to the
entity
whose name appears on the
records of the Certificate Registrar (or, if
applicable, a
transfer agent) as the registered
holder thereof, except as otherwise indicated in the
related
Prospectus Supplement.

If issued in book-entry form, specified classes of
a series
of Certificates will be
initially issued through the book-entry facilities of
The
Depository Trust Company ("DTC"),
or Cedel Bank, societe anonyme ("CEDEL") or the
Euroclear System
("Euroclear") (in
Europe) if they are participants of such systems, or
indirectly
through organizations which
are participants in such systems, or through such other
depository or facility as may be
specified in the related Prospectus Supplement. As to
any such
class of Certificates so
issued ("Book-Entry Certificates"), the record holder
of such
Certificates will be DTC's
nominee. CEDEL and Euroclear will hold omnibus
positions on
behalf of their participants
through customers' securities accounts in CEDEL's and
Euroclear's
names on the books of
their respective depositaries (the "Depositaries"),
which in turn
will hold such positions in
customers' securities accounts in the depositaries'
names on the
books of DTC.

DTC is a limited-purpose trust company organized
under the
laws of the State of
New York, which holds securities for its participating
organizations ("DTC Participants,"
and together with the CEDEL and Euroclear participating
organizations, "Participants") and
facilitates the clearance and settlement of securities
transactions between Participants
through electronic book-entry changes in the accounts
of
Participants. Participants include
securities brokers and dealers, banks, trust companies
and
clearing corporations and may
include certain other organizations. Other
institutions that are
not Participants but clear
through or maintain a custodial relationship with
Participants
(such institutions, "Indirect
Participants") have indirect access to DTC's clearance
system.

Unless otherwise specified in the related
Prospectus
Supplement, no person
acquiring an interest in any Book-Entry Certificate
(each such
person, a "Beneficial
Owner") will be entitled to receive a Certificate
representing
such interest in registered,
certificated form, unless either (i) DTC ceases to act
as
depository in respect thereof and a
successor depository is not obtained or (ii) the
Company elects
in its sole discretion to
discontinue the registration of such Certificates
through DTC.
Prior to any such event,
Beneficial Owners will not be recognized by the
Trustee, the
Master Servicer, any Servicer
or the Certificate Administrator as holders of the
related
Certificates for purposes of the
Pooling and Servicing Agreement, and Beneficial Owners
will be
able to exercise their
rights as owners of such Certificates only indirectly
through
DTC, Participants and Indirect
Participants. Any Beneficial Owner that desires to
purchase,
sell or otherwise transfer any
interest in Book-Entry Certificates may do so only
through DTC,
either directly if such
Beneficial Owner is a Participant or indirectly through
Participants and, if applicable,
Indirect Participants. Pursuant to the procedures of
DTC,
transfers of the beneficial
ownership of any Book-Entry Certificates will be
required to be
made in minimum
denominations specified in the related Prospectus
Supplement.
The ability of a Beneficial
Owner to pledge Book-Entry Certificates to persons or
entities
that are not Participants in
the DTC system, or to otherwise act with respect to
such
Certificates, may be limited
because of the lack of physical certificates evidencing
such
Certificates and because DTC
may act only on behalf of Participants.

Because of time zone differences, the securities
account of a
CEDEL or Euroclear
participant as a result of a transaction with a DTC
Participant
(other than a depositary
holding on behalf of CEDEL or Euroclear) will be
credited during
subsequent securities
settlement processing day (which must be a business day
for CEDEL
or Euroclear, as the
case may be) immediately following the DTC settlement
date. Such
credits or any
transactions in such securities settled during such
processing
will be reported to the relevant
Euroclear Participant or CEDEL Participants on such
business day.
Cash received in
CEDEL or Euroclear as a result of sales of securities
by or
through a CEDEL Participant or
Euroclear Participant to a DTC Participant (other than
the
depositary for CEDEL or
Euroclear) will be received with value on the DTC
settlement
date, but will be available in
the relevant CEDEL or Euroclear cash account only as of
the
business day following
settlement in DTC.

Transfers between Participants will occur in
accordance with
DTC rules. Transfers
between CEDEL 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
CEDEL
Participants or Euroclear
Participants, on the other, will be effected by DTC in
accordance
with DTC rules on behalf
of the relevant European international clearing system
by the
relevant Depositaries;
however, such cross market transactions will require
delivery of
instructions to the relevant
European international clearing system by the
counterparty in
such system in accordance
with its rules and procedures and within its
established
deadlines (European time). The
relevant European international clearing system will,
if the
transaction meets its settlement
requirements, deliver instructions to its 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.
CEDEL Participants and Euroclear Participants may not
deliver
instructions directly to the
Depositaries.

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

Euroclear was created in 1968 to hold securities
for
participants of Euroclear
("Euroclear Participants") and to clear and settle
transactions
between Euroclear Participants
through simultaneous electronic book-entry delivery
against
payment, thereby eliminating
the need for physical movement of certificates and any
risk from
lack of simultaneous
transfers of securities and cash. Transactions may 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 (the "Euroclear Operator"), under contract
with
Euroclear Clearance Systems
S.C., a Belgian co-operative corporation (the
"Cooperative"). All
operations are conducted
by the Euroclear Operator, and all Euroclear securities
clearance
accounts and Euroclear
cash accounts are accounts with the Euroclear Operator,
not the
Cooperative. The
Cooperative establishes policy for Euroclear on behalf
of
Euroclear Participants. Euroclear
Participants include banks (including central banks),
securities
brokers and dealers and other
professional financial intermediaries. Indirect access
to
Euroclear is also available to other
firms that clear through or maintain a custodial
relationship
with a Euroclear Participant,
either directly or indirectly.

The Euroclear Operator is the Belgian branch of a
New York
banking corporation
which is a member bank of the Federal Reserve System.
As such, it
is regulated and
examined by the Board of Governors of the Federal
Reserve System
and the New York
State Banking Department, as well as the Belgian
Banking
Commission. Securities
clearance accounts and cash accounts with the Euroclear
Operator
are governed by the
Terms and Conditions Governing Use of Euroclear and the
related
Operating Procedures of
the Euroclear System and applicable Belgian law
(collectively,
the "Terms and
Conditions"). The Terms and Conditions govern transfers
of
securities and cash within
Euroclear, withdrawals of securities and cash from
Euroclear, and
receipts of payments with
respect to securities in Euroclear. All securities in
Euroclear
are held on a fungible basis
without attribution of specific certificates to
specific
securities clearance accounts. The
Euroclear Operator acts under the Terms and Conditions
only on
behalf of Euroclear
Participants, and has no record of or relationship with
persons
holding through Euroclear
Participants.

Distributions in respect of the Book-Entry
Certificates will
be forwarded by the
Trustee to DTC, and DTC will be responsible for
forwarding such
payments to Participants,
each of which will be responsible for disbursing such
payments to
the Beneficial Owners
it represents or, if applicable, to Indirect
Participants.
Accordingly, Beneficial Owners may
experience delays in the receipt of payments in respect
of their
Certificates. Under DTC's
procedures, DTC will take actions permitted to be taken
by
holders of any class of Book-Entry Certificates under
the Pooling
and Servicing Agreement only at the direction of one
or more Participants to whose account the Book-Entry
Certificates
are credited and whose
aggregate holdings represent no less than any minimum
amount of
Percentage Interests or
voting rights required therefor. DTC may take
conflicting
actions with respect to any action
of Certificateholders of any Class to the extent that
Participants authorize such actions.
None of the Master Servicer, any Servicer, the Company,
the
Certificate Administrator, the
Trustee or any of their respective affiliates will have
any
liability for any aspect of the
records relating to or payments made on account of
beneficial
ownership interests in the
Book-Entry Certificates, or for maintaining,
supervising or
reviewing any records relating
to such beneficial ownership interests.

Assignment of Mortgage Loans

At the time of issuance of a series of
Certificates, the
Company will cause the
Mortgage Loans being included in the related Trust Fund
to be
assigned to the Trustee or
its nominee (which may be the Custodian) together with
all
principal and interest received
on or with respect to such Mortgage Loans after the
Cut-off Date
(other than principal and
interest due on or before the Cut-off Date and any
Spread). The
Trustee will, concurrently
with such assignment, deliver a series of Certificates
to the
Company in exchange for the
Mortgage Loans. Each Mortgage Loan will be identified
in a
schedule appearing as an
exhibit to the related Pooling and Servicing Agreement.
Such
schedule will include, among
other things, information as to the principal balance
of each
Mortgage Loan as of the Cut-off
Date, as well as information respecting the Mortgage
Rate, the
currently scheduled monthly
payment of principal and interest, the maturity of the
Mortgage
Note and the Loan-to-Value
Ratio or Combined Loan-to-Value Ratio and Junior
Mortgage Ratio,
as applicable, at
origination or modification (without regard to any
secondary
financing).

In addition, the Company will, as to each Mortgage
Loan other
than a Mortgage
Loan underlying any Agency Securities, deliver to the
Trustee (or
to the Custodian) the legal
documents relating to such Mortgage Loan that are in
possession
of the Company, which
may include: (i) the note evidencing such Mortgage Loan
(the
"Mortgage Note") (and any
modification or amendment thereto) endorsed without
recourse
either in blank or to the
order of the Trustee (or its nominee); (ii) the
Mortgage (except
for any Mortgage not
returned from the public recording office) with
evidence of
recording indicated thereon or,
in the case of a Cooperative Loan, the respective
security
agreements and any applicable
UCC financing statements; (iii) an assignment in
recordable form
of the Mortgage (or, with
respect to a Cooperative Loan, an assignment of the
respective
security agreements, any
applicable UCC financing statements, recognition
agreements,
relevant stock certificates,
related blank stock powers and the related proprietary
leases or
occupancy agreements); and
(iv) if applicable, any riders or modifications to such
Mortgage
Note and Mortgage, together
with certain other documents at such times as set forth
in the
related Pooling and Servicing
Agreement. Such assignments may be blanket assignments
covering
Mortgages secured by
Mortgaged Properties located in the same county, if
permitted by
law. If so provided in the
related Prospectus Supplement, the Company may not be
required to
deliver one or more
of such documents if such documents are missing from
the files of
the party from whom
such Mortgage Loans were purchased.

In the event that, with respect to any Mortgage
Loan, the
Company cannot deliver
the Mortgage or any assignment with evidence of
recording thereon
concurrently with the
execution and delivery of the related Pooling and
Servicing
Agreement because of a delay
caused by the public recording office, the Company will
deliver
or cause to be delivered to
the Trustee or the Custodian a true and correct
photocopy of such
Mortgage or assignment.
The Company will deliver or cause to be delivered to
the Trustee
or the Custodian such
Mortgage or assignment with evidence of recording
indicated
thereon after receipt thereof
from the public recording office or from the related
Servicer or
Sub-Servicer.

Assignments of the Mortgage Loans to the Trustee
will be
recorded in the
appropriate public recording office, except in states
where, in
the opinion of counsel
acceptable to the Trustee, such recording is not
required to
protect the Trustee's interests in
the Mortgage Loan against the claim of any subsequent
transferee
or any successor to or
creditor of the Company or the originator of such
Mortgage Loan,
or except as otherwise
specified in the related Prospectus Supplement.

Assignment of Contracts

The Company will cause the Contracts constituting
the
Contract Pool to be assigned
to the Trustee or its nominee (which may be the
Custodian),
together with principal and
interest due on or with respect to the Contracts after
the
Cut-off Date, but not including
principal and interest due on or before the Cut-off
Date or any
Spread. Each Contract will
be identified in a schedule appearing as an exhibit to
the
Pooling and Servicing Agreement.
Such schedule will specify, with respect to each
Contract, among
other things: the original
principal amount and the adjusted principal balance as
of the
close of business on the Cut-off Date; the Mortgage
Rate; the
current scheduled monthly level payment of principal
and
interest; and the maturity date of the Contract.

In addition, the Company, the Servicer or the
Master
Servicer, as to each Contract,
will deliver or cause to be delivered to the Trustee,
or, as
specified in the related Prospectus
Supplement, the Custodian, the original Contract and
copies of
documents and instruments
related to each Contract and the security interest in
the
Manufactured Home securing each
Contract. The Company, the Master Servicer or the
Servicer will
cause a UCC-1 financing
statement to be executed by the Company identifying the
Trustee
as the secured party and
identifying all Contracts as collateral. However,
unless
otherwise specified in the related
Prospectus Supplement, the Contracts will not be
stamped or
otherwise marked to reflect
their assignment from the Company to the Trust Fund and
no
recordings or filings will be
made in the jurisdictions in which the Manufactured
Homes are
located. See "Certain Legal
Aspects of Mortgage Loans and Contracts The Contracts."

Review of Mortgage Loan or Contract Documents

The Trustee or the Custodian will hold such
documents in
trust for the benefit of the
Certificateholders and, generally within 45 days after
receipt
thereof, will review such
documents. Unless otherwise provided in the related
Prospectus
Supplement, if any such
document is found to be defective in any material
respect, the
Trustee or such Custodian
shall immediately notify the Master Servicer or the
Servicer, if
any, and the Company, and
if so specified in the related Prospectus Supplement,
the Master
Servicer, the Servicer or the
Trustee shall immediately notify the Mortgage
Collateral Seller.
If the Mortgage Collateral
Seller (or, if so specified in the related Prospectus
Supplement,
the Company) cannot cure
such defect within 60 days (or within such other period
specified
in the related Prospectus
Supplement) after notice of the defect is given to the
Mortgage
Collateral Seller (or, if
applicable, the Company), the Mortgage Collateral
Seller (or, if
applicable, the Company)
will, not later than 90 days after such notice (or
within such
other period specified in the
related Prospectus Supplement), either repurchase the
related
Mortgage Loan or Contract
or any property acquired in respect thereof from the
Trustee or
substitute for such Mortgage
Loan or Contract, a new Mortgage Loan or Contract in
accordance
with the standards set
forth herein. See "The Trust Funds Repurchases of
Mortgage
Collateral." Unless otherwise
specified in the related Prospectus Supplement, the
obligation to
repurchase or substitute
for a Mortgage Loan or Contract constitutes the sole
remedy
available to the
Certificateholders or the Trustee for a material defect
in a
constituent document.

Assignment of Agency Securities

The Company will transfer, convey and assign to the
Trustee
or its nominee (which
may be the Custodian) all right, title and interest of
the
Company in the Agency Securities
and other property to be included in the Trust Fund for
a series.
Such assignment will
include all principal and interest due on or with
respect to the
Agency Securities after the
Cut-off Date specified in the related Prospectus
Supplement
(except for any Spread). The
Company will cause the Agency Securities to be
registered in the
name of the Trustee or its
nominee, and the Trustee will concurrently authenticate
and
deliver the Certificates. Unless
otherwise specified in the related Prospectus
Supplement, the
Trustee will not be in
possession of or be assignee of record of any
underlying assets
for a Agency Security. Each
Agency Security will be identified in a schedule
appearing as an
exhibit to the related
Pooling and Servicing Agreement, which will specify as
to each
Agency Security the
original principal amount and outstanding principal
balance as of
the Cut-off Date; the
annual pass-through rate or interest rate for each
Agency
Security conveyed to the Trustee.

Spread

The Company, the Servicer, the Mortgage Collateral
Seller,
the Master Servicer or
any of their affiliates, or such other entity as may be
specified
in the related Prospectus
Supplement may retain or be paid a portion of interest
(the
"Spread") due with respect to the
related Mortgage Collateral. The payment of any Spread
will be
disclosed in the related
Prospectus Supplement. The Spread may be in addition to
any other
payment (such as the
Servicing Fee) that any such entity is otherwise
entitled to
receive with respect to the
Mortgage Collateral. Any Spread in respect of an item
of Mortgage
Collateral will represent
a specified portion of the interest payable thereon and
will not
be part of the related Trust
Fund. Any partial recovery of interest in respect of an
item of
Mortgage Collateral will be
allocated between the owners of any Spread and the
Certificateholders entitled to payments
of interest as provided in the applicable Pooling and
Servicing
Agreement.

Payments on Mortgage Collateral

The Trustee or the Master Servicer, if any, will,
as to each
series of Certificates,
establish and maintain in trust the Certificate Account
which
will be a separate account that
may be interest bearing or non-interest bearing in the
name of
the Trustee, maintained with
a depository institution and in a manner acceptable to
each
Rating Agency. If permitted by
each such Rating Agency, a Certificate Account may
contain funds
relating to one or more
series of Certificates.

The Trustee, the Servicer or the Master Servicer,
if any,
will establish a Custodial
Account which will be a separate trust account, into
which
payments on the Mortgage
Collateral for such series may be transferred on a
periodic basis
and from which funds may
be transferred to the Certificate Account in order to
make
payments to Certificateholders.
The Custodial Account may contain funds relating to
more than one
series of Certificates
as well as payments received on other mortgage loans
serviced or
master serviced by the
Master Servicer or the Servicer, as applicable. Amounts
held in
the Certificate Account or
a Custodial Account may be invested in Permitted
Investments. See
" Collection of
Payments on Mortgage Loans and Contracts" below. In
addition, if
so stated in such
Prospectus Supplement, one or more other trust
accounts,
including any Reserve Funds, will
be established into which cash, certificates of deposit
or
letters of credit, or a combination
thereof, will be deposited by the Company, if such
assets are
required to make timely
distributions with respect to the Certificates of a
series, are
required as a condition to the
rating of such Certificates or are required in order to
provide
for certain contingencies as
described in the related Prospectus Supplement.

Collection of Payments on Mortgage Loans and
Contracts

Each Servicer or the Master Servicer, if any, will
be
required to deposit into the
Custodial Account (unless otherwise specified in the
related
Prospectus Supplement) all
amounts enumerated in the following paragraph in
respect of the
Mortgage Loans or
Contracts serviced by it, less the Servicing Fee and
Spread, if
any.

The Servicer or Master Servicer, as applicable,
will deposit
or will cause to be
deposited into the Custodial Account certain payments
and
collections received by it
subsequent to the Cut-off Date (other than payments due
on or
before the Cut-off Date), as
specifically set forth in the related Pooling and
Servicing
Agreement, which (except as
otherwise provided therein) generally will include the
following:

(i) all payments on account of principal of the
Mortgage
Loans or
Contracts comprising a Trust Fund;

(ii) all payments on account of interest on
the
Mortgage Loans
comprising such Trust Fund, net of the portion of
each
payment thereof retained by
the Servicer or Sub-Servicer, if any, as Spread,
its
servicing or other compensation;

(iii) all amounts (net of unreimbursed
liquidation
expenses and insured
expenses incurred, and unreimbursed Servicing
Advances made,
by the related
Servicer or Sub-Servicer) received and retained in
connection
with the liquidation
of any defaulted Mortgage Loan or Contract, by
foreclosure or
otherwise
("Liquidation Proceeds"), including all proceeds of
any
Special Hazard Insurance
Policy, Bankruptcy Bond, Mortgage Pool Insurance
Policy,
Contract Pool Insurance
Policy, Primary Insurance Policy and any title,
hazard or
other insurance policy
covering any Mortgage Loan or Contract in such
Trust Fund
(together with any
payments under any Letter of Credit, "Insurance
Proceeds") or
proceeds from any
alternative arrangements established in lieu of any
such
insurance and described in
the applicable Prospectus Supplement, other than
proceeds to
be applied to the
restoration of the related property or released to
the
Mortgagor in accordance with
the Master Servicer's or Servicer's normal
servicing
procedures;

(iv) any Buy-Down Funds (and, if
applicable,
investment earnings
thereon) required to be paid to Certificateholders,
as
described below;

(v) all proceeds of any Mortgage Loan or
Contract in such
Trust Fund
purchased (or, in the case of a substitution,
certain amounts
representing a principal
adjustment) by the Master Servicer, the Company,
Residential
Funding, any Sub-Servicer or Mortgage Collateral Seller
or any
other person pursuant to the terms of
the Pooling and Servicing Agreement. See "The Trust
Funds
Representations with
Respect to Mortgage Collateral" and " Repurchases
of
Defective Mortgage
Collateral" herein;

(vi) any amount required to be deposited by
the
Master Servicer in
connection with losses realized on investments of
funds held
in the Custodial
Account, as described below; and

(vii) any amounts required to be transferred
from the
Certificate Account
to the Custodial Account.

Both the Custodial Account and the Certificate
Account must
be either (i)
maintained with a depository institution whose debt
obligations
at the time of any deposit
therein are rated by any Rating Agency that rated any
Certificates of the related series not
less than a specified level comparable to the rating
category of
such Certificates, (ii) an
account or accounts the deposits in which are fully
insured to
the limits established by the
FDIC, provided that any deposits not so insured shall
be
otherwise maintained such that, as
evidenced by an opinion of counsel, the
Certificateholders have a
claim with respect to the
funds in such accounts or a perfected first priority
security
interest in any collateral securing
such funds that is superior to the claims of any other
depositors
or creditors of the
depository institution with which such accounts are
maintained,
(iii) in the case of the
Custodial Account, a trust account or accounts
maintained in
either the corporate trust
department or the corporate asset services department
of a
financial institution which has
debt obligations that meet certain rating criteria,
(iv) in the
case of the Certificate Account,
a trust account or accounts maintained with the Trustee
or (v)
such other account or
accounts acceptable to any applicable Rating Agency (an
"Eligible
Account"). The collateral
that is eligible to secure amounts in an Eligible
Account is
limited to certain permitted
investments, which are generally limited to United
States
government securities and other
investments that are rated, at the time of acquisition,
in one of
the categories permitted by
the related Pooling and Servicing Agreement ("Permitted
Investments").

Unless otherwise set forth in the related
Prospectus
Supplement, not later than the
business day preceding each Distribution Date, the
Master
Servicer or Servicer, as
applicable, will withdraw from the Custodial Account
and deposit
into the applicable
Certificate Account, in immediately available funds,
the amount
to be distributed therefrom
to Certificateholders on such Distribution Date. The
Master
Servicer, the Servicer or the
Trustee, as applicable, will also deposit or cause to
be
deposited into the Certificate
Account: (i) the amount of any advances made by the
Master
Servicer or the Servicer as
described herein under " Advances," (ii) any payments
under any
Letter of Credit, and any
amounts required to be transferred to the Certificate
Account
from a Reserve Fund, as
described under "Description of Credit Enhancement"
below, (iii)
any amounts required to
be paid by the Master Servicer or Servicer out of its
own funds
due to the operation of a
deductible clause in any blanket policy maintained by
the Master
Servicer or Servicer to
cover hazard losses on the Mortgage Loans as described
under
"Insurance Policies on
Mortgage Loans or Contracts" below, (iv) any
distributions
received on any Agency
Securities included in the Trust Fund and (v) any other
amounts
as set forth in the related
Pooling and Servicing Agreement.

The portion of any payment received by the Master
Servicer or
the Servicer in
respect of a Mortgage Loan that is allocable to Spread
will
generally be deposited into the
Custodial Account, but will not be deposited in the
Certificate
Account for the related series
of Certificates and will be distributed as provided in
the
related Pooling and Servicing
Agreement.

Funds on deposit in the Custodial Account may be
invested in
Permitted
Investments maturing in general not later than the
business day
preceding the next
Distribution Date and funds on deposit in the related
Certificate
Account may be invested
in Permitted Investments maturing, in general, no later
than the
Distribution Date. Unless
otherwise specified in the related Prospectus
Supplement, all
income and gain realized from
any such investment will be for the account of the
Servicer or
the Master Servicer as
additional servicing compensation. The amount of any
loss
incurred in connection with any
such investment must be deposited in the Custodial
Account or in
the Certificate Account,
as the case may be, by the Servicer or the Master
Servicer out of
its own funds upon
realization of such loss.

Collection of Payments on Agency Securities

The Trustee or the Certificate Administrator, as
specified in
the related Prospectus
Supplement, will deposit in the Certificate Account all
payments
on the Agency Securities
as they are received after the Cut-off Date. If the
Trustee has
not received a distribution with
respect to any Agency Security by the second business
day after
the date on which such
distribution was due and payable, the Trustee will
request the
issuer or guarantor, if any, of
such Agency Security to make such payment as promptly
as possible
and legally permitted.
The Trustee may take such legal action against such
issuer or
guarantor as the Trustee
deems appropriate under the circumstances, including
the
prosecution of any claims in
connection therewith. The reasonable legal fees and
expenses
incurred by the Trustee in
connection with the prosecution of such legal action
will be
reimbursable to the Trustee out
of the proceeds of any such action and will be retained
by the
Trustee prior to the deposit
of any remaining proceeds in the Certificate Account
pending
distribution thereof to the
Certificateholders of the affected series. In the event
that the
Trustee has reason to believe
that the proceeds of any such legal action may be
insufficient to
cover its projected legal
fees and expenses, the Trustee will notify such
Certificateholders that it is not obligated to
pursue any such available remedies unless adequate
indemnity for
its legal fees and
expenses is provided by such Certificateholders.

Withdrawals from the Custodial Account

The Servicer or the Master Servicer, as applicable,
may, from
time to time, make
withdrawals from the Custodial Account for certain
purposes, as
specifically set forth in the
related Pooling and Servicing Agreement, which (except
as
otherwise provided therein)
generally will include the following:

(i) to make deposits to the Certificate Account
in the
amounts and in
the manner provided in the Pooling and Servicing
Agreement
and described above
under " Payments on Mortgage Collateral";

(ii) to reimburse itself or any
Sub-Servicer for
Advances, or for
amounts advanced in respect of taxes, insurance
premiums or
similar expenses
incurred in connection with acquiring by
foreclosure or deed
in lieu of foreclosure
a Mortgaged Property, including, if the Master
Servicer and
any affiliate of the
Master Servicer provides services such as
appraisals and
brokerage services that are
customarily provided by persons other than
servicers of
mortgage loans, reasonable
compensation for such services ("Servicing
Advances") as to
any Mortgaged
Property, out of late payments, Insurance Proceeds,
Liquidation Proceeds, any
proceeds in respect of any REO Mortgage Loan or
collections
on the Mortgage
Loan or Contract with respect to which such
Advances or
Servicing Advances were
made;

(iii) to pay to itself or any Sub-Servicer
unpaid
Servicing Fees and
subservicing fees, out of payments or collections
of interest
on each Mortgage Loan
or Contract;

(iv) to pay to itself as additional
servicing
compensation any investment
income on funds deposited in the Custodial Account,
any
amounts remitted by Sub-Servicers as interest in
respect of
partial prepayments on the Mortgage Loans or
Contracts, and, if so provided in the Pooling and
Servicing
Agreement, any profits
realized upon disposition of a Mortgaged Property
acquired by
deed in lieu of
foreclosure or repossession or otherwise allowed
under the
Pooling and Servicing
Agreement;

(v) to pay to itself, a Sub-Servicer,
Residential
Funding, the Company
or the Mortgage Collateral Seller all amounts
received with
respect to each
Mortgage Loan or Contract purchased, repurchased or
removed
pursuant to the
terms of the Pooling and Servicing Agreement and
not required
to be distributed as
of the date on which the related Purchase Price is
determined;

(vi) to pay the Company or its assignee, or
any other
party named in the
related Prospectus Supplement, all amounts
allocable to the
Spread, if any, out of
collections or payments which represent interest on
each
Mortgage Loan or
Contract (including any Mortgage Loan or Contract
as to which
title to the
underlying Mortgaged Property was acquired);

(vii) to reimburse itself or any
Sub-Servicer for any
Advance previously
made which the Master Servicer has determined to
not be
ultimately recoverable
from Liquidation Proceeds, Insurance Proceeds or
otherwise (a
"Nonrecoverable
Advance"), subject to any limitations set forth in
the
Pooling and Servicing
Agreement as described in the related Prospectus
Supplement;

(viii) to reimburse itself or the Company for
certain
other expenses
incurred for which it or the Company is entitled to
reimbursement or against which
it or the Company is indemnified pursuant to the
Pooling and
Servicing Agreement;
and

(ix) to clear the Custodial Account of
amounts
relating to the
corresponding Mortgage Loans or Contracts in
connection with
the termination of
the Trust Fund pursuant to the Pooling and
Servicing
Agreement, as described in
"The Pooling and Servicing Agreement Termination;
Retirement
of Certificates."

Distributions

Distributions of principal and interest (or, where
applicable, of principal only or
interest only) on each class of Certificates entitled
thereto
will be made on each Distribution
Date either by the Trustee, the Master Servicer or the
Certificate Administrator acting on
behalf of the Trustee or a paying agent appointed by
the Trustee
(the "Paying Agent"). Such
distributions will be made to the persons who are
registered as
the holders of such
Certificates at the close of business on the last
business day of
the preceding month (the
"Record Date"). Distributions will be made in
immediately
available funds (by wire transfer
or otherwise) to the account of a Certificateholder at
a bank or
other entity having
appropriate facilities therefor, if such
Certificateholder has so
notified the Trustee, the
Master Servicer, the Certificate Administrator or the
Paying
Agent, as the case may be, and
the applicable Pooling and Servicing Agreement provides
for such
form of payment, or by
check mailed to the address of the person entitled
thereto as it
appears on the Certificate
Register. The final distribution in retirement of the
Certificates will be made only upon
presentation and surrender of the Certificates at the
office or
agency of the Trustee specified
in the notice to Certificateholders. Distributions will
be made
to each Certificateholder in
accordance with such holder's Percentage Interest in a
particular
class. The "Percentage
Interest" represented by a Certificate of a particular
class will
be equal to the percentage
obtained by dividing the initial principal balance or
notional
amount of such Certificate by
the aggregate initial amount or notional balance of all
the
Certificates of such class.

Principal and Interest on the Certificates

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
Certificates will be described in the related
Prospectus
Supplement. Distributions of interest
on each class of Certificates will be made prior to
distributions
of principal thereon. Each
class of Certificates (other than certain classes of
Strip
Certificates) may have a different
Pass-Through Rate, which may be a fixed, variable or
adjustable
Pass-Through Rate, or any
combination of two or more such Pass-Through Rates. The
related
Prospectus Supplement
will specify the Pass-Through Rate or Rates for each
class, or
the initial Pass-Through Rate
or Rates and the method for determining the
Pass-Through Rate or
Rates. Unless otherwise
specified in the related Prospectus Supplement,
interest on the
Certificates will be calculated
on the basis of a 360-day year consisting of twelve
30-day
months.

On each Distribution Date for a series of
Certificates, the
Trustee or the Master
Servicer or the Certificate Administrator on behalf of
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 Certificates, an amount equal to the
Percentage
Interest represented by the
Certificate held by such holder multiplied by such
class's
Distribution Amount. The
"Distribution Amount" for a class of Certificates for
any
Distribution Date will be the
portion, if any, of the Principal Distribution Amount
(as defined
in the related Prospectus
Supplement) allocable to such class for such
Distribution Date,
plus, if such class is entitled
to payments of interest on such Distribution Date, one
month's
interest at the applicable
Pass-Through Rate on the principal balance or notional
amount of
such class specified in
the applicable Prospectus Supplement, less certain
interest
shortfalls, which generally will
include (i) any Deferred Interest added to the
principal balance
of the Mortgage Loans
and/or the outstanding balance of one or more classes
of
Certificates on the related Due
Date, (ii) any other interest shortfalls (including,
without
limitation, shortfalls resulting from
application of the Relief Act or similar legislation or
regulations as in effect from time to
time) allocable to Certificateholders which are not
covered by
advances or the applicable
credit enhancement and (iii) unless otherwise specified
in the
related Prospectus
Supplement, Prepayment Interest Shortfalls, in each
case in such
amount that is allocated
to such class on the basis set forth in the Prospectus
Supplement.

In the case of a series of Certificates which
includes two or
more classes of
Certificates, the timing, sequential order, priority of
payment
or amount of distributions in
respect of principal, and any schedule or formula or
other
provisions applicable to the
determination thereof (including distributions among
multiple
classes of Senior Certificates
or Subordinate Certificates) shall be set forth in the
related
Prospectus Supplement.
Distributions in respect of principal of any class of
Certificates will be made on a pro rata
basis among all of the Certificates of such class
unless
otherwise set forth in the related
Prospectus Supplement.

Except as otherwise provided in the related Pooling
and
Servicing Agreement, on
or prior to the 20th day (or, if such day is not a
business day,
the next business day) of the
month of distribution (the "Determination Date"), the
Master
Servicer or the Certificate
Administrator, as applicable, will determine the
amounts of
principal and interest which will
be passed through to Certificateholders on the
succeeding
Distribution Date. Prior to the
close of business on the business day succeeding each
Determination Date, the Master
Servicer or the Certificate Administrator, as
applicable, will
furnish a statement to the
Trustee (the information in such statement to be made
available
to Certificateholders by the
Master Servicer or the Certificate Administrator, as
applicable,
on request) setting forth,
among other things, the amount to be distributed on the
next
succeeding Distribution Date.

Example of Distributions

The following chart sets forth an example of the
flow of
funds as it would relate to
a hypothetical series of Certificates issued, and with
a Cut-off
Date occurring, in April 1996:

Date Note Description
April 1 . . . . . . . . (A) Cut-off Date.
April 2-30. . . . . . . (B) The Servicers or the
Sub-Servicers,
as
applicable, receive any
Principal
Prepayments
and applicable interest on
such
Principal
Prepayments.
April 30. . . . . . . . (C) Record Date.
May 1 . . . . . . . . . (D) The due date for a
Mortgage Loan or
Contract
(the "Due Date").
May 17. . . . . . . . . (E) The Servicers or the
Sub-Servicers,
as
applicable, remit to the
Master
Servicer or the
Servicer, as applicable,
scheduled
payments of
principal and interest due
on May 1
and
received or advanced by
them.
May 20. . . . . . . . . (F) Determination Date.
May 28. . . . . . . . . (G) Distribution Date.

Succeeding months follow the pattern of (B) through
(G), except
that for succeeding months
(B) will also include the first day of such month.
Certain series
of Certificates may have
different prepayment periods, Cut-off Dates, Record
Dates, Due
Dates, remittance dates,
Determination Dates and/or Distribution Dates than
those set
forth above.
_______________________

(A) The initial principal balance of the Mortgage Pool
or
Contract Pool will be the
aggregate principal balance of the Mortgage Loans
or
Contracts at the close of
business on April 1, 1996, after deducting
principal payments
due on or before such
date. Those principal payments due on or before
April 1, and
the accompanying
interest payments, and any Principal Prepayments
received as
of the close of
business on April 1, 1996 are not part of the
Mortgage Pool
or Contract Pool and
will not be passed through to Certificateholders.

(B) Any principal payments received in advance of the
scheduled
Due Date and not
accompanied by a payment of interest for any
period
following the date of payment
("Principal Prepayments") may be received at any
time during
this period and will
be remitted to the Master Servicer or Servicer as
described
in (E) below for
distribution to Certificateholders as described in
(F)
below. When a Mortgage Loan
or Contract is prepaid in full, interest on the
amount
prepaid is collected from the
Mortgagor only to the date of payment. Partial
Principal
Prepayments are applied
so as to reduce the principal balances of the
related
Mortgage Loans or Contracts
as of the first day of the month in which the
payments are
made; no interest will be
paid to Certificateholders in respect of such
prepaid
amounts for the month in which
such partial Principal Prepayments were received.

(C) Distributions on May 28 (because May 25, 1996 is
not a
business day) will be made
to Certificateholders of record at the close of
business on
April 30.

(D) Scheduled principal and interest payments are due
from
Mortgagors.

(E) Payments due on May 1 from Mortgagors will be
deposited by
the Sub-Servicers
in subservicing accounts or Servicers in
collection accounts
(or will be otherwise
managed in a manner acceptable to the Rating
Agencies) as
received and will
include the scheduled principal payments plus
interest on
the April balances (with
the exception of interest from the date of
prepayment of any
Mortgage Loan or
Contract prepaid in full during April and interest
on the
amount of partial Principal
Prepayments in April). Funds required to be
remitted from
the collection accounts
or the subservicing accounts to the Master
Servicer or the
Servicer, as applicable,
will be so remitted on May 17 (because May 18,
1996 is not a
business day)
together with any required Advances by the
Servicer or the
Sub-Servicers (except
that Principal Prepayments in full and certain
Principal
Prepayments in part
received by Sub-Servicers during the month of
April will
have been remitted to the
Master Servicer or the Servicer, as applicable,
within five
business days of receipt).

(F) On May 20, the Master Servicer or the Certificate
Administrator, if any, will
determine the amounts of principal and interest
which will
be passed through on
May 28 to the holders of each class of
Certificates. The
Master Servicer or the
Certificate Administrator, if any, will be
obligated to
distribute those payments due
May 1 which have been received from Servicers or
Sub-Servicers prior to and
including May 17, as well as all Principal
Prepayments
received on Mortgage Loans
in April (with interest adjusted to the
Pass-Through Rates
applicable to the
respective classes of Certificates and reduced on
account of
Principal Prepayments
as described above). Distributions to the holders
of Senior
Certificates, if any, on
May 28 may include certain amounts otherwise
distributable
to the holders of the
related Subordinate Certificates, amounts
withdrawn from any
Reserve Fund and
amounts advanced by the Master Servicer or the
Servicer
under the circumstances
described in "Subordination" and " Advances."

(G) On May 28, the amounts determined on May 20 will be
distributed to
Certificateholders.

If provided in the related Prospectus Supplement,
the
Distribution Date with respect
to any series of Certificates as to which the Trust
Fund includes
Agency Securities may be
a specified date or dates other than the 25th day of
each month
in order to allow for the
receipt of distributions on such Agency Securities.

Advances

Unless otherwise specified in the related
Prospectus
Supplement, the Master
Servicer or the applicable Servicer will agree to
advance (either
out of its own funds, funds
advanced to it by Servicers or Sub-Servicers, as
applicable, or
funds being held in the
Custodial Account for future distribution), for the
benefit of
the related Certificateholders,
on or before each Distribution Date, an amount equal to
the
aggregate of all scheduled
payments of principal (other than any Balloon Amount in
the case
of a Balloon Loan) and
interest at the applicable Pass-Through Rate or Net
Mortgage
Rate, as the case may be (an
"Advance"), which were delinquent as of the close of
business on
the business day
preceding the related Determination Date on the related
Mortgage
Loans or Contracts, but
only to the extent that such Advances would, in the
judgment of
the Master Servicer or the
Servicer, be recoverable out of late payments by the
Mortgagors,
Liquidation Proceeds,
Insurance Proceeds or otherwise. If a Trust Fund
includes Agency
Securities, any advancing
obligations with respect to underlying Mortgage Loans
or
Contracts will be pursuant to the
terms of such Agency Securities and may differ from the
provisions relating to Advances
described herein.

Advances are intended to maintain a regular flow of
scheduled
interest and principal
payments to related Certificateholders. Such Advances
do not
represent an obligation of the
Master Servicer or the Servicer to guarantee or insure
against
losses. If Advances have been
made by the Master Servicer or Servicer from cash being
held for
future distribution to
Certificateholders, such funds will be required to be
replaced on
or before any future
Distribution Date to the extent that funds in the
Certificate
Account on such Distribution
Date would be less than payments required to be made to
Certificateholders. Any Advances
will be reimbursable to the Master Servicer or Servicer
out of
recoveries on the related
Mortgage Loans or Contracts for which such amounts were
advanced
(e.g., late payments
made by the related Mortgagor, any related Liquidation
Proceeds
and Insurance Proceeds,
proceeds of any applicable form of credit enhancement
or proceeds
of any Mortgage
Collateral purchased by the Company, Residential
Funding, a
Sub-Servicer or a Mortgage
Collateral Seller under the circumstances described
above). Such
Advances will also be
reimbursable from cash otherwise distributable to
Certificateholders to the extent that the
Master Servicer or Servicer shall determine that any
such
Advances previously made are
not ultimately recoverable as described above. With
respect to
any Senior/Subordinate
Series, so long as the related Subordinate Certificates
remain
outstanding and subject to
certain limitations with respect to Special Hazard
Losses, Fraud
Losses, Bankruptcy Losses
and Extraordinary Losses, such Advances may also be
reimbursable
out of amounts
otherwise distributable to holders of the Subordinate
Certificates, if any. The Master
Servicer or the Servicer will also be obligated to make
Servicing
Advances, to the extent
recoverable out of Liquidation Proceeds or otherwise,
in respect
of certain taxes and
insurance premiums not paid by Mortgagors on a timely
basis.
Funds so advanced will be
reimbursable to the Master Servicer or Servicer to the
extent
permitted by the Pooling and
Servicing Agreement. The Master Servicer's or
Servicer's
obligation to make Advances may
be supported by another entity, a letter of credit or
other
method as may be described in the
related Pooling and Servicing Agreement. In the event
that the
short-term or long-term
obligations of the provider of such support are
downgraded by a
Rating Agency rating the
related Certificates or if any collateral supporting
such
obligation is not performing or is
removed pursuant to the terms of any agreement
described in the
related Prospectus
Supplement, the Certificates may also be downgraded.

Prepayment Interest Shortfalls

When a Mortgagor prepays a Mortgage Loan or
Contract in full
between scheduled
Due Dates for such Mortgage Loan or Contract, the
Mortgagor pays
interest on the amount
prepaid only to but not including the date on which
such
Principal Prepayment is made.
Similarly, Liquidation Proceeds from a Mortgaged
Property will
not include interest for any
period after the date on which the liquidation took
place. The
shortfall between a full
month's interest due with respect to a Mortgage Loan or
Contract
and the amount of interest
paid or recovered with respect thereto in the event of
a
prepayment or liquidation is referred
to as a "Prepayment Interest Shortfall." If so
specified in the
related Prospectus Supplement,
to the extent funds are available from the Servicing
Fee, the
Servicer or Master Servicer
may make an additional payment to Certificateholders
with respect
to any Mortgage Loan
or Contract that prepaid in full during the related
prepayment
period equal to the amount,
if any, necessary to assure that, on the related
Distribution
Date, the Available Distribution
Amount would include with respect to each such Mortgage
Loan or
Contract an amount
equal to interest at the Mortgage Rate (less the
Servicing Fee
and Spread, if any) for such
Mortgage Loan or Contract from the date of such
prepayment or
liquidation through the
related Due Date (such amount, "Compensating
Interest").
Compensating Interest may be
limited to the aggregate amount (or any portion
thereof) of the
Servicing Fee received by
the Servicer or Master Servicer in that month in
relation to the
Mortgage Loans or
Contracts, or in any other manner, and, if so limited,
may not be
sufficient to cover the
Prepayment Interest Shortfall. If so disclosed in the
related
Prospectus Supplement,
Prepayment Interest Shortfalls may be applied to reduce
interest
otherwise payable with
respect to one or more classes of Certificates of a
series. See
"Yield Considerations."

Reports to Certificateholders

On each Distribution Date, the Master Servicer or
the
Certificate Administrator, as
applicable, will forward or cause to be forwarded to
each
Certificateholder of record a
statement or statements with respect to the related
Trust Fund
setting forth the information
described in the related Pooling and Servicing
Agreement. Except
as otherwise provided in
the related Pooling and Servicing Agreement, such
information
generally will include the
following (as applicable):

(i) the amount, if any, of such distribution
allocable to
principal;

(ii) the amount, if any, of such
distribution
allocable to interest and the
amount, if any, of any shortfall in the amount of
interest
and principal;

(iii) the aggregate unpaid principal balance
of the
Mortgage Collateral
after giving effect to the distribution of
principal on such
Distribution Date;

(iv) the outstanding principal balance or
notional
amount of each class
of Certificates after giving effect to the
distribution of
principal on such
Distribution Date;

(v) based on the most recent reports furnished
by
Servicers or Sub-Servicers, the number and aggregate
principal
balances of any items of Mortgage
Collateral in the related Trust Fund that are
delinquent (a)
one month, (b) two
months and (c) three months, and that are in
foreclosure;

(vi) the book value of any property
acquired by such
Trust Fund
through foreclosure or grant of a deed in lieu of
foreclosure;

(vii) the balance of the Reserve Fund, if
any, at the
close of business on
such Distribution Date;

(viii) the Senior Percentage, if applicable,
after
giving effect to the
distributions on such Distribution Date;

(ix) the amount of coverage under any
Letter of
Credit, Mortgage Pool
Insurance Policy or other form of credit
enhancement covering
default risk as of the
close of business on the applicable Determination
Date and a
description of any
credit enhancement substituted therefor;

(x) if applicable, the Special Hazard Amount,
Fraud Loss
Amount and
Bankruptcy Amount as of the close of business on
the
applicable Distribution Date
and a description of any change in the calculation
of such
amounts;

(xi) in the case of Certificates benefiting
from
alternative credit
enhancement arrangements described in a Prospectus
Supplement, the amount of
coverage under such alternative arrangements as of
the close
of business on the
applicable Determination Date; and

(xii) with respect to any series of
Certificates as to
which the Trust Fund
includes Agency Securities, certain additional
information as
required under the
related Pooling and Servicing Agreement.

Each amount set forth pursuant to clause (i) and
(ii) above
will be expressed as a
dollar amount per Single Certificate. As to a
particular class of
Certificates, a "Single
Certificate" generally will evidence a Percentage
Interest
obtained by dividing $1,000 by
the initial principal balance or notional balance of
all the
Certificates of such class, except
as otherwise provided in the related Pooling and
Servicing
Agreement. In addition to the
information described above, reports to
Certificateholders will
contain such other
information as is set forth in the applicable Pooling
and
Servicing Agreement, which may
include, without limitation, information as to
Advances,
reimbursements to Sub-Servicers,
Servicers and the Master Servicer and losses borne by
the related
Trust Fund.

In addition, within a reasonable period of time
after the end
of each calendar year,
the Master Servicer or the Certificate Administrator,
as
applicable, will furnish a report to
each person that was a holder of record any class of
Certificates
at any time during such
calendar year. Such report will include information as
to the
aggregate of amounts reported
pursuant to clauses (i) and (ii) above for such
calendar year or,
in the event such person was
a holder of record of a class of Certificates during a
portion of
such calendar year, for the
applicable portion of such year.

Servicing and Administration of Mortgage Collateral

General

The Master Servicer, the Certificate Administrator
or any
Servicer, as applicable,
that is a party to a Pooling and Servicing Agreement,
will be
required to perform the
services and duties specified in the related Pooling
and
Servicing Agreement. The duties to
be performed by the Master Servicer or each Servicer,
subject to
the general supervision by
the Master Servicer or the Certificate Administrator,
if any,
will include the customary
functions of a servicer, including collection of
payments from
Mortgagors; maintenance of
any primary mortgage insurance, hazard insurance and
other types
of insurance; processing
of assumptions or substitutions; attempting to cure
delinquencies; supervising foreclosures;
inspection and management of Mortgaged Properties under
certain
circumstances; and
maintaining accounting records relating to the Mortgage
Collateral. Each Servicer or the
Master Servicer, if any, may be obligated, under
certain
circumstances, to make Advances
in respect of delinquent installments of principal of
and
interest on Mortgage Loans or
Contracts and in respect of certain taxes and insurance
premiums
not paid on a timely basis
by Mortgagors, as described under " Advances" above.
With respect
to any series of
Certificates for which the Trust Fund includes Agency
Securities,
the Master Servicer's or
Certificate Administrator's servicing and
administration
obligations will be set forth in the
related Prospectus Supplement.

Pursuant to each Pooling and Servicing Agreement,
each
Servicer or the Master
Servicer, if there are no Servicers for the related
series, may
enter into sub-servicing
agreements (each, a "Sub-Servicing Agreement") with one
or more
sub-servicers (each, a
"Sub-Servicer") who will agree to perform certain
functions for
the Servicer or Master
Servicer relating to the servicing and administration
of the
Mortgage Loans or Contracts
included in the Trust Fund relating to such
Sub-Servicing
Agreement. Under any Sub-Servicing Agreement, each
Sub-Servicer,
will agree, among other things, to perform some
or all of the Servicer's or the Master Servicer's
servicing
obligations, including but not
limited to, making Advances to the related
Certificateholders.
The Servicer or the Master
Servicer, as applicable, will remain liable for its
servicing
obligations that are delegated to
a Sub-Servicer as if such Servicer or the Master
Servicer alone
were servicing such
Mortgage Loans or Contracts.

Collection and Other Servicing Procedures

Each Servicer or the Master Servicer, as
applicable, will
make reasonable efforts
to collect all payments called for under the Mortgage
Loans or
Contracts and will, consistent
with the related Pooling and Servicing Agreement and
any
applicable insurance policy or
other credit enhancement, follow such collection
procedures as it
follows with respect to
mortgage loans or contracts serviced by it that are
comparable to
the Mortgage Loans or
Contracts. The Servicer or the Master Servicer may, in
its
discretion, waive any prepayment
charge in connection with the prepayment of a Mortgage
Loan or
extend the due dates for
payments due on a Mortgage Note or Contract, provided
that the
insurance coverage for
such Mortgage Loan or Contract or any coverage provided
by any
alternative credit
enhancement will not be adversely affected.

In connection with any significant partial
prepayment of a
Mortgage Loan, the
Master Servicer, to the extent not inconsistent with
the terms of
the Mortgage Note and local
law and practice, may permit the Mortgage Loan to be
re-amortized
such that the monthly
payment is recalculated as an amount that will fully
amortize the
remaining principal
amount thereof by the original maturity date based on
the
original Mortgage Rate, provided
that such re-amortization shall not be permitted if it
would
constitute a modification of the
Mortgage Loan for federal income tax purposes.

The Master Servicer, any Servicer or one or more
Sub-Servicers with respect to a
given Trust Fund may establish and maintain an escrow
account
(the "Escrow Account")
in which Mortgagors will be required to deposit amounts
sufficient to pay taxes,
assessments, certain mortgage and hazard insurance
premiums and
other comparable items
unless, in the case of Junior Mortgage Loans, the
Mortgagor is
required to escrow such
amounts pursuant to the senior mortgage documents.
Withdrawals
from any such Escrow
Account may be made to effect timely payment of taxes,
assessments, mortgage and hazard
insurance, to refund to Mortgagors amounts determined
to be owed,
to pay interest on
balances in any such Escrow Account, if required, to
repair or
otherwise protect the
Mortgaged Properties and to clear and terminate such
account. The
Master Servicer or any
Servicer or Sub-Servicer, as the case may be, will be
responsible
for the administration of
each such Escrow Account and will be obligated to make
advances
to such accounts when
a deficiency exists therein. The Master Servicer,
Servicer or
Sub-Servicer will be entitled
to reimbursement for any such advances from the
Collection
Account.

Other duties and responsibilities of each Servicer,
the
Master Servicer and the
Certificate Administrator are described above under "
Payments on
Mortgage Collateral."

Servicing Compensation and Payment of Expenses

Each Servicer, the Master Servicer or the
Certificate
Administrator, as applicable,
will be paid compensation for the performance of its
servicing
obligations, which
compensation will be part of the servicing fee (the
"Servicing
Fee") specified in the related
Prospects Supplement. Any Sub-Servicer will be entitled
to
receive a portion of the
Servicing Fee. Except as otherwise provided in the
related
Prospectus Supplement, the
Servicer or the Master Servicer, if any, will deduct
the
Servicing Fee with respect to the
Mortgage Loans or Contracts underlying the Certificates
of a
Series in an amount to be
specified in the related Prospectus Supplement. The
Servicing Fee
may be fixed or variable.
In addition to the Servicing Fee, unless otherwise
specified in
the related Prospectus
Supplement, the Master Servicer, any Servicer or the
relevant
Sub-Servicers, if any, will be
entitled to servicing compensation in the form of
assumption
fees, late payments charges
or excess proceeds following disposition of property in
connection with defaulted Mortgage
Loans or Contracts and any earnings on investments held
in the
Certificate Account or any
Custodial Account. Any Spread retained by a Mortgage
Collateral
Seller, the Master
Servicer, or any Servicer or Sub-Servicer will not
constitute
part of the Servicing Fee.
Notwithstanding the foregoing, with respect to a series
of
Certificates as to which the Trust
Fund includes Agency Securities, the compensation
payable to the
Master Servicer or
Certificate Administrator for servicing and
administering such
Agency Securities on behalf
of the holders of such Certificates may be based on a
percentage
per annum described in the
related Prospectus Supplement of the outstanding
balance of such
Agency Securities and
may be retained from distributions of interest thereon,
if so
specified in the related
Prospectus Supplement.

Unless otherwise specified in the related
Prospectus
Supplement, the Servicer, the
Master Servicer or the Certificate Administrator will
pay from
the Servicing Fee (i) the fees
of any Sub-Servicers, (ii) certain expenses incurred in
connection with the servicing of the
Mortgage Loans or Contracts, including, without
limitation,
payment of certain of the
insurance policy premiums, fees or other amounts
payable for any
alternative credit
enhancement, reimbursement of expenses incurred in
connection
with a foreclosure or deed
in lieu of foreclosure upon a Mortgaged Property,
payment of the
fees and disbursements
of the Trustee (and any Custodian selected by the
Trustee), the
Certificate Registrar, any
Paying Agent, independent accountants and payment of
expenses
incurred in enforcing the
obligations of Sub-Servicers, Servicers and Mortgage
Collateral
Sellers and (iii) expenses
related to the preparation of reports to
Certificateholders.
Certain of these expenses may be
reimbursable from Liquidation Proceeds or insurance
policies and,
in the case of
enforcement of the obligations of Sub-Servicers, from
any
recoveries in excess of amounts
due with respect to the related Mortgage Loans or
Contracts or
from specific recoveries of
costs. The related Pooling and Servicing Agreement may
provide
that the Certificate
Administrator, the Master Servicer, and any Servicer
and
Sub-Servicer may obtain their
respective fees by deducting them from amounts
otherwise required
to be deposited into the
Collection Account.

The related Trust Fund will suffer no loss by
reason of the
expenses of the Servicer
or Master Servicer described above to the extent claims
are fully
paid from amounts in any
Reserve Fund, any related insurance policies, the
Liquidation
Proceeds, any proceeds in
respect of an REO Mortgage Loan (with respect to
expenses
incurred in connection with a
foreclosure or deed in lieu of foreclosure) or any
applicable
alternative credit enhancement
described in the related Prospectus Supplement. In the
event,
however, that claims are either
not made or are not fully paid from such sources, the
related
Trust Fund will suffer a loss
to the extent that Liquidation Proceeds, after
reimbursement of
the expenses of the Master
Servicer or any Servicer or Sub-Servicer, are less than
the
principal balance of and accrued
interest on the related Mortgage Loan or Contract. In
addition,
the Master Servicer or any
Servicer or Sub-Servicer, as applicable, will be
entitled to
reimbursement of expenditures
incurred by it in connection with the restoration of
Mortgaged
Property, such right of
reimbursement being prior to the rights of the
Certificateholders
to receive any payments
from any Reserve Fund or from any related Insurance
Proceeds,
Liquidation Proceeds or
any proceeds of alternative credit enhancement.

Evidence as to Compliance

Each Servicer, the Master Servicer or the
Certificate
Administrator, as appropriate,
will, with respect to each series of Certificates,
deliver to the
Trustee, on or before the date
in each year specified in the related Pooling and
Servicing
Agreement, an officer's
certificate stating that (i) a review of the activities
of the
Certificate Administrator, each
Servicer or the Master Servicer and each Sub-Servicer,
as
applicable, during the preceding
calendar year and of performance under such Pooling and
Servicing
Agreement and the
applicable Sub-Servicing Agreement, if any, has been
made under
the supervision of such
officer, and (ii) to the best of such officer's
knowledge, based
on such review, the Certificate
Administrator, each Servicer or the Master Servicer and
each
Sub-Servicer, as applicable,
has fulfilled all its obligations under such Pooling
and
Servicing Agreement throughout such
year, or, if there has been a default in the
fulfillment of any
such obligation, specifying each
such default known to such officer and the nature and
status
thereof. If set forth in the
Prospectus Supplement, such officer's certificate shall
be
accompanied by a statement of a
firm of independent public accountants to the effect
that, on the
basis of an examination of
certain documents and records relating to servicing of
the
Mortgage Loans or Contracts,
including similar reports delivered by each Servicer or
Sub-Servicer (upon which such firm
is entitled to rely), conducted in accordance with the
Uniform
Single Attestation Program
for Mortgage Bankers or similar standards acceptable to
the
Servicer, the Master Servicer
or the Certificate Administrator, as applicable, the
servicing of
the Mortgage Loans or
Contracts was conducted in compliance with the
provisions of the
related Pooling and
Servicing Agreement and the applicable Sub-Servicing
Agreement,
if any, except for (a)
such exceptions as such firm believes to be immaterial
and (b)
such other exceptions as are
set forth in such statement.

Certain Other Matters Regarding Servicing

Each Servicer, the Master Servicer or the
Certificate
Administrator, as applicable,
may not resign from its obligations and duties under
the related
Pooling and Servicing
Agreement except with the consent of all
Certificateholders or
upon a determination that its
duties thereunder are no longer permissible under
applicable law.
No such resignation will
become effective until the Trustee or a successor
servicer or
administrator has assumed the
Servicer's, the Master Servicer's or the Certificate
Administrator's obligations and duties
under such Pooling and Servicing Agreement. A Servicer,
the
Master Servicer or the
Certificate Administrator, as applicable, may be
removed upon the
occurrence of certain
Events of Default described below under "The Pooling
and
Servicing Agreement Events
of Default" and " Rights Upon Event of Default."

Each Pooling and Servicing Agreement will also
provide that
neither the Servicer,
the Master Servicer or the Certificate Administrator,
nor any
director, officer, employee or
agent thereof, will be under any liability to the Trust
Fund or
the Certificateholders for any
action taken or for restraining from taking any action
in good
faith pursuant to the Pooling
and Servicing Agreement, or for errors in judgment.
However,
neither the Servicer, the
Master Servicer or the Certificate Administrator nor
any such
person will be protected
against any liability which would otherwise be imposed
by reason
of the failure to perform
its obligations in compliance with any standard of care
set forth
in the Pooling and Servicing
Agreement. The Servicer, the Master Servicer or the
Certificate
Administrator, as
applicable, may, in its discretion, undertake any such
action
that it may deem necessary or
desirable with respect to the Pooling and Servicing
Agreement and
the rights and duties of
the parties thereto and the interest of the
Certificateholders
thereunder. In such event, the
legal expenses and costs of such action and any
liability
resulting therefrom will be
expenses, costs and liabilities of the Trust Fund and
the
Servicer, the Master Servicer or the
Certificate Administrator will be entitled to be
reimbursed
therefor out of funds otherwise
distributable to Certificateholders.

The Master Servicer or Servicer may in its
discretion (i)
waive any late payment
charge or any prepayment charge or penalty interest in
connection
with the prepayment of
a Mortgage Loan or Contract and (ii) extend the Due
Date for
payments due on a Mortgage
Loan or Contract, if the Master Servicer or Servicer
has
determined that any such waiver
or extension will not impair the coverage of any
related
insurance policy, materially
adversely affect the lien of the related Mortgage or,
if a REMIC
election has been made
with respect to the Trust Fund, adversely affect such
REMIC
status.

The Master Servicer will be required to maintain a
fidelity
bond and errors and
omissions policy with respect to its officers and
employees and
other persons acting on
behalf of the Master Servicer in connection with its
activities
under the Pooling and
Servicing Agreement.

A Servicer, the Master Servicer or the Certificate
Administrator may have other
business relationships with the Company, any Mortgage
Collateral
Seller or their affiliates.

Special Servicing

If provided for in the related Prospectus
Supplement, the
Pooling and Servicing
Agreement for a series of Certificates may name a
special
servicer (a "Special Servicer").
The Special Servicer will be responsible for the
servicing of
certain delinquent Mortgage
Loans or Contracts as described in the Prospectus
Supplement. The
Special Servicer may
have certain discretion to extend relief to Mortgagors
whose
payments become delinquent.
The Special Servicer may be permitted to grant a period
of
temporary indulgence to a
Mortgagor or may enter into a liquidating plan
providing for
repayment by the Mortgagor,
in each case without the prior approval of the Master
Servicer or
the Servicer, as applicable.
Other types of forbearance generally will require the
approval of
the Master Servicer or
Servicer, as applicable.

Enforcement of "Due-on-Sale" Clauses

Unless otherwise specified in the related
Prospectus
Supplement, when any
Mortgaged Property relating to a Mortgage Loan or
Contract (other
than an ARM Loan
described below) is about to be conveyed by the
Mortgagor, the
Master Servicer or the
Servicer, as applicable, directly or through a
Sub-Servicer, to
the extent it has knowledge
of such proposed conveyance, generally will be
obligated to
exercise the Trustee's rights to
accelerate the maturity of such Mortgage Loan or
Contract under
any due-on-sale clause
applicable thereto. A due-on-sale clause will be
enforced only if
the exercise of such rights
is permitted by applicable law and only to the extent
it would
not adversely affect or
jeopardize coverage under any Primary Insurance Policy
or
applicable credit enhancement
arrangements. See "Certain Legal Aspects of Mortgage
Loans and
Contracts The
Mortgage Loans Enforceability of Certain Provisions"
and " The
Contracts 'Due-on-Sale' Clauses." If the Master
Servicer,
Servicer or Sub-Servicer is prevented from enforcing
a due-on-sale clause under applicable law or if the
Master
Servicer, Servicer or Sub-Servicer
determines that it is reasonably likely that a legal
action would
be instituted by the related
Mortgagor to avoid enforcement of such due-on-sale
clause, the
Master Servicer, Servicer
or Sub-Servicer will enter into an assumption and
modification
agreement with the person
to whom such property has been or is about to be
conveyed,
pursuant to which such person
becomes liable under the Mortgage Note or Contract
subject to
certain specified conditions.
The original Mortgagor may be released from liability
on a
Mortgage Loan or Contract if
the Master Servicer, Servicer or Sub-Servicer shall
have
determined in good faith that such
release will not adversely affect the collectability of
the
Mortgage Loan or Contract. In the
event of the sale of a Mortgaged Property subject to an
ARM Loan,
such ARM Loan may
be assumed if it is by its terms assumable and if, in
the
reasonable judgment of the Master
Servicer, Servicer or Sub-Servicer, the proposed
transferee of
the related Mortgaged
Property establishes its ability to repay the loan and
the
security for such ARM Loan would
not be impaired by the assumption. If a Mortgagor
transfers the
Mortgaged Property subject
to an ARM Loan without consent, such ARM Loan may be
declared due
and payable. In
connection with any such assumption, the Mortgage Rate
borne by
the related Mortgage
Note or Contract may not be altered. Mortgagors may,
from time to
time, request partial
releases of the Mortgaged Properties, easements,
consents to
alteration or demolition and
other similar matters. The Master Servicer, Servicer or
Sub-Servicer may approve such a
request if it has determined, exercising its good faith
business
judgment, that such approval
will not adversely affect the security for, and the
timely and
full collectability of, the related
Mortgage Loan or Contract. Any fee collected by the
Master
Servicer, Servicer or Sub-Servicer for entering into an
assumption or substitution of liability agreement or
for
processing a request for partial release of the
Mortgaged
Property generally will be retained
by the Master Servicer, Servicer or Sub-Servicer as
additional
servicing compensation.

Realization Upon Defaulted Property

With respect to a Mortgage Loan in default, the
Master
Servicer or the related
Subservicer will decide whether to foreclose upon the
Mortgage
Property or write off the
principal balance of the Mortgage Loan or Contract as a
bad debt.

In connection with such
decision, the Master Servicer or the related
Subservicer will,
following usual practices in
connection with senior and junior mortgage servicing
activities,
estimate the proceeds
expected to be received and the expenses expected to be
incurred
in connection with such
foreclosure to determine whether a foreclosure
proceeding is
appropriate. With respect to
any Junior Mortgage Loan, following any default
thereon, in the
event that the senior
mortgage holder commences a foreclosure action it is
likely that
such Mortgage Loan will
be written off as bad debt with no foreclosure
proceeding unless
foreclosure proceeds for
such Mortgage Loan are expected to at least satisfy the
related
senior mortgage loan in full
and to pay foreclosure costs. See "Risk Factors Risks
Associated
with the Mortgage
Collateral" herein.

In the event that title to any Mortgaged Property
is acquired
in foreclosure or by
deed in lieu of foreclosure (or, in the case of
Contracts in
certain states, by repossession of
the related Manufactured Home), the deed or certificate
of sale
will be issued to the Trustee
or to its nominee on behalf of Certificateholders.
Notwithstanding any such acquisition of
title and cancellation of the related Mortgage Loan or
Contract,
such Mortgage Loan (an
"REO Mortgage Loan") or Contract (an "REO Contract")
will be
considered for most
purposes to be an outstanding Mortgage Loan or Contract
held in
the Trust Fund until such
time as the Mortgaged Property is sold and all
recoverable
Liquidation Proceeds and
Insurance Proceeds have been received with respect to
such
defaulted Mortgage Loan (a
"Liquidated Mortgage Loan") or Contract (a "Liquidated
Contract"). For purposes of
calculations of amounts distributable to
Certificateholders in
respect of an REO Mortgage
Loan or an REO Contract, the amortization schedule in
effect at
the time of any such
acquisition of title (before any adjustment thereto by
reason of
any bankruptcy or any
similar proceeding or any moratorium or similar waiver
or grace
period) will be deemed to
have continued in effect (and, in the case of an ARM
Loan, such
amortization schedule will
be deemed to have adjusted in accordance with any
interest rate
changes occurring on any
adjustment date therefor) so long as such REO Mortgage
Loan or
REO Contract is
considered to remain in the Trust Fund. If a REMIC
election has
been made, any Mortgaged
Property so acquired by the Trust Fund must be disposed
of in
accordance with applicable
federal income tax regulations and consistent with the
status of
the Trust Fund as a REMIC.
To the extent provided in the related Pooling and
Servicing
Agreement, any income (net of
expenses and other than gains described below) received
by the
Sub-Servicer, Servicer or
Master Servicer on such Mortgaged Property prior to its
disposition will be deposited in the
Custodial Account upon receipt and will be available at
such time
for making payments to
Certificateholders.

With respect to a Mortgage Loan or Contract in
default, the
Master Servicer or
Servicer may pursue foreclosure (or similar remedies)
subject to
any senior loan positions
and certain other restrictions pertaining to junior
loans as
described under "Certain Legal
Aspects of Mortgage Loans and Related Matters
Foreclosure on
Mortgage Loans"
concurrently with pursuing any remedy for a breach of a
representation and warranty.
However, the Master Servicer or Servicer is not
required to
continue to pursue both such
remedies if it determines that one such remedy is more
likely to
result in a greater recovery.
Upon the first to occur of final liquidation and a
repurchase or
substitution pursuant to a
breach of a representation and warranty, such Mortgage
Loan or
Contract will be removed
from the related Trust Fund. The Master Servicer or
Servicer may
elect to treat a defaulted
Mortgage Loan or Contract as having been finally
liquidated if
substantially all amounts
expected to be received in connection therewith have
been
received. Any additional
liquidation expenses relating to such Mortgage Loan or
Contract
thereafter incurred will be
reimbursable to the Master Servicer or Servicer (or any
Sub-Servicer) from any amounts
otherwise distributable to the related
Certificateholders, or may
be offset by any subsequent
recovery related to such Mortgage Loan or Contract.
Alternatively, for purposes of
determining the amount of related Liquidation Proceeds
to be
distributed to
Certificateholders, the amount of any Realized Loss or
the amount
required to be drawn
under any applicable form of credit enhancement, the
Master
Servicer or Servicer may take
into account minimal amounts of additional receipts
expected to
be received, as well as
estimated additional liquidation expenses expected to
be incurred
in connection with such
defaulted Mortgage Loan or Contract.

With respect to certain series of Certificates, if
so
provided in the related Prospectus
Supplement, the applicable form of credit enhancement
may
provide, to the extent of
coverage thereunder, that a defaulted Mortgage Loan or
Contract
or REO Mortgage Loan
or REO Contract will be removed from the Trust Fund
prior to the
final liquidation thereof.
In addition, the Master Servicer or Servicer may have
the option
to purchase from the Trust
Fund any defaulted Mortgage Loan or Contract after a
specified
period of delinquency. In
the case of a Senior/Subordinate Series, unless
otherwise
specified in the related Prospectus
Supplement, if a final liquidation of a Mortgage Loan
or Contract
resulted in a Realized
Loss and within two years thereafter the Master
Servicer or
Servicer receives a subsequent
recovery specifically related to such Mortgage Loan or
Contract
(in connection with a
related breach of a representation or warranty or
otherwise),
such subsequent recovery shall
be distributed to the then-current Certificateholders
of any
outstanding class to which such
Realized Loss was allocated (with the amounts to be
distributed
allocated among such
classes in the same proportions as such Realized Loss
was
allocated), provided that no such
distribution shall result in distributions on the
Certificates of
any such class in excess of the
total amounts of principal and interest that would have
been
distributable thereon if such
Mortgage Loan or Contract had been liquidated with no
Realized
Loss. In the case of a
series of Certificates other than a Senior/Subordinate
Series, if
so provided in the related
Prospectus Supplement, the applicable form of credit
enhancement
may provide for
reinstatement subject to certain conditions in the
event that,
following the final liquidation
of a Mortgage Loan or Contract and a draw under such
credit
enhancement, subsequent
recoveries are received. If a defaulted Mortgage Loan
or Contract
or REO Mortgage Loan
or REO Contract is not so removed from the Trust Fund,
then, upon
the final liquidation
thereof, if a loss is realized which is not covered by
any
applicable form of credit
enhancement or other insurance, the Certificateholders
will bear
such loss. However, if a
gain results from the final liquidation of an REO
Mortgage Loan
or REO Contract which
is not required by law to be remitted to the related
Mortgagor,
the Master Servicer or the
Servicer will be entitled to retain such gain as
additional
servicing compensation unless the
related Prospectus Supplement provides otherwise. For a
description of the Certificate
Administrator's, the Master Servicer's or the
Servicer's
obligations to maintain and make
claims under applicable forms of credit enhancement and
insurance
relating to the Mortgage
Loans or Contracts, see "Description of Credit
Enhancement" and
"Insurance Policies on
Mortgage Loans or Contracts."

For a discussion of legal rights and limitations
associated
with the foreclosure of
a Mortgage Loan or Contract, see "Certain Legal Aspects
of
Mortgage Loans and
Contracts."

The Master Servicer or the Certificate
Administrator, as
applicable, will deal with
any defaulted Agency Securities in the manner set forth
in the
related Prospectus
Supplement.

SUBORDINATION

A Senior/Subordinate Series of Certificates will
consist of
one or more classes of
Senior Certificates and one or more classes of
Subordinate
Certificates, as set forth in the
related Prospectus Supplement. Subordination of the
Subordinate
Certificates of any
Senior/Subordinate Series will be effected by the
following
method, unless an alternative
method is specified in the related Prospectus
Supplement. In
addition, certain classes of
Senior (or Subordinate) Certificates may be senior to
other
classes of Senior (or
Subordinate) Certificates, as specified in the related
Prospectus
Supplement.

With respect to any Senior/Subordinate Series, the
total
amount available for
distribution on each Distribution Date, as well as the
method for
allocating such amount
among the various classes of Certificates included in
such
series, will be described in the
related Prospectus Supplement. Generally, with respect
to any
such series, the amount
available for distribution will be allocated first to
interest on
the Senior Certificates and then
to principal of the Senior Certificates up to the
amounts
described in the related Prospectus
Supplement, prior to allocation of any amounts to the
Subordinate
Certificates.

With respect to any defaulted Mortgage Loan or
Contract that
is finally liquidated,
the amount of loss realized, if any (as described in
the related
Pooling and Servicing
Agreement, a "Realized Loss"), will equal the portion
of the
Stated Principal Balance
remaining after application of all amounts recovered
(net of
amounts reimbursable to the
Master Servicer or Servicer for related Advances and
expenses)
towards interest and
principal owing on the Mortgage Loan. With respect to a
Mortgage
Loan or Contract, the
principal balance of which has been reduced in
connection with
bankruptcy proceedings,
the amount of such reduction will be treated as a
Realized Loss.
If so provided in the
Pooling and Servicing Agreement, the Master Servicer
may be
permitted, under certain
circumstances, to purchase any Mortgage Loan that is
three or
more months delinquent in
payments of principal and interest, at the Purchase
Price. Any
Realized Loss incurred in
connection with any such Mortgage Loan will be passed
through to
the then outstanding
Certificateholders of the related series in the same
manner as
Realized Losses on Mortgage
Loans that have not been so purchased.

In the event of any Realized Losses not in excess
of the
limitations described below
(other than Extraordinary Losses), the rights of the
Subordinate
Certificateholders to receive
distributions will be subordinate to the rights of the
Senior
Certificateholders.

Except as noted below, Realized Losses will be
allocated to
the Subordinate
Certificates of the related series until the
outstanding
principal balance thereof has been
reduced to zero. Additional Realized Losses, if any,
will be
allocated to the Senior
Certificates. If such series includes more than one
class of
Senior Certificates, such
additional Realized Losses will be allocated either on
a pro rata
basis among all of the
Senior Certificates in proportion to their respective
outstanding
principal balances or as
otherwise provided in the related Prospectus
Supplement.

With respect to certain Realized Losses resulting
from
physical damage to
Mortgaged Properties which are generally of the same
type as are
covered under a Special
Hazard Insurance Policy, the amount thereof that may be
allocated
to the Subordinate
Certificates of the related series may be limited to an
amount
(the "Special Hazard
Amount") specified in the related Prospectus
Supplement. See
"Description of Credit
Enhancement Special Hazard Insurance Policies." If so,
any
Special Hazard Losses in
excess of the Special Hazard Amount will be allocated
among all
outstanding classes of
Certificates of the related series, either on a pro
rata basis in
proportion to their outstanding
principal balances, or as otherwise provided in the
related
Prospectus Supplement. The
respective amounts of other specified types of losses
(including
Fraud Losses and
Bankruptcy Losses) that may be borne solely by the
Subordinate
Certificates may be
similarly limited to an amount (with respect to Fraud
Losses, the
"Fraud Loss Amount" and
with respect to Bankruptcy Losses, the "Bankruptcy
Amount"), and
the Subordinate
Certificates may provide no coverage with respect to
certain
other specified types of losses,
as described in the related Prospectus Supplement, in
which case
such losses would be
allocated on a pro rata basis among all outstanding
classes of
Certificates. Each of the
Special Hazard Amount, Fraud Loss Amount and Bankruptcy
Amount
may be subject to
periodic reductions and may be subject to further
reduction or
termination, without the
consent of the Certificateholders, upon the written
confirmation
from each applicable Rating
Agency that the then-current rating of the related
series of
Certificates will not be adversely
affected thereby.

Generally, any allocation of a Realized Loss
(including a
Special Hazard Loss) to
a Certificate will be made by reducing the outstanding
principal
balance thereof as of the
Distribution Date following the calendar month in which
such
Realized Loss was incurred.
At any given time, the percentage of the outstanding
principal
balances of all of the
Certificates evidenced by the Senior Certificates is
the "Senior
Percentage," determined in
the manner set forth in the related Prospectus
Supplement. The
"Stated Principal Balance"
of any item of Mortgage Collateral as of any date of
determination is equal to the principal
balance thereof as of the Cut-off Date, after
application of all
scheduled principal payments
due on or before the Cut-off Date, whether received or
not,
reduced by all amounts allocable
to principal that are distributed to Certificateholders
on or
before the date of determination,
and as further reduced to the extent that any Realized
Loss
thereon has been allocated to any
Certificates on or before such date.

As set forth above, the rights of holders of the
various
classes of Certificates of any
series to receive distributions of principal and
interest is
determined by the aggregate
outstanding principal balance of each such class (or,
if
applicable, the related notional
amount). The outstanding principal balance of any
Certificate
will be reduced by all
amounts previously distributed on such Certificate in
respect of
principal and by any
Realized Losses allocated thereto. If there are no
Realized
Losses or Principal Prepayments
on any item of Mortgage Collateral, the respective
rights of the
holders of Certificates of
any series to future distributions generally would not
change.
However, to the extent set
forth in the related Prospectus Supplement, holders of
Senior
Certificates may be entitled
to receive a disproportionately larger amount of
prepayments
received during certain
specified periods, which will have the effect (absent
offsetting
losses) of accelerating the
amortization of the Senior Certificates and increasing
the
respective percentage ownership
interest evidenced by the Subordinate Certificates in
the related
Trust Fund (with a
corresponding decrease in the Senior Percentage),
thereby
preserving the availability of the
subordination provided by the Subordinate Certificates.
In
addition, as set forth above,
certain Realized Losses generally will be allocated
first to
Subordinate Certificates by
reduction of the outstanding principal balance thereof,
which
will have the effect of
increasing the respective ownership interest evidenced
by the
Senior Certificates in the
related Trust Fund.

If so provided in the related Prospectus
Supplement, certain
amounts otherwise
payable on any Distribution Date to holders of
Subordinate
Certificates may be deposited
into a Reserve Fund. Amounts held in any Reserve Fund
may be
applied as described under
"Description of Credit Enhancement Reserve Funds" and
in the
related Prospectus
Supplement.

With respect to any Senior/Subordinate Series, the
terms and
provisions of the
subordination may vary from those described above. Any
such
variation and any additional
credit enhancement will be described in the related
Prospectus
Supplement.

DESCRIPTION OF CREDIT ENHANCEMENT

General

Credit support with respect to each series of
Certificates
may be comprised of one
or more of the following components. Each component
will have a
dollar limit and will
provide coverage with respect to Realized Losses that
are (i)
attributable to the Mortgagor's
failure to make any payment of principal or interest as
required
under the Mortgage Note
or Contract, but not including Special Hazard Losses,
Extraordinary Losses or other losses
resulting from damage to a Mortgaged Property,
Bankruptcy Losses
or Fraud Losses (any
such losses, "Defaulted Mortgage Losses"); (ii) of a
type
generally covered by a Special
Hazard Insurance Policy (any such losses, "Special
Hazard
Losses"); (iii) attributable to
certain actions which may be taken by a bankruptcy
court in
connection with a Mortgage
Loan, including a reduction by a bankruptcy court of
the
principal balance of or the
Mortgage Rate on a Mortgage Loan or Contract or an
extension of
its maturity (any such
losses, "Bankruptcy Losses"); and (iv) incurred on
defaulted
Mortgage Loans or Contracts
as to which there was fraud in the origination of such
Mortgage
Loans or Contracts (any
such losses, "Fraud Losses").

Unless otherwise specified in the related
Prospectus
Supplement, credit support will
not provide protection against all risks of loss and
will not
guarantee repayment of the entire
outstanding principal balance of the Certificates and
interest
thereon. If losses occur which
exceed the amount covered by credit support or which
are not
covered by the credit support,
Certificateholders will bear their allocable share of
deficiencies. In particular, Defaulted
Mortgage Losses, Special Hazard Losses, Bankruptcy
Losses and
Fraud Losses in excess
of the amount of coverage provided therefor and losses
occasioned
by war, civil
insurrection, certain governmental actions, nuclear
reaction and
certain other risks
("Extraordinary Losses") will not be covered. To the
extent that
the credit enhancement for
any series of Certificates is exhausted, the
Certificateholders
will bear all further risks of
loss not otherwise insured against.

As set forth below and in the related Prospectus
Supplement,
(i) coverage with
respect to Defaulted Mortgage Losses may be provided by
a
Mortgage Pool Insurance
Policy or Contract Pool Insurance Policy, (ii) coverage
with
respect to Special Hazard
Losses may be provided by a Special Hazard Insurance
Policy,
(iii) coverage with respect
to Bankruptcy Losses may be provided by a Bankruptcy
Bond and
(iv) coverage with
respect to Fraud Losses may be provided by a Mortgage
Pool
Insurance Policy or mortgage
repurchase bond. In addition, if so specified in the
applicable
Prospectus Supplement, in lieu
of or in addition to any or all of the foregoing
arrangements,
credit enhancement may be in
the form of a Reserve Fund to cover such losses, in the
form of
subordination of one or more
classes of Certificates as described under
"Subordination," or in
the form of a Certificate
Insurance Policy, a Letter of Credit, surety bonds or
other types
of insurance policies,
certain other secured or unsecured corporate guarantees
or in
such other form as may be
described in the related Prospectus Supplement, or in
the form of
a combination of two or
more of the foregoing. The credit support may be
provided by an
assignment of the right to
receive certain cash amounts, a deposit of cash into a
Reserve
Fund or other pledged assets,
or by banks, insurance companies, guarantees or any
combination
thereof identified in the
related Prospectus Supplement.

Each Prospectus Supplement will include a
description of (a)
the amount payable
under the credit enhancement arrangement, if any,
provided with
respect to a series, (b) any
conditions to payment thereunder not otherwise
described herein,
(c) the conditions under
which the amount payable under such credit support may
be reduced
and under which such
credit support may be terminated or replaced and (d)
the material
provisions of any
agreement relating to such credit support.
Additionally, each
such Prospectus Supplement
will set forth certain information with respect to the
issuer of
any third-party credit
enhancement.

The descriptions of any insurance policies, bonds
or other
instruments described in
this Prospectus or any Prospectus Supplement and the
coverage
thereunder do not purport
to be complete and are qualified in their entirety by
reference
to the actual forms of such
policies, copies of which will be exhibits to the
Current Report
on Form 8-K to be filed with
the Securities and Exchange Commission in connection
with the
issuance of the related
series of Certificates.

Letters of Credit

If any component of credit enhancement as to any
series of
Certificates is to be
provided by a letter of credit (the "Letter of
Credit"), a bank
(the "Letter of Credit Bank")
will deliver to the Trustee an irrevocable Letter of
Credit. The
Letter of Credit may provide
direct coverage with respect to the Mortgage
Collateral. The
Letter of Credit Bank, the
amount available under the Letter of Credit with
respect to each
component of credit
enhancement, the expiration date of the Letter of
Credit, and a
more detailed description of
the Letter of Credit will be specified in the related
Prospectus
Supplement. On or before
each Distribution Date, the Letter of Credit Bank will
be
required to make certain payments
after notification from the Trustee, to be deposited in
the
related Certificate Account with
respect to the coverage provided thereby. The Letter of
Credit
may also provide for the
payment of Advances.

Mortgage Pool Insurance Policies

Any pool-wide insurance policy covering losses on
Mortgage
Loans (each, a
"Mortgage Pool Insurance Policy") obtained by the
Company for a
Trust Fund will be issued
by the insurer named in the related Prospectus
Supplement (the
"Pool Insurer"). Each
Mortgage Pool Insurance Policy, subject to the
limitations
described below and in the
Prospectus Supplement, if any, will cover Defaulted
Mortgage
Losses in an amount
specified in the applicable Prospectus Supplement. As
set forth
under " Maintenance of
Credit Enhancement" below, the Master Servicer,
Servicer or
Certificate Administrator, as
applicable, will use its best reasonable efforts to
maintain the
Mortgage Pool Insurance
Policy and to present claims thereunder to the Pool
Insurer on
behalf of itself, the Trustee
and the Certificateholders. The Mortgage Pool Insurance
Policies,
however, are not blanket
policies against loss, since claims thereunder may only
be made
respecting particular
defaulted Mortgage Loans and only upon satisfaction of
certain
conditions precedent
described below. Unless specified in the related
Prospectus
Supplement, the Mortgage Pool
Insurance Policies may not cover losses due to a
failure to pay
or denial of a claim under a
Primary Insurance Policy, irrespective of the reason
therefor.

Each Mortgage Pool Insurance Policy will provide
that no
claims may be validly
presented thereunder unless, among other things, (i)
any required
Primary Insurance Policy
is in effect for the defaulted Mortgage Loan and a
claim
thereunder has been submitted and
settled, (ii) hazard insurance on the property securing
such
Mortgage Loan has been kept
in force and real estate taxes and other protection and
preservation expenses have been paid
by the Master Servicer, Servicer or Sub-Servicer, (iii)
if there
has been physical loss or
damage to the Mortgaged Property, it has been restored
to its
condition (reasonable wear
and tear excepted) at the Cut-off Date and (iv) the
insured has
acquired good and
merchantable title to the Mortgaged Property free and
clear of
liens except certain permitted
encumbrances. Upon satisfaction of these conditions,
the Pool
Insurer will have the option
either (a) to purchase the property securing the
defaulted
Mortgage Loan at a price equal to
the outstanding principal balance thereof plus accrued
and unpaid
interest at the applicable
Mortgage Rate to the date of purchase and certain
expenses
incurred by the Master Servicer,
Servicer or Sub-Servicer on behalf of the Trustee and
Certificateholders, or (b) to pay the
amount by which the sum of the outstanding principal
balance of
the defaulted Mortgage
Loan plus accrued and unpaid interest at the Mortgage
Rate to the
date of payment of the
claim and the aforementioned expenses exceeds the
proceeds
received from an approved
sale of the Mortgaged Property, in either case net of
certain
amounts paid or assumed to
have been paid under any related Primary Insurance
Policy.
Certificateholders will
experience a shortfall in the amount of interest
payable on the
related Certificates in
connection with the payment of claims under a Mortgage
Pool
Insurance Policy because the
Pool Insurer is only required to remit unpaid interest
through
the date a claim is paid rather
than through the end of the month in which such claim
is paid. In
addition, the
Certificateholders will also experience losses with
respect to
the related Certificates in
connection with payments made under a Mortgage Pool
Insurance
Policy to the extent that
the Master Servicer, Servicer or Sub-Servicer expends
funds to
cover unpaid real estate
taxes or to repair the related Mortgaged Property in
order to
make a claim under a Mortgage
Pool Insurance Policy, as those amounts will not be
covered by
payments under such policy
and will be reimbursable to the Master Servicer,
Servicer or
Sub-Servicer from funds
otherwise payable to the Certificateholders. If any
Mortgaged
Property securing a defaulted
Mortgage Loan is damaged and proceeds, if any (see "
Special
Hazard Insurance Policies"
below for risks which are not covered by such
policies), from the
related hazard insurance
policy or applicable Special Hazard Instrument are
insufficient
to restore the damaged
property to a condition sufficient to permit recovery
under the
Mortgage Pool Insurance
Policy, the Master Servicer, Servicer or Sub-Servicer
is not
required to expend its own funds
to restore the damaged property unless it determines
that (a)
such restoration will increase
the proceeds to Certificateholders on liquidation of
the Mortgage
Loan after reimbursement
of the Master Servicer, Servicer or Sub-Servicer for
its expenses
and (b) such expenses will
be recoverable by it through Liquidation Proceeds or
Insurance
Proceeds.

Unless otherwise specified in the related
Prospectus
Supplement, a Mortgage Pool
Insurance Policy (and certain Primary Insurance
Policies) will
likely not insure against loss
sustained by reason of a default arising from, among
other
things, (i) fraud or negligence
in the origination or servicing of a Mortgage Loan,
including
misrepresentation by the
Mortgagor, the Mortgage Collateral Seller or other
persons
involved in the origination
thereof, or (ii) failure to construct a Mortgaged
Property in
accordance with plans and
specifications. Depending upon the nature of the event,
a breach
of representation made by
a Mortgage Collateral Seller may also have occurred.
Such a
breach, unless otherwise
specified in the related Prospectus Supplement, would
not give
rise to a repurchase
obligation on the part of the Company or Residential
Funding.

The original amount of coverage under each Mortgage
Pool
Insurance Policy will
be reduced over the life of the related series of
Certificates by
the aggregate amount of
claims paid less the aggregate of the net amounts
realized by the
Pool Insurer upon
disposition of all foreclosed properties. The amount of
claims
paid includes certain expenses
incurred by the Master Servicer, Servicer or
Sub-Servicer as well
as accrued interest on
delinquent Mortgage Loans to the date of payment of the
claim.
See "Certain Legal Aspects
of Mortgage Loans and Contracts Foreclosure."
Accordingly, if
aggregate net claims paid
under any Mortgage Pool Insurance Policy reach the
original
policy limit, coverage under
that Mortgage Pool Insurance Policy will be exhausted
and any
further losses will be borne
by the related Certificateholders. In addition, unless
the Master
Servicer or Servicer could
determine that an Advance in respect of a delinquent
Mortgage
Loan would be recoverable
to it from the proceeds of the liquidation of such
Mortgage Loan
or otherwise, the Master
Servicer or Servicer would not be obligated to make an
Advance
respecting any such
delinquency since the Advance would not be ultimately
recoverable
to it from either the
Mortgage Pool Insurance Policy or from any other
related source.
See "Description of the
Certificates Advances."

Since each Mortgage Pool Insurance Policy will
require that
the property subject
to a defaulted Mortgage Loan be restored to its
original
condition prior to claiming against
the Pool Insurer, such policy will not provide coverage
against
hazard losses. As set forth
under "Insurance Policies on Mortgage Loans or
Contracts Standard
Hazard Insurance on
Mortgaged Properties," the hazard policies covering the
Mortgage
Loans typically exclude
from coverage physical damage resulting from a number
of causes
and, even when the
damage is covered, may afford recoveries which are
significantly
less than full replacement
cost of such losses. Additionally, no coverage in
respect of
Special Hazard Losses, Fraud
Losses or Bankruptcy Losses will cover all risks, and
the amount
of any such coverage will
be limited. See " Special Hazard Insurance Policies"
below. As a
result, certain hazard
risks will not be insured against and may be borne by
Certificateholders.

Contract Pools may be covered by pool insurance
policies
(each, a "Contract Pool
Insurance Policy") that are similar to the Mortgage
Pool
Insurance Policies described above.

Special Hazard Insurance Policies

Any insurance policy covering Special Hazard Losses
(a
"Special Hazard Insurance
Policy") obtained for a Trust Fund will be issued by
the insurer
named in the related
Prospectus Supplement (the "Special Hazard Insurer").
Each
Special Hazard Insurance
Policy, subject to limitations described below and in
the related
Prospectus Supplement, if
any, will protect the related Certificateholders from
Special
Hazard Losses which are (i)
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 (ii)
losses from partial damage caused by reason of the
application of
the co-insurance clauses
contained in hazard insurance policies. See "Insurance
Policies
on Mortgage Loans or
Contracts." A Special Hazard Insurance Policy will not
cover
losses occasioned by war,
civil insurrection, certain governmental actions,
errors in
design, faulty workmanship or
materials (except under certain circumstances), nuclear
reaction,
chemical contamination
or waste by the Mortgagor. Aggregate claims under a
Special
Hazard Insurance Policy will
be limited to the amount set forth in the related
Pooling and
Servicing Agreement and will
be subject to reduction as set forth in such related
Pooling and
Servicing Agreement. A
Special Hazard Insurance Policy will provide that no
claim may be
paid unless hazard and,
if applicable, flood insurance on the property securing
the
Mortgage Loan or Contract has
been kept in force and other protection and
preservation expenses
have been paid by the
Master Servicer or Servicer.

Subject to the foregoing limitations, a Special
Hazard
Insurance Policy will provide
that, where there has been damage to property securing
a
foreclosed Mortgage Loan (title
to which has been acquired by the insured) and to the
extent such
damage is not covered by
the hazard insurance policy or flood insurance policy,
if any,
maintained by the Mortgagor
or the Master Servicer, Servicer or Sub-Servicer, the
insurer
will pay the lesser of (i) the
cost of repair or replacement of such property or (ii)
upon
transfer of the property to the
insurer, the unpaid principal balance of such Mortgage
Loan or
Contract at the time of
acquisition of such property by foreclosure or deed in
lieu of
foreclosure, plus accrued
interest at the Mortgage Rate to the date of claim
settlement and
certain expenses incurred
by the Master Servicer, Servicer or Sub-Servicer with
respect to
such property. If the
property is transferred to a third party in a sale
approved by
the Special Hazard Insurer, the
amount that the Special Hazard Insurer will pay will be
the
amount under (ii) above reduced
by the net proceeds of the sale of the property. If the
unpaid
principal balance plus accrued
interest and certain expenses is paid by the Special
Hazard
Insurer, the amount of further
coverage under the related Special Hazard Insurance
Policy will
be reduced by such amount
less any net proceeds from the sale of the property.
Any amount
paid as the cost of repair
of the property will further reduce coverage by such
amount.
Restoration of the property
with the proceeds described under (i) above will
satisfy the
condition under each Mortgage
Pool Insurance Policy or Contract Pool Insurance Policy
that the
property be restored before
a claim under such policy may be validly presented with
respect
to the defaulted Mortgage
Loan or Contract secured by such property. The payment
described
under (ii) above will
render presentation of a claim in respect of such
Mortgage Loan
or Contract under the
related Mortgage Pool Insurance Policy or Contract Pool
Insurance
Policy unnecessary.
Therefore, so long as a Mortgage Pool Insurance Policy
or
Contract Pool Insurance Policy
remains in effect, the payment by the insurer under a
Special
Hazard Insurance Policy of the
cost of repair or of the unpaid principal balance of
the related
Mortgage Loan or contract
plus accrued interest and certain expenses will not
affect the
total Insurance Proceeds paid
to Certificateholders, but will affect the relative
amounts of
coverage remaining under the
related Special Hazard Insurance Policy and Mortgage
Pool
Insurance Policy or Contract
Pool Insurance Policy.

To the extent set forth in the related Prospectus
Supplement,
coverage in respect of
Special Hazard Losses for a series of Certificates may
be
provided, in whole or in part, by
a type of special hazard coverage other than a Special
Hazard
Insurance Policy or by means
of a representation of the Company or Residential
Funding.

Bankruptcy Bonds

In the event of a personal bankruptcy of a
Mortgagor, a
bankruptcy court may
establish the value of the Mortgaged Property of such
Mortgagor
at an amount less than the
then outstanding principal balance of the first and
junior liens
or Contract secured by such
Mortgaged Property (such difference, a "Deficient
Valuation").
The amount of the secured
debt could then be reduced to such value and, thus, the
holder of
a Mortgage Loan or
Contract would become an unsecured creditor to the
extent the
outstanding principal balance
of such Mortgage Loan (together with any senior
mortgage loan,
with respect to a Junior
Mortgage Loan) or Contract exceeds the value assigned
to the
Mortgaged Property by the
bankruptcy court. In addition, certain other
modifications of the
terms of a Mortgage Loan
or Contract can result from a bankruptcy proceeding,
including a
reduction in the amount
of the Monthly Payment on the related Mortgage Loan (a
"Debt
Service Reduction"). See
"Certain Legal Aspects of Mortgage Loans and Contracts
Mortgage
Loans Anti-Deficiency Legislation and Other Limitations
on
Lenders." Any Bankruptcy Bond to
provide coverage for Bankruptcy Losses resulting from
proceedings
under the federal
Bankruptcy Code obtained for a Trust Fund will be
issued by an
insurer named in the related
Prospectus Supplement. The level of coverage under each
Bankruptcy Bond will be set forth
in the related Prospectus Supplement.

Reserve Funds

If so specified in the related Prospectus
Supplement, the
Company will deposit or
cause to be deposited in an account (a "Reserve Fund")
any
combination of cash or
Permitted Investments in specified amounts, or any
other
instrument satisfactory to the
Rating Agency or Agencies, which will be applied and
maintained
in the manner and under
the conditions specified in such Prospectus Supplement.
In the
alternative or in addition to
such deposit, to the extent described in the related
Prospectus
Supplement, a Reserve Fund
may be funded through application of all or a portion
of amounts
otherwise payable on any
related Subordinate Certificates, from the Spread or
otherwise.
To the extent that the
funding of the Reserve Fund is dependent on amounts
otherwise
payable on related
Subordinate Certificates, Spread or other cash flows
attributable
to the related Mortgage
Loans or on reinvestment income, the Reserve Fund may
provide
less coverage than initially
expected if the cash flows or reinvestment income on
which such
funding is dependent are
lower than anticipated. With respect to any series of
Certificates as to which credit
enhancement includes a Letter of Credit, if so
specified in the
related Prospectus
Supplement, under certain circumstances the remaining
amount of
the Letter of Credit may
be drawn by the Trustee and deposited in a Reserve
Fund. Amounts
in a Reserve Fund may
be distributed to Certificateholders, or applied to
reimburse the
Master Servicer or Servicer
for outstanding Advances, or may be used for other
purposes, in
the manner and to the
extent specified in the related Prospectus Supplement.
Unless
otherwise specified in the
related Prospectus Supplement, any such Reserve Fund
will not be
deemed to be part of the
related Trust Fund. A Reserve Fund may provide coverage
to more
than one series of
Certificates, if set forth in the related Prospectus
Supplement.

Unless otherwise specified in the related
Prospectus
Supplement, the Trustee will
have a perfected security interest for the benefit of
the
Certificateholders in the assets in the
Reserve Fund. However, to the extent that the Company,
any
affiliate thereof or any other
entity has an interest in any Reserve Fund, in the
event of the
bankruptcy, receivership or
insolvency of such entity, there could be delays in
withdrawals
from the Reserve Fund and
the corresponding payments to the Certificateholders.
Such delays
could adversely affect
the yield to investors on the related Certificates.

Amounts deposited in any Reserve Fund for a series
will be
invested in Permitted
Investments by, or at the direction of, and for the
benefit of a
Servicer, the Master Servicer,
the Certificate Administrator or any other person named
in the
related Prospectus
Supplement.

Certificate Insurance Policies

If so specified in the related Prospectus
Supplement, the
Company may obtain one
or more certificate insurance policies (each, a
"Certificate
Insurance Policy"), issued by
insurers acceptable to the Rating Agency or Agencies
rating the
Certificates offered
pursuant to such Prospectus Supplement, insuring the
holders of
one or more classes of
Certificates the payment of amounts due in accordance
with the
terms of such class or
classes of Certificates. Any Certificate Insurance
Policy will
have the characteristics
described in and will be subject to such limitations
and
exceptions as set forth in the related
Prospectus Supplement.

Surety Bonds

If so specified in the related Prospectus
Supplement, the
Company may obtain one
or more surety bonds (each, a "Surety Bond"), issued by
insurers
acceptable to the Rating
Agency or Agencies rating the Certificates offered
pursuant to
such Prospectus Supplement,
insuring the holders of one or more classes of
Certificates the
payment of amounts due in
accordance with the terms of such class or classes of
Certificates. Any surety bond will have
the characteristics described in and will be subject to
such
limitations and exceptions as set
forth in the related Prospectus Supplement.

Maintenance of Credit Enhancement

If credit enhancement has been obtained for a
series of
Certificates, the Master
Servicer, the Servicer or the Certificate Administrator
will be
obligated to exercise its best
reasonable efforts to keep or cause to be kept such
credit
enhancement in full force and
effect throughout the term of the applicable Pooling
and
Servicing Agreement or Trust
Agreement, unless coverage thereunder has been
exhausted through
payment of claims or
otherwise, or substitution therefor is made as
described below
under " Reduction or
Substitution of Credit Enhancement." The Master
Servicer, the
Servicer or the Certificate
Administrator, as applicable, on behalf of itself, the
Trustee
and Certificateholders, will be
required to provide information required for the
Trustee to draw
under any applicable credit
enhancement.

Unless otherwise specified in the related
Prospectus
Supplement, the Master
Servicer, the Servicer or the Certificate Administrator
will
agree to pay the premiums for
each Mortgage Pool Insurance Policy, Contract Pool
Insurance
Policy, Special Hazard
Insurance Policy, Bankruptcy Bond, Certificate
Insurance Policy
or Surety Bond, as
applicable, on a timely basis. In the event the related
insurer
ceases to be a "Qualified
Insurer" because it ceases to be qualified under
applicable law
to transact such insurance
business or coverage is terminated for any reason other
than
exhaustion of such coverage,
the Master Servicer, the Servicer or the Certificate
Administrator will use its best reasonable
efforts to obtain from another Qualified Insurer a
comparable
replacement insurance policy
or bond with a total coverage equal to the then
outstanding
coverage of such policy or bond.
If the cost of the replacement policy is greater than
the cost of
such policy or bond, the
coverage of the replacement policy or bond will, unless
otherwise
agreed to by the
Company, be reduced to a level such that its premium
rate does
not exceed the premium rate
on the original insurance policy. In the event that the
Pool
Insurer ceases to be a Qualified
Insurer because it ceases to be approved as an insurer
by Freddie
Mac, Fannie Mae or any
successor entity, the Master Servicer, the Servicer or
the
Certificate Administrator, as
applicable, will review, not less often than monthly,
the
financial condition of the Pool
Insurer with a view toward determining whether
recoveries under
the Mortgage Pool
Insurance Policy or Contract Pool Insurance Policy are
jeopardized for reasons related to
the financial condition of the Pool Insurer. If the
Master
Servicer, the Servicer or the
Certificate Administrator determines that recoveries
are so
jeopardized, it will exercise its
best reasonable efforts to obtain from another
Qualified Insurer
a replacement insurance
policy as described above, subject to the same cost
limit. Any
losses in market value of the
Certificates associated with any reduction or
withdrawal in
rating by an applicable Rating
Agency shall be borne by the Certificateholders.

If any property securing a defaulted Mortgage Loan
or
Contract is damaged and
proceeds, if any, from the related hazard insurance
policy or any
applicable Special Hazard
Insurance Policy are insufficient to restore the
damaged property
to a condition sufficient
to permit recovery under any Letter of Credit, Mortgage
Pool
Insurance Policy, Contract
Pool Insurance Policy or any related Primary Insurance
Policy,
the Master Servicer or the
Servicer, as applicable, is not required to expend its
own funds
to restore the damaged
property unless it determines (i) that such restoration
will
increase the proceeds to one or
more classes of Certificateholders on liquidation of
the Mortgage
Loan after reimbursement
of the Master Servicer or the Servicer, as applicable,
for its
expenses and (ii) that such
expenses will be recoverable by it through Liquidation
Proceeds
or Insurance Proceeds. If
recovery under any Letter of Credit, Mortgage Pool
Insurance
Policy, Contract Pool
Insurance Policy, other credit enhancement or any
related Primary
Insurance Policy is not
available because the Master Servicer or the Servicer,
as
applicable, has been unable to
make the above determinations, has made such
determinations
incorrectly or recovery is not
available for any other reason, the Master Servicer or
the
Servicer, as applicable, is
nevertheless obligated to follow such normal practices
and
procedures (subject to the
preceding sentence) as it deems necessary or advisable
to realize
upon the defaulted
Mortgage Loan and in the event such determination has
been
incorrectly made, is entitled
to reimbursement of its expenses in connection with
such
restoration.

Reduction or Substitution of Credit Enhancement

Unless otherwise specified in the Prospectus
Supplement, the
amount of credit
support provided with respect to any series of
Certificates may
be reduced under certain
specified circumstances. In most cases, the amount
available as
credit support will be
subject to periodic reduction on a non-discretionary
basis in
accordance with a schedule or
formula set forth in the related Pooling and Servicing
Agreement
or Trust Agreement.
Additionally, in most cases, such credit support may be
replaced,
reduced or terminated, and
the formula used in calculating the amount of coverage
with
respect to Bankruptcy Losses,
Special Hazard Losses or Fraud Losses may be changed,
without the
consent of the
Certificateholders, upon the written assurance from
each
applicable Rating Agency that the
then-current rating of the related series of
Certificates will
not be adversely affected thereby.
Furthermore, in the event that the credit rating of any
obligor
under any applicable credit
enhancement is downgraded, the credit rating of each
class of the
related Certificates may
be downgraded to a corresponding level, and, unless
otherwise
specified in the related
Prospectus Supplement, the Master Servicer, the
Servicer or the
Certificate Administrator,
as applicable, will not be obligated to obtain
replacement credit
support in order to restore
the rating of the Certificates. The Master Servicer,
the Servicer
or the Certificate
Administrator, as applicable, will also be permitted to
replace
such credit support with other
credit enhancement instruments issued by obligors whose
credit
ratings are equivalent to
such downgraded level and in lower amounts which would
satisfy
such downgraded level,
provided that the then-current rating of each class of
the
related series of Certificates is
maintained. Where the credit support 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 the Company, the Master Servicer
or such
other person that is
entitled thereto. Any assets so released will not be
available
for distributions in future
periods.

INSURANCE POLICIES ON MORTGAGE LOANS OR
CONTRACTS

Each Mortgage Loan or Contract will be required to
be covered
by a hazard
insurance policy (as described below) and, in certain
cases, a
Primary Insurance Policy. In
addition, FHA Loans and VA Loans will be covered by the
government mortgage insurance
programs described below. The descriptions of any
insurance
policies set forth in this
Prospectus or any Prospectus Supplement and the
coverage
thereunder do not purport to be
complete and are qualified in their entirety by
reference to such
forms of policies.

Primary Mortgage Insurance Policies

Unless otherwise specified in the related
Prospectus
Supplement, (i) each Mortgage
Loan having a Loan-to-Value Ratio at origination of
over 80% will
be covered by a primary
mortgage guaranty insurance policy (a "Primary
Insurance Policy")
insuring against default
on such Mortgage Loan as to at least the principal
amount thereof
exceeding 75% of the
Appraised Value of the Mortgaged Property at
origination of the
Mortgage Loan, unless and
until the principal balance of the Mortgage Loan is
reduced to a
level that would produce
a Loan-to-Value Ratio equal to or less than 80%, and
(ii) the
Company or the related
Mortgage Collateral Seller will represent and warrant
that, to
the best of such entity's
knowledge, such Mortgage Loans are so covered. Unless
otherwise
specified in the
Prospectus Supplement, the Company will have the
ability to
cancel any Primary Insurance
Policy if the Loan-to-Value Ratio of the Mortgage Loan
is reduced
below 80% (or a lesser
specified percentage) based on an appraisal of the
Mortgaged
Property after the related
Closing Date or as a result of principal payments that
reduce the
principal balance of the
Mortgage Loan after such Closing Date. Mortgage Loans
which are
subject to negative
amortization will only be covered by a Primary
Insurance Policy
if such coverage was so
required upon their origination, notwithstanding that
subsequent
negative amortization may
cause such Mortgage Loan's Loan-to-Value Ratio (based
on the
then-current balance) to
subsequently exceed the limits which would have
required such
coverage upon their
origination. Junior Mortgage Loans generally will not
be required
by the Company to be
covered by a primary mortgage guaranty insurance policy
insuring
against default on such
Mortgage Loan.

While the terms and conditions of the Primary
Insurance
Policies issued by one
primary mortgage guaranty insurer (a "Primary Insurer")
will
differ from those in Primary
Insurance Policies issued by other Primary Insurers,
each Primary
Insurance Policy
generally will pay either: (i) the insured percentage
of the loss
on the related Mortgaged
Property; (ii) the entire amount of such loss, after
receipt by
the Primary Insurer of good and
merchantable title to, and possession of, the Mortgaged
Property;
or (iii) at the option of the
Primary Insurer under certain Primary Insurance
Policies, the sum
of the delinquent monthly
payments plus any advances made by the insured, both to
the date
of the claim payment and,
thereafter, monthly payments in the amount that would
have become
due under the
Mortgage Loan if it had not been discharged plus any
advances
made by the insured until
the earlier of (a) the date the Mortgage Loan would
have been
discharged in full if the
default had not occurred or (b) an approved sale. The
amount of
the loss as calculated under
a Primary Insurance Policy covering a Mortgage Loan
will
generally consist of the unpaid
principal amount of such Mortgage Loan and accrued and
unpaid
interest thereon and
reimbursement of certain expenses, less (i) rents or
other
payments received by the insured
(other than the proceeds of hazard insurance) that are
derived
from the related Mortgaged
Property, (ii) hazard insurance proceeds received by
the insured
in excess of the amount
required to restore such Mortgaged Property and which
have not
been applied to the
payment of the Mortgage Loan, (iii) amounts expended
but not
approved by the Primary
Insurer, (iv) claim payments previously made on such
Mortgage
Loan and (v) unpaid
premiums and certain other amounts.

As conditions precedent to the filing or payment of
a claim
under a Primary
Insurance Policy, in the event of default by the
Mortgagor, the
insured will typically be
required, among other things, to: (i) advance or
discharge (a)
hazard insurance premiums
and (b) as necessary and approved in advance by the
Primary
Insurer, real estate taxes,
protection and preservation expenses and foreclosure
and related
costs; (ii) 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 Insurance Policy
(ordinary wear and tear excepted); and (iii) tender to
the
Primary Insurer good and
merchantable title to, and possession of, the Mortgaged
Property.

The Pooling and Servicing Agreement for a series
generally
will require that the
Master Servicer or Servicer maintain, or cause to be
maintained,
coverage under a Primary
Insurance Policy to the extent such coverage was in
place on the
Cut-off Date. In the event
that the Company gains knowledge that, as of the
Closing Date, a
Mortgage Loan had a
Loan-to-Value Ratio at origination in excess of 80% and
was not
the subject of a Primary
Insurance Policy (and was not included in any exception
to such
standard disclosed in the
related Prospectus Supplement) and that such Mortgage
Loan has a
then current Loan-to-Value Ratio in excess of 80%, then
the
Master Servicer or the Servicer is required to use its
reasonable efforts to obtain and maintain a Primary
Insurance
Policy to the extent that such
a policy is obtainable at a reasonable price.

Any primary mortgage insurance or primary credit
insurance
policies relating to
Contracts will be described in the related Prospectus
Supplement.

Standard Hazard Insurance on Mortgaged Properties

The terms of the Mortgage Loans require each
Mortgagor to
maintain a hazard
insurance policy covering the related Mortgaged
Property and
providing for coverage at
least equal to that of the standard form of fire
insurance policy
with extended coverage
customary in the state in which the property is
located. Such
coverage generally will be in
an amount equal to the lesser of (i) the principal
balance of
such Mortgage Loan and, in the
case of Junior Mortgage Loans, the principal balance of
any
senior mortgage loans, or (ii)
100% of the insurable value of the improvements
securing the
Mortgage Loan. The Pooling
and Servicing Agreement will provide that the Master
Servicer or
Servicer shall cause such
hazard policies to be maintained or shall obtain a
blanket policy
insuring against losses on
the Mortgage Loans. The ability of the Master Servicer
or
Servicer to ensure that hazard
insurance proceeds are appropriately applied may be
dependent on
its being named as an
additional insured under any hazard insurance policy
and under
any flood insurance policy
referred to below, or upon the extent to which
information in
this regard is furnished to the
Master Servicer or the Servicer by Mortgagors or
Sub-Servicers.
If Junior Mortgage Loans
are included within any Trust Fund, investors should
also
consider the application of hazard
insurance proceeds discussed herein under "Certain
Legal Aspects
of the Mortgage Loans
and Contracts The Mortgage Loans Junior Mortgages,
Rights of
Senior Mortgages."

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, hail, riot, strike and civil
commotion, subject
to the conditions and
exclusions specified in each policy. The policies
relating to the
Mortgage Loans will be
underwritten by different insurers under different
state laws in
accordance with different
applicable state forms and therefore will not contain
identical
terms and conditions, the
basic terms thereof are dictated by respective state
laws. Such
policies typically do not cover
any physical damage resulting from the following: war,
revolution, governmental actions,
floods and other water-related causes, earth movement
(including
earthquakes, landslides
and mudflows), nuclear reactions, wet or dry rot,
vermin,
rodents, insects or domestic
animals, theft and, in certain cases, vandalism. The
foregoing
list is merely indicative of
certain kinds of uninsured risks and is not intended to
be
all-inclusive. Where the
improvements securing a Mortgage Loan are located in a
federally
designated flood area at
the time of origination of such Mortgage Loan, the
Pooling and
Servicing Agreement
generally requires the Master Servicer or Servicer to
cause to be
maintained for each such
Mortgage Loan serviced, flood insurance (to the extent
available)
in an amount equal in
general to the lesser of the amount required to
compensate for
any loss or damage on a
replacement cost basis or the maximum insurance
available under
the federal flood
insurance program.

Since the amount of hazard insurance that
Mortgagors are
required to maintain on
the improvements securing the Mortgage Loans may
decline as the
principal balances owing
thereon decrease, and since residential properties have
historically appreciated in value over
time, hazard insurance proceeds could be insufficient
to restore
fully the damaged property
in the event of a partial loss. See "Subordination"
above for a
description of when
subordination is provided, the protection (limited to
the Special
Hazard Amount as
described in the related Prospectus Supplement)
afforded by such
subordination, and
"Description of Credit Enhancement Special Hazard
Insurance
Policies" for a description
of the limited protection afforded by any Special
Hazard
Insurance Policy against losses
occasioned by hazards which are otherwise uninsured
against.

Standard Hazard Insurance on Manufactured Homes

The terms of the Pooling and Servicing Agreement
will require
the Servicer or the
Master Servicer, as applicable, to cause to be
maintained with
respect to each Contract one
or more Standard Hazard Insurance Policies which
provide, at a
minimum, the same
coverage as a standard form fire and extended coverage
insurance
policy that is customary
for manufactured housing, issued by a company
authorized to issue
such policies in the state
in which the Manufactured Home is located, and in an
amount which
is not less than the
maximum insurable value of such Manufactured Home or
the
principal balance due from
the Mortgagor on the related Contract, whichever is
less. Such
coverage may be provided
by one or more blanket insurance policies covering
losses on the
Contracts resulting from
the absence or insufficiency of individual Standard
Hazard
Insurance Policies. If a
Manufactured Home's location was, at the time of
origination of
the related Contract, within
a federally designated flood area, the Servicer or the
Master
Servicer also will be required
to maintain flood insurance.

If the Servicer or the Master Servicer repossesses
a
Manufactured Home on behalf
of the Trustee, the Servicer or the Master Servicer
will either
(i) maintain at its expense
hazard insurance with respect to such Manufactured Home
or (ii)
indemnify the Trustee
against any damage to such Manufactured Home prior to
resale or
other disposition.

FHA Mortgage Insurance

The Housing Act authorizes various FHA mortgage
insurance
programs. Some of
the Mortgage Loans may be insured under either Section
203(b),
Section 234 or Section 235
of the Housing Act. Under Section 203(b), FHA insures
mortgage
loans of up to 30 years'
duration for the purchase of one- to four-family
dwelling units.
Mortgage Loans for the
purchase of condominium units are insured by FHA under
Section
234. Loans insured under
these programs must bear interest at a rate not
exceeding the
maximum rate in effect at the
time the loan is made, as established by HUD, and may
not exceed
specified percentages
of the lesser of the appraised value of the property
and the
sales price, less seller paid
closing costs for the property, up to certain specified
maximums.
In addition, FHA imposes
initial investment minimums and other requirements on
mortgage
loans insured under the
Section 203(b) and Section 234 programs.

Under Section 235, assistance payments are paid by
HUD to the
mortgagee on
behalf of eligible mortgagors for as long as the
mortgagors
continue to be eligible for the
payments. To be eligible, a mortgagor must be part of a
family,
have income within the
limits prescribed by HUD at the time of initial
occupancy, occupy
the property and meet
requirements for recertification at least annually.

The regulations governing these programs provide
that
insurance benefits are
payable either (i) upon foreclosure (or other
acquisition of
possession) and conveyance of
the mortgaged premises to HUD or (ii) upon assignment
of the
defaulted mortgage loan to
HUD. The FHA insurance that may be provided under these
programs
upon the conveyance
of the home to HUD is equal to 100% of the outstanding
principal
balance of the mortgage
loan, plus accrued interest, as described below, and
certain
additional costs and expenses.
When entitlement to insurance benefits results from
assignment of
the mortgage loan to
HUD, the insurance payment is computed as of the date
of the
assignment and includes the
unpaid principal amount of the mortgage loan plus
mortgage
interest accrued and unpaid
to the assignment date.

When entitlement to insurance benefits results from
foreclosure (or other acquisition
of possession) and conveyance, the insurance payment is
equal to
the unpaid principal
amount of the mortgage loan, adjusted to reimburse the
mortgagee
for certain tax, insurance
and similar payments made by it and to deduct certain
amounts
received or retained by the
mortgagee after default, plus reimbursement not to
exceed
two-thirds of the mortgagee's
foreclosure costs. Any FHA insurance relating to
Contracts
underlying a series of
Certificates will be described in the related
Prospectus
Supplement.

VA Mortgage Guaranty

The Servicemen's Readjustment Act of 1944, as
amended,
permits a veteran (or, in
certain instances, his or her spouse) to obtain a
mortgage loan
guaranty by the VA covering
mortgage financing of the purchase of a one- to
four-family
dwelling unit to be occupied
as the veteran's home at an interest rate not exceeding
the
maximum rate in effect at the time
the loan is made, as established by HUD. The program
has no limit
on the amount of a
mortgage loan, requires no down payment from the
purchaser and
permits the guaranty of
mortgage loans with terms, limited by the estimated
economic life
of the property, up to 30
years. The maximum guaranty that may be issued by the
VA under
this program is 50% of
the original principal amount of the mortgage loan up
to a
certain dollar limit established
by the VA. The liability on the guaranty is reduced or
increased
pro rata with any reduction
or increase in the amount of indebtedness, but in no
event will
the amount payable on the
guaranty exceed the amount of the original guaranty.
Notwithstanding the dollar and
percentage limitations of the guaranty, a mortgagee
will
ordinarily suffer a monetary loss
only when the difference between the unsatisfied
indebtedness and
the proceeds of a
foreclosure sale of mortgaged premises is greater than
the
original guaranty as adjusted. The
VA may, at its option, and without regard to the
guaranty, make
full payment to a mortgagee
of the unsatisfied indebtedness on a mortgage upon its
assignment
to the VA.

Since there is no limit imposed by the VA on the
principal
amount of a VA-guaranteed mortgage loan but there is a
limit on
the amount of the VA guaranty, additional
coverage under a Primary Mortgage Insurance Policy may
be
required by the Company for
VA loans in excess of certain amounts. The amount of
any such
additional coverage will be
set forth in the related Prospectus Supplement. Any VA
guaranty
relating to Contracts
underlying a series of Certificates will be described
in the
related Prospectus Supplement.

THE COMPANY

The Company is an indirect wholly-owned subsidiary
of GMAC
Mortgage which
is a wholly-owned subsidiary of General Motors
Acceptance
Corporation. The Company
was incorporated in the State of Delaware in November
1994. The
Company was organized
for the purpose of acquiring mortgage loans and
contracts and
issuing securities backed by
such mortgage loans or contracts. The Company
anticipates that it
will in many cases have
acquired Mortgage Loans indirectly through Residential
Funding,
which is also an indirect
wholly-owned subsidiary of GMAC Mortgage. The Company
does not
have, nor is it
expected in the future to have, any significant assets.

The Certificates do not represent an interest in or
an
obligation of the Company. The
Company's only obligations with respect to a series of
Certificates will be pursuant to
certain limited representations and warranties made by
the
Company or as otherwise
provided in the related Prospectus Supplement.

The Company maintains its principal office at 8400
Normandale
Lake Boulevard,
Suite 700, Minneapolis, Minnesota 55437. Its telephone
number is
(612) 832-7000.

RESIDENTIAL FUNDING CORPORATION

Unless otherwise specified in the related
Prospectus
Supplement, Residential
Funding, an affiliate of the Company, will act as the
Master
Servicer or Certificate
Administrator for each series of Certificates.

Residential Funding buys conventional mortgage
loans under
several loan purchase
programs from mortgage loan originators or sellers
nationwide
that meet its seller/servicer
eligibility requirements and services mortgage loans
for its own
account and for others.
Residential Funding's principal executive offices are
located at
8400 Normandale Lake
Boulevard, Suite 700, Minneapolis, Minnesota 55437. Its
telephone
number is (612) 832-7000. Residential Funding conducts
operations
from its headquarters in Minneapolis and
from offices located in California, Connecticut,
Florida,
Georgia, Rhode Island and
Washington, D.C. At September 30, 1995, Residential
Funding was
master servicing a
mortgage loan portfolio of approximately $25.256
billion.

THE POOLING AND SERVICING AGREEMENT

As described above under "Description of the
Certificates
General," each series
of Certificates will be issued pursuant to a Pooling
and
Servicing Agreement or, if the Trust
Fund for a series of Certificates contains Agency
Securities, a
Trust Agreement. The
discussion below covers Pooling and Servicing
Agreements, but its
terms are also generally
applicable to Trust Agreements. The following summaries
describe
certain additional
provisions common to each Pooling and Servicing
Agreement and are
qualified entirely by
reference to the actual terms of the Pooling and
Servicing
Agreement for a series of
Certificates.

Servicing and Administration

The Pooling and Servicing Agreement for a series of
Certificates will set forth the
party responsible for performing servicing functions
for such
series which may be the
Master Servicer or one or more Servicers. If there is
more than
one Servicer and there is no
Master Servicer, a Certificate Administrator may be
party to the
Pooling and Servicing
Agreement. The Certificate Administrator will not be
responsible
for servicing Mortgage
Loans or Contracts and instead will perform certain
specified
administrative and reporting
functions with regard to the Trust Fund. In addition,
if the
Trust Fund for a series of
Certificates contains Agency Securities, generally the
Certificate Administrator will perform
collection, administrative and reporting functions
pursuant to a
Trust Agreement and no
Master Servicer or Servicer will be appointed for such
series.

The Master Servicer or any Servicer for a series of
Certificates generally will
perform the functions set forth under "Description of
the
Certificates Servicing and
Administration of Mortgage Collateral" above.

Events of Default

Events of Default under the Pooling and Servicing
Agreement
in respect of a series
of Certificates, unless otherwise specified in the
Prospectus
Supplement, will include: (i)
in the case of a Trust Fund including Mortgage Loans or
Contracts, any failure by the
Certificate Administrator, the Master Servicer or a
Servicer (if
such Servicer is a party to
the Pooling and Servicing Agreement) to make a required
deposit
to the Certificate Account
or, if the Certificate Administrator or the Master
Servicer is
the Paying Agent, to distribute
to the holders of any class of Certificates of such
series any
required payment which
continues unremedied for five days after the giving of
written
notice of such failure to the
Master Servicer or the Certificate Administrator, as
applicable,
by the Trustee or the
Company, or to the Master Servicer, the Certificate
Administrator, the Company and the
Trustee by the holders of Certificates of such class
evidencing
not less than 25% of the
aggregate Percentage Interests constituting such class;
(ii) any
failure by the Master Servicer
or the Certificate Administrator, as applicable, duly
to observe
or perform in any material
respect any other of its covenants or agreements in the
Pooling
and Servicing Agreement
with respect to such series of Certificates which
continues
unremedied for 30 days (15 days
in the case of a failure to pay the premium for any
insurance
policy which is required to be
maintained under the Pooling and Servicing Agreement)
after the
giving of written notice
of such failure to the Master Servicer or the
Certificate
Administrator, as applicable, by the
Trustee or the Company, or to the Master Servicer, the
Certificate Administrator, the
Company and the Trustee by the holders of any class of
Certificates of such series
evidencing not less than 25% (33% in the case of a
Trust Fund
including Agency Securities)
of the aggregate Percentage Interests constituting such
class;
and (iii) certain events of
insolvency, readjustment of debt, marshalling of assets
and
liabilities or similar proceedings
regarding the Master Servicer or the Certificate
Administrator,
as applicable, and certain
actions by the Master Servicer or the Certificate
Administrator
indicating its insolvency or
inability to pay its obligations. A default pursuant to
the terms
of any Agency Securities
included in any Trust Fund will not constitute an Event
of
Default under the related Pooling
and Servicing Agreement.

Rights Upon Event of Default

So long as an Event of Default remains unremedied,
either the
Company or the
Trustee may, and, at the direction of the holders of
Certificates
evidencing not less than 51%
of the aggregate voting rights in the related Trust
Fund, the
Trustee shall, by written
notification to the Master Servicer or the Certificate
Administrator, as applicable, and to the
Company or the Trustee, terminate all of the rights and
obligations of the Master Servicer
or the Certificate Administrator under the Pooling and
Servicing
Agreement (other than any
rights of the Master Servicer or the Certificate
Administrator as
Certificateholder) covering
such Trust Fund and in and to the Mortgage Collateral
and the
proceeds thereof, whereupon
the Trustee or, upon notice to the Company and with the
Company's
consent, its designee
will succeed to all responsibilities, duties and
liabilities of
the Master Servicer or the
Certificate Administrator under such Pooling and
Servicing
Agreement (other than the
obligation to purchase Mortgage Collateral under
certain
circumstances) and will be entitled
to similar compensation arrangements. In the event that
the
Trustee would be obligated to
succeed the Master Servicer but is unwilling so to act,
it may
appoint (or if it is unable so
to act, it shall appoint) or petition a court of
competent
jurisdiction for the appointment of,
a Fannie Mae or Freddie Mac approved mortgage servicing
institution with a net worth of
at least $10,000,000 to act as successor to the Master
Servicer
under the Pooling and
Servicing Agreement (unless otherwise set forth in the
Pooling
and Servicing Agreement).
Pending such appointment, the Trustee is obligated to
act in such
capacity. The Trustee and
such successor may agree upon the servicing
compensation to be
paid, which in no event
may be greater than the compensation to the initial
Master
Servicer or the Certificate
Administrator under the Pooling and Servicing
Agreement.

No Certificateholder will have any right under a
Pooling and
Servicing Agreement
to institute any proceeding with respect to such
Pooling and
Servicing Agreement unless
such holder previously has given to the Trustee written
notice of
default and the continuance
thereof and unless the holders of Certificates of any
class
evidencing not less than 25% of
the aggregate Percentage Interests constituting such
class have
made written request upon
the Trustee to institute such proceeding in its own
name as
Trustee thereunder and have
offered to the Trustee reasonable indemnity and the
Trustee for
60 days after receipt of such
request and indemnity has neglected or refused to
institute any
such proceeding. However,
the Trustee will be under no obligation to exercise any
of the
trusts or powers vested in it
by the Pooling and Servicing Agreement or to institute,
conduct
or defend any litigation
thereunder or in relation thereto at the request, order
or
direction of any of the holders of
Certificates covered by such Pooling and Servicing
Agreement,
unless such
Certificateholders have offered to the Trustee
reasonable
security or indemnity against the
costs, expenses and liabilities which may be incurred
therein or
thereby.

Amendment

Each Pooling and Servicing Agreement may be amended
by the
Company, the
Master Servicer, the Certificate Administrator or any
Servicer,
as applicable, and the
Trustee, without the consent of the related
Certificateholders:
(i) to cure any ambiguity; (ii)
to correct or supplement any provision therein which
may be
inconsistent with any other
provision therein or to correct any error; (iii) to
change the
timing and/or nature of deposits
in the Custodial Account or the Certificate Account or
to change
the name in which the
Custodial Account is maintained (except that (a)
deposits to the
Certificate Account may
not occur later than the related Distribution Date, (b)
such
change may not adversely affect
in any material respect the interests of any
Certificateholder,
as evidenced by an opinion of
counsel, and (c) such change may not adversely affect
the
then-current rating of any rated
classes of Certificates, as evidenced by a letter from
each
applicable Rating Agency); (iv)
if a REMIC election has been made with respect to the
related
Trust Fund, to modify,
eliminate or add to any of its provisions (a) to the
extent
necessary to maintain the
qualification of the Trust Fund as a REMIC or to avoid
or
minimize the risk of imposition
of any tax on the related Trust Fund, provided that the
Trustee
has received an opinion of
counsel to the effect that (1) such action is necessary
or
desirable to maintain such
qualification or to avoid or minimize such risk and (2)
such
action will not adversely affect
in any material respect the interests of any related
Certificateholder or (b) to restrict the
transfer of the REMIC Residual Certificates, provided
that the
Company has determined
that such change would not adversely affect the
applicable
ratings of any classes of the
Certificates, as evidenced by a letter from each
applicable
Rating Agency, and that any such
amendment will not give rise to any tax with respect to
the
transfer of the REMIC Residual
Certificates to a non-permitted transferee; or (v) to
make any
other provisions with respect
to matters or questions arising under such Pooling and
Servicing
Agreement which are not
materially inconsistent with the provisions thereof, so
long as
such action will not adversely
affect in any material respect the interests of any
Certificateholder.

The Pooling and Servicing Agreement may also be
amended by
the Company, the
Master Servicer, the Certificate Administrator or any
Servicer,
as applicable, and the
Trustee with the consent of the holders of Certificates
of each
class affected thereby
evidencing, in each case, not less than 66% of the
aggregate
Percentage Interests
constituting such class for the purpose of adding any
provisions
to or changing in any
manner or eliminating any of the provisions of such
Pooling and
Servicing Agreement or
of modifying in any manner the rights of the related
Certificateholders, except that no such
amendment may (i) reduce in any manner the amount of,
or delay
the timing of, payments
received on Mortgage Collateral which are required to
be
distributed on a Certificate of any
class without the consent of the holder of such
Certificate or
(ii) reduce the percentage of
Certificates of any class the holders of which are
required to
consent to any such
amendment unless the holders of all Certificates of
such class
have consented to the change
in such percentage.

Notwithstanding the foregoing, if a REMIC election
has been
made with respect to
the related Trust Fund, the Trustee will not be
entitled to
consent to any amendment to a
Pooling and Servicing Agreement without having first
received an
opinion of counsel to the
effect that such amendment or the exercise of any power
granted
to the Master Servicer, the
Certificate Administrator, any Servicer, the Company or
the
Trustee in accordance with
such amendment will not result in the imposition of a
tax on the
related Trust Fund or cause
such Trust Fund to fail to qualify as a REMIC.

Termination; Retirement of Certificates

The obligations created by the Pooling and
Servicing
Agreement for each series of
Certificates (other than certain limited payment and
notice
obligations of the Trustee and
the Company, respectively) will terminate upon the
payment to the
related
Certificateholders of all amounts held in the
Certificate Account
or by the Master Servicer
or any Servicer and required to be paid to
Certificateholders
following the earlier of (i) the
final payment or other liquidation or disposition (or
any advance
with respect thereto) of the
last item of Mortgage Collateral subject thereto and
all property
acquired upon foreclosure
or deed in lieu of foreclosure of any Mortgage Loan or
Contract
and (ii) the purchase by the
Master Servicer, the Certificate Administrator, a
Servicer or the
Company or, if specified
in the related Prospectus Supplement, by the holder of
the REMIC
Residual Certificates (see
"Certain Federal Income Tax Consequences" below) from
the Trust
Fund for such series of
all remaining Mortgage Collateral and all property
acquired in
respect of such Mortgage
Collateral. In addition to the foregoing, the Master
Servicer,
the Certificate Administrator
or the Company may have the option to purchase, in
whole but not
in part, the Certificates
specified in the related Prospectus Supplement in the
manner set
forth in the related
Prospectus Supplement. Upon the purchase of such
Certificates or
at any time thereafter,
at the option of the Master Servicer, the Certificate
Administrator or the Company, the
Mortgage Collateral may be sold, thereby effecting a
retirement
of the Certificates and the
termination of the Trust Fund, or the Certificates so
purchased
may be held or resold by the
Master Servicer, the Certificate Administrator or the
Company.
Written notice of
termination of the Pooling and Servicing Agreement will
be given
to each Certificateholder,
and the final distribution will be made only upon
surrender and
cancellation of the
Certificates at an office or agency appointed by the
Trustee
which will be specified in the
notice of termination. If the Certificateholders are
permitted to
terminate the trust under the
applicable Pooling and Servicing Agreement, a penalty
may be
imposed upon the
Certificateholders based upon the fee that would be
foregone by
the Master Servicer, the
Certificate Administrator or a Servicer, as applicable,
because
of such termination.

Any such purchase of Mortgage Collateral and
property
acquired in respect of
Mortgage Collateral evidenced by a series of
Certificates shall
be made at the option of the
Master Servicer, the Certificate Administrator, a
Servicer, the
Company or, if applicable,
the holder of the REMIC Residual Certificates at the
price
specified in the related
Prospectus Supplement. The exercise of such right will
effect
early retirement of the
Certificates of that series, but the right of any such
entity to
purchase the Mortgage
Collateral and related property will be subject to the
criteria,
and will be at the price, set
forth in the related Prospectus Supplement. Such early
termination may adversely affect the
yield to holders of certain classes of such
Certificates. If a
REMIC election has been made,
the termination of the related Trust Fund will be
effected in a
manner consistent with
applicable federal income tax regulations and its
status as a
REMIC.

The Trustee

The Trustee under each Pooling and Servicing
Agreement will
be named in the
related Prospectus Supplement. The commercial bank or
trust
company serving as Trustee
may have normal banking relationships with the Company
and/or its
affiliates, including
Residential Funding.

The Trustee may resign at any time, in which event
the
Company will be obligated
to appoint a successor trustee. The Company may also
remove the
Trustee if the Trustee
ceases to be eligible to continue as such under the
Pooling and
Servicing Agreement or if
the Trustee becomes insolvent. Upon becoming aware of
such
circumstances, the Company
will be obligated to appoint a successor Trustee. The
Trustee may
also be removed at any
time by the holders of Certificates evidencing not less
than 51%
of the aggregate voting
rights in the related Trust Fund. Any resignation or
removal of
the Trustee and appointment
of a successor Trustee will not become effective until
acceptance
of the appointment by the
successor Trustee.

YIELD CONSIDERATIONS

The yield to maturity of a Certificate will depend
on the
price paid by the holder for
such Certificate, the Pass-Through Rate on any such
Certificate
entitled to payments of
interest (which Pass-Through Rate may vary if so
specified in the
related Prospectus
Supplement) and the rate and timing of principal
payments
(including prepayments,
defaults, liquidations and repurchases) on the Mortgage
Collateral and the allocation thereof
to reduce the principal balance of such Certificate (or
notional
amount thereof, if
applicable).

The rate of defaults on the Mortgage Loans or
Contracts will
affect the rate and
timing of principal prepayments on such Mortgage
Collateral and,
thus, the yield on the
Certificates. Defaults on the Mortgage Loans or
Contracts may
lead to Realized Losses upon
foreclosure and liquidation. To the extent Realized
Losses are
not covered by any credit
enhancement, they will be allocated to Certificates as
described
in the related Prospectus
Supplement and, accordingly, will affect the yield on
such
Certificates. In general, defaults
on mortgage loans or manufactured housing contracts are
expected
to occur with greater
frequency in their early years. The rate of default on
refinance,
limited documentation or no
documentation mortgage loans, and on mortgage loans or
manufactured housing contracts
with high Loan-to-Value Ratios or Combined
Loan-to-Value Ratios,
as applicable, may be
higher than for other types of mortgage loans or
manufactured
housing contracts. See "Risk
Factors Risks Associated with the Mortgage Collateral."
Likewise,
the rate of default on
mortgage loans or manufactured housing contracts that
have been
originated pursuant to
lower than traditional underwriting standards may be
higher than
those originated pursuant
to traditional standards. A Trust Fund may include
Mortgage Loans
or Contracts that are one
month or more delinquent at the time of offering of the
related
series of Certificates. In
addition, the rate and timing of prepayments, defaults
and
liquidations on the Mortgage
Loans or Contracts will be affected by the general
economic
condition of the region of the
country or the locality in which the related Mortgaged
Properties
are located. The risk of
delinquencies and loss is greater and prepayments are
less likely
in regions where a weak
or deteriorating economy exists, as may be evidenced
by, among
other factors, increasing
unemployment or falling property values. In addition,
Manufactured Homes may decline
in value even in areas where real estate values
generally have
not declined. Each Prospectus
Supplement will highlight any material characteristics
of the
Mortgage Collateral in the
related Trust Fund that may make such Mortgage
Collateral more
susceptible to default.

To the extent that any document relating to a
Mortgage Loan
or Contract is not in
the possession of the Trustee, such deficiency may make
it
difficult or impossible to realize
on the Mortgaged Property in the event of foreclosure
which will
affect the amount of
Liquidation Proceeds received by the Trustee. See
"Description of
the
Certificates Assignment of Mortgage Loans" and "
Assignment of
Contracts."

The amount of interest payments with respect to
each item of
Mortgage Collateral
distributed (or accrued in the case of Deferred
Interest or
Accrual Certificates) monthly to
holders of a class of Certificates entitled to payments
of
interest will be calculated on the
basis of such class's specified percentage of each such
payment
of interest (or accrual in the
case of Accrual Certificates) and will be expressed as
a fixed,
adjustable or variable Pass-Through Rate payable on the
outstanding principal balance or notional amount of
such
Certificate, or any combination of such Pass-Through
Rates,
calculated as described herein
and in the related Prospectus Supplement. See
"Description of the
Certificates Distributions." Holders of Strip
Certificates or a
class of Certificates having
a Pass-Through Rate that varies based on the weighted
average
interest rate of the
underlying Mortgage Collateral will be affected by
disproportionate prepayments and
repurchases of Mortgage Collateral having higher net
interest
rates or higher rates
applicable to the Strip Certificates, as applicable.

The effective yield to maturity to each holder of
Certificates entitled to payments
of interest will be below that otherwise produced by
the
applicable Pass-Through Rate and
purchase price of such Certificate because, while
interest will
accrue on each Mortgage
Loan or Contract from the first day of each month, the
distribution of such interest will be
made on the 25th day (or, if such day is not a business
day, the
next succeeding business
day) of the month following the month of accrual or, in
the case
of a Trust Fund including
Agency Certificates, such other day that is specified
in the
related Prospectus Supplement.

A class of Certificates may be entitled to payments
of
interest at a fixed, variable
or adjustable Pass-Through Rate, or any combination of
such
Pass-Through Rates, as
specified in the related Prospectus Supplement. A
variable
Pass-Through Rate may be
calculated based on the weighted average of the
Mortgage Rates
(net of Servicing Fees and
any Certificate Administrator fee or Spread (each, a
"Net
Mortgage Rate")) of the related
Mortgage Collateral for the month preceding the
Distribution
Date, by reference to an index
or otherwise. The aggregate payments of interest on a
class of
Certificates, and the yield to
maturity thereon, will be affected by the rate of
payment of
principal on the Certificates (or
the rate of reduction in the notional amount of
Certificates
entitled to payments of interest
only) and, in the case of Certificates evidencing
interests in
ARM Loans, by changes in the
Net Mortgage Rates on the ARM Loans. See "Maturity and
Prepayment
Considerations"
below. The yield on the Certificates will also be
affected by
liquidations of Mortgage Loans
or Contracts following Mortgagor defaults and by
purchases of
Mortgage Collateral in the
event of breaches of representations made in respect of
such
Mortgage Collateral by the
Company, the Master Servicer and others, or conversions
of ARM
Loans to a fixed interest
rate. See "The Trust Funds Representations with Respect
to
Mortgage Collateral."

In general, if a Certificate is purchased at a
premium over
its face amount and
payments of principal on the related Mortgage
Collateral occur at
a rate faster than
anticipated at the time of purchase, the purchaser's
actual yield
to maturity will be lower
than that assumed at the time of purchase. Conversely,
if a class
of Certificates is purchased
at a discount from its face amount and payments of
principal on
the related Mortgage
Collateral occur at a rate slower than that assumed at
the time
of purchase, the purchaser's
actual yield to maturity will be lower than that
originally
anticipated. If Strip Certificates
are issued evidencing a right to payments of interest
only or
disproportionate payments of
interest, a faster than expected rate of principal
prepayments on
the Mortgage Collateral will
negatively affect the total return to investors in any
such
Certificates. If Strip Certificates
are issued evidencing a right to payments of principal
only or
disproportionate payments of
principal, a slower than expected rate of principal
payments on
the Mortgage Collateral
could negatively affect the anticipated yield on such
Strip
Certificates. If Certificates with
either of the foregoing characteristics are issued, the
total
return to investors of such
Certificates will be extremely sensitive to such
prepayments. In
addition, the total return to
investors of Certificates evidencing a right to
distributions of
interest at a rate that is based
on the weighted average Net Mortgage Rate of the
Mortgage
Collateral from time to time
will be adversely affected by principal prepayments on
Mortgage
Collateral with Mortgage
Rates higher than the weighted average Mortgage Rate on
the
Mortgage Collateral. In
general, mortgage loans or manufactured housing
contracts with
higher Mortgage Rates
prepay at a faster rate than mortgage loans or
manufactured
housing contracts with lower
Mortgage Rates. The yield on a class of Strip
Certificates that
is entitled to receive a portion
of principal or interest from each item of Mortgage
Collateral in
a Trust Fund will be
affected by any losses on the Mortgage Collateral
because of the
affect on timing and
amount of payments. In certain circumstances, rapid
prepayments
may result in the failure
of such holders to recoup their original investment. In
addition,
the yield to maturity on
certain other types of classes of Certificates,
including Accrual
Certificates, Certificates
with a Pass-Through Rate that fluctuates inversely with
or at a
multiple of an index or
certain other classes in a series including more than
one class
of Certificates, may be
relatively more sensitive to the rate of prepayment on
the
related Mortgage Collateral than
other classes of Certificates.

The timing of changes in the rate of principal
payments on or
repurchases of the
Mortgage Collateral may significantly affect an
investor's actual
yield to maturity, even if
the average rate of principal payments experienced over
time is
consistent with an investor's
expectation. In general, the earlier a prepayment of
principal on
the Mortgage Collateral or
a repurchase thereof, the greater will be the effect on
an
investor's yield to maturity. As a
result, the effect on an investor's yield of principal
payments
and repurchases occurring at
a rate higher (or lower) than the rate anticipated by
the
investor during the period
immediately following the issuance of a series of
Certificates
would not be fully offset by
a subsequent like reduction (or increase) in the rate
of
principal payments.

Unless otherwise specified in the related
Prospectus
Supplement, prepayments in
full or final liquidations will reduce the amount of
interest
distributed in the following
month to holders of Certificates entitled to
distributions of
interest because the resulting
Prepayment Interest Shortfall will not be covered by
Compensating
Interest. See
"Description of the Certificates Prepayment Interest
Shortfalls."
Unless otherwise
specified in the related Prospectus Supplement, a
partial
prepayment of principal is applied
so as to reduce the outstanding principal balance of
the related
Mortgage Loan or Contract
as of the first day of the month in which such partial
prepayment
is received. As a result,
unless otherwise specified in the related Prospectus
Supplement,
the effect of a partial
prepayment on a Mortgage Loan or Contract will be to
reduce the
amount of interest
distributed to holders of Certificates in the month
following the
receipt of such partial
prepayment by an amount equal to one month's interest
at the
applicable Pass-Through Rate
or Net Mortgage Rate, as the case may be, on the
prepaid amount.
See "Description of the
Certificates Prepayment Interest Shortfalls." Neither
full or
partial principal prepayments
nor Liquidation Proceeds will be distributed until the
Distribution Date in the month
following receipt. See "Maturity and Prepayment
Considerations."

With respect to certain ARM Loans, the Mortgage
Rate at
origination may be below
the rate that would result from the sum of the
then-applicable
Index and Gross Margin.
Under the applicable underwriting standards, the
Mortgagor under
each Mortgage Loan or
Contract generally will be qualified on the basis of
the Mortgage
Rate in effect at
origination and not the higher rate that would be
produced by the
sum of the Index and
Gross Margin. The repayment of any such Mortgage Loan
or Contract
may thus be
dependent on the ability of the Mortgagor to make
larger level
monthly payments following
the adjustment of the Mortgage Rate. In addition, the
periodic
increase in the amount paid
by the Mortgagor of a Buy-Down Loan during or at the
end of the
applicable Buy-Down
Period may create a greater financial burden for the
Mortgagor,
who might not have
otherwise qualified for a mortgage under the applicable
underwriting guidelines, and may
accordingly increase the risk of default with respect
to the
related Mortgage Loan.

For any Junior Mortgage Loans, the inability of the
Mortgagor
to pay off the
balance thereof may affect the ability of the Mortgagor
to obtain
refinancing of any related
senior mortgage loan, thereby preventing a potential
improvement
in the Mortgagor's
circumstances. Furthermore, if so specified in the
related
Prospectus Supplement, under the
applicable Pooling and Servicing Agreement the Master
Servicer
may be restricted or
prohibited from consenting to any refinancing of any
related
senior mortgage loan, which
in turn could adversely affect the Mortgagor's
circumstances or
result in a prepayment or
default under the corresponding Junior Mortgage Loan.

If so specified in the related Prospectus
Supplement, a Trust
Fund may contain Neg-Am ARM Loans with fluctuating
Mortgage Rates
that adjust more frequently than the
monthly payment with respect to such Mortgage Loans or
Contracts.
During a period of
rising interest rates as well as immediately after
origination,
the amount of interest accruing
on the principal balance of such Mortgage Loans may
exceed the
amount of the minimum
scheduled monthly payment thereon. As a result, a
portion of the
accrued interest on Neg-Am ARM Loans may become
Deferred Interest
which will be added to the principal balance
thereof and will bear interest at the applicable
Mortgage Rate.
The addition of any such
Deferred Interest to the principal balance of any
related class
of Certificates will lengthen
the weighted average life thereof and may adversely
affect yield
to holders thereof. In
addition, with respect to certain Neg-Am ARM Loans,
during a
period of declining interest
rates, it might be expected that each minimum scheduled
monthly
payment on such a
Mortgage Loan would exceed the amount of scheduled
principal and
accrued interest on the
principal balance thereof, and since such excess will
be applied
to reduce the principal
balance of the related class or classes of
Certificates, the
weighted average life of such
Certificates will be reduced and may adversely affect
yield to
holders thereof.

If so specified in the related Prospectus
Supplement, a Trust
Fund may contain
GPM Loans or Buy-Down Loans which have monthly payments
that
increase during the
first few years following origination. Mortgagors
generally will
be qualified for such loans
on the basis of the initial monthly payment. To the
extent that
the related Mortgagor's
income does not increase at the same rate as the
monthly payment,
such a loan may be more
likely to default than a mortgage loan with level
monthly
payments.

If so specified in the related Prospectus
Supplement, a Trust
Fund may contain
Balloon Loans which require a single payment of a
Balloon Amount.
The payment of
Balloon Amounts may result in a lower yield on
Certificates than
would be the case if all
such Mortgage Collateral was fully-amortizing because
the
maturity of a Balloon Loan
occurs earlier than that for a fully-amortizing
Mortgage Loan due
to the payment of a
Balloon Amount. Balloon Loans also pose a greater risk
of default
than fully-amortizing
Mortgage Loans because Mortgagors are required to pay
the Balloon
Amount upon
maturity. A Mortgagor's ability to pay a Balloon Amount
may
depend on its ability to
refinance the related Mortgaged Property.

If credit enhancement for a series of Certificates
is
provided by a Letter of Credit,
insurance policy or bond that is issued or guaranteed
by an
entity that suffers financial
difficulty, such credit enhancement may not provide the
level of
support that was anticipated
at the time an investor purchased its Certificate. In
the event
of a default under the terms of
such a Letter of Credit, insurance policy or bond, any
Realized
Losses on the Mortgage
Collateral not covered by such credit enhancement will
be applied
to a series of Certificates
in the manner described in the related Prospectus
Supplement and
may reduce an investor's
anticipated yield to maturity.

The related Prospectus Supplement may set forth
other factors
concerning the
Mortgage Collateral securing a series of Certificates
or the
structure of such series that will
affect the yield on such Certificates.

MATURITY AND PREPAYMENT CONSIDERATIONS

As indicated above under "The Trust Funds," the
original
terms to maturity of the
Mortgage Collateral in a given Trust Fund will vary
depending
upon the type of Mortgage
Collateral included in such Trust Fund. The Prospectus
Supplement
for a series of
Certificates will contain information with respect to
the types
and maturities of the
Mortgage Collateral in the related Trust Fund. The
prepayment
experience, the timing and
rate of repurchases and the timing and amount of
liquidations
with respect to the related
Mortgage Loans or Contracts will affect the life and
yield of the
related series of
Certificates.

Prepayments on mortgage loans and manufactured
housing
contracts are commonly
measured relative to a prepayment standard or model.
The
Prospectus Supplement for each
series of Certificates may describe one or more such
prepayment
standards or models and
may contain tables setting forth the projected yields
to maturity
on each class of Certificates
or the weighted average life of each class of
Certificates and
the percentage of the original
principal amount of each class of Certificates of such
series
that would be outstanding on
specified payment dates for such series based on the
assumptions
stated in such Prospectus
Supplement, including assumptions that prepayments on
the
Mortgage Collateral are made
at rates corresponding to various percentages of the
prepayment
standard or model specified
in the related Prospectus Supplement.

There is no assurance that prepayment of the
Mortgage
Collateral underlying a
series of Certificates will conform to any level of the
prepayment standard or model
specified in the related Prospectus Supplement. A
number of
factors, including homeowner
mobility, economic conditions, changes in mortgagors'
housing
needs, job transfers,
unemployment, mortgagors' net equity in the properties
securing
the mortgages, servicing
decisions, enforceability of due-on-sale clauses,
mortgage market
interest rates, mortgage
recording taxes, solicitations and the availability of
mortgage
funds, may affect prepayment
experience. The rate of prepayment with respect to
conventional
fixed-rate mortgage loans
and contracts has fluctuated significantly in recent
years. In
general, however, if prevailing
interest rates fall significantly below the Mortgage
Rates on the
Mortgage Loans or
Contracts underlying a series of Certificates, the
prepayment
rate of such Mortgage Loans
or Contracts is likely to be higher than if prevailing
rates
remain at or above the rates borne
by such Mortgage Loans or Contracts. It should be noted
that
Certificates of a certain series
may evidence an interest in Mortgage Loans or Contracts
with
different Mortgage Rates.
Accordingly, the prepayment experience of these
Certificates will
to some extent be a
function of the range of interest rates of such
Mortgage Loans or
Contracts.

Generally, junior mortgage loans are not viewed by
Mortgagors
as permanent
financing. Accordingly, Junior Mortgage Loans may
experience a
higher rate of
prepayment than typical first lien mortgage loans.

Unless otherwise specified in the related
Prospectus
Supplement, all of the
Mortgage Loans or Contracts may be prepaid without
penalty in
full or in part at any time.
The terms of the related Pooling and Servicing
Agreement
generally will require the
Servicer or Master Servicer, as the case may be, to
enforce any
due-on-sale clause to the
extent it has knowledge of the conveyance or the
proposed
conveyance of the underlying
Mortgaged Property and to the extent permitted by
applicable law,
except that any
enforcement action that would impair or threaten to
impair any
recovery under any related
insurance policy will not be required or permitted. See
"Description of the
Certificates Servicing and Administration of Mortgage
Collateral
Enforcement of 'Due-on-Sale' Clauses" and "Certain
Legal Aspects
of Mortgage Loans and Contracts The
Mortgage Loans Enforceability of Certain Provisions"
and " The
Contracts" for a
description of certain provisions of each Pooling and
Servicing
Agreement and certain legal
aspects that may affect the prepayment rate of Mortgage
Loans or
Contracts.

Certain types of Mortgage Collateral included in a
Trust Fund
may have
characteristics that make it more likely to default
than
collateral provided for mortgage
pass-through certificates from other mortgage purchase
programs.
The Company anticipates
including "limited documentation" and "no
documentation" Mortgage
Loans and Contracts,
as well as Mortgage Loans and Contracts that were
originated in
accordance with lower
underwriting standards and which may have been made to
Mortgagors
with imperfect credit
histories and prior bankruptcies. Likewise, a Trust
Fund may
include Mortgage Loans or
Contracts that are one month or more delinquent at the
time of
offering of the related series
of Certificates. Such Mortgage Collateral may be
susceptible to a
greater risk of default and
liquidation than might otherwise be expected by
investors in the
related Certificates.

The Master Servicer, a Servicer, a Sub-Servicer or
a Mortgage
Collateral Seller may
refinance a Mortgage Loan or Contract in a Trust Fund
by
accepting full prepayment thereof
and making a new loan secured by a mortgage on the same
property.
A Mortgagor may be
legally entitled to require the Master Servicer,
Servicer,
Sub-Servicer or Mortgage
Collateral Seller, as applicable, to allow such
refinancing. Any
such refinancing will have
the same effect on the Certificateholders as a
prepayment in full
of the refinanced Mortgage
Loan or Contract, thereby affecting the yield to
Certificateholders.

There are no uniform statistics compiled for
prepayments of
contracts relating to
Manufactured Homes. Prepayments on manufactured housing
contracts
may be influenced
by a variety of economic, geographic, social and other
facts,
including repossessions, aging,
seasonality and interest rate fluctuations. Other
factors
affecting prepayment of
manufactured housing contracts include changes in
housing needs,
job transfers,
unemployment and servicing decisions. An investment in
Certificates evidencing interests
in Contracts may be affected by, among other things, a
downturn
in regional or local
economic conditions. These regional or local economic
conditions
are often volatile, and
historically have affected the delinquency, loan loss
and
repossession experience of the
Contracts. To the extent that losses on the Contracts
are not
covered by any credit
enhancement, holders of the Certificates of a series
evidencing
interests in such Contracts
will bear all risk of loss resulting from default by
Mortgagors
and will have to look
primarily to the value of the Manufactured Homes, which
generally
depreciate in value, for
recovery of the outstanding principal and unpaid
interest of the
defaulted Contracts. See
"The Trust Funds The Contracts."

While most manufactured housing contracts will
contain
"due-on-sale" provisions
permitting the holder of the contract to accelerate the
maturity
of the contract upon
conveyance by the Mortgagor, the Master Servicer,
Servicer or
Sub-Servicer, as applicable,
may permit proposed assumptions of contracts where the
proposed
buyer of the
Manufactured Home meets the underwriting standards
described
above. Such assumption
would have the effect of extending the average life of
the
contract. FHA Loans, FHA
Contracts, VA Loans and VA Contracts are not permitted
to contain
"due-on-sale" clauses,
and are freely assumable.

Although the Mortgage Rates on ARM Loans will be
subject to
periodic
adjustments, such adjustments generally will (i) not
increase or
decrease such Mortgage
Rates by more than a fixed percentage amount on each
adjustment
date, (ii) not increase
such Mortgage Rates over a fixed percentage amount
during the
life of any ARM Loan and
(iii) be based on an index (which may not rise and fall
consistently with mortgage interest
rates) plus the related Gross Margin (which may be
different from
margins being used at the
time for newly originated adjustable rate mortgage
loans). As a
result, the Mortgage Rates
on the ARM Loans in a Trust Fund at any time may not
equal the
prevailing rates for
similar, newly originated adjustable rate mortgage
loans. In
certain rate environments, the
prevailing rates on fixed-rate mortgage loans may be
sufficiently
low in relation to the then-current Mortgage Rates on
ARM Loans
that the rate of prepayment may increase as a result
of refinancings. There can be no certainty as to the
rate of
prepayments on the Mortgage
Collateral during any period or over the life of any
series of
Certificates.

With respect to Balloon Loans, payment of the
Balloon Amount
(which, based on
the amortization schedule of such Mortgage Loans, is
expected to
be a substantial amount)
will generally depend on the Mortgagor's ability to
obtain
refinancing of such a Mortgage
Loan or to sell the Mortgaged Property prior to the
maturity of
the Balloon Loan. The ability
to obtain refinancing will depend on a number of
factors
prevailing at the time refinancing
or sale is required, including, without limitation,
real estate
values, the Mortgagor's financial
situation, prevailing mortgage loan interest rates, the
Mortgagor's equity in the related
Mortgaged Property, tax laws and prevailing general
economic
conditions. Unless otherwise
specified in the related Prospectus Supplement, none of
the
Company, the Master Servicer,
a Servicer, a Sub-Servicer, a Mortgage Collateral
Seller nor any
of their affiliates will be
obligated to refinance or repurchase any Mortgage Loan
or to sell
the Mortgaged Property.

An ARM Loan is assumable under certain conditions
if the
proposed transferee of
the related Mortgaged Property establishes its ability
to repay
the Mortgage Loan and, in
the reasonable judgment of the Master Servicer or the
related
Sub-Servicer, the security for
the ARM Loan would not be impaired by the assumption.
The extent
to which ARM Loans
are assumed by purchasers of the Mortgaged Properties
rather than
prepaid by the related
Mortgagors in connection with the sales of the
Mortgaged
Properties will affect the
weighted average life of the related series of
Certificates. See
"Description of the
Certificates" and "Certain Legal Aspects of Mortgage
Loans and
Contracts."

No assurance can be given that the value of the
Mortgaged
Property securing a
Mortgage Loan or Contract has remained or will remain
at the
level existing on the date of
origination. If the residential real estate market
should
experience an overall decline in
property values such that the outstanding balances of
the
Mortgage Loans or Contracts and
any secondary financing on the Mortgaged Properties in
a
particular Mortgage Pool or
Contract Pool become equal to or greater than the value
of the
Mortgaged Properties, the
actual rates of delinquencies, foreclosures and losses
could be
higher than those now
generally experienced in the mortgage lending industry.
In
addition, the value of property
securing Cooperative Loans and the delinquency rates
with respect
to Cooperative Loans
could be adversely affected if the current favorable
tax
treatment of cooperative tenant
stockholders were to become less favorable. See
"Certain Legal
Aspects of Mortgage Loans
and Contracts."

To the extent that losses resulting from
delinquencies,
losses and foreclosures or
repossession of Mortgaged Property with respect to
Mortgage Loans
or Contracts included
in a Trust Fund for a series of Certificates are not
covered by
the methods of credit
enhancement described herein under "Description of
Credit
Enhancement" or in the related
Prospectus Supplement, such losses will be borne by
holders of
the Certificates of such
series. Even where credit enhancement covers all
Realized Losses
resulting from
delinquency and foreclosure or repossession, the effect
of
foreclosures and repossessions
may be to increase prepayment experience on the
Mortgage
Collateral, thus reducing
average weighted life and affecting yield to maturity.
See "Yield
Considerations."

Under certain circumstances, the Master Servicer, a
Servicer,
the Company or, if
specified in the related Prospectus Supplement, the
holders of
the REMIC Residual
Certificates may have the option to purchase the
Mortgage Loans
in a Trust Fund. See "The
Pooling and Servicing Agreement Termination; Retirement
of
Certificates." Any such
repurchase will shorten the weighted average lives of
the related
Certificates.

CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS AND
CONTRACTS

The following discussion contains summaries of
certain legal
aspects of mortgage
loans and manufactured housing contracts that are
general in
nature. Because such legal
aspects are governed in part by state law (which laws
may differ
substantially from state to
state), the summaries do not purport to be complete, to
reflect
the laws of any particular
state or to encompass the laws of all states in which
the
Mortgaged Properties may be
situated. The summaries are qualified in their entirety
by
reference to the applicable federal
and state laws governing the Mortgage Loans or
Contracts.

The Mortgage Loans

General

The Mortgage Loans (other than Cooperative Loans)
will be
secured by deeds of
trust, mortgages or deeds to secure debt, depending
upon the
prevailing practice in the state
in which the related Mortgaged Property is located. In
some
states, a mortgage, deed of trust
or deed to secure debt creates a lien upon the real
property
encumbered by the mortgage. In
other states, the mortgage, deed of trust or deed to
secure debt
conveys legal title to the
property to the mortgagee subject to a condition
subsequent
(i.e., the payment of the
indebtedness secured thereby). It is not prior to the
lien for
real estate taxes and assessments
and other charges imposed under governmental police
powers.
Priority with respect to such
instruments depends on their terms and in some cases on
the terms
of separate subordination
or inter-creditor agreements, and generally on the
order of
recordation of the mortgage in
the appropriate recording office. There are two parties
to a
mortgage, the mortgagor, who
is the borrower and homeowner, and the mortgagee, who
is the
lender. Under the mortgage
instrument, the mortgagor delivers to the mortgagee a
note or
bond and the mortgage. In the
case of a land trust, there are three parties because
title to
the property is held by a land
trustee under a land trust agreement of which the
borrower is the
beneficiary; at origination
of a mortgage loan, the borrower executes a separate
undertaking
to make payments on the
mortgage note. Although a deed of trust is similar to a
mortgage,
a deed of trust has three
parties: the trustor, who is the borrower/homeowner;
the
beneficiary, who is the lender; and
a third-party grantee called the trustee. Under a deed
of trust,
the borrower grants the
property, irrevocably until the debt is paid, in trust,
generally
with a power of sale, to the
trustee to secure payment of the obligation. A deed to
secure
debt typically has two parties,
pursuant to which the borrower, or grantor, conveys
title to the
real property to the grantee,
or lender, generally with a power of sale, until such
time as the
debt is repaid. The trustee's
authority under a deed of trust and the mortgagee's
authority
under a mortgage or a deed to
secure debt are governed by the law of the state in
which the
real property is located, the
express provisions of the deed of trust, mortgage or
deed to
secure debt and, in certain deed
of trust transactions, the directions of the
beneficiary.

Cooperative Loans

If specified in the Prospectus Supplement relating
to a
series of Certificates, the
Mortgage Loans may include Cooperative Loans. Each debt
instrument (a "Cooperative
Note") evidencing a Cooperative Loan will be secured by
a
security interest in shares issued
by a related cooperative housing corporation, which is
a private
corporation entitled to be
treated as a housing cooperative under federal tax law,
and in
the related proprietary lease
or occupancy agreement granting exclusive rights to
occupy a
specific dwelling unit in the
cooperative's building. The security agreement will
create a lien
upon, or grant a security
interest in, the cooperative shares and proprietary
leases or
occupancy agreements, the
priority of which will depend on the terms of the
particular
security agreement as well as
the order of recordation of the agreement (or the
filing of the
financing statements related
thereto) in the appropriate recording office or the
taking of
possession of the cooperative
shares, depending on the law of the state in which the
cooperative is located. Such a lien
or security interest is not, in general, prior to liens
in favor
of the cooperative corporation
for unpaid assessments or common charges.

Unless otherwise specified in the related
Prospectus
Supplement, all cooperative
apartments relating to the Cooperative Loans are
located in the
State of New York. Each
cooperative owns in fee or has a leasehold interest in
all the
real property and owns in fee
or leases the building and all separate dwelling units
therein.
The cooperative is directly
responsible for property management and, in most cases,
payment
of real estate taxes, other
governmental impositions and hazard and liability
insurance. If
there is a blanket mortgage
(or mortgages) on the cooperative apartment building or
underlying land, as is generally the
case, or an underlying lease of the land, as is the
case in some
instances, the cooperative
housing corporation, as property mortgagor or lessee,
as the case
may be, is also responsible
for fulfilling such mortgage or rental obligations. A
blanket
mortgage is ordinarily incurred
by the cooperative in connection with either the
construction or
purchase of the
cooperative's apartment building or the obtaining of
capital by
the cooperative. The interest
of the occupant under proprietary leases or occupancy
agreements
as to which that
cooperative is the landlord is generally subordinate to
the
interest of the holder of a blanket
mortgage and to the interest of the holder of a land
lease. If
the cooperative is unable to
meet the payment obligations (i) arising under a
blanket
mortgage, the mortgagee holding
a blanket mortgage could foreclose on that mortgage and
terminate
all subordinate
proprietary leases and occupancy agreements or (ii)
arising under
its land lease, the holder
of the landlord's interest under the land lease could
terminate
it and all subordinate
proprietary leases and occupancy agreements. In
addition, a
blanket mortgage on a
cooperative may provide financing in the form of a
mortgage that
does not fully amortize,
with a significant portion of principal being due in
one final
payment at maturity. The
inability of the cooperative to refinance a mortgage
and its
consequent inability to make
such final payment could lead to foreclosure by the
mortgagee.
Similarly, a land lease has
an expiration date and the inability of the cooperative
to extend
its term or, in the
alternative, to purchase the land, could lead to
termination of
the cooperative's interest in
the property and termination of all proprietary leases
and
occupancy agreements. In either
event, a foreclosure by the holder of a blanket
mortgage or the
termination of the underlying
lease could eliminate or significantly diminish the
value of any
collateral held by the lender
who financed the purchase by an individual
tenant-stockholder of
cooperative shares or, in
the case of the Mortgage Loans, the collateral securing
the
Cooperative Loans.

Each cooperative is owned by tenant-stockholders
who, through
ownership of stock
or shares in the corporation, receive proprietary
leases or
occupancy agreements which
confer exclusive rights to occupy specific units.
Generally, a
tenant-stockholder of a
cooperative must make a monthly payment to the
cooperative
representing such tenant-stockholder's pro rata share
of the
cooperative's payments for its blanket mortgage, real
property taxes, maintenance expenses and other capital
or
ordinary expenses. An ownership
interest in a cooperative (which is accompanied by
occupancy
rights to the related dwelling
unit) may be financed through a Cooperative Loan
evidenced by a
Cooperative Note and
secured by an assignment of and a security interest in
the
occupancy agreement or
proprietary lease and a security interest in the
related
cooperative shares. The lender
generally takes possession of the share certificate and
a
counterpart of the proprietary lease
or occupancy agreement and a financing statement
covering the
proprietary lease or
occupancy agreement and the cooperative shares is filed
in the
appropriate state and local
offices to perfect the lender's interest in its
collateral.
Subject to the limitations discussed
below, upon default of the tenant-stockholder, the
lender may sue
for judgment on the
Cooperative Note, dispose of the collateral at a public
or
private sale or otherwise proceed
against the collateral or tenant-stockholder as an
individual as
provided in the security
agreement covering the assignment of the proprietary
lease or
occupancy agreement and the
pledge of cooperative shares. See " Foreclosure on
Shares of
Cooperatives" below.

Foreclosure on Mortgage Loans

Although a deed of trust or a deed to secure debt
may also be
foreclosed by judicial
action, foreclosure of a deed of trust or a deed to
secure debt
is generally accomplished by
a non-judicial trustee's sale under a specific
provision in the
deed of trust which authorizes
the trustee or lender, as applicable, to sell the
property upon
any default by the borrower
under the terms of the note or deed of trust or a deed
to secure
debt. In addition to any notice
requirements contained in a deed of trust, 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 notice of default and notice of
sale. In
addition, in some states, the
trustee or lender, as applicable, must provide notice
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 a specified period, a notice
of sale
must be posted in a public place
and, in most states, published for a specific period of
time in
one or more newspapers. In
addition, some states' 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 real
property.

Foreclosure of a mortgage generally is 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 may occasionally result
from difficulties in locating necessary parties. If the
mortgagee's right to foreclose is
contested, the legal proceedings necessary to resolve
the issue
can be time-consuming.

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, in such states, 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.

In the case of foreclosure under a mortgage, a deed
of trust
or deed to secure debt,
the sale by the referee or other designated officer or
by the
trustee is a public sale. However,
because of the difficulty a potential buyer at the sale
would
have in determining the exact
status of title and because the physical condition of
the
property may have deteriorated
during the foreclosure proceedings, it is uncommon for
a third
party to purchase the
property at a foreclosure sale. Rather, it is common
for the
lender to purchase the property
from the trustee or referee for a credit bid less than
or equal
to the unpaid principal amount
of the mortgage, deed of trust or deed to secure debt,
accrued
and unpaid interest and the
expense of foreclosure. Generally, state law controls
the amount
of foreclosure costs and
expenses, including attorneys' fees, which may be
recovered by a
lender. Thereafter, subject
to the right of the borrower in some states to remain
in
possession during the redemption
period, the lender will assume the burdens of
ownership,
including obtaining hazard
insurance and making such repairs at its own expense as
are
necessary to render the property
suitable for sale. Generally, the lender will obtain
the services
of a real estate broker and pay
the broker's commission in connection with the sale of
the
property. Depending upon market
conditions, the ultimate proceeds of the sale of the
property may
not equal the lender's
investment in the property and, in some states, the
lender may be
entitled to a deficiency
judgment. In some cases, a deficiency judgment may be
pursued in
lieu of foreclosure. Any
loss may be reduced by the receipt of any mortgage
insurance
proceeds or other forms of
credit enhancement for a series of Certificates. See
"Description
of Credit Enhancement."

A junior mortgagee may not foreclose on the
property securing
a Junior Mortgage
Loan unless it forecloses subject to the senior
mortgages, in
which case it must either pay
the entire amount due on the senior mortgages to the
senior
mortgagees prior to or at the
time of the foreclosure sale or undertake the
obligation to make
payments on the senior
mortgages in the event the mortgagor is in default
thereunder, in
either event adding the
amounts expended to the balance due on the junior loan,
and may
be subrogated to the rights
of the senior mortgagees. In addition, in the event
that the
foreclosure by a junior
mortgagee triggers the enforcement of a "due-on-sale"
clause in a
senior mortgage, the
junior mortgagee may be required to pay the full amount
of the
senior mortgages to the
senior mortgagees (to avoid a default with respect
thereto).
Accordingly, with respect to
such Junior Mortgage Loans, if the junior lender
purchases the
property, the lender's title
will be subject to all senior liens and claims and
certain
governmental liens. The proceeds
received by the referee or trustee from the sale are
applied
first to the costs, fees and
expenses of sale and then in satisfaction of the
indebtedness
secured by the mortgage or
deed of trust under which the sale was conducted. Any
remaining
proceeds are generally
payable to the holders of junior mortgages or deeds of
trust and
other liens and claims in
order of their priority, whether or not the borrower is
in
default. Any additional proceeds
are generally payable to the mortgagor or trustor. The
payment
of the proceeds to the
holders of junior mortgages may occur in the
foreclosure action
of the senior mortgagee or
may require the institution of separate legal
proceedings. See
"Risk Factors Risks
Associated with the Mortgage Collateral" and
"Description of the
Certificates Realization
Upon Defaulted Property" herein.

Foreclosure on Shares of Cooperatives

The cooperative shares owned by the
tenant-stockholder,
together with the rights
of the tenant-stockholder under the proprietary lease
or
occupancy agreement, are pledged
to the lender and are, in almost all cases, subject to
restrictions on transfer as set forth in the
cooperative's certificate of incorporation and by-laws,
as well
as in the proprietary lease or
occupancy agreement. The proprietary lease or occupancy
agreement, even while pledged,
may be cancelled by the cooperative for failure by the
tenant
stockholder to pay rent or other
obligations or charges owed by such tenant-stockholder,
including
mechanics' liens against
the cooperative apartment building incurred by such
tenant-stockholder. Generally, rent and
other obligations and charges arising under a
proprietary lease
or occupancy agreement
which are owed to the cooperative are made liens upon
the shares
to which the proprietary
lease or occupancy agreement relates. In addition, the
proprietary lease or occupancy
agreement generally permits the cooperative to
terminate such
lease or agreement in the
event the borrower defaults in the performance of
covenants
thereunder. Typically, the
lender and the cooperative enter into a recognition
agreement
which, together with any
lender protection provisions contained in the
proprietary lease,
establishes the rights and
obligations of both parties in the event of a default
by the
tenant-stockholder on its
obligations under the proprietary lease or occupancy
agreement. A
default by the tenant-stockholder under the proprietary
lease or
occupancy agreement will usually constitute a
default under the security agreement between the lender
and the
tenant-stockholder.

The recognition agreement generally provides that,
in the
event that the tenant-stockholder has defaulted under
the
proprietary lease or occupancy agreement, the
cooperative will take no action to terminate such lease
or
agreement until the lender has
been provided with notice of and an opportunity to cure
the
default. The recognition
agreement typically provides that if the proprietary
lease or
occupancy agreement is
terminated, the cooperative will recognize the lender's
lien
against proceeds from a sale of
the cooperative apartment, subject, however, to the
cooperative's
right to sums due under
such proprietary lease or occupancy agreement or which
have
become liens on the shares
relating to the proprietary lease or occupancy
agreement. The
total amount owed to the
cooperative by the tenant-stockholder, which the lender
generally
cannot restrict and does
not monitor, could reduce the amount realized upon a
sale of the
collateral below the
outstanding principal balance of the Cooperative Loan
and accrued
and unpaid interest
thereon.

Recognition agreements also generally provide that
in the
event the lender succeeds
to the tenant-shareholder's shares and proprietary
lease or
occupancy agreement as the result
of realizing upon its collateral for 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 and assigning the proprietary lease.
Such
approval or consent is usually
based on the prospective purchaser's income and net
worth, among
other factors, and may
significantly reduce the number of potential
purchasers, which
could limit the ability of the
lender to sell and realize upon the value of the
collateral.
Generally, the lender is not limited
in any rights it may have to dispossess the
tenant-stockholder.

The terms of the Cooperative Loans do not require
either the
tenant-stockholder or
the cooperative to obtain title insurance of any type.
Consequently, the existence of any
prior liens or other imperfections of title to the
building also
may adversely affect the
marketability of the cooperative dwelling unit in the
event of
foreclosure.

A foreclosure on the cooperative shares is
accomplished by
public sale in
accordance with the provisions of Article 9 of the
Uniform
Commercial Code (the "UCC")
and the security agreement relating to those shares.
Article 9 of
the UCC requires that a sale
be conducted in a "commercially reasonable" manner.
Whether a
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 sale
and the
sale price. Generally, a sale
conducted according to the usual practice of creditors
selling
similar collateral in the same
area will be considered reasonably conducted.

Where the lienholder is the junior lienholder, any
foreclosure may be delayed until
the junior lienholder obtains actual possession of such
cooperative shares . Additionally,
if the lender does not have a first priority perfected
security
interest in such cooperative
shares, any foreclosure sale would be subject to the
rights and
interests of any creditor
holding senior interests therein. Also, a junior
lienholder may
not be able to obtain a
recognition agreement from a cooperative since many
cooperatives
do not permit
subordinate financing. Without a recognition
agreement, the
junior lienholder will not be
afforded the usual lender protections (i.e., notice of
default
and opportunity to cure) from
the cooperative which are generally provided for in
recognition
agreements.

Article 9 of the UCC provides that the proceeds of
the sale
will be applied first to
pay the costs and expenses of the sale and then to
satisfy the
indebtedness secured by the
lender's security interest. The recognition agreement,
however,
generally provides that the
lender's right to reimbursement is subject to the right
of the
cooperative corporation to
receive sums due under the proprietary lease or
occupancy
agreement. If there are proceeds
remaining, the lender must account to the
tenant-stockholder for
the surplus. Conversely,
if a portion of the indebtedness remains unpaid, the
tenant-stockholder is generally
responsible for the deficiency. See " Anti-Deficiency
Legislation
and Other Limitations
on Lenders" below.

Rights of Redemption

In some states, after sale pursuant to a deed of
trust, a
deed to secure debt or
foreclosure of a mortgage, the borrower and foreclosed
junior
lienors or other parties are
given a statutory period (generally ranging from six
months to
two years) in which to
redeem the property from the foreclosure sale. In some
states,
redemption may occur only
upon payment of the entire principal balance of the
loan, accrued
interest and expenses of
foreclosure. In other states, redemption may be
authorized if the
former borrower pays only
a portion of the sums due. The effect of a statutory
right of
redemption is to diminish the
ability of the lender to sell the foreclosed property.
The rights
of redemption would defeat
the title of any purchaser subsequent to foreclosure or
sale
under a deed of trust or a deed
to secure debt. 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 expired.

Anti-Deficiency Legislation and Other Limitations
on Lenders

Certain states have imposed statutory prohibitions
which
limit the remedies of a
beneficiary under a deed of trust or a mortgagee under
a mortgage
or a deed to secure debt.
In some states (including California), statutes limit
the right
of the beneficiary or mortgagee
to obtain a deficiency judgment against the borrower
following
foreclosure. A deficiency
judgment is a personal judgment against the former
borrower equal
in most cases to the
difference between the net amount realized upon the
public sale
of the real property and the
amount due to the lender. In the case of a Mortgage
Loan secured
by a property owned by
a trust where the Mortgage Note is executed on behalf
of the
trust, a deficiency judgment
against the trust following foreclosure or sale under a
deed of
trust, even if obtainable under
applicable law, may be of little value to the mortgagee
or
beneficiary if there are no trust
assets against which such deficiency judgment may be
executed.
Other statutes require the
beneficiary or mortgagee to exhaust the security
afforded under a
deed of trust, deed to
secure debt or mortgage by foreclosure in an attempt to
satisfy
the full debt before bringing
a personal action against the borrower. In certain
other states,
the lender has the option of
bringing a personal action against the borrower on the
debt
without first exhausting such
security; however, in some of these states, the lender,
following
judgment on such personal
action, may be deemed to have elected a remedy and may
be
precluded from exercising
remedies with respect to the security. Consequently,
the
practical effect of the election
requirement, in those states permitting such election,
is that
lenders will usually proceed
against the security first rather than bringing a
personal action
against the borrower. Finally,
in certain other states, statutory provisions limit any
deficiency judgment against the former
borrower following a foreclosure to the excess of the
outstanding
debt over the fair value
of the property at the time of the public sale. The
purpose of
these statutes is generally to
prevent a beneficiary or mortgagee from obtaining a
large
deficiency judgment against the
former borrower as a result of low or no bids at the
judicial
sale.

In the case of cooperative loans, lenders generally
realize
on cooperative shares and
the accompanying proprietary lease or occupancy
agreement given
to secure a cooperative
loan under Article 9 of the UCC. Some courts have
interpreted
Article 9 to prohibit or limit
a deficiency award in certain circumstances, including
circumstances where the disposition
of the collateral was not conducted in a commercially
reasonable
manner.

In addition to laws limiting or prohibiting
deficiency
judgments, numerous other
federal and state statutory provisions, including the
federal
bankruptcy laws and state laws
affording relief to debtors, may interfere with or
affect the
ability of the secured mortgage
lender to realize upon collateral or enforce a
deficiency
judgment. For example, with respect
to federal bankruptcy law, a court having federal
bankruptcy
jurisdiction may permit a
debtor through its Chapter 11 or Chapter 13
rehabilitative plan
to cure a monetary default
in respect of a mortgage loan on such debtor's
residence by
paying arrearages within a
reasonable time period and reinstating the original
mortgage loan
payment schedule, even
though the lender accelerated the mortgage loan and
final
judgment of foreclosure had been
entered in state court (provided no sale of the
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
allowed modifications that include reducing the amount
of each
monthly payment, changing
the rate of interest, altering the repayment schedule,
forgiving
all or a portion of the debt
and reducing the lender's security interest to the
value of the
residence, thus leaving the
lender a general unsecured creditor for the difference
between
the value of the residence and
the outstanding balance of the loan. Generally,
however, the
terms of a mortgage loan
secured only by a mortgage on real property that is the
debtor's
principal residence may not
be modified pursuant to a plan confirmed pursuant to
Chapter 13
except with respect to
mortgage payment arrearages, which may be cured within
a
reasonable time period.

Certain tax liens arising under the Code may, in
certain
circumstances, have priority
over the lien of a mortgage, deed to secure debt or
deed of
trust. In addition, substantive
requirements are imposed upon mortgage lenders in
connection with
the origination and the
servicing of mortgage loans by numerous federal and
some state
consumer protection laws.
These laws include the federal Truth-in-Lending Act,
Real Estate
Settlement Procedures
Act, Equal Credit Opportunity Act, Fair Credit Billing
Act, Fair
Credit Reporting Act and
related statutes. These federal laws impose specific
statutory
liabilities upon lenders who
originate 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.

Certain of the Mortgage Loans may be subject to
special
rules, disclosure
requirements and other provisions that were added to
the federal
Truth-in-Lending Act by
the Homeownership and Equity Protection Act of 1994
(such
Mortgage Loans, "High Cost
Loans"), if such Mortgage Loans were originated on or
after
October 1, 1995, are not
mortgage loans made to finance the purchase of the
mortgaged
property and have interest
rates or origination costs in excess of certain
prescribed
levels. Purchasers or assignees of
any High Cost Loan, including any Trust Fund, could be
liable for
all claims and subject to
all defenses arising under such provisions that the
borrower
could assert against the
originator thereof. Remedies available to the borrower
include
monetary penalties, as well
as recision rights if the appropriate disclosures were
not given
as required.

Enforceability of Certain Provisions

Unless the Prospectus Supplement indicates
otherwise, the
Mortgage Loans
generally contain due-on-sale clauses. These clauses
permit the
lender to accelerate the
maturity of the loan if the borrower sells, transfers
or conveys
the property. The
enforceability of these clauses has been the subject of
legislation or litigation in many states,
and in some cases the enforceability of these clauses
has been
limited or denied. However,
the Garn-St Germain Depository Institutions Act of 1982
(the
"Garn-St Germain Act"),
preempts state constitutional, statutory and case law
that
prohibit the enforcement of due-on-sale clauses and
permits
lenders to enforce these clauses in accordance with
their terms,
subject to certain limited exceptions. The Garn-St
Germain Act
does "encourage" lenders
to permit assumption of loans at the original rate of
interest or
at some other rate less than
the average of the original rate and the market rate.

The Garn-St Germain Act also sets forth nine
specific
instances in which a
mortgage lender covered by the Garn-St Germain Act may
not
exercise a due-on-sale
clause, notwithstanding the fact that a transfer of the
property
may have occurred. These
include intra-family transfers, certain transfers by
operation of
law, leases of fewer than
three years and the creation of a junior encumbrance.
Regulations
promulgated under the
Garn-St Germain Act also prohibit the imposition of a
prepayment
penalty upon the
acceleration of a loan pursuant to a due-on-sale
clause.

The inability to enforce a due-on-sale clause may
result in a
mortgage loan bearing
an interest rate below the current market rate being
assumed by a
new home buyer rather
than being paid off, which may have an impact upon the
average
life of the Mortgage Loans
and the number of Mortgage Loans which may be
outstanding until
maturity.

Upon foreclosure, courts have imposed general
equitable
principles. These equitable
principles are generally designed to relieve the
borrower from
the legal effect of its defaults
under the loan documents. Examples of judicial remedies
that have
been fashioned include
judicial requirements that the lender undertake
affirmative and
expensive actions to
determine the causes for the borrower's default and the
likelihood that the borrower will be
able to reinstate the loan. In some cases, courts have
required
that lenders reinstate loans or
recast payment schedules in order to accommodate
borrowers who
are suffering from
temporary financial disability. In other cases, courts
have
limited the right of the lender to
foreclose if the default under the mortgage instrument
is not
monetary, such as the borrower
failing to adequately maintain the property. Finally,
some courts
have been faced with the
issue of whether or not federal or state constitutional
provisions reflecting due process
concerns for adequate notice require that borrowers
under deeds
of trust, deeds to secure
debt or mortgages receive notices in addition to the
statutorily
prescribed minimum. For the
most part, these cases have upheld the notice
provisions as being
reasonable or have found
that the sale by a trustee under a deed of trust, or
under a deed
to secure debt or a mortgage
having a power of sale, does not involve sufficient
state action
to afford constitutional
protections to the borrower.

Applicability of Usury Laws

Title V of the Depository Institutions Deregulation
and
Monetary Control Act of
1980 ("Title V"), provides that state usury limitations
shall not
apply to certain types of
residential first mortgage loans originated by certain
lenders
after March 31, 1980. A similar
federal statute was in effect with respect to mortgage
loans made
during the first three
months of 1980. The Office of Thrift Supervision is
authorized to
issue rules and regulations
and to publish interpretations governing implementation
of Title
V. The statute authorized
any state to impose interest rate limits by adopting,
before
April 1, 1983, a law or
constitutional provision which expressly rejects
application of
the federal law. In addition,
even where Title V is not so rejected, any state is
authorized by
the law to adopt a provision
limiting discount points or other charges on mortgage
loans
covered by Title V. Certain
states have taken action to reimpose interest rate
limits or to
limit discount points or other
charges.

Usury limits apply to junior mortgage loans in many
states.
Any applicable usury
limits in effect at origination will be reflected in
the maximum
Mortgage Rates on ARM
Loans, which will be set forth in the related
Prospectus
Supplement.

Unless otherwise set forth in the related
Prospectus
Supplement, each Mortgage
Collateral Seller, or another specified party, will
have
represented that each Mortgage Loan
was originated in compliance with then applicable state
laws,
including usury laws, in all
material respects. However, the Mortgage Rates on the
Mortgage
Loans will be subject to
applicable usury laws as in effect from time to time.

Alternative Mortgage Instruments

Alternative mortgage instruments, including
adjustable rate
mortgage loans and
early ownership mortgage loans, originated by
non-federally
chartered lenders, have
historically been subjected to a variety of
restrictions. Such
restrictions differed from state
to state, resulting in difficulties in determining
whether a
particular alternative mortgage
instrument originated by a state-chartered lender was
in
compliance with applicable law.
These difficulties were alleviated substantially as a
result of
the enactment of Title VIII of
the Garn-St Germain Act ("Title VIII"). Title VIII
provides that,
notwithstanding any state
law to the contrary, (i) state-chartered banks may
originate
alternative mortgage instruments
in accordance with regulations promulgated by the
Comptroller of
the Currency with respect
to the origination of alternative mortgage instruments
by
national banks, (ii) state-chartered
credit unions may originate alternative mortgage
instruments in
accordance with regulations
promulgated by the National Credit Union Administration
with
respect to origination of
alternative mortgage instruments by federal credit
unions and
(iii) all other non-federally
chartered housing creditors, including state-chartered
savings
and loan associations, state-chartered savings banks
and mutual
savings banks and mortgage banking companies, may
originate alternative mortgage instruments in
accordance with the
regulations promulgated
by the Federal Home Loan Bank Board, predecessor to the
Office of
Thrift Supervision,
with respect to origination of alternative mortgage
instruments
by federal savings and loan
associations. Title VIII also provides that any state
may reject
applicability of the provisions
of Title VIII by adopting, prior to October 15, 1985, a
law or
constitutional provision
expressly rejecting the applicability of such
provisions. Certain
states have taken such
action.

Junior Mortgages; Rights of Senior Mortgagees

The Mortgage Loans included in the Trust Fund may
be junior
to other mortgages,
deeds to secure debt or deeds of trust held by other
lenders.
The rights of the Trust Fund
(and therefore the Certificateholders), as mortgagee
under a
junior mortgage, are
subordinate to those of the mortgagee under the senior
mortgage,
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,
which may extinguish the junior mortgagee's lien unless
the
junior mortgagee asserts its
subordinate interest in the property in foreclosure
litigation
and, in certain cases, either
reinstates or satisfies the defaulted senior loan or
loans. A
junior mortgagee may satisfy a
defaulted senior loan in full or, in some states, may
cure such
default and bring the senior
loan current thereby reinstating the senior loan, in
either event
usually adding the amounts
expended to the balance due on the junior loan. In
most states,
absent a provision in the
mortgage, deed to secure debt or deed of trust, no
notice of
default is required to be given
to a junior mortgagee. Where applicable law or the
terms of the
senior mortgage, deed to
secure debt or deed of trust do not require notice of
default to
the junior mortgagee, the lack
of any such notice may prevent the junior mortgagee
from
exercising any right to reinstate
the loan which applicable law may provide.

The standard form of the mortgage, deed to secure
debt or
deed of trust used by
most institutional lenders confers on the mortgagee the
right
both to receive all proceeds
collected under any hazard insurance policy and all
awards made
in connection with
condemnation proceedings, and to apply such proceeds
and awards
to any indebtedness
secured by the mortgage, deed to secure debt or deed of
trust, in
such order as the mortgagee
may determine. 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 underlying senior
mortgages will
have the prior right to
collect any insurance proceeds payable under a hazard
insurance
policy and any award of
damages in connection with the condemnation and to
apply the same
to the indebtedness
secured by the senior mortgages. Proceeds in excess of
the
amount of senior mortgage
indebtedness, in most cases, may be applied to the
indebtedness
of junior mortgages in the
order of their priority.

Another provision sometimes found in the form of
the
mortgage, deed to secure
debt or deed of trust used by institutional lenders
obligates the
mortgagor to pay before
delinquency all taxes and assessments on the property
and, when
due, all encumbrances,
charges and liens on the property which are 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
under the mortgage. Upon
a failure of the mortgagor to perform any of these
obligations,
the mortgagee or beneficiary
is given the right under certain mortgages or deeds of
trust to
perform the obligation itself,
at its election, with the mortgagor agreeing to
reimburse the
mortgagee for any sums
expended by the mortgagee on behalf of the mortgagor.
All sums
so expended by a senior
mortgagee become part of the indebtedness secured by
the senior
mortgage. Also, since
most senior mortgages require the related Mortgagor to
make
escrow deposits with the
holder of the senior mortgage for all real estate taxes
and
insurance premiums, many junior
mortgagees will not collect and retain such escrows and
will rely
upon the holder of the
senior mortgage to collect and disburse such escrows.

The Contracts

General

A Contract evidences both (a) the obligation of the
Mortgagor
to repay the loan
evidenced thereby and (b) the grant of a security
interest in the
Manufactured Home to
secure repayment of such loan. Certain aspects of both
features
of the Contracts are
described below.

Security Interests in Manufactured Homes

The law governing perfection of a security interest
in a
Manufactured Homes varies
from state to state. 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 payments of a fee to the state motor
vehicle
authority, depending on state
law. In some non-title states, perfection pursuant to
the
provisions of the UCC is required.
The lender, the Servicer or the Master Servicer may
effect such
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 Contract is
registered. In the event the Master Servicer, the
Servicer or the
lender fails to effect such
notation or delivery, or files the security interest
under the
wrong law (for example, under
a motor vehicle title statute rather than under the
UCC, in a few
states), the
Certificateholders 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 certain
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 holder of
the
security interest must record
a mortgage, deed of trust or deed to secure debt, as
applicable,
under the real estate laws of
the state where the manufactured home is located. These
filings
must be made in the real
estate records office of the county where the
manufactured home
is located. Unless
otherwise provided in the related Prospectus
Supplement,
substantially all of the Contracts
will contain provisions prohibiting the Mortgagor from
permanently attaching the
Manufactured Home to its site. So long as the Mortgagor
does not
violate this agreement
and a court does not hold that the Manufactured Home is
real
property, 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
seller's security interest in the
Manufactured Home. If, however, a Manufactured Home is
permanently attached to its site
or if a court determines that a Manufactured Home is
real
property, other parties could
obtain an interest in the Manufactured Home which is
prior to the
security interest originally
retained by the Mortgage Collateral Seller and
transferred to the
Company. In certain cases,
the Master Servicer or the Servicer, as applicable, may
be
required to perfect a security
interest in the Manufactured Home under applicable real
estate
laws. If such real estate
recordings are not required and if any of the foregoing
events
were to occur, the only
recourse of the Certificateholders would be against the
Mortgage
Collateral Seller pursuant
to its repurchase obligation for breach of
representations or
warranties.

The Company will assign its security interests in
the
Manufactured Homes to the
Trustee on behalf of the Certificateholders. See
"Description of
the
Certificates Assignment of Contracts." Unless otherwise
specified
in the related
Prospectus Supplement, if a Manufactured Home is
governed by the
applicable motor
vehicle laws of the relevant state neither the Company
nor the
Trustee will amend the
certificates of title to identify the Trustee as the
new secured
party. Accordingly, the
Company or such other entity as may be specified in the
Prospectus Supplement will
continue to be named as the secured party on the
certificates of
title relating to the
Manufactured Homes. However, there exists a risk that,
in the
absence of an amendment to
the certificate of title, such assignment of the
security
interest may not be held effective
against subsequent purchasers of a Manufactured Home or
subsequent lenders who take a
security interest in the Manufactured Home or creditors
of the
assignor.

If the owner of a Manufactured Home moves it to a
state other
than the state in
which such Manufactured Home initially is registered
and if steps
are not taken to re-perfect
the Trustee's security interest in such state, the
security
interest in the Manufactured Home
will cease to be perfected. While in many circumstances
the
Trustee would have the
opportunity to re-perfect its security interest in the
Manufactured Home in the state of
relocation, there can be no assurance that the Trustee
will be
able to do so.

When a Mortgagor under a Contract sells a
Manufactured Home,
the Trustee, or the
Servicer or the Master Servicer on behalf of the
Trustee, must
surrender possession of the
certificate of title or will receive notice as a result
of its
lien noted thereon and accordingly
will have an opportunity to require satisfaction of the
related
lien before release of the lien.

Under the laws of most states, liens for repairs
performed on
a Manufactured Home
take priority over a perfected security interest. The
applicable
Mortgage Collateral Seller
generally will represent that it has no knowledge of
any such
liens with respect to any
Manufactured Home securing payment on any Contract.
However, such
liens could arise at
any time during the term of a Contract. No notice will
be given
to the Trustee or
Certificateholders in the event such a lien arises and
such lien
would not give rise to a
repurchase obligation on the part of the party
specified in the
Pooling and Servicing
Agreement.

To the extent that Manufactured Homes are not
treated as real
property under
applicable state law, contracts generally are "chattel
paper" as
defined in the UCC in effect
in the states in which the Manufactured Homes initially
were
registered. Pursuant to the
UCC, the sale of chattel paper is treated in a manner
similar to
perfection of a security
interest in chattel paper. Under the Pooling and
Servicing
Agreement, the Master Servicer
or the Company, as the case may be, will transfer
physical
possession of the Contracts to
the Trustee or its Custodian. In addition, the Master
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
related Prospectus
Supplement, the Contracts will not be stamped or marked
otherwise
to reflect their
assignment from the Company to the Trustee. Therefore,
if a
subsequent purchaser were
able to take physical possession of the Contracts
without notice
of such assignment, the
Trustee's interest in the Contracts could be defeated.
To the
extent that Manufactured Homes
are treated as real property under applicable state
law,
Contracts will be treated in a manner
similar to that described above with regard to Mortgage
Loans.
See " The Mortgage
Loans" above.

Enforcement of Security Interests in Manufactured
Homes

The Servicer or the Master Servicer on behalf of
the Trustee,
to the extent required
by the related Pooling and Servicing Agreement, may
take action
to enforce the Trustee's
security interest with respect to Contracts in default
by
repossession and sale of the
Manufactured Homes securing such defaulted Contracts.
So long as
the Manufactured
Home has not become subject to real estate law, a
creditor
generally 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
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 debtor may also have
a right to redeem the Manufactured Home at or before
resale.

Certain 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.
For a
discussion of deficiency
judgments, see " The Mortgage Loans Anti-Deficiency
Legislation
and Other
Limitations on Lenders" above.

Consumer Protection Laws

If the transferor of a consumer credit contract is
also the
seller of goods that give
rise to the transaction (and, in certain cases, related
lenders
and assignees), the "Holder-in-Due-Course" rule of the
Federal
Trade Commission is intended to defeat the ability of
such
transferor to transfer such 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 that
the debtor could assert against the seller of goods.
Liability
under this rule is limited to
amounts paid under a Contract; however, the Mortgagor
also may be
able to assert the rule
to set off remaining amounts due as a defense against a
claim
brought against such
Mortgagor. Numerous other federal and state consumer
protection
laws impose
requirements applicable to the origination and lending
pursuant
to 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 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 related
Contract.

"Due-on-Sale" Clauses

The Contracts, in general, prohibit the sale or
transfer of
the related Manufactured
Homes without the consent of the Company, the Master
Servicer or
the Servicer and permit
the acceleration of the maturity of the Contracts by
the Company,
the Master Servicer or the
Servicer upon any such sale or transfer that is not
consented to.
Unless otherwise specified
in the related Prospectus Supplement, the Company, the
Master
Servicer or the Servicer
generally will permit most transfers of Manufactured
Homes and
not accelerate the maturity
of the related Contracts. In certain cases, the
transfer may be
made by a delinquent
Mortgagor in order to avoid a repossession proceeding
with
respect to a Manufactured
Home.

In the case of a transfer of a Manufactured Home
after which
the Company desires
to accelerate the maturity of the related Contract, the
Company's
ability to do so will depend
on the enforceability under state law of the
"due-on-sale"
clause. The Garn-St Germain Act
preempts, subject to certain exceptions and conditions,
state
laws prohibiting enforcement
of "due-on-sale" clauses applicable to the Manufactured
Homes. In
some states the
Company or the Master Servicer may be prohibited from
enforcing a
"due-on-sale" clause
in respect of certain Manufactured Homes.

Applicability of Usury Laws

Title V provides that, subject to certain
conditions, state
usury limitations shall not
apply to any loan that is secured by a first lien on
certain
kinds of manufactured housing.
For a discussion of Title V, see " The Mortgage Loans
Applicability of Usury Laws"
above. Unless otherwise specified in the related
Pooling and
Servicing Agreement, each
Mortgage Collateral Seller, or another specified party,
will
represent that all of the Contracts
comply with applicable usury laws.

Environmental Legislation

Real property pledged as security to a lender may
be subject
to unforeseen
environmental risks. Most environmental statutes create
obligations for any party that can
be classified as the "owner" or "operator" of a
"facility"
(referring to both operating
facilities and to real property). Under the laws of
some states
and under the federal
Comprehensive Environmental Response, Compensation and
Liability
Act of 1980, a lender
may be liable, as an "owner" or "operator," for costs
arising out
of releases or threatened
releases of hazardous substances that require remedy at
a
mortgaged property, if agents or
employees of the lender have become sufficiently
involved in the
operations of the borrower
or, subsequent to a foreclosure, in the management of
the
property. Such liability may arise
regardless of whether the environmental damage or
threat was
caused by a prior owner.

Under federal and certain state laws, contamination
of a
property may give rise to
a lien on the property to assure the payment of costs
of
clean-up. Under federal law and in
several states, such a lien has priority over the lien
of an
existing mortgage against such
property. If a lender is or becomes directly liable
following a
foreclosure, it may be
precluded from bringing an action for contribution
against the
owner or operator who
created the environmental hazard. Such clean-up costs
may be
substantial. It is possible that
such costs could become a liability of the related
Trust Fund and
occasion a loss to
Certificateholders in certain circumstances described
above if
such remedial costs were
incurred.

Except as otherwise specified in the applicable
Prospectus
Supplement, at the time
the Mortgage Loans or Contracts were originated, no
environmental
assessment or a very
limited environment assessment of the Mortgaged
Properties will
have been conducted.

Soldiers' and Sailors' Civil Relief Act of 1940

Under the terms of the Relief Act, a borrower who
enters
military service after the
origination of such borrower's mortgage loan or
contract
(including a borrower who was in
reserve status and is called to active duty after
origination of
the mortgage loan or contract),
may not be charged interest (including fees and
charges) above an
annual rate of 6% during
the period of such borrower's active duty status,
unless a court
orders otherwise upon
application of the lender. The Relief Act applies to
borrowers
who are members of the Air
Force, Army, Marines, Navy, National Guard, Reserves or
Coast
Guard, and officers of the
U.S. Public Health Service assigned to duty with the
military.
Because the Relief Act
applies to borrowers who enter military service
(including
reservists who are called to active
duty) after origination of the related mortgage loan or
contract,
no information can be
provided as to the number of Mortgage Loans or
Contracts that may
be affected by the
Relief Act. With respect to Mortgage Loans or Contracts
included
in a Trust Fund,
application of the Relief Act would adversely affect,
for an
indeterminate period of time,
the ability of the Servicer or the Master Servicer, as
applicable, to collect full amounts of
interest on such Mortgage Collateral. Any shortfall in
interest
collections resulting from the
application of the Relief Act or similar legislation or
regulations, which would not be
recoverable from the related Mortgage Loans or
Contracts, would
result in a reduction of
the amounts distributable to the holders of the related
Certificates, and would not be covered
by Advances or any form of credit enhancement provided
in
connection with the related
series of Certificates. In addition, the Relief Act
imposes
limitations that would impair the
ability of the Servicer or the Master Servicer, as
applicable, to
foreclose on an affected
Mortgage Loan or Contract during the Mortgagor's period
of active
duty status, and, under
certain circumstances, during an additional three month
period
thereafter. Thus, in the event
that the Relief Act or similar legislation or
regulations applies
to any Mortgage Loan or
Contract which goes into default, there may be delays
in payment
and losses on the related
Certificates in connection therewith. Any other
interest
shortfalls, deferrals or forgiveness
of payments on the Mortgage Loans or Contracts
resulting from
similar legislation or
regulations may result in delays in payments or losses
to
Certificateholders of the related
series.

Default Interest and Limitations on Prepayments

Notes and mortgages may contain provisions that
obligate the
borrower to pay a late
charge or additional interest if payments are not
timely made,
and in some circumstances,
may prohibit prepayments for a specified period and/or
condition
prepayments upon the
borrower's payment of prepayment fees or yield
maintenance
penalties. In certain states,
there are or may be specific limitations upon the late
charges
which a lender may collect
from a borrower for delinquent payments. Certain
states also
limit the amounts that a lender
may collect from a borrower as an additional charge if
the loan
is prepaid. In addition, the
enforceability of provisions that provide for
prepayment fees or
penalties upon an
involuntary prepayment is unclear under the laws of
many states.
Most conventional single-family mortgage loans may be
prepaid in
full or in part without penalty. The regulations
of the Federal Home Loan Bank Board, as succeeded by
the OTS,
prohibit the imposition
of a prepayment penalty or equivalent fee for or in
connection
with the acceleration of a
loan by exercise of a due-on-sale clause. A mortgagee
to whom a
prepayment in full has
been tendered may be compelled to give either a release
of the
mortgage or an instrument
assigning the existing mortgage. The absence of a
restraint on
prepayment, particularly with
respect to Mortgage Loans having higher mortgage rates,
may
increase the likelihood of
refinancing or other early retirements of the Mortgage
Loans.

Forfeitures in Drug and RICO Proceedings

Federal law provides that property owned by persons
convicted
of drug-related
crimes or of criminal violations of the Racketeer
Influenced and
Corrupt Organizations
("RICO") statute can be seized by the government if the
property
was used in, or purchased
with the proceeds of, such crimes. Under procedures
contained in
the Comprehensive
Crime Control Act of 1984 (the "Crime Control Act"),
the
government may seize the
property even before conviction. The government must
publish
notice of the forfeiture
proceeding and may give notice to all parties "known to
have an
alleged interest in the
property," including the holders of mortgage loans.

A lender may avoid forfeiture of its interest in
the property
if it establishes that: (i)
its mortgage was executed and recorded before
commission of the
crime upon which the
forfeiture is based, or (ii) the lender was, at the
time of
execution of the mortgage,
"reasonably without cause to believe" that the property
was used
in, or purchased with the
proceeds of, illegal drug or RICO activities.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

General

The following is a general discussion of certain
anticipated
material federal income
tax consequences of the purchase, ownership and
disposition of
the Certificates offered
hereunder. This discussion has been prepared with the
advice of
Orrick, Herrington &
Sutcliffe and Thacher Proffitt & Wood, counsel to the
Company.
This discussion is directed
solely to Certificateholders that hold the Certificates
as
capital assets within the meaning
of Section 1221 of the Code and does not purport to
discuss all
federal income tax
consequences that may be applicable to particular
categories of
investors, some of which
(such as banks, insurance companies and foreign
investors) may be
subject to special rules.
In addition, the authorities on which this discussion,
and the
opinion referred to below, are
based are subject to change or differing
interpretations, which
could apply retroactively.
Taxpayers and preparers of tax returns (including those
filed by
any REMIC or other issuer)
should be aware that under applicable Treasury
regulations a
provider of advice on specific
issues of law is not considered an income tax return
preparer
unless the advice (i) is given
with respect to events that have occurred at the time
the advice
is rendered and is not given
with respect to the consequences of contemplated
actions, and
(ii) is directly relevant to the
determination of an entry on a tax return. Accordingly,
taxpayers
should consult their tax
advisors and tax return preparers regarding the
preparation of
any item on a tax return, even
where the anticipated tax treatment has been discussed
herein or
in a Prospectus
Supplement. In addition to the federal income tax
consequences
described herein, potential
investors should consider the state and local tax
consequences,
if any, of the purchase,
ownership and disposition of the Certificates. See
"State and
Other Tax Consequences."
Certificateholders are advised to consult their tax
advisors
concerning the federal, state,
local or other tax consequences to them of the
purchase,
ownership and disposition of the
Certificates offered hereunder.

The following discussion addresses certificates
(the "REMIC
Certificates")
representing interests in a Trust Fund, or a portion
thereof,
which the Master Servicer or
Certificate Administrator, as applicable, will covenant
to elect
to have treated as a REMIC
under Sections 860A through 860G (the "REMIC
Provisions") of the
Code. The Prospectus
Supplement for each series of Certificates will
indicate whether
a REMIC election (or
elections) will be made for the related Trust Fund and,
if such
an election is to be made, will
identify all "regular interests" and "residual
interests" in the
REMIC. If a REMIC election
will not be made for a Trust Fund, the federal income
consequences of the purchase,
ownership and disposition of the related Certificates
will be set
forth in the related
Prospectus Supplement. For purposes of this tax
discussion,
references to a
"Certificateholder" or a "holder" are to the beneficial
owner of
a Certificate.

The following discussion is based in part upon the
rules
governing original issue
discount that are set forth in Sections 1271 through
1273 and
Section 1275 of the Code and
in the Treasury regulations issued thereunder (the "OID
Regulations"), and in part upon the
REMIC Provisions and the Treasury regulations issued
thereunder
(the "REMIC
Regulations"). The OID Regulations do not adequately
address
certain issues relevant to,
and in some instances provide that they are not
applicable to,
securities such as the
Certificates.

REMICs

Classification of REMICs

Upon the issuance of each series of REMIC
Certificates,
Orrick, Herrington &
Sutcliffe or Thacher Proffitt & Wood, counsel to the
Company,
will deliver their opinion
generally to the effect that, assuming compliance with
all
provisions of the related Pooling
and Servicing Agreement or Trust Agreement, the related
Trust
Fund (or each applicable
portion thereof) will qualify as a REMIC and the REMIC
Certificates offered with respect
thereto will be considered to evidence ownership of
"regular
interests" ("REMIC Regular
Certificates") or "residual interests" ("REMIC Residual
Certificates") in that REMIC within
the meaning of the REMIC Provisions.

If an entity electing to be treated as a REMIC
fails to
comply with one or more of
the ongoing requirements of the Code for such status
during any
taxable year, the Code
provides that the entity will not be treated as a REMIC
for such
year and thereafter. In that
event, such entity may be taxable as a separate
corporation under
Treasury regulations, and
the related REMIC Certificates may not be accorded the
status or
given the tax treatment
described below. Although the Code authorizes the
Treasury
Department to issue
regulations providing relief in the event of an
inadvertent
termination of REMIC status, no
such regulations have been issued. Any such relief,
moreover, may
be accompanied by
sanctions, such as the imposition of a corporate tax on
all or a
portion of the Trust Fund's
income for the period in which the requirements for
such status
are not satisfied. The
Pooling and Servicing Agreement or Trust Agreement,
with respect
to each REMIC will
include provisions designed to maintain the Trust
Fund's status
as a REMIC under the
REMIC Provisions. It is not anticipated that the status
of any
Trust Fund as a REMIC will
be terminated.

Characterization of Investments in REMIC
Certificates

In general, the REMIC Certificates will be
"qualifying real
property loans" within
the meaning of Section 593(d) of the Code, "real estate
assets"
within the meaning of
Section 856(c)(5)(A) of the Code and assets described
in Section
7701(a)(19)(C) of the
Code in the same proportion that the assets of the
REMIC
underlying such Certificates
would be so treated. Moreover, if 95% or more of the
assets of
the REMIC qualify for any
of the foregoing treatments at all times during a
calendar year,
the REMIC Certificates will
qualify for the corresponding status in their entirety
for that
calendar year. Interest
(including original issue discount) on the REMIC
Regular
Certificates and income allocated
to the class of REMIC Residual Certificates will be
interest
described in Section
856(c)(3)(B) of the Code to the extent that such
Certificates are
treated as "real estate
assets" within the meaning of Section 856(c)(5)(A) of
the Code.
In addition, the REMIC
Regular Certificates will be "qualified mortgages"
within the
meaning of Section
860G(a)(3)(C) of the Code if transferred to another
REMIC on its
startup day in exchange
for regular or residual interests therein. The
determination as
to the percentage of the
REMIC's assets that constitute assets described in the
foregoing
sections of the Code will
be made with respect to each calendar quarter based on
the
average adjusted basis of each
category of the assets held by the REMIC during such
calendar
quarter. The Master Servicer
or the Certificate Administrator, as applicable, will
report
those determinations to
Certificateholders in the manner and at the times
required by
applicable Treasury
regulations.

The assets of the REMIC will include, in addition
to Mortgage
Collateral, payments
on Mortgage Collateral held pending distribution on the
REMIC
Certificates and property
acquired by foreclosure held pending sale, and may
include
amounts in reserve accounts.
It is unclear whether property acquired by foreclosure
held
pending sale and amounts in
reserve accounts would be considered to be part of the
Mortgage
Collateral, or whether such
assets (to the extent not invested in assets described
in the
foregoing sections) otherwise
would receive the same treatment as the Mortgage
Collateral for
purposes of all of the
foregoing sections. In addition, in some instances
Mortgage
Collateral may not be treated
entirely as assets described in the foregoing sections.
If so,
the related Prospectus
Supplement will describe the Mortgage Collateral that
may not be
so treated. The REMIC
Regulations do provide, however, that payments on
Mortgage
Collateral held pending
distribution are considered part of the Mortgage
Collateral for
purposes of Sections 593(d)
and 856(c)(5)(A) of the Code.

Tiered REMIC Structures

For certain series of REMIC Certificates, two or
more
separate elections may be
made to treat designated portions of the related Trust
Fund as
REMICs ("Tiered REMICs")
for federal income tax purposes. Upon the issuance of
any such
series of REMIC
Certificates, Orrick, Herrington & Sutcliffe or Thacher
Proffitt
& Wood, counsel to the
Company, will deliver their opinion generally to the
effect that,
assuming compliance with
all provisions of the related Pooling and Servicing
Agreement or
Trust Agreement, the
Tiered REMICs will each qualify as a REMIC and the
REMIC
Certificates issued by the
Tiered REMICs, respectively, will be considered to
evidence
ownership of REMIC Regular
Certificates or REMIC Residual Certificates in the
related REMIC
within the meaning of
the REMIC Provisions.

Solely for purposes of determining whether the
REMIC
Certificates will be
"qualifying real property loans" under Section 593(d)
of the
Code, "real estate assets" within
the meaning of Section 856(c)(5)(A) of the Code, and
"loans
secured by an interest in real
property" under Section 7701(a)(19)(C) of the Code, and
whether
the income on such
Certificates is interest described in Section
856(c)(3)(B) of the
Code, the Tiered REMICs
will be treated as one REMIC.

Taxation of Owners of REMIC Regular Certificates

General. Except as otherwise stated in this
discussion,
REMIC Regular Certificates
will be treated for federal income tax purposes as debt
instruments issued by the REMIC
and not as ownership interests in the REMIC or its
assets.
Moreover, holders of REMIC
Regular Certificates that otherwise report income under
a cash
method of accounting will
be required to report income with respect to REMIC
Regular
Certificates under an accrual
method.

Original Issue Discount. Certain REMIC Regular
Certificates
may be issued with
"original issue discount" within the meaning of Section
1273(a)
of the Code. Any holders
of REMIC Regular Certificates issued with original
issue discount
generally will be required
to include original issue discount in income as it
accrues, in
accordance with the method
described below, in advance of the receipt of the cash
attributable to such income. In
addition, Section 1272(a)(6) of the Code provides
special rules
applicable to REMIC
Regular Certificates and certain other debt instruments
issued
with original issue discount.
Regulations have not been issued under that section.

The Code requires that a prepayment assumption be
used with
respect to Mortgage
Collateral held by a REMIC in computing the accrual of
original
issue discount on REMIC
Regular Certificates issued by that REMIC, and that
adjustments
be made in the amount and
rate of accrual of such discount to reflect differences
between
the actual prepayment rate
and the prepayment assumption. The prepayment
assumption is to be
determined in a
manner prescribed in Treasury regulations; as noted
above, those
regulations have not been
issued. The Conference Committee Report (the "Committee
Report")
accompanying the Tax
Reform Act of 1986 indicates that the regulations will
provide
that the prepayment
assumption used with respect to a REMIC Regular
Certificate must
be the same as that used
in pricing the initial offering of such REMIC Regular
Certificate. The Prepayment
Assumption used by the Master Servicer or the
Certificate
Administrator, as applicable, in
reporting original issue discount for each series of
REMIC
Regular Certificates will be
consistent with this standard and will be disclosed in
the
related Prospectus Supplement.
However, neither the Company, the Master Servicer nor
the
Certificate Administrator will
make any representation that the Mortgage Collateral
will in fact
prepay at a rate
conforming to the Prepayment Assumption or at any other
rate.

The original issue discount, if any, on a REMIC
Regular
Certificate will be the
excess of its stated redemption price at maturity over
its issue
price. The issue price of a
particular class of REMIC Regular Certificates will be
the first
cash price at which a
substantial amount of REMIC Regular Certificates of
that class is
sold (excluding sales to
bond houses, brokers and underwriters). If less than a
substantial amount of a particular
class of REMIC Regular Certificates is sold for cash on
or prior
to the date of their initial
issuance (the "Closing Date"), the issue price for such
class
will be treated as the fair market
value of such class on the Closing Date. Under the OID
Regulations, the stated redemption
price of a REMIC Regular Certificate is equal to the
total of all
payments to be made on
such Certificate other than "qualified stated
interest."
"Qualified stated interest" includes
interest that is unconditionally payable at least
annually at a
single fixed rate, or in the case
of a variable rate debt instrument, at a "qualified
floating
rate," an "objective rate," a
combination of a single fixed rate and one or more
"qualified
floating rates" or one
"qualified inverse floating rate," or a combination of
"qualified
floating rates" that generally
does not operate in a manner that accelerates or defers
interest
payments on such REMIC
Regular Certificate.

In the case of REMIC Regular Certificates bearing
adjustable
interest rates, the
determination of the total amount of original issue
discount and
the timing of the inclusion
thereof will vary according to the characteristics of
such REMIC
Regular Certificates. If the
original issue discount rules apply to such
Certificates, the
related Prospectus Supplement
will describe the manner in which such rules will be
applied by
the Master Servicer or the
Certificate Administrator, as applicable, with respect
to those
Certificates in preparing
information returns to the Certificateholders and the
Internal
Revenue Service (the "IRS").

Certain classes of the REMIC Regular Certificates
may provide
for the first interest
payment with respect to such Certificates to be made
more than
one month after the date of
issuance, a period which is longer than the subsequent
monthly
intervals between interest
payments. Assuming the "accrual period" (as defined
herein) for
original issue discount is
each monthly period that begins or ends on a
Distribution Date,
in some cases, as a
consequence of this "long first accrual period," some
or all
interest payments may be
required to be included in the stated redemption price
of the
REMIC Regular Certificate and
accounted for as original issue discount. Because
interest on
REMIC Regular Certificates
must in any event be accounted for under an accrual
method,
applying this analysis would
result in only a slight difference in the timing of the
inclusion
in income of the yield on the
REMIC Regular Certificates.

In addition, if the accrued interest to be paid on
the first
Distribution Date is
computed with respect to a period that begins prior to
the
Closing Date, a portion of the
purchase price paid for a REMIC Regular Certificate
will reflect
such accrued interest. In
such cases, information returns to the
Certificateholders and the
IRS will be based on the
position that the portion of the purchase price paid
for the
interest accrued with respect to
periods prior to the Closing Date is treated as part of
the
overall cost of such REMIC
Regular Certificate (and not as a separate asset the
cost of
which is recovered entirely out
of interest received on the next Distribution Date) and
that
portion of the interest paid on the
first Distribution Date in excess of interest accrued
for a
number of days corresponding to
the number of days from the Closing Date to the first
Distribution Date should be included
in the stated redemption price of such REMIC Regular
Certificate.
However, the OID
Regulations state that all or some portion of such
accrued
interest may be treated as a
separate asset the cost of which is recovered entirely
out of
interest paid on the first
Distribution Date. It is unclear how an election to do
so would
be made under the OID
Regulations and whether such an election could be made
unilaterally by a Certificateholder.

Notwithstanding the general definition of original
issue
discount, original issue
discount on a REMIC Regular Certificate will be
considered to be
de minimis if it is less
than 0.25% of the stated redemption price of the REMIC
Regular
Certificate multiplied by
its weighted average life. For this purpose, the
weighted average
life of the REMIC Regular
Certificate is computed as the sum of the amounts
determined, as
to each payment included
in the stated redemption price of such REMIC Regular
Certificate,
by multiplying (i) the
number of complete years (rounding down for partial
years) from
the issue date until such
payment is expected to be made (presumably taking into
account
the Prepayment
Assumption) by (ii) a fraction, the numerator of which
is the
amount of the payment, and
the denominator of which is the stated redemption price
at
maturity of such REMIC Regular
Certificate. Under the OID Regulations, original issue
discount
of only a de minimis amount
(other than de minimis original issue discount
attributable to a
so-called "teaser" interest rate
or an initial interest holiday) will be included in
income as
each payment of stated principal
is made, based on the product of the total amount of
such de
minimis original issue discount
and a fraction, the numerator of which is the amount of
such
principal payment and the
denominator of which is the outstanding stated
principal amount
of the REMIC Regular
Certificate. The OID Regulations also would permit a
Certificateholder to elect to accrue
de minimis original issue discount into income
currently based on
a constant yield method.
See " Market Discount" for a description of such
election under
the OID Regulations.

If original issue discount on a REMIC Regular
Certificate is
in excess of a de
minimis amount, the holder of such Certificate must
include in
ordinary gross income the
sum of the "daily portions" of original issue discount
for each
day during its taxable year
on which it held such REMIC Regular Certificate,
including the
purchase date but excluding
the disposition date. In the case of an original holder
of a
REMIC Regular Certificate, the
daily portions of original issue discount will be
determined as
follows.

As to each "accrual period," that is, unless
otherwise stated
in the related Prospectus
Supplement, each period that begins or ends on a date
that
corresponds to a Distribution
Date and begins on the first day following the
immediately
preceding accrual period (or in
the case of the first such period, begins on the
Closing Date), a
calculation will be made of
the portion of the original issue discount that accrued
during
such accrual period. The
portion of original issue discount that accrues in any
accrual
period will equal the excess,
if any, of (i) the sum of (A) the present value, as of
the end of
the accrual period, of all of
the distributions remaining to be made on the REMIC
Regular
Certificate, if any, in future
periods and (B) the distributions made on such REMIC
Regular
Certificate during the
accrual period of amounts included in the stated
redemption
price, over (ii) the adjusted
issue price of such REMIC Regular Certificate at the
beginning of
the accrual period. The
present value of the remaining distributions referred
to in the
preceding sentence will be
calculated (1) assuming that distributions on the REMIC
Regular
Certificate will be
received in future periods based on the Mortgage
Collateral being
prepaid at a rate equal to
the Prepayment Assumption and (2) using a discount rate
equal to
the original yield to
maturity of the Certificate. For these purposes, the
original
yield to maturity of the
Certificate will be calculated based on its issue price
and
assuming that distributions on the
Certificate will be made in all accrual periods based
on the
Mortgage Collateral being
prepaid at a rate equal to the Prepayment Assumption.
The
adjusted issue price of a REMIC
Regular Certificate at the beginning of any accrual
period will
equal the issue price of such
Certificate, increased by the aggregate amount of
original issue
discount that accrued with
respect to such Certificate in prior accrual periods,
and reduced
by the amount of any
distributions made on such REMIC Regular Certificate in
prior
accrual periods of amounts
included in its stated redemption price. The original
issue
discount accruing during any
accrual period, computed as described above, will be
allocated
ratably to each day during
the accrual period to determine the daily portion of
original
issue discount for such day.

The OID Regulations suggest that original issue
discount with
respect to securities
that represent multiple uncertificated REMIC regular
interests,
in which ownership interests
will be issued simultaneously to the same buyer and
which may be
required under the
related Pooling and Servicing Agreement to be
transferred
together, should be computed on
an aggregate method. In the absence of further
guidance from the
IRS, original issue
discount with respect to securities that represent the
ownership
of multiple uncertificated
REMIC regular interests will be reported to the IRS and
the
Certificateholders on an
aggregate method based on a single overall constant
yield and the
prepayment assumption
stated in the related Prospectus Supplement, treating
all such
uncertificated regular interests
as a single debt instrument as set forth in the OID
Regulations,
so long as the Pooling and
Servicing Agreement requires that such uncertificated
regular
interests be transferred
together.

A subsequent purchaser of a REMIC Regular
Certificate that
purchases such
Certificate at a cost (excluding any portion of such
cost
attributable to accrued qualified
stated interest) less than its remaining stated
redemption price
will also be required to
include in gross income the daily portions of any
original issue
discount with respect to such
Certificate. However, each such daily portion will be
reduced, if
such cost is in excess of
its "adjusted issue price," in proportion to the ratio
such
excess bears to the aggregate
original issue discount remaining to be accrued on such
REMIC
Regular Certificate. The
adjusted issue price of a REMIC Regular Certificate on
any given
day equals the sum of (i)
the adjusted issue price (or, in the case of the first
accrual
period, the issue price) of such
Certificate at the beginning of the accrual period
which includes
such day and (ii) the daily
portions of original issue discount for all days during
such
accrual period prior to such day.

Market Discount. A Certificateholder that
purchases a REMIC
Regular Certificate
at a market discount, that is, in the case of a REMIC
Regular
Certificate issued without
original issue discount, at a purchase price less than
its
remaining stated principal amount,
or in the case of a REMIC Regular Certificate issued
with
original issue discount, at a
purchase price less than its adjusted issue price will
recognize
income upon receipt of each
distribution representing stated redemption price. In
particular,
under Section 1276 of the
Code such a Certificateholder generally will be
required to
allocate the portion of each such
distribution representing stated redemption price first
to
accrued market discount not
previously included in income, and to recognize
ordinary income
to that extent. A
Certificateholder may elect to include market discount
in income
currently as it accrues
rather than including it on a deferred basis in
accordance with
the foregoing. If made, such
election will apply to all market discount bonds
acquired by such
Certificateholder on or
after the first day of the first taxable year to which
such
election applies. In addition, the
OID Regulations permit a Certificateholder to elect to
accrue all
interest, discount
(including de minimis market or original issue
discount) and
premium in income as interest,
based on a constant yield method. If such an election
were made
with respect to a REMIC
Regular Certificate with market discount, the
Certificateholder
would be deemed to have
made an election to include currently market discount
in income
with respect to all other
debt instruments having market discount that such
Certificateholder acquires during the
taxable year of the election or thereafter, and
possibly
previously acquired instruments.
Similarly, a Certificateholder that made this election
for a
Certificate that is acquired at a
premium would be deemed to have made an election to
amortize bond
premium with respect
to all debt instruments having amortizable bond premium
that such
Certificateholder owns
or acquires. See " Premium." Each of these elections to
accrue
interest, discount and
premium with respect to a Certificate on a constant
yield method
or as interest would be
irrevocable.

However, market discount with respect to a REMIC
Regular
Certificate will be
considered to be de minimis for purposes of Section
1276 of the
Code if such market
discount is less than 0.25% of the remaining stated
redemption
price of such REMIC
Regular Certificate multiplied by the number of
complete years to
maturity remaining after
the date of its purchase. In interpreting a similar
rule with
respect to original issue discount
on obligations payable in installments, the OID
Regulations refer
to the weighted average
maturity of obligations, and it is likely that the same
rule will
be applied with respect to
market discount, presumably taking into account the
Prepayment
Assumption. If market
discount is treated as de minimis under this rule, it
appears
that the actual discount would
be treated in a manner similar to original issue
discount of a de
minimis amount. See
" Original Issue Discount." Such treatment would result
in
discount being included in
income at a slower rate than discount would be required
to be
included in income using the
method described above.

Section 1276(b)(3) of the Code specifically
authorizes the
Treasury Department to
issue regulations providing for the method for accruing
market
discount on debt
instruments, the principal of which is payable in more
than one
installment. Until
regulations are issued by the Treasury Department,
certain rules
described in the Committee
Report apply. The Committee Report indicates that in
each accrual
period market discount
on REMIC Regular Certificates should accrue, at the
Certificateholder's option: (i) on the
basis of a constant yield method, (ii) in the case of a
REMIC
Regular Certificate issued
without original issue discount, in an amount that
bears the same
ratio to the total remaining
market discount as the stated interest paid in the
accrual period
bears to the total amount of
stated interest remaining to be paid on the REMIC
Regular
Certificate as of the beginning
of the accrual period, or (iii) in the case of a REMIC
Regular
Certificate issued with original
issue discount, in an amount that bears the same ratio
to the
total remaining market discount
as the original issue discount accrued in the accrual
period
bears to the total original issue
discount remaining on the REMIC Regular Certificate at
the
beginning of the accrual
period. Moreover, the Prepayment Assumption used in
calculating
the accrual of original
issue discount is to be used in calculating the accrual
of market
discount. Because the
regulations referred to in this paragraph have not been
issued,
it is not possible to predict
what effect such regulations might have on the tax
treatment of a
REMIC Regular
Certificate purchased at a discount in the secondary
market.

To the extent that REMIC Regular Certificates
provide for
monthly or other
periodic distributions throughout their term, the
effect of these
rules may be to require
market discount to be includible in income at a rate
that is not
significantly slower than the
rate at which such discount would accrue if it were
original
issue discount. Moreover, in any
event a holder of a REMIC Regular Certificate generally
will be
required to treat a portion
of any gain on the sale or exchange of such Certificate
as
ordinary income to the extent of
the market discount accrued to the date of disposition
under one
of the foregoing methods,
less any accrued market discount previously reported as
ordinary
income.

In addition, under Section 1277 of the Code, a
holder of a
REMIC Regular
Certificate may be required to defer a portion of its
interest
deductions for the taxable year
attributable to any indebtedness incurred or continued
to
purchase or carry a REMIC
Regular Certificate purchased with market discount. For
these
purposes, the de minimis rule
referred to above applies. Any such deferred interest
expense
would not exceed the market
discount that accrues during such taxable year and is,
in
general, allowed as a deduction not
later than the year in which such market discount is
includible
in income. If such holder
elects to include market discount in income currently
as it
accrues on all market discount
instruments acquired by such holder in that taxable
year or
thereafter, the interest deferral
rule described above will not apply.

Premium. A REMIC Regular Certificate purchased at
a cost
(excluding any portion
of such cost attributable to accrued qualified stated
interest)
greater than its remaining stated
redemption price will be considered to be purchased at
a premium.
The holder of such a
REMIC Regular Certificate may elect under Section 171
of the Code
to amortize such
premium under the constant yield method over the life
of the
Certificate. If made, such an
election will apply to all debt instruments having
amortizable
bond premium that the holder
owns or subsequently acquires. Amortizable premium will
be
treated as an offset to interest
income on the related REMIC Regular Certificate, rather
than as a
separate interest
deduction. The OID Regulations also permit
Certificateholders to
elect to include all
interest, discount and premium in income based on a
constant
yield method, further treating
the Certificateholder as having made the election to
amortize
premium generally. See
" Market Discount." The Committee Report states that
the same
rules that apply to accrual
of market discount (which rules will require use of a
Prepayment
Assumption in accruing
market discount with respect to REMIC Regular
Certificates
without regard to whether such
Certificates have original issue discount) will also
apply in
amortizing bond premium under
Section 171 of the Code.

Realized Losses. Under Section 166 of the Code,
both
corporate holders of the
REMIC Regular Certificates and noncorporate holders of
the REMIC
Regular Certificates
that acquire such Certificates in connection with a
trade or
business should be allowed to
deduct, as ordinary losses, any losses sustained during
a taxable
year in which their
Certificates become wholly or partially worthless as
the result
of one or more Realized
Losses on the Mortgage Collateral. However, it appears
that a
noncorporate holder that does
not acquire a REMIC Regular Certificate in connection
with a
trade or business will not be
entitled to deduct a loss under Section 166 of the Code
until
such holder's Certificate
becomes wholly worthless (i.e., until its outstanding
principal
balance has been reduced to
zero) and that the loss will be characterized as a
short-term
capital loss.

Each holder of a REMIC Regular Certificate will be
required
to accrue interest and
original issue discount with respect to such
Certificate, without
giving effect to any
reductions in distributions attributable to defaults or
delinquencies on the Mortgage
Collateral until it can be established that any such
reduction
ultimately will not be
recoverable. As a result, the amount of taxable income
reported
in any period by the holder
of a REMIC Regular Certificate could exceed the amount
of
economic income actually
realized by the holder in such period. Although the
holder of a
REMIC Regular Certificate
eventually will recognize a loss or reduction in income
attributable to previously accrued
and included income that, as the result of a realized
loss,
ultimately will not be realized, the
law is unclear with respect to the timing and character
of such
loss or reduction in income.

Taxation of Owners of REMIC Residual Certificates

General. As residual interests, the REMIC Residual
Certificates will be subject to
tax rules that differ significantly from those that
would apply
if the REMIC Residual
Certificates were treated for federal income tax
purposes as
direct ownership interests in the
Mortgage Collateral or as debt instruments issued by
the REMIC.

A holder of a REMIC Residual Certificate generally
will be
required to report its
daily portion of the taxable income or, subject to the
limitations noted in this discussion, the
net loss of the REMIC for each day during a calendar
quarter that
such holder owned such
REMIC Residual Certificate. For this purpose, the
taxable income
or net loss of the REMIC
will be allocated to each day in the calendar quarter
ratably
using a "30 days per month/90
days per quarter/360 days per year" convention unless
otherwise
disclosed in the related
Prospectus Supplement. The daily amounts will then be
allocated
among the REMIC
Residual Certificateholders in proportion to their
respective
ownership interests on such day.
Any amount included in the gross income or allowed as a
loss of
any REMIC Residual
Certificateholder by virtue of this allocation will be
treated as
ordinary income or loss. The
taxable income of the REMIC will be determined under
the rules
described below in
" Taxable Income of the REMIC" and will be taxable to
the REMIC
Residual
Certificateholders without regard to the timing or
amount of cash
distributions by the
REMIC. Ordinary income derived from REMIC Residual
Certificates
will be "portfolio
income" for purposes of the taxation of taxpayers
subject to
limitations under Section 469
of the Code on the deductibility of "passive losses."

A holder of a REMIC Residual Certificate that
purchased such
Certificate from a
prior holder of such Certificate also will be required
to report
on its federal income tax
return amounts representing its daily portion of the
taxable
income (or net loss) of the
REMIC for each day that it holds such REMIC Residual
Certificate.
These daily portions
generally will equal the amounts of taxable income or
net loss
determined as described
above. The Committee Report indicates that certain
modifications
of the general rules may
be made, by regulations, legislation or otherwise, to
reduce (or
increase) the income or loss
of a holder of a REMIC Residual Certificateholder that
purchased
such REMIC Residual
Certificate from a prior holder of such Certificate at
a price
greater than (or less than) the
adjusted basis (as defined herein) such REMIC Residual
Certificate would have had in the
hands of an original holder of such Certificate. The
REMIC
Regulations, however, do not
provide for any such modifications.

Any payments received by a holder of a REMIC
Residual
Certificate in connection
with the acquisition of such REMIC Residual Certificate
will be
taken into account in
determining the income of such holder for federal
income tax
purposes. Although it appears
likely that any such payment would be includible in
income
immediately upon its receipt,
the IRS might assert that such payment should be
included in
income over time according
to an amortization schedule or according to some other
method.
Because of the uncertainty
concerning the treatment of such payments, holders of
REMIC
Residual Certificates should
consult their tax advisors concerning the treatment of
such
payments for income tax
purposes.

The amount of income REMIC Residual
Certificateholders will
be required to
report (or the tax liability associated with such
income) may
exceed the amount of cash
distributions received from the REMIC for the
corresponding
period. Consequently, REMIC
Residual Certificateholders should have other sources
of funds
sufficient to pay any federal
income taxes due as a result of their ownership of
REMIC Residual
Certificates or unrelated
deductions against which income may be offset, subject
to the
rules relating to "excess
inclusions," residual interests without "significant
value" and
"noneconomic" residual
interests discussed below. The fact that the tax
liability
associated with the income allocated
to REMIC Residual Certificateholders may exceed the
cash
distributions received by such
REMIC Residual Certificateholders for the corresponding
period
may significantly
adversely affect such REMIC Residual
Certificateholders'
after-tax rate of return.

Taxable Income of the REMIC. The taxable income of
the REMIC
will equal the
income from the Mortgage Collateral and other assets of
the REMIC
plus any cancellation
of indebtedness income due to the allocation of
realized losses
to REMIC Regular
Certificates, less the deductions allowed to the REMIC
for
interest (including original issue
discount and reduced by the amortization of any premium
received
on issuance) on the
REMIC Regular Certificates (and any other class of
REMIC
Certificates constituting
"regular interests" in the REMIC not offered hereby),
amortization of any premium on the
Mortgage Collateral, bad debt deductions with respect
to the
Mortgage Collateral and,
except as described below, for servicing,
administrative and
other expenses.

For purposes of determining its taxable income, the
REMIC
will have an initial
aggregate basis in its assets equal to their fair
market value
immediately after their transfer
to the REMIC. For this purpose, the Master Servicer or
the
Certificate Administrator, as
applicable, intends to treat the fair market value of
the
Mortgage Collateral as being equal
to the aggregate issue prices of the REMIC Regular
Certificates
and REMIC Residual
Certificates. Such aggregate basis will be allocated
among the
Mortgage Collateral
collectively and the other assets of the REMIC in
proportion to
their respective fair market
values. The issue price of any REMIC Certificates
offered hereby
will be determined in the
manner described above under " Taxation of Owners of
REMIC
Regular
Certificates Original Issue Discount." Accordingly, if
one or
more classes of REMIC
Certificates are retained initially rather than sold,
the Master
Servicer or the Certificate
Administrator, as applicable, may be required to
estimate the
fair market value of such
interests in order to determine the basis of the REMIC
in the
Mortgage Collateral and other
property held by the REMIC.

Subject to the possible application of the de
minimis rules,
the method of accrual
by the REMIC of original issue discount income and
market
discount income with respect
to Mortgage Collateral that it holds will be equivalent
to the
method of accruing original
issue discount income for REMIC Regular
Certificateholders (that
is, under the constant
yield method taking into account the Prepayment
Assumption).
However, a REMIC that
acquires Mortgage Collateral at a market discount must
include
such discount in income
currently, as it accrues, on a constant interest basis.
See "
Taxation of Owners of REMIC
Regular Certificates" above, which describes a method
of accruing
discount income that is
analogous to that required to be used by a REMIC as to
Mortgage
Collateral with market
discount that it holds.

An item of Mortgage Collateral will be deemed to
have been
acquired with discount
(or premium) to the extent that the REMIC's basis
therein,
determined as described in the
preceding paragraph, is less than (or greater than) its
stated
redemption price. Any such
discount will be includible in the income of the REMIC
as it
accrues, in advance of receipt
of the cash attributable to such income, under a method
similar
to the method described
above for accruing original issue discount on the REMIC
Regular
Certificates. It is
anticipated that each REMIC will elect under Section
171 of the
Code to amortize any
premium on the Mortgage Collateral. Premium on any item
of
Mortgage Collateral to which
such election applies may be amortized under a constant
yield
method, presumably taking
into account a Prepayment Assumption.

The REMIC will be allowed deductions for interest
(including
original issue
discount) on the REMIC Regular Certificates (including
any other
class of REMIC
Certificates constituting "regular interests" in the
REMIC not
offered hereby) equal to the
deductions that would be allowed if the REMIC Regular
Certificates (including any other
class of REMIC Certificates constituting "regular
interests" in
the REMIC not offered
hereby) were indebtedness of the REMIC. Original issue
discount
will be considered to
accrue for this purpose as described above under "
Taxation of
Owners of REMIC Regular
Certificates Original Issue Discount," except that the
de minimis
rule and the adjustments
for subsequent holders of REMIC Regular Certificates
(including
any other class of
Certificates constituting "regular interests" in the
REMIC not
offered hereby) described
therein will not apply.

If a class of REMIC Regular Certificates is issued
at a price
in excess of the stated
redemption price of such class (such excess, "Issue
Premium"),
the net amount of interest
deductions that are allowed the REMIC in each taxable
year with
respect to the REMIC
Regular Certificates of such class will be reduced by
an amount
equal to the portion of the
Issue Premium that is considered to be amortized or
repaid in
that year. Although the matter
is not entirely certain, it is likely that Issue
Premium would be
amortized under a constant
yield method in a manner analogous to the method of
accruing
original issue discount
described above under " Taxation of Owners of REMIC
Regular
Certificates Original
Issue Discount."

As a general rule, the taxable income of the REMIC
will be
determined in the same
manner as if the REMIC were an individual having the
calendar
year as its taxable year and
using the accrual method of accounting. However, no
item of
income, gain, loss or
deduction allocable to a prohibited transaction will be
taken
into account. See " Prohibited
Transactions and Other Possible REMIC Taxes" below.
Further, the
limitation on
miscellaneous itemized deductions imposed on
individuals by
Section 67 of the Code
(which allows such deductions only to the extent they
exceed in
the aggregate two percent
of the taxpayer's adjusted gross income) will not be
applied at
the REMIC level so that the
REMIC will be allowed deductions for servicing,
administrative
and other non-interest
expenses in determining its taxable income. All such
expenses
will be allocated as a
separate item to the holders of REMIC Certificates,
subject to
the limitation of Section 67
of the Code. See " Possible Pass-Through of
Miscellaneous
Itemized Deductions" below.
If the deductions allowed to the REMIC exceed its gross
income
for a calendar quarter, such
excess will be the net loss for the REMIC for that
calendar
quarter.

Basis Rules, Net Losses and Distributions. The
adjusted
basis of a REMIC Residual
Certificate will be equal to the amount paid for such
REMIC
Residual Certificate, increased
by amounts included in the income of the related
Certificateholder and decreased (but not
below zero) by distributions made, and by net losses
allocated,
to such Certificateholder.

A REMIC Residual Certificateholder is not allowed
to take
into account any net loss
for any calendar quarter to the extent such net loss
exceeds such
REMIC Residual
Certificateholder's adjusted basis in its REMIC
Residual
Certificate as of the close of such
calendar quarter (determined without regard to such net
loss).
Any loss that is not currently
deductible by reason of this limitation may be carried
forward
indefinitely to future calendar
quarters and, subject to the same limitation, may be
used only to
offset income from the
REMIC Residual Certificate. The ability of holders of
REMIC
Residual Certificates to
deduct net losses may be subject to additional
limitations under
the Code, as to which such
Certificateholders should consult their tax advisors.

Any distribution on a REMIC Residual Certificate
will be
treated as a non-taxable
return of capital to the extent it does not exceed the
holder's
adjusted basis in such REMIC
Residual Certificate. To the extent a distribution on a
REMIC
Residual Certificate exceeds
such adjusted basis, it will be treated as gain from
the sale of
such REMIC Residual
Certificate. Holders of certain REMIC Residual
Certificates may
be entitled to distributions
early in the term of the related REMIC under
circumstances in
which their bases in such
REMIC Residual Certificates will not be sufficiently
large that
such distributions will be
treated as nontaxable returns of capital. Their bases
in such
REMIC Residual Certificates
will initially equal the amount paid for such REMIC
Residual
Certificates and will be
increased by their allocable shares of taxable income
of the
Trust Fund. However, such basis
increases may not occur until the end of the calendar
quarter, or
perhaps the end of the
calendar year, with respect to which such REMIC taxable
income is
allocated to the holders
of REMIC Residual Certificates. To the extent such
Certificateholders' initial bases are less
than the distributions to such REMIC Residual
Certificateholders,
and increases in such
initial bases either occur after such distributions or
(together
with their initial bases) are less
than the amount of such distributions, gain will be
recognized to
such Certificateholders on
such distributions and will be treated as gain from the
sale of
their REMIC Residual
Certificates.

The effect of these rules is that a
Certificateholder may not
amortize its basis in a
REMIC Residual Certificate, but may only recover its
basis
through distributions, through
the deduction of its share of any net losses of the
REMIC or upon
the sale of its REMIC
Residual Certificate. See " Sales of REMIC
Certificates" below.
For a discussion of
possible modifications of these rules that may require
adjustments to income of a holder of
a REMIC Residual Certificate other than an original
holder in
order to reflect any difference
between the cost of such REMIC Residual Certificate to
such
holder and the adjusted basis
such REMIC Residual Certificate would have had in the
hands of
the original holder, see
" General" above.

Excess Inclusions. Any "excess inclusions" with
respect to a
REMIC Residual
Certificate will, with an exception discussed below for
certain
REMIC Residual Certificates
held by thrift institutions, be subject to federal
income tax in
all events.

In general, the "excess inclusions" with respect to
a REMIC
Residual Certificate for
any calendar quarter will be the excess, if any, of (i)
the sum
of the daily portions of REMIC
taxable income allocable to such REMIC Residual
Certificate over
(ii) the sum of the "daily
accruals" (as defined herein) for each day during such
quarter
that such REMIC Residual
Certificate was held by such REMIC Residual
Certificateholder.
The daily accruals of a
REMIC Residual Certificateholder will be determined by
allocating
to each day during a
calendar quarter its ratable portion of the product of
the
"adjusted issue price" of the REMIC
Residual Certificate at the beginning of the calendar
quarter and
120% of the "long-term
federal rate" in effect on the Closing Date. For this
purpose,
the adjusted issue price of a
REMIC Residual Certificate as of the beginning of any
calendar
quarter will be equal to the
issue price of the REMIC Residual Certificate,
increased by the
sum of the daily accruals
for all prior quarters and decreased (but not below
zero) by any
distributions made with
respect to such REMIC Residual Certificate before the
beginning
of such quarter. The issue
price of a REMIC Residual Certificate is the initial
offering
price to the public (excluding
bond houses and brokers) at which a substantial amount
of the
REMIC Residual Certificates
were sold. The "long-term federal rate" is an average
of current
yields on Treasury securities
with a remaining term of greater than nine years,
computed and
published monthly by the
IRS.

For REMIC Residual Certificateholders, an excess
inclusion
(i) will not be
permitted to be offset by deductions, losses or loss
carryovers
from other activities, (ii) will
be treated as "unrelated business taxable income" to an
otherwise
tax-exempt organization
and (iii) will not be eligible for any rate reduction
or
exemption under any applicable tax
treaty with respect to the 30% United States
withholding tax
imposed on distributions to
REMIC Residual Certificateholders that are foreign
investors.
See, however, " Foreign
Investors in REMIC Certificates" below.

As an exception to the general rules described
above, thrift
institutions are allowed
to offset their excess inclusions with unrelated
deductions,
losses or loss carryovers, but
only if the REMIC Residual Certificates are considered
to have
"significant value." The
REMIC Regulations provide that in order to be treated
as having
significant value, the
REMIC Residual Certificates must have an aggregate
issue price at
least equal to two
percent of the aggregate issue prices of all of the
related
REMIC's Regular and Residual
Certificates. In addition, based on the Prepayment
Assumption,
the anticipated weighted
average life of the REMIC Residual Certificates must
equal or
exceed 20% of the
anticipated weighted average life of the REMIC and on
any
required or permitted clean up
calls or required qualified liquidation provided for in
the
REMIC's organizational
documents. Although it has not done so, the Treasury
also has
authority to issue regulations
that would treat the entire amount of income accruing
on a REMIC
Residual Certificate as
an excess inclusion if the REMIC Residual Certificates
are
considered not to have
"significant value." The related Prospectus Supplement
will
disclose whether offered
REMIC Residual Certificates may be considered to have
"significant value" under the
REMIC Regulations; except that any disclosure that a
REMIC
Residual Certificate will have
"significant value" will be based upon certain
assumptions, and
the Company will make no
representation that a REMIC Residual Certificate will
have
"significant value" for purposes
of the above-described rules. The above-described
exception for
thrift institutions applies
only to those residual interests held directly by, and
deductions, losses and loss carryovers
incurred by, such institutions (and not by other
members of an
affiliated group of
corporations filing a consolidated income tax return)
or by
certain wholly-owned direct
subsidiaries of such institutions formed or operated
exclusively
in connection with the
organization and operation of one or more REMICs.

In the case of any REMIC Residual Certificates held
by a real
estate investment
trust, the aggregate excess inclusions with respect to
such REMIC
Residual Certificates,
reduced (but not below zero) by the real estate
investment trust
taxable income (within the
meaning of Section 857(b)(2) of the Code, excluding any
net
capital gain), will be allocated
among the shareholders of such trust in proportion to
the
dividends received by such
shareholders from such trust, and any amount so
allocated will be
treated as an excess
inclusion with respect to a REMIC Residual Certificate
as if held
directly by such
shareholder. Treasury regulations yet to be issued
could apply a
similar rule to regulated
investment companies, common trust funds and certain
cooperatives; the REMIC
Regulations currently do not address this subject.

Noneconomic REMIC Residual Certificates. Under the
REMIC
Regulations,
transfers of "noneconomic" REMIC Residual Certificates
will be
disregarded for all federal
income tax purposes if "a significant purpose of the
transfer was
to enable the transferor to
impede the assessment or collection of tax." If such
transfer is
disregarded, the purported
transferor will continue to remain liable for any taxes
due with
respect to the income on
such "noneconomic" REMIC Residual Certificate. The
REMIC
Regulations provide that a
REMIC Residual Certificate is noneconomic unless, based
on the
Prepayment Assumption
and on any required or permitted clean up calls, or
required
qualified liquidation provided
for in the REMIC's organizational documents, (1) the
present
value of the expected future
distributions (discounted using the "applicable federal
rate" for
obligations whose term ends
on the close of the last quarter in which excess
inclusions are
expected to accrue with
respect to the REMIC Residual Certificate, which rate
is computed
and published monthly
by the IRS) on the REMIC Residual Certificate equals at
least the
present value of the
expected tax on the anticipated excess inclusions, and
(2) the
transferor reasonably expects
that the transferee will receive distributions with
respect to
the REMIC Residual Certificate
at or after the time the taxes accrue on the
anticipated excess
inclusions in an amount
sufficient to satisfy the accrued taxes. Accordingly,
all
transfers of REMIC Residual
Certificates that may constitute noneconomic residual
interests
will be subject to certain
restrictions under the terms of the related Pooling and
Servicing
Agreement or Trust
Agreement that are intended to reduce the possibility
of any such
transfer being disregarded.
Such restrictions will require each party to a transfer
to
provide an affidavit that no purpose
of such transfer is to impede the assessment or
collection of
tax, including certain
representations as to the financial condition of the
prospective
transferee, as to which the
transferor also is required to make a reasonable
investigation to
determine such transferee's
historic payment of its debts and ability to continue
to pay its
debts as they come due in the
future. Prior to purchasing a REMIC Residual
Certificate,
prospective purchasers should
consider the possibility that a purported transfer of
such REMIC
Residual Certificate by
such a purchaser to another purchaser at some future
date may be
disregarded in accordance
with the above-described rules which would result in
the
retention of tax liability by such
purchaser.

The related Prospectus Supplement will disclose
whether
offered REMIC Residual
Certificates may be considered "noneconomic" residual
interests
under the REMIC
Regulations. Any such disclosure that a REMIC Residual
Certificate will not be considered
"noneconomic" will be based upon certain assumptions,
and the
Company will make no
representation that a REMIC Residual Certificate will
not be
considered "noneconomic" for
purposes of the above-described rules. See " Foreign
Investors in
REMIC Certificates"
below for additional restrictions applicable to
transfers of
certain REMIC Residual
Certificates to foreign persons.

Mark-to-Market Rules. On December 28, 1993, the
IRS released
temporary
regulations (the "Mark-to-Market Regulations") relating
to the
requirement that a securities
dealer mark to market securities held for sale to
customers. This
mark-to-market
requirement applies to all securities owned by a
dealer, except
to the extent that the dealer
has specifically identified a security as held for
investment.
The Mark-to-Market
Regulations provide that for purposes of this
mark-to-market
requirement, a "negative
value" REMIC Residual Certificate is not treated as a
security
and thus generally may not
be marked to market. This exclusion from the
mark-to-market
requirement is expanded to
include all REMIC Residual Certificates under proposed
Treasury
regulations published
January 4, 1995 which provide that any REMIC Residual
Certificate
issued after January
4, 1995 will not be treated as a security and therefore
generally
may not be marked to
market. Prospective purchasers of a REMIC Residual
Certificate
should consult their tax
advisors regarding the possible application of the
mark-to-market
requirement to REMIC
Residual Certificates.

Possible Pass-Through of Miscellaneous Itemized
Deductions.
Fees and expenses
of a REMIC generally will be allocated to the holders
of the
related REMIC Residual
Certificates. The applicable Treasury regulations
indicate,
however, that in the case of a
REMIC that is similar to a single class grantor trust,
all or a
portion of such fees and
expenses should be allocated to the holders of the
related REMIC
Regular Certificates.
Unless otherwise stated in the related Prospectus
Supplement,
such fees and expenses will
be allocated to holders of the related REMIC Residual
Certificates in their entirety and not
to the holders of the related REMIC Regular
Certificates.

With respect to REMIC Residual Certificates or
REMIC Regular
Certificates the
holders of which receive an allocation of fees and
expenses in
accordance with the
preceding discussion, if any holder thereof is an
individual,
estate or trust, or a "pass-through entity"
beneficially owned by
one or more individuals, estates or trusts, (i) an
amount equal to such individual's, estate's or trust's
share of
such fees and expenses will be
added to the gross income of such holder and (ii) such
individual's, estate's or trust's share
of such fees and expenses will be treated as a
miscellaneous
itemized deduction allowable
subject to the limitation of Section 67 of the Code,
which
permits such deductions only to
the extent they exceed in the aggregate two percent of
a
taxpayer's adjusted gross income.
In addition, Section 68 of the Code provides that the
amount of
itemized deductions
otherwise allowable for an individual whose adjusted
gross income
exceeds a specified
amount will be reduced by the lesser of (i) 3% of the
excess of
the individual's adjusted
gross income over such amount or (ii) 80% of the amount
of
itemized deductions otherwise
allowable for the taxable year. The amount of
additional taxable
income reportable by
REMIC Certificateholders that are subject to the
limitations of
either Section 67 or Section
68 of the Code may be substantial. Furthermore, in
determining
the alternative minimum
taxable income of such a holder of a REMIC Certificate
that is an
individual, estate or trust,
or a "pass-through entity" beneficially owned by one or
more
individuals, estates or trusts,
no deduction will be allowed for such holder's
allocable portion
of servicing fees and other
miscellaneous itemized deductions of the REMIC, even
though an
amount equal to the
amount of such fees and other deductions will be
included in such
holder's gross income.
Accordingly, such REMIC Certificates may not be
appropriate
investments for individuals,
estates, or trusts, or pass-through entities
beneficially owned
by one or more individuals,
estates or trusts. Such prospective investors should
consult with
their tax advisors prior to
making an investment in such Certificates.

Sales of REMIC Certificates

If a REMIC Certificate is sold, the selling
Certificateholder
will recognize gain or
loss equal to the difference between the amount
realized on the
sale and its adjusted basis
in the REMIC Certificate. The adjusted basis of a REMIC
Regular
Certificate generally will
equal the cost of such REMIC Regular Certificate to
such
Certificateholder, increased by
income reported by such Certificateholder with respect
to such
REMIC Regular Certificate
(including original issue discount and market discount
income)
and reduced (but not below
zero) by distributions on such REMIC Regular
Certificate received
by such
Certificateholder and by any amortized premium. The
adjusted
basis of a REMIC Residual
Certificate will be determined as described under "
Taxation of
Owners of REMIC
Residual Certificates Basis Rules, Net Losses and
Distributions"
above. Except as
described below, any such gain or loss generally will
be capital
gain or loss. The Code as
of the date of this Prospectus provides for a top
marginal tax
rate of 39.6% for individuals
and a maximum marginal rate for long-term capital gains
of
individuals of 28%. No such
rate differential exists for corporations. In addition,
the
distinction between a capital gain
or loss and ordinary income or loss remains relevant
for other
purposes.

Gain from the sale of a REMIC Regular Certificate
that might
otherwise be capital
gain will be treated as ordinary income to the extent
such gain
does not exceed the excess,
if any, of (i) the amount that would have been
includible in the
seller's income with respect
to such REMIC Regular Certificate had income accrued
thereon at a
rate equal to 110% of
the "applicable federal rate" (generally, a rate based
on an
average of current yields on
Treasury securities having a maturity comparable to
that of the
Certificate, which rate is
computed and published monthly by the IRS), determined
as of the
date of purchase of such
REMIC Regular Certificate, over (ii) the amount of
ordinary
income actually includible in
the seller's income prior to such sale. In addition,
gain
recognized on the sale of a REMIC
Regular Certificate by a seller who purchased such
REMIC Regular
Certificate at a market
discount will be taxable as ordinary income to the
extent of any
accrued and previously
unrecognized market discount that accrued during the
period the
Certificate was held. See
" Taxation of Owners of REMIC Regular Certificates
Market
Discount" above.

REMIC Certificates will be "evidences of
indebtedness" within
the meaning of
Section 582(c)(1) of the Code, so that gain or loss
recognized
from the sale of a REMIC
Certificate by a bank or thrift institution to which
such section
applies will be ordinary
income or loss.

A portion of any gain from the sale of a REMIC
Regular
Certificate that might
otherwise be capital gain may be treated as ordinary
income to
the extent that such
Certificate is held as part of a "conversion
transaction" within
the meaning of Section 1258
of the Code. A conversion transaction generally is one
in which
the taxpayer has taken two
or more positions in Certificates or similar property
that reduce
or eliminate market risk, if
substantially all of the taxpayer's return is
attributable to the
time value of the taxpayer's net
investment in such transaction. The amount of gain so
realized in
a conversion transaction
that is recharacterized as ordinary income generally
will not
exceed the amount of interest
that would have accrued on the taxpayer's net
investment at 120%
of the appropriate
"applicable federal rate" (which rate is computed and
published
monthly by the IRS) at the
time the taxpayer enters into the conversion
transaction, subject
to appropriate reduction for
prior inclusion of interest and other ordinary income
items from
the transaction.

Finally, a taxpayer may elect to have net capital
gain taxed
at ordinary income rates
rather than capital gains rates in order to include
such net
capital gain in total net investment
income for the taxable year, for purposes of the
limitation on
the deduction of interest on
indebtedness incurred to purchase or carry property
held for
investment to a taxpayer's net
investment income.

Except as may be provided in Treasury regulations
yet to be
issued, if the seller of
a REMIC Residual Certificate reacquires the
Certificate, any
other residual interest in a
REMIC or any similar interest in a "taxable mortgage
pool" (as
defined in Section 7701(i)
of the Code) within six months of the date of such
sale, the sale
will be subject to the "wash
sale" rules of Section 1091 of the Code. In that event,
any loss
realized by the REMIC
Residual Certificateholder on the sale will not be
deductible,
but instead will be added to
such REMIC Residual Certificateholder's adjusted basis
in the
newly-acquired asset.

Prohibited Transactions and Other Possible REMIC
Taxes

The Code imposes a tax on REMICs equal to 100% of
the net
income derived from
"prohibited transactions" (the "Prohibited Transactions
Tax"). In
general, subject to certain
specified exceptions a prohibited transaction means the
disposition of an item of Mortgage
Collateral, the receipt of income from a source other
than an
item of Mortgage Collateral
or certain other permitted investments, the receipt of
compensation for services, or gain
from the disposition of an asset purchased with the
payments on
the Mortgage Collateral for
temporary investment pending distribution on the REMIC
Certificates. It is not anticipated
that any REMIC will engage in any prohibited
transactions in
which it would recognize a
material amount of net income.

In addition, certain contributions to a REMIC made
after the
day on which the
REMIC issues all of its interests could result in the
imposition
of a tax on the REMIC equal
to 100% of the value of the contributed property (the
"Contributions Tax"). Each Pooling
and Servicing Agreement or Trust Agreement will include
provisions designed to prevent
the acceptance of any contributions that would be
subject to such
tax.

REMICs also are subject to federal income tax at
the highest
corporate rate on "net
income from foreclosure property," determined by
reference to the
rules applicable to real
estate investment trusts. "Net income from foreclosure
property"
generally means gain from
the sale of a foreclosure property that is inventory
property and
gross income from
foreclosure property other than qualifying rents and
other
qualifying income for a real estate
investment trust. Unless otherwise disclosed in the
related
Prospectus Supplement, it is not
anticipated that any REMIC will recognize "net income
from
foreclosure property" subject
to federal income tax.

Unless otherwise disclosed in the related
Prospectus
Supplement, it is not
anticipated that any material state or local income or
franchise
tax will be imposed on any
REMIC.

Unless otherwise stated in the related Prospectus
Supplement,
and to the extent
permitted by then applicable laws, any Prohibited
Transactions
Tax, Contributions Tax, tax
on "net income from foreclosure property" or state or
local
income or franchise tax that may
be imposed on the REMIC will be borne by the related
Master
Servicer, the Certificate
Administrator or the Trustee in either case out of its
own funds,
provided that the Master
Servicer, the Certificate Administrator or the Trustee,
as the
case may be, has sufficient
assets to do so, and provided further that such tax
arises out of
a breach of the Master
Servicer's, the Certificate Administrator's or the
Trustee's
obligations, as the case may be,
under the related Pooling and Servicing Agreement or
Trust
Agreement and in respect of
compliance with applicable laws and regulations. Any
such tax not
borne by the Master
Servicer, the Certificate Administrator or the Trustee
will be
payable out of the related Trust
Fund resulting in a reduction in amounts payable to
holders of
the related REMIC
Certificates.

Tax and Restrictions on Transfers of REMIC Residual
Certificates to Certain
Organizations

If a REMIC Residual Certificate is transferred to a
"disqualified organization" (as
defined below), a tax would be imposed in an amount
(determined
under the REMIC
Regulations) equal to the product of (i) the present
value
(discounted using the "applicable
federal rate" for obligations whose term ends on the
close of the
last quarter in which excess
inclusions are expected to accrue with respect to the
Certificate, which rate is computed and
published monthly by the IRS) of the total anticipated
excess
inclusions with respect to such
REMIC Residual Certificate for periods after the
transfer and
(ii) the highest marginal
federal income tax rate applicable to corporations. The
anticipated excess inclusions must
be determined as of the date that the REMIC Residual
Certificate
is transferred and must
be based on events that have occurred up to the time of
such
transfer, the Prepayment
Assumption and any required or permitted clean up calls
or
required liquidation provided
for in the REMIC's organizational documents. Such a tax
generally
would be imposed on
the transferor of the REMIC Residual Certificate,
except that
where such transfer is through
an agent for a disqualified organization, the tax would
instead
be imposed on such agent.
However, a transferor of a REMIC Residual Certificate
would in no
event be liable for such
tax with respect to a transfer if the transferee
furnishes to the
transferor an affidavit that the
transferee is not a disqualified organization and, as
of the time
of the transfer, the transferor
does not have actual knowledge that such affidavit is
false.
Moreover, an entity will not
qualify as a REMIC unless there are reasonable
arrangements
designed to ensure that (i)
residual interests in such entity are not held by
disqualified
organizations and (ii)
information necessary for the application of the tax
described
herein will be made available.
Restrictions on the transfer of REMIC Residual
Certificates and
certain other provisions that
are intended to meet this requirement will be included
in the
Pooling and Servicing
Agreement or Trust Agreement, including provisions (a)
requiring
any transferee of a
REMIC Residual Certificate to provide an affidavit
representing
that it is not a "disqualified
organization" and is not acquiring the REMIC Residual
Certificate
on behalf of a
"disqualified organization," undertaking to maintain
such status
and agreeing to obtain a
similar affidavit from any person to whom it shall
transfer the
REMIC Residual Certificate,
(b) providing that any transfer of a REMIC Residual
Certificate
to a "disqualified person"
shall be null and void and (c) granting to the Master
Servicer or
Certificate Administrator,
as applicable, the right, without notice to the holder
or any
prior holder, to sell to a
purchaser of its choice any REMIC Residual Certificate
that shall
become owned by a
"disqualified organization" despite (a) and (b) above.

In addition, if a "pass-through entity" (as defined
below)
includes in income excess
inclusions with respect to a REMIC Residual
Certificate, and a
disqualified organization is
the record holder of an interest in such entity, then a
tax will
be imposed on such entity
equal to the product of (i) the amount of excess
inclusions on
the REMIC Residual
Certificate that are allocable to the interest in the
pass-through entity held by such
disqualified organization and (ii) the highest marginal
federal
income tax rate imposed on
corporations. A pass-through entity will not be subject
to this
tax for any period, however,
if each record holder of an interest in such
pass-through entity
furnishes to such pass-through entity (i) such holder's
social
security number and a statement under penalties of
perjury that such social security number is that of the
record
holder or (ii) a statement under
penalties of perjury that such record holder is not a
disqualified organization.

For these purposes, a "disqualified organization"
means (i)
the United States, any
State or political subdivision thereof, any foreign
government,
any international
organization, or any agency or instrumentality of the
foregoing
(but would not include
instrumentalities described in Section 168(h)(2)(D) of
the Code
or Freddie Mac), (ii) any
organization (other than a cooperative described in
Section 521
of the Code) that is exempt
from federal income tax, unless it is subject to the
tax imposed
by Section 511 of the Code
or (iii) any organization described in Section
1381(a)(2)(C) of
the Code. For these purposes,
a "pass-through entity" means any regulated investment
company,
real estate investment
trust, trust, partnership or certain other entities
described in
Section 860E(e)(6) of the Code.
In addition, a person holding an interest in a
pass-through
entity as a nominee for another
person will, with respect to such interest, be treated
as a
pass-through entity.

Termination

A REMIC will terminate immediately after the
Distribution
Date following receipt
by the REMIC of the final payment in respect of the
Mortgage
Collateral or upon a sale of
the REMIC's assets following the adoption by the REMIC
of a plan
of complete liquidation.
The last distribution on a REMIC Regular Certificate
will be
treated as a payment in
retirement of a debt instrument. In the case of a REMIC
Residual
Certificate, if the last
distribution on such REMIC Residual Certificate is less
than the
Certificateholder's adjusted
basis in such Certificate, such Certificateholder
should be
treated as realizing a loss equal
to the amount of such difference, and such loss may be
treated as
a capital loss.

Reporting and Other Administrative Matters

Solely for purposes of the administrative
provisions of the
Code, the REMIC will
be treated as a partnership and holders of REMIC
Residual
Certificates will be treated as
partners. Unless otherwise stated in the related
Prospectus
Supplement, the Master Servicer
or the Certificate Administrator, as applicable, will
file REMIC
federal income tax returns
on behalf of the related REMIC and will be designated
as and will
act as the "tax matters
person" for the REMIC in all respects, and may hold a
nominal
amount of REMIC Residual
Certificates.

As the tax matters person, the Master Servicer or
the
Certificate Administrator, as
applicable, subject to certain notice requirements and
various
restrictions and limitations,
generally will have the authority to act on behalf of
the REMIC
and the holders of REMIC
Residual Certificates in connection with the
administrative and
judicial review of items of
income, deduction, gain or loss of the REMIC, as well
as the
REMIC's classification.
Holders of REMIC Residual Certificates generally will
be required
to report such REMIC
items consistently with their treatment on the related
REMIC's
tax return and may in some
circumstances be bound by a settlement agreement
between the
Master Servicer or the
Certificate Administrator, as applicable, as tax
matters person,
and the IRS concerning any
such REMIC item. Adjustments made to the REMIC tax
return may
require a holder of a
REMIC Residual Certificate to make corresponding
adjustments on
its return, and an audit
of the REMIC's tax return, or the adjustments resulting
from such
an audit, could result in
an audit of such Certificateholder's return. No REMIC
will be
registered as a tax shelter
pursuant to Section 6111 of the Code because it is not
anticipated that any REMIC will have
a net loss for any of the first five taxable years of
its
existence. Any person that holds a
REMIC Residual Certificate as a nominee for another
person may be
required to furnish to
the related REMIC, in a manner to be provided in
Treasury
regulations, the name and
address of such person and other information.

Reporting of interest income, including any
original issue
discount, with respect to
REMIC Regular Certificates is required annually, and
may be
required more frequently
under Treasury regulations. These information reports
generally
are required to be sent to
individual holders of REMIC Regular Interests and the
IRS;
holders of REMIC Regular
Certificates that are corporations, trusts, securities
dealers
and certain other non-individuals
will be provided interest and original issue discount
income
information and the information
set forth in the following paragraph upon request in
accordance
with the requirements of the
applicable regulations. The information must be
provided by the
later of 30 days after the
end of the quarter for which the information was
requested, or
two weeks after the receipt
of the request. The REMIC must also comply with rules
requiring a
REMIC Regular
Certificate issued with original issue discount to
disclose on
its face certain information
including the amount of original issue discount and the
issue
date, and requiring such
information to be reported to the IRS. Reporting with
respect to
the REMIC Residual
Certificates, including income, excess inclusions,
investment
expenses and relevant
information regarding qualification of the REMIC's
assets will be
made as required under
the Treasury regulations, generally on a quarterly
basis.

As applicable, the REMIC Regular Certificate
information
reports will include a
statement of the adjusted issue price of the REMIC
Regular
Certificate at the beginning of
each accrual period. In addition, the reports will
include
information required by regulations
with respect to computing the accrual of any market
discount.
Because exact computation
of the accrual of market discount on a constant yield
method
requires information relating
to the holder's purchase price that the Master Servicer
or the
Certificate Administrator will
not have, such regulations only require that
information
pertaining to the appropriate
proportionate method of accruing market discount be
provided. See
" Taxation of Owners
of REMIC Regular Certificates Market Discount."

The responsibility for complying with the foregoing
reporting
rules will be borne
by the Master Servicer or the Certificate
Administrator.
Certificateholders may request any
information with respect to the returns described in
Section
1.6049-7(e)(2) of the Treasury
regulations. Such request should be directed to the
Master
Servicer or the Certificate
Administrator, as applicable, at Residential Funding
Corporation,
8400 Normandale Lake
Boulevard, Suite 600, Minneapolis, Minnesota 55437.

Backup Withholding with Respect to REMIC
Certificates

Payments of interest and principal, as well as
payments of
proceeds from the sale
of REMIC Certificates, may be subject to the "backup
withholding
tax" under Section 3406
of the Code at a rate of 31% if recipients of such
payments fail
to furnish to the payor
certain information, including their taxpayer
identification
numbers, or otherwise fail to
establish an exemption from such tax. Any amounts
deducted and
withheld from a
distribution to a recipient would be allowed as a
credit against
such recipient's federal
income tax. Furthermore, certain penalties may be
imposed by the
IRS on a recipient of
payments that is required to supply information but
that does not
do so in the proper
manner.

Foreign Investors in REMIC Certificates

A REMIC Regular Certificateholder that is not a
"United
States person" and is not
subject to federal income tax as a result of any direct
or
indirect connection to the United
States in addition to its ownership of a REMIC Regular
Certificate will not be subject to
United States federal income or withholding tax in
respect of a
distribution on a REMIC
Regular Certificate, provided that the holder complies
to the
extent necessary with certain
identification requirements (including delivery of a
statement,
signed by the
Certificateholder under penalties of perjury,
certifying that
such Certificateholder is not a
United States person and providing the name and address
of such
Certificateholder). For
these purposes, "United States person" means a citizen
or
resident of the United States, a
corporation, partnership or other entity created or
organized in,
or under the laws of, the
United States or any political subdivision thereof, or
an estate
or trust whose income from
sources without the United States is includible in
gross income
for United States federal
income tax purposes regardless of its connection with
the conduct
of a trade or business
within the United States. It is possible that the IRS
may assert
that the foregoing tax
exemption should not apply with respect to a REMIC
Regular
Certificate held by a
Certificateholder that owns directly or indirectly a
10% or
greater interest in the REMIC
Residual Certificates. If the holder does not qualify
for
exemption, distributions of interest,
including distributions in respect of accrued original
issue
discount, to such holder may be
subject to a tax rate of 30%, subject to reduction
under any
applicable tax treaty.

In addition, the foregoing rules will not apply to
exempt a
United States shareholder
of a controlled foreign corporation from taxation on
such United
States shareholder's
allocable portion of the interest income received by
such
controlled foreign corporation.

Further, it appears that a REMIC Regular
Certificate would
not be included in the
estate of a non-resident alien individual and would not
be
subject to United States estate
taxes. However, Certificateholders who are non-resident
alien
individuals should consult
their tax advisors concerning this question.

Unless otherwise stated in the related Prospectus
Supplement,
transfers of REMIC
Residual Certificates to investors that are not United
States
persons will be prohibited under
the related Pooling and Servicing Agreement or Trust
Agreement.

STATE AND OTHER TAX CONSEQUENCES

In addition to the federal income tax consequences
described
in "Certain Federal
Income Tax Consequences," potential investors should
consider the
state and local tax
consequences of the acquisition, ownership, and
disposition of
the Certificates offered. State
tax law may differ substantially from the corresponding
federal
tax law, and the discussion
above does not purport to describe any aspect of the
tax laws of
any state or other
jurisdiction. Therefore, prospective investors should
consult
their tax advisors with respect
to the various tax consequences of investments in the
Certificates offered hereby.

ERISA CONSIDERATIONS

ERISA imposes certain fiduciary and prohibited
transaction
restrictions on
employee pension and welfare benefit plans subject to
ERISA
("ERISA Plans"). Section
4975 of the Code imposes similar prohibited transaction
restrictions on tax-qualified
retirement plans described in Section 401(a) of the
Code
("Qualified Retirement Plans") and
on individual retirement accounts and annuities
("IRAs")
described in Section 408 of the
Code (collectively, "Tax-Favored Plans").

Certain employee benefit plans, such as
governmental plans
(as defined in Section
3(32) of ERISA), are not subject to the ERISA
requirements
discussed herein. Accordingly,
assets of such plans may be invested in Certificates
without
regard to the ERISA
considerations described below, subject to the
provisions of
applicable federal and state law.
Any such plan that is a Qualified Retirement Plan 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.

In addition to imposing general fiduciary
requirements,
including those of
investment prudence and diversification and the
requirement that
a Plan's investment be
made in accordance with the documents governing the
Plan, Section
406 of ERISA and
Section 4975 of the Code prohibit a broad range of
transactions
involving "plan assets" of
ERISA Plans and Tax-Favored Plans (collectively,
"Plans") and
persons ("Parties in
Interest" under ERISA or "Disqualified Persons" under
the Code)
who have certain
specified relationships to the Plans, unless a
statutory or
administrative exemption is
available. Certain Parties in Interest or Disqualified
Persons
that participate in a prohibited
transaction may be subject to a penalty (or an excise
tax)
imposed pursuant to Section 502(i)
of ERISA or Section 4975 of the Code, unless a
statutory or
administrative exemption is
available.

Plan Asset Regulations

An investment of Plan Assets in Certificates may
cause the
underlying Mortgage
Loans, Contracts or Agency Securities included in a
Trust Fund to
be deemed "plan assets"
of such Plan. The U.S. Department of Labor (the "DOL")
has
promulgated regulations at
29 C.F.R. (S) 2510.3-101 (the "DOL Regulations")
concerning
whether or not a Plan's assets
would be deemed to include an interest in the
underlying assets
of an entity (such as a Trust
Fund) for purposes of applying the general fiduciary
responsibility provisions of ERISA and
the prohibited transaction provisions of ERISA and
Section 4975
of the Code, when a Plan
acquires an "equity interest" (such as a Certificate)
in such
entity. Because of the factual
nature of certain of the rules set forth in the DOL
Regulations,
Plan Assets either may be
deemed to include an interest in the assets of an
entity (such as
a Trust Fund) or may be
deemed merely to include its interest in the instrument
evidencing such equity interest (such
as a Certificate). Therefore, neither Plans nor such
entities
should acquire or hold
Certificates in reliance upon the availability of any
exception
under the DOL Regulations.
For purposes of this section, the term "plan assets"
("Plan
Assets") or "assets of a Plan" has
the meaning specified in the DOL Regulations and
includes an
undivided interest in the
underlying assets of certain entities in which a Plan
invests.

The prohibited transaction provisions of Section
406 of ERISA
and Section 4975
of the Code may apply to a Trust Fund and cause the
Company, the
Master Servicer, the
Certificate Administrator, any Servicer, any
Sub-Servicer, the
Trustee, the obligor under any
credit enhancement mechanism or certain affiliates
thereof to be
considered or become
Parties in Interest or Disqualified Persons with
respect to an
investing Plan (or of a Plan
holding an interest in such an entity). If so, the
acquisition or
holding of Certificates by or
on behalf of the investing Plan could also give rise to
a
prohibited transaction under ERISA
and/or Section 4975 of the Code, unless some statutory
or
administrative exemption is
available. Certificates acquired by a Plan would be
assets of
that Plan. Under the DOL
Regulations, the Trust Fund, including the Mortgage
Loans,
Contracts or Agency Securities
and the other assets held in the Trust Fund, may also
be deemed
to be assets of each Plan
that acquires Certificates. Special caution should be
exercised
before Plan Assets are used
to acquire a Certificate in such circumstances,
especially if,
with respect to such assets, the
Company, the Master Servicer, the Certificate
Administrator, any
Servicer, any Sub-Servicer, the Trustee, the obligor
under any
credit enhancement mechanism or an affiliate
thereof either (i) has investment discretion with
respect to the
investment of Plan Assets;
or (ii) has authority or responsibility to give (or
regularly
gives) investment advice with
respect to Plan Assets for a fee pursuant to an
agreement or
understanding that such advice
will serve as a primary basis for investment decisions
with
respect to such Plan Assets.

Any person who has discretionary authority or
control
respecting the management
or disposition of Plan Assets, and any person who
provides
investment advice with respect
to such Plan Assets for a fee (in the manner described
above), is
a fiduciary of the investing
Plan. If the Mortgage Loans, Contracts or Agency
Securities were
to constitute Plan Assets,
then any party exercising management or discretionary
control
regarding those Plan Assets
may be deemed to be a Plan "fiduciary," and thus
subject to the
fiduciary requirements of
ERISA and the prohibited transaction provisions of
ERISA and
Section 4975 of the Code
with respect to any investing Plan. In addition, if the
Mortgage
Loans, Contracts or Agency
Securities were to constitute Plan Assets, then the
acquisition
or holding of Certificates by,
on behalf of or with Plan Assets, as well as the
operation of the
Trust Fund, may constitute
or involve a prohibited transaction under ERISA and the
Code.

Prohibited Transaction Exemption

On March 29, 1994, the DOL issued (with an
effective date of
June 9, 1992) an
individual exemption (the "Exemption"), to Residential
Funding
and certain of its affiliates,
which generally exempts from the application of the
prohibited
transaction provisions of
Section 406 of ERISA, and the excise taxes imposed on
such
prohibited transactions
pursuant to Section 4975(a) and (b) of the Code,
certain
transactions, among others, relating
to the servicing and operation of pools of certain
secured
obligations such as Mortgage
Loans, Cooperative Loans, Contracts or Agency
Securities which
are held in a trust and the
purchase, sale and holding of pass-through certificates
issued by
such a trust as to which (i)
the Company or any of its affiliates is the sponsor if
any entity
which has received from the
DOL an individual prohibited transaction exemption
which is
similar to the Exemption is
the sole underwriter, or manager or co-manager of the
underwriting syndicate or a seller or
placement agent, or (ii) the Company or an affiliate is
the
underwriter, provided that certain
conditions set forth in the Exemption are satisfied.
For purposes
of this section, the term
"Underwriter" shall include (a) the Company and certain
of its
affiliates, (b) any person
directly or indirectly, through one or more
intermediaries,
controlling, controlled by or
under common control with the Company and certain of
its
affiliates, (c) any member of the
underwriting syndicate or selling group of which a
person
described in (a) or (b) is a
manager or co-manager with respect to a class of
Certificates, or
(d) any entity which has
received an exemption from the DOL relating to
Certificates which
is similar to the
Exemption.

The Exemption sets forth six general conditions
which must be
satisfied for a
transaction involving the purchase, sale and holding of
Certificates to be eligible for
exemptive relief thereunder. First, the acquisition of
Certificates by a Plan or with Plan
Assets must be on terms that are at least as favorable
to the
Plan as they would be in an
arm's-length transaction with an unrelated party.
Second, the
Exemption only applies to
Certificates evidencing rights and interests that are
not
subordinated to the rights and
interests evidenced by the other Certificates of the
same trust.
Third, the Certificates at the
time of acquisition by a Plan or with Plan Assets must
be rated
in one of the three highest
generic rating categories by Standard & Poor's Ratings
Services,
Moody's Investors Service,
Inc., Duff & Phelps, Inc. or Fitch Investors Service,
L.P.
Fourth, the Trustee cannot be an
affiliate of any other member of the "Restricted Group"
which
consists of any Underwriter,
the Company, the Master Servicer, the Certificate
Administrator,
any Servicer, any Sub-Servicer, the Trustee and any
mortgagor
with respect to assets of a Trust Fund constituting
more than 5% of the aggregate unamortized principal
balance of
the assets in the related
Trust Fund as of the date of initial issuance of the
Certificates. Fifth, the sum of all
payments made to and retained by the underwriters must
represent
not more than reasonable
compensation for underwriting the Certificates; the sum
of all
payments made to and
retained by the Company pursuant to the assignment of
the assets
to the related Trust Fund
must represent not more than the fair market value of
such
obligations; and the sum of all
payments made to and retained by the Master Servicer,
the
Certificate Administrator, any
Servicer or any Sub-Servicer must represent not more
than
reasonable compensation for
such person's services under the related Pooling and
Servicing
Agreement or Trust
Agreement and reimbursement of such person's reasonable
expenses
in connection
therewith. Sixth, the Exemption states that the
investing Plan or
Plan Asset investor must
be an accredited investor as defined in Rule 501(a)(1)
of
Regulation D of the Commission
under the Securities Act of 1933, as amended.

A fiduciary of or other investor of Plan Assets
contemplating
purchasing a
Certificate must make its own determination that the
general
conditions set forth above will
be satisfied with respect to such Certificate.

If the general conditions of the Exemption are
satisfied, the
Exemption may provide
an exemption from the restrictions imposed by Sections
406(a) and
407 of ERISA (as well
as the excise taxes imposed by Sections 4975(a) and (b)
of the
Code by reason of Sections
4975(c)(1)(A) through (D) of the Code) in connection
with the
direct or indirect sale,
exchange, transfer, holding or the direct or indirect
acquisition
or disposition in the
secondary market of Certificates by a Plan or with Plan
Assets.
However, no exemption is
provided from the restrictions of Sections 406(a)(1)(E)
and
406(a)(2) of ERISA for the
acquisition or holding of a Certificate by a Plan or
with Plan
Assets of an Excluded Plan by
any person who has discretionary authority or renders
investment
advice with respect to
Plan Assets of such Excluded Plan. For purposes of the
Certificates, an "Excluded Plan" is
a Plan sponsored by any member of the Restricted Group.

If certain specific conditions of the Exemption are
also
satisfied, the Exemption
may provide an exemption from the restrictions imposed
by
Sections 406(b)(1) and (b)(2)
of ERISA and the taxes imposed by Section 4975(c)(1)(E)
of the
Code in connection with
(1) the direct or indirect sale, exchange or transfer
of
Certificates in the initial issuance of
Certificates between the Company or an Underwriter and
a Plan
when the person who has
discretionary authority or renders investment advice
with respect
to the investment of the
relevant Plan Assets in the Certificates is (a) a
mortgagor with
respect to 5% or less of the
fair market value of the assets of a Trust Fund or (b)
an
affiliate of such a person, (2) the
direct or indirect acquisition or disposition in the
secondary
market of Certificates by a Plan
or with Plan Assets and (3) the holding of Certificates
by a Plan
or with Plan Assets.

Additionally, if certain specific conditions of the
Exemption
are satisfied, the
Exemption may provide an exemption from the
restrictions imposed
by Sections 406(a),
406(b) and 407 of ERISA, and the taxes imposed by
Sections
4975(a) and (b) of the Code
by reason of Section 4975(c) of the Code, for
transactions in
connection with the servicing,
management and operation of the Mortgage Pools and
Contract
Pools. The Company
expects that the specific conditions of the Exemption
required
for this purpose will be
satisfied with respect to the Certificates so that the
Exemption
would provide an exemption
from the restrictions imposed by Sections 406(a) and
(b) of ERISA
(as well as the excise
taxes imposed by Sections 4975(a) and (b) of the Code
by reason
of Section 4975(c) of the
Code) for transactions in connection with the
servicing,
management and operation of the
Mortgage Pools and Contract Pools, provided that the
general
conditions of the Exemption
are satisfied.

The Exemption also may provide an exemption from
the
restrictions imposed by
Sections 406(a) and 407(a) of ERISA, and the taxes
imposed by
Section 4975(a) and (b) of
the Code by reason of Sections 4975(c)(1)(A) through
(D) of the
Code if such restrictions
are deemed to otherwise apply merely because a person
is deemed
to be a Party in Interest
or a Disqualified Person with respect to an investing
Plan (or
the investing entity holding
Plan Assets) by virtue of providing services to the
Plan or such
Plan Assets (or by virtue of
having certain specified relationships to such a
person) solely
as a result of the ownership
of Certificates by a Plan or such Plan Asset investor.

Before purchasing a Certificate, a fiduciary or
other
investor of Plan Assets should
itself confirm (a) that the Certificates constitute
"certificates" for purposes of the Exemption
and (b) that the specific and general conditions set
forth in the
Exemption and the other
requirements set forth in the Exemption would be
satisfied. In
addition to making its own
determination as to the availability of the exemptive
relief
provided in the Exemption, the
fiduciary or other investor of Plan Assets should
consider its
general fiduciary obligations
under ERISA in determining whether to purchase any
Certificates
with Plan Assets.

Any fiduciary or other investor of Plan Assets that
proposes
to purchase Certificates
on behalf of or with Plan Assets should consult with
its counsel
with respect to the potential
applicability of ERISA and the Code to such investment
and the
availability of the
Exemption or any other prohibited transaction exemption
in
connection therewith. In
particular, in connection with a contemplated purchase
of
Certificates representing a
beneficial ownership interest in a pool of
single-family
residential first Mortgage Loans or
Agency Certificates, such fiduciary or other Plan
investor should
consider the availability
of the Exemption or Prohibited Transaction Class
Exemption
("PTCE") 83-1 ("PTCE 83-1")
for certain transactions involving mortgage pool
investment
trusts. However, PTCE 83-1
does not provide exemptive relief with respect to
Certificates
evidencing interests in Trust
Funds that include Mortgage Loans secured by third or
more junior
liens, Contracts or
Cooperative Loans. In addition, such fiduciary or
other Plan
investor should consider the
availability of PTCE 95-60, regarding investments by
insurance
company general accounts,
PTCE 90-1, regarding investments by insurance company
pooled
separate accounts, PTCE
91-38, regarding investments by bank collective
investment funds,
and PTCE 84-14,
regarding transactions effected by "qualified
professional asset
managers." The Prospectus
Supplement with respect to a series of Certificates may
contain
additional information
regarding the application of the Exemption, PTCE 83-1,
or any
other exemption, with
respect to the Certificates offered thereby. There can
be no
assurance that any of these
exemptions will apply with respect to any particular
Plan's or
other Plan Asset investor's
investment in the Certificates or, even if an exemption
were
deemed to apply, that any
exemption would apply to all prohibited transactions
that may
occur in connection with such
an investment.

Tax-Exempt Investors

A Plan that is exempt from federal income taxation
pursuant
to Section 501 of the
Code (a "Tax-Exempt Investor") nonetheless will be
subject to
federal income taxation to
the extent that its income is "unrelated business
taxable income"
("UBTI") within the
meaning of Section 512 of the Code. All "excess
inclusions" of a
REMIC allocated to a
REMIC Residual Certificate held by a Tax-Exempt
Investor will be
considered UBTI and
thus will be subject to federal income tax. See
"Certain Federal
Income Tax Consequences-Taxation of Owners of REMIC
Residual
Certificates Excess Inclusions."

Consultation with Counsel

Any fiduciary or other investor of Plan Assets that
proposes
to acquire or hold
Certificates on behalf of or with Plan Assets of any
Plan should
consult with its counsel with
respect to the potential applicability of the fiduciary
responsibility provisions of ERISA and
the prohibited transaction provisions of ERISA and the
Code to
the proposed investment and
the Exemption, the availability of PTCE 83-1 or any
other
prohibited transaction exemption.

LEGAL INVESTMENT MATTERS

Each class of Certificates offered hereby and by
the related
Prospectus Supplement
will be rated at the date of issuance in one of the
four highest
rating categories by at least
one Rating Agency. Unless otherwise specified in the
related
Prospectus Supplement and
except with respect to any class of Certificates that
will
evidence an interest in Mortgage
Loans secured by second or more junior liens, each such
class
that is, and continues to be,
rated in one of the two highest rating categories by at
least one
nationally recognized
statistical rating organization will constitute
"mortgage related
securities" for purposes of
SMMEA, and, as such, will be legal investments for
persons,
trusts, corporations,
partnerships, associations, business trusts and
business entities
(including depository
institutions, life insurance companies and pension
funds) created
pursuant to or existing
under the laws of the United States or of any State
whose
authorized investments are subject
to state regulation to the same extent that, under
applicable
law, obligations issued by or
guaranteed as to principal and interest by the United
States or
any agency or instrumentality
thereof constitute legal investments for such entities.
Under
SMMEA, if a State enacted
legislation on or prior to October 3, 1991 specifically
limiting
the legal investment authority
of any such entities with respect to "mortgage related
securities," such securities will
constitute legal investments for entities subject to
such
legislation only to the extent
provided therein. Certain States enacted legislation
which
overrides the preemption
provisions of SMMEA. SMMEA provides, however, that in
no event
will the enactment of
any such legislation affect the validity of any
contractual
commitment to purchase, hold or
invest in "mortgage related securities," or require the
sale or
other disposition of such
securities, so long as such contractual commitment was
made or
such securities acquired
prior to the enactment of such 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 such securities, and national banks may
purchase such
securities for their own
account without regard to the limitations generally
applicable to
investment securities set
forth in 12 U.S.C. (S) 24 (Seventh), subject in each
case to such
regulations as the
applicable federal regulatory authority may prescribe.

The Federal Financial Institutions Examination
Council has
issued a supervisory
policy statement (the "Policy Statement") applicable to
all
depository institutions, setting
forth guidelines for and significant restrictions on
investments
in "high-risk mortgage
securities." The Policy Statement has been adopted by
the Federal
Reserve Board, the Office
of the Comptroller of the Currency, the FDIC and the
Office of
Thrift Supervision (the
"OTS") with an effective date of February 10, 1992. The
Policy
Statement generally
indicates that a mortgage derivative product will be
deemed to be
high risk if it exhibits
greater price volatility than a standard fixed-rate
thirty-year
mortgage security. According
to the Policy Statement, prior to purchase, a
depository
institution will be required to
determine whether a mortgage derivative product that it
is
considering acquiring is high-risk
and, if so, that the proposed acquisition would reduce
the
institution's overall interest rate
risk. Reliance on analysis and documentation obtained
from a
securities dealer or other
outside party without internal analysis by the
institution would
be unacceptable. There can
be no assurance as to which classes of Certificates
will be
treated as high-risk under the
Policy Statement.

The predecessor to the OTS issued a bulletin,
entitled
"Mortgage Derivative
Products and Mortgage Swaps," which is applicable to
thrift
institutions regulated by the
OTS. The bulletin established guidelines for the
investment by
savings institutions in certain
"high-risk" mortgage derivative securities and
limitations on the
use of such securities by
insolvent, undercapitalized or otherwise "troubled"
institutions.
According to the bulletin,
such "high-risk" mortgage derivative securities include
securities having certain specified
characteristics, which may include certain classes of
Certificates. In addition, the National
Credit Union Administration has issued regulations
governing
federal credit union
investments which prohibit investment in certain
specified types
of securities, which may
include certain classes of Certificates. Similar policy
statements have been issued by
regulators having jurisdiction over other types of
depository
institutions.

Certain classes of Certificates offered hereby,
including any
class that is not rated
in one of the two highest rating categories by at least
one
nationally recognized statistical
rating organization and any class of Certificates that
evidences
an interest in Mortgage
Loans secured by second or more junior liens, will not
constitute
"mortgage related
securities" for purposes of SMMEA. Any such class of
Certificates
will be identified in the
related Prospectus Supplement. Prospective investors in
such
classes of Certificates, in
particular, should consider the matters discussed in
the
following paragraph.

There may be other restrictions on the ability of
certain
investors either to purchase
certain classes of Certificates or to purchase any
class of
Certificates representing more than
a specified percentage of the investors' assets. The
Company will
make no representations
as to the proper characterization of any class of
Certificates
for legal investment or other
purposes, or as to the ability of particular investors
to
purchase any class of Certificates
under applicable legal investment restrictions. These
uncertainties may adversely affect the
liquidity of any class of Certificates. Accordingly,
all
investors whose investment activities
are subject to legal investment laws and regulations,
regulatory
capital requirements or
review by regulatory authorities should consult with
their own
legal advisors in determining
whether and to what extent the Certificates of any
class
constitute legal investments or are
subject to investment, capital or other restrictions,
and, if
applicable, whether SMMEA has
been overridden in any jurisdiction relevant to such
investor.

USE OF PROCEEDS

Unless otherwise specified in the related
Prospectus
Supplement, substantially all
of the net proceeds to be received from the sale of
Certificates
will be applied by the
Company to finance the purchase of, or to repay
short-term loans
incurred to finance the
purchase of, the Mortgage Collateral underlying the
Certificates
or will be used by the
Company for general corporate purposes. The Company
expects that
it will make additional
sales of securities similar to the Certificates from
time to
time, but the timing and amount
of any such additional offerings will be dependent upon
a number
of factors, including the
volume of mortgage loans, contracts or mortgage
securities
purchased by the Company,
prevailing interest rates, availability of funds and
general
market conditions.

METHODS OF DISTRIBUTION

The Certificates offered hereby and by the related
Prospectus
Supplements will be
offered in series through one or more of the methods
described
below. The Prospectus
Supplement prepared for each series will describe the
method of
offering being utilized for
that series and will state the net proceeds to the
Company from
such sale.

The Company intends that Certificates will be
offered through
the following
methods from time to time and that offerings may be
made
concurrently through more than
one of these methods or that an offering of a
particular series
of Certificates may be made
through a combination of two or more of these methods.
Such
methods are as follows:

1. by negotiated firm commitment or best
efforts
underwriting and
public re-offering by underwriters;

2. by placements by the Company with
institutional
investors through
dealers; and

3. by direct placements by the Company with
institutional investors.

In addition, if specified in the related Prospectus
Supplement, a series of Certificates
may be offered in whole or in part in exchange for the
Mortgage
Collateral (and other
assets, if applicable) that would comprise the Trust
Fund for
such Certificates.

If underwriters are used in a sale of any
Certificates (other
than in connection with
an underwriting on a best efforts basis), such
Certificates will
be acquired by the
underwriters for their own account and may be resold
from time to
time in one or more
transactions, including negotiated transactions, at
fixed public
offering prices or at varying
prices to be determined at the time of sale or at the
time of
commitment therefor. Such
underwriters may be broker-dealers affiliated with the
Company
whose identities and
relationships to the Company will be as set forth in
the related
Prospectus Supplement. The
managing underwriter or underwriters with respect to
the offer
and sale of a particular series
of Certificates will be set forth on the cover of the
Prospectus
Supplement relating to such
series and the members of the underwriting syndicate,
if any,
will be named in such
Prospectus Supplement.

In connection with the sale of the Certificates,
underwriters
may receive
compensation from the Company or from purchasers of the
Certificates in the form of
discounts, concessions or commissions. Underwriters and
dealers
participating in the
distribution of the Certificates may be deemed to be
underwriters
in connection with such
Certificates, and any discounts or commissions received
by them
from the Company and
any profit on the resale of Certificates by them may be
deemed to
be underwriting discounts
and commissions under the Securities Act of 1933, as
amended.

It is anticipated that the underwriting agreement
pertaining
to the sale of any series
of Certificates will provide that the obligations of
the
underwriters will be subject to certain
conditions precedent, that the underwriters will be
obligated to
purchase all such Certificates
if any are purchased (other than in connection with an
underwriting on a best efforts basis)
and that, in limited circumstances, the Company will
indemnify
the several underwriters and
the underwriters will indemnify the Company against
certain civil
liabilities, including
liabilities under the Securities Act of 1933, as
amended, or will
contribute to payments
required to be made in respect thereof.

The Prospectus Supplement with respect to any
series offered
by placements
through dealers will contain information regarding the
nature of
such offering and any
agreements to be entered into between the Company and
purchasers
of Certificates of such
series.

The Company anticipates that the Certificates
offered hereby
will be sold primarily
to institutional investors or sophisticated
non-institutional
investors. Purchasers of
Certificates, including dealers, may, depending on the
facts and
circumstances of such
purchases, be deemed to be "underwriters" within the
meaning of
the Securities Act of 1933,
as amended, in connection with reoffers and sales by
them of
Certificates. Holders of
Certificates should consult with their legal advisors
in this
regard prior to any such reoffer
or sale.

LEGAL MATTERS

Certain legal matters, including certain federal
income tax
matters, will be passed
upon for the Company by Orrick, Herrington & Sutcliffe,
New York,
New York, or by
Thacher Proffitt & Wood, New York, New York, as
specified in the
Prospectus Supplement.

FINANCIAL INFORMATION

The Company has determined that its financial
statements are
not material to the
offering made hereby. The Certificates do not represent
an
interest in or an obligation of the
Company. The Company's only obligations with respect to
a series
of Certificates will be
to repurchase certain items of Mortgage Collateral upon
any
breach of certain limited
representations and warranties made by the Company, or
as
otherwise provided in the
applicable Prospectus Supplement.

INDEX OF PRINCIPAL DEFINITIONS

Page

Accrual Certificates . . . . . . . . . . . . . . . . .
. . . . .
. . .7
Advance. . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 43
Affiliated Seller. . . . . . . . . . . . . . . . . . .
. . . . .
. . 27
Agency Securities. . . . . . . . . . . . . . . . . . .
. . . . .
. . 10
Agency Securities Pool . . . . . . . . . . . . . . . .
. . . . .
. . 17
AlterNet Loans . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 18
AlterNet Mortgage Program. . . . . . . . . . . . . . .
. . . . .
. . 18
AlterNet Program Seller. . . . . . . . . . . . . . . .
. . . . .
. . 27
AlterNet Seller Guide. . . . . . . . . . . . . . . . .
. . . . .
. . 24
Appraised Value. . . . . . . . . . . . . . . . . . . .
. . . . .
19, 25
ARM Loans. . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 20
Balloon Amount . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 18
Balloon Loans. . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 18
Bankruptcy Amount. . . . . . . . . . . . . . . . . . .
. . . . .
. . 52
Bankruptcy Losses. . . . . . . . . . . . . . . . . . .
. . . . .
. . 53
Beneficial Owner . . . . . . . . . . . . . . . . . . .
. . . . .
. . 32
Bi-Weekly Loans. . . . . . . . . . . . . . . . . . . .
. . . . .
. . 18
Book-Entry Certificates. . . . . . . . . . . . . . . .
. . . . .
. . 32
Buy-Down Funds . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 21
Buy-Down Loans . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 18
Buy-Down Period. . . . . . . . . . . . . . . . . . . .
. . . . .
. . 21
CEDEL. . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 32
CEDEL Participants . . . . . . . . . . . . . . . . . .
. . . . .
. . 33
Certificate Account. . . . . . . . . . . . . . . . . .
. . . . .
. . 17
Certificate Administrator. . . . . . . . . . . . . . .
. . . . .
. . .1
Certificate Insurance Policy . . . . . . . . . . . . .
. . . . .
. . 58
Certificate Registrar. . . . . . . . . . . . . . . . .
. . . . .
. . 31
Certificateholder. . . . . . . . . . . . . . . . . . .
. . . . .
. . 31
Certificates . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . .1
Closing Date . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 90
Code . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 12
Combined Loan-to-Value Ratio . . . . . . . . . . . . .
. . . . .
. . 19
Commission . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 17
Committee Report . . . . . . . . . . . . . . . . . . .
. . . . .
. . 89
Company. . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . .1
Compensating Interest. . . . . . . . . . . . . . . . .
. . . . .
. . 44
Contract Pool. . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 10
Contract Pool Insurance Policy . . . . . . . . . . . .
. . . . .
. . 56
Contracts. . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . .1
Contributions Tax. . . . . . . . . . . . . . . . . . .
. . . . .
. .101
Conventional Loans . . . . . . . . . . . . . . . . . .
. . . . .
. . 18
Convertible Mortgage Loan. . . . . . . . . . . . . . .
. . . . .
. . 21
Cooperative. . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 33
Cooperative Dwellings. . . . . . . . . . . . . . . . .
. . . . .
. . 18
Cooperative Loans. . . . . . . . . . . . . . . . . . .
. . . . .
. . .9
Cooperative Note . . . . . . . . . . . . . . . . . . .
. . . . .
. . 75
Cooperatives . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 18
Crime Control Act. . . . . . . . . . . . . . . . . . .
. . . . .
. . 87
Custodial Account. . . . . . . . . . . . . . . . . . .
. . . . .
. . 17
Custodian. . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 17
Cut-off Date . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 17
Debt Service Reduction . . . . . . . . . . . . . . . .
. . . . .
. . 57
Defaulted Mortgage Losses. . . . . . . . . . . . . . .
. . . . .
. . 53
Deferred Interest. . . . . . . . . . . . . . . . . . .
. . . . .
. . 21
Deficient Valuation. . . . . . . . . . . . . . . . . .
. . . . .
. . 57
Depositaries . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 32
Determination Date . . . . . . . . . . . . . . . . . .
. . . . .
. . 41
Disqualified Persons . . . . . . . . . . . . . . . . .
. . . . .
. .105
Distribution Amount. . . . . . . . . . . . . . . . . .
. . . . .
. . 40
Distribution Date. . . . . . . . . . . . . . . . . . .
. . . . .
. . .8
DOL. . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. .105
DOL Regulations. . . . . . . . . . . . . . . . . . . .
. . . . .
. .105
DTC. . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 32
DTC Participants . . . . . . . . . . . . . . . . . . .
. . . . .
. . 32
Due Date . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 41
Eligible Account . . . . . . . . . . . . . . . . . . .
. . . . .
. . 38
ERISA. . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 12
ERISA Plans. . . . . . . . . . . . . . . . . . . . . .
. . . . .
. .105
Escrow Account . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 46
Euroclear. . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 32
Euroclear Operator . . . . . . . . . . . . . . . . . .
. . . . .
. . 33
Euroclear Participants . . . . . . . . . . . . . . . .
. . . . .
. . 33
Exchange Act . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . .2
Excluded Plan. . . . . . . . . . . . . . . . . . . . .
. . . . .
. .107
Exemption. . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. .106
Extraordinary Losses . . . . . . . . . . . . . . . . .
. . . . .
. . 53
Fannie Mae . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 17
Fannie Mae Securities. . . . . . . . . . . . . . . . .
. . . . .
. . 17
FDIC . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 27
FHA. . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 18
FHA Contracts. . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 24
FHA Loans. . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 18
Form 8-K . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 17
Fraud Loss Amount. . . . . . . . . . . . . . . . . . .
. . . . .
. . 52
Fraud Losses . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 53
Freddie Mac. . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 17
Freddie Mac Act. . . . . . . . . . . . . . . . . . . .
. . . . .
. . 26
Freddie Mac Securities . . . . . . . . . . . . . . . .
. . . . .
. . 17
Garn-St Germain Act. . . . . . . . . . . . . . . . . .
. . . . .
. . 80
Ginnie Mae . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 17
Ginnie Mae Securities. . . . . . . . . . . . . . . . .
. . . . .
. . 17
GMAC Mortgage. . . . . . . . . . . . . . . . . . . . .
. . . . .
. . .1
GPM Loans. . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 18
Gross Margin . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 20
High Cost Loans. . . . . . . . . . . . . . . . . . . .
. . . . .
. . 80
Housing Act. . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 25
HUD. . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 18
Index. . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 20
Indirect Participants. . . . . . . . . . . . . . . . .
. . . . .
. . 32
Insurance Proceeds . . . . . . . . . . . . . . . . . .
. . . . .
. . 37
IRAs . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. .105
IRS. . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 90
Issue Premium. . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 96
Junior Mortgage Loans. . . . . . . . . . . . . . . . .
. . . . .
. . 13
Junior Mortgage Ratio. . . . . . . . . . . . . . . . .
. . . . .
. . 20
Letter of Credit . . . . . . . . . . . . . . . . . . .
. . . . .
. . 54
Letter of Credit Bank. . . . . . . . . . . . . . . . .
. . . . .
. . 54
Liquidated Contract. . . . . . . . . . . . . . . . . .
. . . . .
. . 50
Liquidated Mortgage Loan . . . . . . . . . . . . . . .
. . . . .
. . 50
Liquidation Proceeds . . . . . . . . . . . . . . . . .
. . . . .
. . 37
Loan-to-Value Ratio. . . . . . . . . . . . . . . . . .
. . . . .
. . 19
Manufactured Home. . . . . . . . . . . . . . . . . . .
. . . . .
. . 10
Mark-to-Market Regulations . . . . . . . . . . . . . .
. . . . .
. . 99
Master Commitments . . . . . . . . . . . . . . . . . .
. . . . .
. . 24
Master Servicer. . . . . . . . . . . . . . . . . . . .
. . . . .
. . .1
Maximum Mortgage Rate. . . . . . . . . . . . . . . . .
. . . . .
. . 20
Mezzanine Certificates . . . . . . . . . . . . . . . .
. . . . .
. . .7
Minimum Mortgage Rate. . . . . . . . . . . . . . . . .
. . . . .
. . 20
Modified Mortgage Loan . . . . . . . . . . . . . . . .
. . . . .
. . 18
Mortgage Collateral. . . . . . . . . . . . . . . . . .
. . . . .
. . .1
Mortgage Collateral Seller . . . . . . . . . . . . . .
. . . . .
. . .9
Mortgage Loans . . . . . . . . . . . . . . . . . . . .
. . . . .
. . .1
Mortgage Note. . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 34
Mortgage Pool. . . . . . . . . . . . . . . . . . . . .
. . . . .
. . .9
Mortgage Pool Insurance Policy . . . . . . . . . . . .
. . . . .
. . 54
Mortgage Rates . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 18
Mortgaged Property . . . . . . . . . . . . . . . . . .
. . . . .
.9, 10
Mortgages. . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 18
Mortgagors . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 13
Neg-Am ARM Loans . . . . . . . . . . . . . . . . . . .
. . . . .
. . 20
Net Mortgage Rate. . . . . . . . . . . . . . . . . . .
. . . . .
. . 69
Nonrecoverable Advance . . . . . . . . . . . . . . . .
. . . . .
. . 39
OID Regulations. . . . . . . . . . . . . . . . . . . .
. . . . .
. . 87
OTS. . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. .109
Participants . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 32
Parties in Interest. . . . . . . . . . . . . . . . . .
. . . . .
. .105
Pass-Through Rate. . . . . . . . . . . . . . . . . . .
. . . . .
. . .7
Paying Agent . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 40
Percentage Interest. . . . . . . . . . . . . . . . . .
. . . . .
. . 40
Periodic Cap . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 20
Permitted Investments. . . . . . . . . . . . . . . . .
. . . . .
. . 38
Plan Assets. . . . . . . . . . . . . . . . . . . . . .
. . . . .
. .105
Plans. . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. .105
Policy Statement . . . . . . . . . . . . . . . . . . .
. . . . .
. .109
Pool Insurer . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 54
Pooling and Servicing Agreement. . . . . . . . . . . .
. . . . .
. . .1
Prepayment Interest Shortfall. . . . . . . . . . . . .
. . . . .
. . 43
Primary Insurance Policy . . . . . . . . . . . . . . .
. . . . .
. . 60
Primary Insurer. . . . . . . . . . . . . . . . . . . .
. . . . .
. . 60
Principal Prepayments. . . . . . . . . . . . . . . . .
. . . . .
. . 42
Prohibited Transactions Tax. . . . . . . . . . . . . .
. . . . .
. .101
PTCE . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. .108
PTCE 83-1. . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. .108
Purchase Price . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 29
Qualified Insurer. . . . . . . . . . . . . . . . . . .
. . . . .
. . 59
Qualified Retirement Plans . . . . . . . . . . . . . .
. . . . .
. .105
Qualified Substitute Contract. . . . . . . . . . . . .
. . . . .
. . 30
Qualified Substitute Mortgage Loan . . . . . . . . . .
. . . . .
. . 30
Rating Agency. . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 11
Realized Loss. . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 51
Record Date. . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 40
Registration Statement . . . . . . . . . . . . . . . .
. . . . .
. . .2
REMIC. . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . .1
REMIC Certificates . . . . . . . . . . . . . . . . . .
. . . . .
. . 87
REMIC Provisions . . . . . . . . . . . . . . . . . . .
. . . . .
. . 87
REMIC Regular Certificates . . . . . . . . . . . . . .
. . . . .
. . 88
REMIC Regulations. . . . . . . . . . . . . . . . . . .
. . . . .
. . 88
REMIC Residual Certificates. . . . . . . . . . . . . .
. . . . .
. . 88
REO Contract . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 50
REO Mortgage Loan. . . . . . . . . . . . . . . . . . .
. . . . .
. . 50
Repurchased Contract . . . . . . . . . . . . . . . . .
. . . . .
. . 30
Repurchased Mortgage Loan. . . . . . . . . . . . . . .
. . . . .
. . 30
Reserve Fund . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 57
Residential Funding. . . . . . . . . . . . . . . . . .
. . . . .
. . .6
Restricted Group . . . . . . . . . . . . . . . . . . .
. . . . .
. .106
RICO . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 87
Senior Certificates. . . . . . . . . . . . . . . . . .
. . . . .
. . .7
Senior Percentage. . . . . . . . . . . . . . . . . . .
. . . . .
. . 52
Senior/Subordinate Series. . . . . . . . . . . . . . .
. . . . .
. . 31
Servicer . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . .1
Servicing Advances . . . . . . . . . . . . . . . . . .
. . . . .
. . 39
Servicing Fee. . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 46
Single Certificate . . . . . . . . . . . . . . . . . .
. . . . .
. . 45
SMMEA. . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 11
Special Hazard Amount. . . . . . . . . . . . . . . . .
. . . . .
. . 52
Special Hazard Insurance Policy. . . . . . . . . . . .
. . . . .
. . 56
Special Hazard Insurer . . . . . . . . . . . . . . . .
. . . . .
. . 56
Special Hazard Losses. . . . . . . . . . . . . . . . .
. . . . .
. . 53
Special Servicer . . . . . . . . . . . . . . . . . . .
. . . . .
. . 48
Spread . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 36
Stated Principal Balance . . . . . . . . . . . . . . .
. . . . .
. . 52
Strip Certificate. . . . . . . . . . . . . . . . . . .
. . . . .
. . .7
Sub-Servicer . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 45
Sub-Servicing Agreement. . . . . . . . . . . . . . . .
. . . . .
. . 45
Subordinate Certificates . . . . . . . . . . . . . . .
. . . . .
. . .7
Surety Bond. . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 58
Tax-Exempt Investor. . . . . . . . . . . . . . . . . .
. . . . .
. .108
Tax-Favored Plans. . . . . . . . . . . . . . . . . . .
. . . . .
. .105
Terms and Conditions . . . . . . . . . . . . . . . . .
. . . . .
. . 33
Tiered REMICs. . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 89
Title V. . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 81
Title VIII . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 81
Trust Agreement. . . . . . . . . . . . . . . . . . . .
. . . . .
. . .1
Trust Fund . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . .1
Trustee. . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 17
UBTI . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. .108
UCC. . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 78
Unaffiliated Seller. . . . . . . . . . . . . . . . . .
. . . . .
. . 27
Underwriter. . . . . . . . . . . . . . . . . . . . . .
. . . . .
. .106
VA . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 18
VA Contracts . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 24
VA Loans . . . . . . . . . . . . . . . . . . . . . . .
. . . . .
. . 18

<PAGE>

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NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMA-
TION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS SUPPLE-
MENT AND THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTA-
TIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY
THE UNDERWRITER. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTI-
TUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE SECURITIES
OFFERED HEREBY TO ANYONE IN ANY JURISDICTION IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UN-
LAWFUL 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 HEREIN OR
THEREIN IS CORRECT AS OF ANY TIME SINCE THE DATE OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
PROSPECTUS SUPPLEMENT
<S> <C>
Summary.................................................................... S-3
Risk Factors............................................................... S-11
Description of the Mortgage Pool........................................... S-12
Description of the Certificates............................................ S-23
The Insurer................................................................ S-35
Certain Yield and Prepayment Considerations................................ S-37
Pooling and Servicing Agreement............................................ S-43
Certain Federal Income Tax Consequences.................................... S-45
Method of Distribution..................................................... S-48
Legal Opinions............................................................. S-49
Experts.................................................................... S-49
Ratings.................................................................... S-49
Legal Investment........................................................... S-50
ERISA Considerations....................................................... S-50
PROSPECTUS
Additional Information..................................................... 2
Reports to Certificateholders.............................................. 2
Incorporation of Certain Information by Reference.......................... 2
Summary of Prospectus...................................................... 4
Risk Factors............................................................... 11
The Trust Funds............................................................ 14
Description of the Certificates............................................ 27
Subordination.............................................................. 46
Description of Credit Enhancement.......................................... 48
Insurance Policies on Mortgage Loans or Contracts.......................... 54
The Company................................................................ 58
Residential Funding Corporation............................................ 58
The Pooling and Servicing Agreement........................................ 58
Yield Considerations....................................................... 62
Maturity and Prepayment Considerations..................................... 65
Certain Legal Aspects of Mortgage Loans and Contracts...................... 68
Certain Federal Income Tax Consequences.................................... 80
State and Other Tax Consequences........................................... 97
ERISA Considerations....................................................... 97
Legal Investment Matters................................................... 100
Use of Proceeds............................................................ 102
Methods of Distribution.................................................... 102
Legal Matters.............................................................. 103
Financial Information...................................................... 103
Index of Principal Definitions............................................. 104
</TABLE>

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RESIDENTIAL ASSET SECURITIES CORPORATION

$95,439,541

MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1996-KS2

<TABLE>
<S> <C> <C> <C>
CLASS A-1 CERTIFICATES % $
CLASS A-2 CERTIFICATES % $
CLASS A-3 CERTIFICATES % $
CLASS A-4 CERTIFICATES % $
CLASS A-5 CERTIFICATES 0.00% $
CLASS R-I CERTIFICATES % $ 100
CLASS R-II CERTIFICATES % $ 100
</TABLE>

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

PROSPECTUS SUPPLEMENT

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

MERRILL LYNCH & CO.

MAY , 1996

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