RESIDENTIAL FUNDING MORTGAGE SECURITIES II INC
424B5, 2000-09-20
ASSET-BACKED SECURITIES
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<PAGE>

Prospectus supplement dated September 19, 2000
(to prospectus dated June 21, 2000)

                                  $138,370,000

                RESIDENTIAL FUNDING MORTGAGE SECURITIES II, INC.
                                   Depositor

                        HOME EQUITY LOAN TRUST 2000-HS1

                        RESIDENTIAL FUNDING CORPORATION
                                Master Servicer

              HOME EQUITY LOAN-BACKED TERM NOTES, SERIES 2000-HS1

OFFERED NOTES

The trust will issue one class of term notes backed by primarily second lien,
adjustable rate, home equity revolving credit loans.

CREDIT ENHANCEMENT

Credit enhancement for the notes consists of:

     o excess interest and overcollateralization; and

     o a financial guaranty insurance policy issued by

                               [GRAPHIC OMITTED]

      YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE S-9
                         IN THIS PROSPECTUS SUPPLEMENT.


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


THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE
MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

Residential Funding Securities Corporation will offer the term notes to the
public, on a best efforts basis, at varying prices to be determined at the time
of sale. See "Method of Distribution" in this prospectus supplement.



                   RESIDENTIAL FUNDING SECURITIES CORPORATION
                                  UNDERWRITER

<PAGE>


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

We provide information to you about the term notes in two separate documents
that provide progressively more detail.

o    the prospectus, which provides general information, some of which may not
     apply to your series of term notes; and

o    this prospectus supplement, which describes the specific terms of your
     series of term notes.

IF THE DESCRIPTION OF YOUR TERM NOTES IN THIS PROSPECTUS SUPPLEMENT DIFFERS FROM
THE RELATED DESCRIPTION IN THE ACCOMPANYING PROSPECTUS, YOU SHOULD RELY ON THE
INFORMATION IN THIS PROSPECTUS SUPPLEMENT.

The Depositor's principal offices are located at 8400 Normandale Lake Boulevard,
Suite 600, Minneapolis, Minnesota 55437 and its telephone number is (952)
832-7000.


                                       S-2


<PAGE>

                               TABLE OF CONTENTS


Summary......................................................................S-4
Risk Factors.................................................................S-9
Introduction................................................................S-13
Description of the Mortgage Pool............................................S-13
       General..............................................................S-13
       Origination..........................................................S-13
       Revolving Credit Loan Terms..........................................S-14
       Revolving Credit Loan Characteristics................................S-17
       Underwriting Standards...............................................S-30
       Representations and Warranties.......................................S-31
       Additional Information...............................................S-31
Servicing of Revolving Credit Loans.........................................S-32
       General..............................................................S-32
       Release of Lien; Refinancing of Senior Lien..........................S-32
       Collection and Liquidation Practices; Loss Mitigation ...............S-33
       Optional Repurchase of Defaulted Revolving Credit Loans..............S-33
       The Master Servicer..................................................S-33
       The Initial Subservicer..............................................S-34
       Delinquency and Loss Experience of the Master Servicer's Portfolio...S-34
       Servicing and Other Compensation and Payment of Expenses ............S-35
The Issuer..................................................................S-36
       General..............................................................S-36
The Owner Trustee...........................................................S-36
The Indenture Trustee.......................................................S-37
The Credit Enhancer.........................................................S-37
Description of the Securities...............................................S-39
       General..............................................................S-39
       Book-Entry Notes.....................................................S-39
       Payments on the Notes................................................S-42
       Glossary of Terms....................................................S-42
       Interest Payments on the Notes.......................................S-46
       Principal Payments on the Notes......................................S-48
       Allocation of Payments on the Revolving Credit Loans ................S-48
       Optional Transfers of Revolving Credit Loans to
       Holders of Certificates............................................. S-49
       Outstanding Reserve Amount...........................................S-49
       The Paying Agent.....................................................S-50
       Maturity and Optional Redemption.....................................S-50
Description of the Policy...................................................S-51
Certain Yield and Prepayment Considerations.................................S-52
       General..............................................................S-52
Description of the Revolving Credit Loan Purchase Agreement.................S-57
       Transfer of Revolving Credit Loans...................................S-57
       Representations and Warranties.......................................S-58
       Description of the Servicing Agreement...............................S-59
       P&I Collections......................................................S-60
Description of the Trust Agreement and Indenture............................S-60
       The Trust Fund.......................................................S-60
       Reports To Holders...................................................S-61
       Certain Covenants....................................................S-61
       Modification of Indenture............................................S-62
       Certain Matters Regarding the Indenture Trustee and the Issuer.......S-63
Material Federal Income Tax Consequences....................................S-64
ERISA Considerations........................................................S-64
Legal Investment............................................................S-65
Method of Distribution......................................................S-65
Experts.....................................................................S-67
Legal Matters...............................................................S-67
Ratings.....................................................................S-67
ANNEX I......................................................................I-1



                                      S-3
<PAGE>


                                     SUMMARY

     The following summary is a very general overview of the offered notes and
does not contain all of the information that you should consider in making your
investment decision. To understand the terms of the term notes, you should read
carefully this entire document and the prospectus.


<TABLE>
<S>                                          <C>

Issuer or trust......................      Home Equity Loan Trust 2000-HS1.

Title of the offered securities......      Home Equity Loan-Backed Term Notes, Series 2000-HS1.

Initial principal balance............      $138,370,000.

Note interest rates..................      LIBOR plus 0.24% per annum for the term notes, subject to
                                           the limits described in this prospectus supplement under
                                           "Description of the Securities - Interest Payments on the
                                           Notes."

Ratings..............................      When issued, the term notes will be rated not lower than
                                           "AAA" by Fitch, Inc. and "AAA" by Standard & Poor's Ratings
                                           Services, a division of The McGraw-Hill Companies, Inc.

Depositor............................      Residential Funding Mortgage Securities II, Inc., an
                                           affiliate of Residential Funding Corporation.

Master servicer and seller...........      Residential Funding Corporation.

Owner trustee........................      Wilmington Trust Company.

Indenture trustee....................      The Chase Manhattan Bank.

Credit enhancer......................      Ambac Assurance Corporation.

Mortgage loan pool...................      3,809 adjustable rate revolving credit loans with an
                                           aggregate unpaid principal balance of approximately
                                           $136,996,433 as of the close of business on the day prior to
                                           the cut-off date, secured primarily by second liens on
                                           one-to four-family residential properties.

Cut-off date.........................      September 1, 2000.

Closing date.........................      On or about September 26, 2000.

Payment dates........................      Beginning in October 2000 on the 20th of each month or, if
                                           the 20th is not a business day, on the next business day.

</TABLE>

                                      S-4
<PAGE>
<TABLE>
<S>                                                  <C>
Scheduled final payment date.........      September 2030.  The actual final payment date could be
                                           substantially earlier.

Form of notes........................      Book-entry.

                                           See "Description of the Securities -- Book-Entry Notes" in
                                           this prospectus supplement.

Minimum denominations................      $25,000.

</TABLE>


                                      S-5
<PAGE>





THE TRUST

The depositor will establish Home Equity Loan Trust 2000-HS1, a Delaware
business trust, to issue the Home Equity Loan-Backed Term Notes, Series
2000-HS1. The trust will be established under a trust agreement. The trust will
issue the term notes and the variable funding notes under an indenture. The
assets of the trust will consist of the revolving credit loans and related
assets.

THE MORTGAGE POOL

97.6% of the revolving credit loans are secured by second mortgages or deeds of
trust and the remainder are secured by first mortgages or deeds of trust. In
addition, the revolving credit loans have the following characteristics as of
the cut-off date:

   Range of principal balances        $0 to
                                      $290,000,000

   Average principal balance          $35,967
   Range of loan rates                5.99% to
                                      14.75%

   Weighted average loan rate         9.0007%
   Range of credit limits             $8,900 to
                                      $350,000

   Average credit limit               $47,981
   Weighted average credit
      limit utilization rate          74.96%

See "Description of the Mortgage Pool" in this prospectus supplement.

THE VARIABLE FUNDING NOTES

The trust will issue Home Equity Loan-Backed Variable Funding Notes, Series
2000-HS1, which are not offered by this prospectus supplement.

THE CERTIFICATES

The trust will issue Home Equity Loan-Backed Certificates, Series 2000-HS1,
which are not offered by this prospectus supplement.

PAYMENTS ON THE NOTES

Amount available for monthly distribution. On each monthly payment date, the
indenture trustee will make distributions to investors. The amounts available
for distribution will include:

     o    collections of monthly payments of principal and interest on the
          revolving credit loans, including prepayments and other unscheduled
          collections plus

     o    amounts from any draws on the policy minus

     o    up to and including September 2005, draws made pursuant to applicable
          credit agreements minus

     o    fees and expenses of the subservicers and the master servicer.

See "Description of the Servicing Agreement--P&I Collections" in this prospectus
supplement.

Payments. Payments to noteholders and other payments will be made from principal
and interest collections as follows:

     o    Distribution of interest on the notes
     o    Distribution of principal on the notes
     o    Distribution of principal on the notes to cover specified losses
     o    Payment to the credit enhancer for its premium for the policy
     o    Reimbursement to the credit enhancer for specified prior draws made on
          the policy

                                      S-6

<PAGE>

     o    Distribution of additional principal on the notes if the level of
          overcollateralization is below its required level, after the payment
          date in October 2000
     o    Payment to the credit enhancer for any other amounts owed
     o    Distribution of basis risk shortfalls to the term notes and the
          variable funding notes caused by the cap on the related note rate
     o    Distribution of any remaining funds to the certificates

The note rate on the term notes is subject to a net rate cap, which creates the
possibility of basis risk shortfalls. The financial guaranty insurance policy
does not cover any basis risk shortfall on the term notes.

Principal payments on the notes will be made as described under "Description of
the Securities--Principal Payments on the Notes" in this prospectus supplement.

In addition, payments to noteholders will be made on each payment date from
draws on the financial guaranty insurance policy, if necessary. Draws will cover
shortfalls in amounts available to pay

     o    interest on the notes at the note rates except for any basis risk
          shortfall,
     o    any losses allocated to the notes and
     o    amounts due on the notes on the payment date occurring in September
          2030.

CREDIT ENHANCEMENT

The credit enhancement provided for the benefit of the term notes consists of:

EXCESS INTEREST. Because more interest is expected to be paid by the borrowers
on the revolving credit loans than is necessary to pay the interest on the
notes, along with fees and expenses of the trust each month, there may be excess
interest. Some of this excess interest may be used, after the payment date in
October 2000, to protect the notes against most types of losses, by making an
additional payment of principal up to the amount of the losses.

OVERCOLLATERALIZATION. Initially, the principal amount of the notes will be
greater than the principal balance of the revolving credit loans by
approximately 1.00%. This difference represents the initial
undercollateralization. After the payment date in October 2000, any excess
interest not used to cover interest shortfalls or current period losses will be
paid as principal on the notes to reduce the initial undercollateralization to
zero and then to reduce the security balance of the notes below the balance of
the revolving credit loans. This difference represents overcollateralization
which may absorb some losses on the revolving credit loans, if not covered by
excess interest. If the level of overcollateralization falls below what is
required, the excess interest described above will again be paid to the notes as
principal in order to increase the level of overcollateralization to its
required level.

POLICY. On the closing date, the credit enhancer will issue the financial
guaranty insurance policy in favor of the indenture trustee. The policy will
unconditionally and irrevocably guarantee interest on the notes at the
applicable note rate, will guarantee amounts due on the notes on the payment
date in September 2030 and will cover any losses allocated to the notes that are
not covered by excess interest or overcollateralization. The policy does not
cover any basis risk shortfalls.

OPTIONAL REDEMPTION

On any payment date on which the aggregate principal balance of the revolving
credit loans after applying payments received in the related


                                      S-7
<PAGE>

collection period is less than 10% of the aggregate principal balance of the
revolving credit loans as of the cut-off date, the master servicer will have the
option to purchase some or all of the remaining revolving credit loans.

Under an optional purchase of all of the revolving credit loans, the outstanding
principal balance of the term notes will be paid in full with accrued interest.

RATINGS

When issued, the term notes will receive the ratings listed under "Ratings" in
this prospectus supplement. A security rating is not a recommendation to buy,
sell or hold a security and may be changed or withdrawn at any time by the
assigning rating agency. The ratings also do not address the rate of principal
prepayments on the revolving credit loans or the likelihood of basis risk
shortfalls. The rate of prepayments, if different than originally anticipated,
could adversely affect the yield realized by holders of the term notes.

LEGAL INVESTMENT

The term notes will not be "mortgage related securities" for purposes of the
Secondary Mortgage Market Enhancement Act of 1984. You should consult your legal
advisors in determining whether and to what extent the term notes constitute
legal investments for you.

ERISA CONSIDERATIONS

The term notes may be eligible for purchase by persons investing assets of
employee benefit plans or individual retirement accounts. Plans should consult
with their legal advisors before investing in the term notes.

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

TAX STATUS

For federal income tax purposes, the term notes will be treated as debt. The
trust itself will not be subject to tax.

See "Material Federal Income Tax Consequences" in this prospectus supplement and
in the prospectus.


                                      S-8
<PAGE>


                                  RISK FACTORS

         The term notes are not suitable investments for all investors. In
particular, you should not purchase the term notes unless you understand the
prepayment, credit, liquidity and market risks associated with the term notes.

         The term notes are complex securities. You should possess, either alone
or together with an investment advisor, the expertise necessary to evaluate the
information contained in this prospectus supplement and the accompanying
prospectus in the context of your financial situation and tolerance for risk.

         You should carefully consider, among other things, the following
factors in connection with the purchase of the term notes:

RISKS ASSOCIATED WITH THE REVOLVING CREDIT LOANS

<TABLE>
<CAPTION>
<S>                                               <C>

THE RETURN ON YOUR NOTES MAY                Approximately 97.6% of the cut-off date principal balance of the
BE REDUCED BY LOSSES ON THE                 revolving credit loans are secured by second mortgages or
REVOLVING CREDIT LOANS, WHICH               deeds of trust. Proceeds from liquidation of the property
ARE MORE LIKELY BECAUSE THEY                will be available to satisfy the revolving credit loans only
ARE PRIMARILY SECURED BY                    if the claims of any senior mortgages have been satisfied in
SECOND LIENS.                               full. When it is uneconomical to foreclose on the mortgaged
                                            property or engage in other loss mitigation procedures, the
                                            master servicer may write off the entire outstanding balance
                                            of the revolving credit loan as a bad debt. These risks are
                                            particularly applicable to revolving credit loans secured by
                                            second liens that have high combined loan-to value ratios or
                                            low junior ratios because it is comparatively more likely
                                            that the master servicer would determine foreclosure to be
                                            uneconomical.

DELAYS IN PAYMENT ON YOUR NOTES MAY         The master servicer is not obligated to advance scheduled monthly
RESULT FROM DELINQUENT REVOLVING CREDIT     payments of principal and interest on revolving credit loans
LOANS BECAUSE THE MASTER SERVICER IS NOT    that are delinquent or in default. As a result, noteholders
REQUIRED TO ADVANCE.                        will not receive a regular stream of payments from the
                                            revolving credit loans that become delinquent or go into
                                            default. The rate of delinquency and default of second
                                            mortgage loans may be greater than that of mortgage loans
                                            secured by first liens on comparable properties.

THE RETURN ON YOUR NOTES MAY                Mortgage loans similar to those included in the mortgage pool
BE REDUCED IN AN ECONOMIC                   have been originated for a limited period of time. During this
DOWNTURN.                                   time, economic conditions nationally and in most regions of the
                                            country have been generally favorable. However, a
                                            deterioration in economic conditions could adversely affect
                                            the ability and willingness of borrowers to

</TABLE>

                                      S-9
<PAGE>


<TABLE>
<CAPTION>
<S>                                               <C>
                                            repay their revolving credit loans. No prediction can be
                                            made as to the effect of an economic downturn on the rate of
                                            delinquencies and losses on the revolving credit loans.



THE RETURN ON YOUR NOTES MAY BE             The concentration of the related mortgaged properties in one
PARTICULARLY SENSITIVE TO                   or more geographic regions may increase the risk of loss on
CHANGES IN REAL ESTATE MARKETS              the term notes. Approximately 44.2% of the cut-off date
IN SPECIFIC REGIONS                         principal balance of the revolving credit loans are located
                                            in California. If the regional economy or housing market
                                            weakens in California or in any other region having a
                                            significant concentration of the properties underlying the
                                            revolving credit loans, the revolving credit loans secured
                                            by properties in that region may experience increased rates
                                            of delinquency, which may result in losses on the revolving
                                            credit loans. A region's economic condition and housing
                                            market may be adversely affected by a variety of events,
                                            including natural disasters such as earthquakes, hurricanes,
                                            floods and eruptions, and civil disturbances such as riots.

YOUR NOTES MAY BE ADVERSELY AFFECTED        Approximately 38.2% of the cut-off date principal balance of
BECAUSE CERTAIN OF THE REVOLVING            the revolving credit loans do not require principal payment
CREDIT LOANS DO NOT REQUIRE                 until maturity. Revolving credit loans with this balloon
PRINCIPAL PAYMENTS UNTIL MATURITY.          payment feature involve a greater degree of risk because the
                                            ability of a borrower to make a balloon payment typically
                                            will depend upon the borrower's ability either to timely
                                            refinance the loan or to sell the related mortgaged
                                            property.

LIMITED OBLIGATION

PAYMENTS ON THE REVOLVING                   Credit enhancement includes excess interest,
CREDIT LOANS, TOGETHER WITH THE             overcollateralization and the financial guaranty insurance
FINANCIAL GUARANTY INSURANCE                policy. None of the depositor, the master servicer or any of
POLICY, ARE THE SOLE SOURCE OF              their affiliates will have any obligation to replace or
PAYMENTS ON YOUR NOTES.                     supplement the credit enhancement, or take any other action
                                            to maintain any rating of the term notes. If any losses are
                                            incurred on the revolving credit loans that are not covered
                                            by the credit enhancement, the holders of the term notes
                                            will bear the risk of these losses.

LIQUIDITY RISKS

YOU MAY HAVE TO HOLD YOUR                   A secondary market for your notes may not develop. Even if a
TERM NOTES TO MATURITY IF THEIR             secondary market does develop, it may not continue, or it
MARKETABILITY IS LIMITED.                   may be illiquid. Illiquidity means you may not be able to
                                            find a buyer to buy your securities readily or at prices
                                            that will enable you to realize a desired yield.

</TABLE>


                                      S-10
<PAGE>

<TABLE>
<CAPTION>
<S>                                               <C>
SPECIAL YIELD AND PREPAYMENT CONSIDERATIONS

THE YIELD TO MATURITY ON YOUR               The yield to maturity of your notes will depend on a variety
NOTES WILL VARY DEPENDING ON                of factors, including:
THE RATE OF PREPAYMENTS.

                                            o the rate and timing of principal payments on the
                                              revolving credit loans, including payments in excess of
                                              required installments, prepayments in full, defaults and
                                              liquidations, and repurchases due to breaches of
                                              representations or warranties;

                                            o the rate and timing of new draws on the revolving credit
                                              loans;

                                            o the note rate on your notes; and

                                            o the price at which you purchase your notes.

                                            The rate of principal prepayments is one of the most important
                                            and last predictable of these factors.

                                            In general, if you purchase a note at a price higher than
                                            its outstanding principal balance and principal payments
                                            occur faster than you assumed at the time of purchase, your
                                            yield will be lower than anticipated. Conversely, if you
                                            purchase your note at a price lower than its outstanding
                                            principal balance and principal payments occur more slowly
                                            than you assumed at the time of purchase, your yield will be
                                            lower than anticipate.


THE RATE OF PREPAYMENTS ON THE              Since borrowers can generally prepay their revolving credit
REVOLVING CREDIT LOANS WILL VARY            loans at any time, the rate and timing of principal payments
DEPENDING ON FUTURE MARKET                  on the term notes are highly uncertain. The interest rates
CONDITIONS AND OTHER FACTORS.               on the revolving credit loans are subject to adjustment
                                            based on changes in interest rates and subject to certain
                                            limitations. Any increase in the interest rate on a
                                            revolving credit loan may encourage a borrower to repay the
                                            loan faster. The deductibility of interest payments for
                                            federal tax purposes, however, may act as a disincentive to
                                            prepayment, despite the increase in the interest rate. In
                                            addition, due to the revolving features of the loans, the
                                            rate of principal payments may be unrelated to changes in
                                            market rates of interest.

                                            Refinancing programs, which may involve soliciting all or
                                            some of the borrowers to refinance their revolving credit
</TABLE>


                                      S-11
<PAGE>

<TABLE>
<CAPTION>
<S>                                                           <C>

                                            loans, may increase the rate of prepayments on the revolving
                                            credit loans.

                                            See "Description of the Mortgage Pool -- Revolving Credit Loan
                                            Terms" in this prospectus supplement and "Yield and
                                            Prepayment Consideration" in the prospectus.

RISKS OF CERTAIN SHORTFALLS

YOU MAY NOT ALWAYS RECEIVE                  The term notes may not always receive interest at a rate
INTEREST ON YOUR TERM NOTES                 equal to LIBOR plus the applicable margin.
BASED ON LIBOR PLUS THE
APPLICABLE MARGIN.                          If the weighted average of the net loan rates on the
                                            revolving credit loans is less than LIBOR plus the
                                            applicable margin, the note rate on the term notes will be
                                            limited to that rate. Thus, your yield will be sensitive to
                                            changes in the level of LIBOR and may be adversely affected
                                            by the application of this limit. The prepayment of the
                                            revolving credit loans with higher net loan rates may result
                                            in a lower weighted average net loan rate.

                                            If the interest on the term notes is subject to this limit, the
                                            difference between the rate of LIBOR plus the applicable
                                            margin and the weighted average net loan rate will create a
                                            basis risk shortfall that will carry forward with interest
                                            thereon. Any basis risk shortfall allocated to the term notes
                                            will not be covered by the financial guaranty insurance
                                            policy and will only be payable from excess interest that
                                            may be available in future periods.

                                            See "Description of the Securities -- Interest Payments on
                                            the Notes" in this prospectus supplement.


</TABLE>

                                      S-12
<PAGE>


                                  INTRODUCTION

         The trust will be formed under a trust agreement as amended by the
amended and restated trust agreement to be dated the closing date, between the
depositor and the owner trustee. The issuer will issue $138,370,000 aggregate
principal amount of Home Equity Loan-Backed Term Notes, Series 2000-HS1 and the
Home Equity Loan-Backed Variable Funding Notes, Series 2000-HS1. The term notes
and the variable funding notes are collectively referred to as the notes in this
prospectus supplement. The notes will be issued under an indenture, to be dated
as of the closing date, between the issuer and the indenture trustee. Under a
trust agreement, the issuer will issue one class of Home Equity Loan-Backed
Certificates, Series 2000-HS1. The notes and the certificates are collectively
referred to in this prospectus supplement as the securities. Only the term notes
are offered by this prospectus supplement.

         You can find a listing of definitions for capitalized terms used both
in the prospectus and this prospectus supplement under the caption "Glossary"
beginning on page 126 in the prospectus and under the caption "Description of
the Securities -- Glossary of Terms" in this prospectus supplement.

                        DESCRIPTION OF THE MORTGAGE POOL

GENERAL

         On the closing date, the depositor will transfer to the issuer a pool
of revolving credit loans secured primarily by second liens on one- to
four-family residential properties.

         The mortgage pool will consist of revolving credit loans with an
aggregate unpaid principal balance of $136,996,433 as of the close of business
on the business day prior to the cut-off date. The mortgage pool also will
include any additions thereto made after the cut-off date as a result of
additional balances or draws made pursuant to the applicable credit line
agreement after such date except as otherwise provided in this prospectus
supplement.

         Approximately 97.6% of the cut-off date principal balance of the
revolving credit loans are second liens on fee-simple or leasehold interests in
one-to-four-family residential properties and the remainder are first liens. As
to approximately 99.5% of the cut-off date principal balance of the revolving
credit loans, the borrower represented at the time of origination that the
related mortgaged property would be owner occupied as a primary, second or
vacation home. As to revolving credit loans that have been modified, references
in this prospectus supplement to the date of origination shall be deemed to be
the date of the most recent modification.

ORIGINATION

         The revolving credit loans were originated under credit line
agreements. All of the revolving credit loans were acquired by the seller from
banks, savings and loan associations, mortgage bankers, investment banking firms
and other revolving credit loan originators and sellers, under the seller's home
equity program on a servicing released basis. 33.4% of the revolving credit
loans were acquired by the seller from HomeComings Financial Network, Inc., an
affiliate of the seller. No unaffiliated seller sold more than 7.2% of the
revolving credit loans


                                   S-13
<PAGE>

to the seller.

     The revolving credit loans were underwritten as described under
"--Underwriting Standards" in this prospectus supplement.

     All percentages of the revolving credit loans described in this prospectus
supplement are approximate percentages determined except as otherwise indicated
by cut-off date balance.

     As of the cut-off date:

     o    The average balance is $35,967, the minimum balance is $0, the maximum
          balance is $290,000.

     o    The lowest loan rate and the highest loan rate are 5.99% and 14.75%
          per annum, respectively, and the weighted average loan rate is 9.0007%
          per annum.

     o    The combined loan to value ratios based on the related credit limit
          range from 13.00% to 100.00%, with a weighted average of 80.32%.

     o    The weighted average credit limit utilization rate based on the credit
          limits of the revolving credit loans is 74.96%.

     o    The weighted average junior ratio of the revolving credit loans based
          on the related credit limit is approximately 23.42%.

     o    The latest scheduled maturity of any revolving credit loan will occur
          in January 2030.

     o    With respect to 44.2% of the revolving credit loans, the related
          mortgaged properties are located in California.

     As of the cut-off date, the loan rates on approximately 50.8% of the
revolving credit loans will be introductory or "teaser" rates that are lower
than the rate that would have been in effect if the applicable index and gross
margin at the time these loans were originated were used to determine the loan
rate. Beginning on their first adjustment date, the loan rates on the teaser
loans will be based on the applicable index and gross margin. As of the cut-off
date, the weighted average months until the teaser loans reach their teaser
expiration date is approximately 3.03 months.

     As of the cut-off date, no revolving credit loan will be 30 or more days
delinquent in payment. For a description of the methodology used to categorize
mortgage loans as delinquent, see "Servicing of Revolving Credit
Loans--Delinquency and Loss Experience of the Master Servicer's Portfolio" in
this prospectus supplement.

REVOLVING CREDIT LOAN TERMS

     Interest on each revolving credit loan is calculated based on the average
daily balance outstanding during the billing cycle, and with respect to each
revolving credit loan, the billing


                                      S-14
<PAGE>

cycle is the calendar month preceding the related due date.

     Each revolving credit loan has a loan rate that is subject to adjustments
on each adjustment date to equal the sum of (a) the index and (b) the gross
margin specified in the related credit line agreement; provided, however, that
the loan rate will in no event be greater than the maximum loan rate set forth
in the related credit line agreement and subject to the maximum rate permitted
by applicable law. The adjustment date is the first day of each related billing
cycle beginning on the date specified in the applicable credit line agreement.
The index for any adjustment date will be the prime rate for corporate loans at
United States commercial banks, as published in The Wall Street Journal on the
first business day of the month in which the relevant billing cycle begins. If,
on any day, more than one prime rate or a range of prime rates for corporate
loans at United States commercial banks is published in The Wall Street Journal,
the index on such day will be the highest of the prime rates.

     Each revolving credit loan had a term to maturity from the date of
origination of not more than 360 months. The borrower for each revolving credit
loan may make a draw under the related credit line agreement at any time during
the draw period. The draw period begins on the related origination date and will
be 5 years with respect to 29.7% of the revolving credit loans and 15 years with
respect to 32.1% of the revolving credit loans. The maximum amount of each draw
under any revolving credit loan is equal to the excess, if any, of the credit
limit over the outstanding principal balance under such credit line agreement at
the time of such draw. Each revolving credit loan may be prepaid in full or in
part at any time and without penalty, but with respect to each revolving credit
loan, the related borrower will have the right during the related draw period to
make a draw in the amount of any prepayment theretofore made with respect to
such revolving credit loan. Each borrower generally will have access to make
draws with either checks or a credit card, subject to applicable law. The credit
line agreement or mortgage related to each revolving credit loan generally will
contain a customary "due-on-sale" clause.

     A borrower's rights to receive draws during the related draw period may be
suspended, or the credit limit may be reduced for cause under a number of
circumstances, including, but not limited to:

     o    a materially adverse change in the borrower's financial circumstances;

     o    a decline in the value of the mortgaged property significantly below
          its appraised value at origination; or

     o    a payment default by the borrower.

     However, a suspension or reduction generally will not affect the payment
terms for previously drawn balances. The subservicers and the master servicer
will have no obligation to investigate as to whether any of those circumstances
have occurred and may have no knowledge of their occurrence. Therefore, there
can be no assurance that any borrower's ability to receive draws will be
suspended or reduced if the foregoing circumstances occur. In the event of
default under a revolving credit loan, the revolving credit loan may be
terminated and declared immediately due and payable in full. For this purpose, a
default includes, but is not limited to:



                                      S-15
<PAGE>


     o    the borrower's failure to make any payment as required;

     o    any action or inaction by the borrower that adversely affects the
          mortgaged property or the rights in the mortgaged property; or

     o    fraud or material misrepresentation by the borrower in connection with
          the revolving credit loan.

     Prior to the end of the related draw period or prior to the date of
maturity for loans permitting draws until maturity, the borrower for each
revolving credit loan will be obligated to make monthly payments in a minimum
amount that generally will be equal to the finance charge for each billing
cycle. In addition, except as described below, if the draw period terminates
prior to maturity, during the remaining term, the borrower will be obligated to
make monthly payments consisting of principal installments that would
substantially amortize the principal balance by the maturity date, and to pay
any current finance charges and additional charges.

     Approximately 38.2% of the revolving credit loans are balloon loans.
Balloon loans will permit draws until maturity and prior to the related maturity
date, the related borrowers will be obligated to make monthly payments in a
minimum amount that generally will equal the finance charge for the related
billing cycle. On the related maturity date, the borrower will be obligated to
make a payment equal to the related account balance.

     The finance charge for each revolving credit loan for any billing cycle
will be an amount equal to the aggregate of, as calculated for each day in the
billing cycle, the then-applicable loan rate divided by 365 multiplied by that
day's principal balance. The account balance on any day generally will equal:

     o    the principal balance on that date, plus

     o    additional charges, if any, consisting of unpaid fees, insurance
          premiums and other charges, plus

     o    unpaid finance charges, plus

     o    draws funded on that day, minus

     o    all payments and credits applied to the repayment of the principal
          balance on that day.

     Payments made by or on behalf of the borrower for each revolving credit
loan will be applied to any unpaid finance charges that are due thereon prior to
application to any unpaid principal outstanding.

     The combined loan-to-value ratio for each revolving credit loan, in most
cases, will be the ratio, expressed as a percentage, of (A) the sum of (x) the
credit limit and (y) any outstanding principal balance, at the time of
origination of that revolving credit loan, of all other mortgage loans, if any,
secured by senior or subordinate liens on the related mortgaged property, to (B)
the appraised value, or, to the extent permitted by the origination guidelines
of Residential Funding


                                      S-16
<PAGE>

Corporation, a statistical valuation or the stated value. The appraised value
for any revolving credit loan will be the appraised value of the related
mortgaged property determined in the appraisal used in the origination of that
revolving credit loan which may have been obtained at an earlier time. If a
revolving credit loan was originated simultaneously with or not more than 12
months after a senior lien on the related mortgaged property, the appraised
value shall be the lesser of the appraised value at the origination of the
senior lien and the sales price for the mortgaged property. However, with
respect to not more than 6.1% of the revolving credit loans, the stated value
will be the value of the property as stated by the related borrower in his or
her application. See "Trust Asset Program - Underwriting Standards" and "Trust
Asset Program - Guide Standards" in the prospectus and "Description of the
Mortgage Pool -- Underwriting Standards" in this prospectus supplement.

     In connection with each revolving credit loan that is secured by a
leasehold interest, the seller will have represented that, among other things:

     o    the use of leasehold estates for residential properties is an accepted
          practice in the area when the related mortgaged property is located;

     o    residential property in the area consisting of leasehold estates is
          readily marketable;

     o    the lease is recorded and no party is in any way in breach of any
          provision of the lease;

     o    the leasehold is in full force and effect and is not subject to any
          prior lien or encumbrance by which the leasehold could be terminated;
          and

     o    the remaining term of the lease does not terminate less than five
          years after the maturity date of the revolving credit loan.

     The master servicer will have the option to allow an increase in the credit
limit applicable to any revolving credit loan under limited circumstances
described in the related servicing agreement.

REVOLVING CREDIT LOAN CHARACTERISTICS

     Below is a description of some additional characteristics of the revolving
credit loans as of the cut-off date. Unless otherwise specified, all principal
balances of the revolving credit loans are by aggregate, as of the cut-off date
and are rounded to the nearest dollar, and all percentages are approximate
percentages by aggregate principal balance as of the cut-off date except as
otherwise indicated.


                                      S-17

<PAGE>

<TABLE>
<CAPTION>

                                 OCCUPANCY TYPES
                                                                                                     PERCENTAGE OF
                                                             NUMBER OF                               MORTGAGE POOL
OCCUPANCY                                                    REVOLVING          CUT-OFF DATE          BY CUT-OFF
(AS INDICATED BY BORROWER)                                  CREDIT LOANS          BALANCE            DATE BALANCE
-------------------------                                   ------------          -------            ------------
<S>                                                           <C>              <C>                      <C>
Primary.......................................                3,769            $135,922,311             99.22%
Non-Owner Occupied............................                   25                 745,145              0.54%
Second/Vacation................................                  15                 328,978              0.24%
                                                            ------------        ------------         -------------
          Totals...............................               3,809            $136,996,433            100.00%
                                                            ============        ============         ==============



                                                    PRINCIPAL BALANCES

                                                                                                     PERCENTAGE OF
                                                       NUMBER OF                                     MORTGAGE POOL
                                                       REVOLVING                 CUT-OFF DATE        BY CUT-OFF
RANGE OF PRINCIPAL BALANCE                            CREDIT LOANS                 BALANCE           DATE BALANCE
-------------------------                             ------------                 -------           ------------
<S>      <C>                                                     <C>                      <C>             <C>
Equal to $0.00............................                       63                       $0              0.00%
$0.01 to  25,000.00.......................                    1,571               23,195,641             16.93%
$ 25,000.01 to 50,000.00..................                    1,429               52,444,434             38.28%
$ 50,000.01 to 75,000.00..................                      407               24,986,757             18.24%
$ 75,000.01 to 100,000.00.................                      252               22,959,419             16.76%
$100,000.01 to 125,000.00.................                       25                2,843,278              2.08%
$125,000.01 to 150,000.00.................                       23                3,181,800              2.32%
$150,000.01 to 175,000.00.................                       15                2,450,391              1.79%
$175,000.01 to 200,000.00.................                       20                3,900,129              2.85%
$200,000.01 to 250,000.00.................                        2                  470,308              0.34%
$250,000.01 to 300,000.00.................                        2                  564,275              0.41%
                                                         ---------------        ------------        -----------
Totals....................................                    3,809             $136,996,433            100.00%
                                                         ===============        ============        ===========
</TABLE>

     The average principal balance of the revolving credit loans will be
$35,967.

                                      S-18
<PAGE>


                           GEOGRAPHICAL DISTRIBUTIONS

                                                                 PERCENTAGE OF
                        NUMBER OF                                MORTGAGE POOL
                        REVOLVING            CUT-OFF DATE        BY CUT-OFF
STATE                  CREDIT LOANS            BALANCE           DATE BALANCE
------                 ------------            -------           ------------
California .......      1,406              $ 60,531,036              44.18%
New Jersey .......        305                10,100,010               7.37%
Colorado .........        211                 7,864,259               5.74%
Georgia ..........        222                 6,729,660               4.91%
Florida ..........        225                 6,427,853               4.69%
Michigan .........        147                 5,063,518               3.70%
Massachusetts ....        120                 4,568,354               3.33%
Utah .............        149                 4,283,107               3.13%
New York .........        103                 4,030,669               2.94%
Washington .......         95                 3,227,047               2.36%
Arizona ..........         93                 3,126,856               2.28%
Other ............        733                21,044,034              15.36%
                        -----              ------------             ------
            Totals      3,809              $136,996,433             100.00%
                        =====              ============             ======

---------

Other includes states and the District of Columbia under 2.00% of the cut-off
date balance individually.

                                      S-19
<PAGE>



                          COMBINED LOAN-TO-VALUE RATIOS

                                                                  PERCENTAGE OF
                            NUMBER OF                             MORTGAGE POOL
RANGE OF COMBINED          REVOLVING            CUT-OFF DATE       BY CUT-OFF
LOAN-TO-VALUE RATIOS(%)    CREDIT LOANS            BALANCE         DATE BALANCE
----------------------     ------------            -------         ------------
10.01 to 20.00                 16                   $365,411           0.27%
20.01 to 30.00                 17                    519,173           0.38%
30.01 to 40.00                 39                  1,752,538           1.28%
40.01 to 50.00                 82                  3,084,412           2.25%
50.01 to 60.00                147                  6,288,411           4.59%
60.01 to 70.00                298                 12,361,779           9.02%
70.01 to 75.00                317                 11,563,328           8.44%
75.01 to 80.00                749                 27,467,232          20.05%
80.01 to 85.00                193                  6,709,987           4.90%
85.01 to 90.00              1,026                 33,126,186          24.18%
90.01 to 95.00                653                 23,717,470          17.31%
95.01 to 100.00               272                 10,040,506           7.33%
                         ----------              -----------         ------
     Totals                 3,809               $136,996,433         100.00%
                         ==========              ===========         ======


     The weighted average combined loan-to-value ratio based on the credit
limits of the revolving credit loans is 80.32%.

                                      S-20
<PAGE>


                                  JUNIOR RATIOS

<TABLE>
<CAPTION>
                                                                                             PERCENTAGE OF
                                                       NUMBER OF                             MORTGAGE POOL
RANGE OF                                              REVOLVING            CUT-OFF DATE       BY CUT-OFF
JUNIOR RATIOS(%)                                     CREDIT LOANS            BALANCE         DATE BALANCE
---------------                                      ------------            -------         ------------
<S>                                                       <C>               <C>                    <C>
0.01 TO 5.00..............................                 24            $    278,632              0.21%
5.01 to 10.00.............................                303               6,697,164              5.01%
10.01 to 15.00............................                962              27,188,715             20.33%
15.01 to 20.00............................              1,016              34,922,753             26.12%
20.01 to 25.00............................                564              21,623,187             16.17%
25.01 to 30.00............................                357              15,802,197             11.82%
30.01 to 40.00............................                353              18,029,204             13.48%
40.01 to 50.00............................                104               4,809,684              3.60%
50.01 to 60.00............................                 40               2,315,391              1.73%
60.01 to 70.00............................                 18               1,399,154              1.05%
70.01 to 80.00............................                  8                 474,469              0.35%
80.01 to 90.00............................                  3                 155,560              0.12%
90.01 to 100.00...........................                  1                  13,376              0.01%
                                                  -----------            ------------        -----------
Totals....................................              3,753            $133,709,487            100.00%
                                                  ===========            ============        ===========
</TABLE>

---------

         This table excludes first lien revolving credit loans. Junior ratio is
defined as the ratio of the credit limits of the second lien revolving credit
loans to the sum of (a) the credit limits of the second lien revolving credit
loans, and (b) the unpaid principal balance of any senior lien balance at the
time of origination of the second lien revolving credit loan.

         The weighted average junior ratio of the revolving credit loans secured
by a second lien will be 23.42%.

                                      S-21
<PAGE>
<TABLE>
<CAPTION>

                                   LOAN RATES
                                                                                       PERCENTAGE OF
                                                 NUMBER OF                             MORTGAGE POOL
RANGE OF                                        REVOLVING            CUT-OFF DATE       BY CUT-OFF
JUNIOR RATIOS(%)                               CREDIT LOANS            BALANCE         DATE BALANCE
---------------                                ------------            -------         ------------
<S>      <C>                                         <C>              <C>                  <C>
5.501 to 6.000......................                 754              $29,805,502          21.76%
8.001 to 8.500......................               1,533               53,827,348          39.29%
9.001 to 9.500......................                 206                8,752,371           6.39%
9.501 to 10.000.....................                 203                6,493,038           4.74%
10.001 to 10.500....................                 200                7,523,723           5.49%
10.501 to 11.000....................                 155                5,330,493           3.89%
11.001 to 11.500....................                 181                5,714,187           4.17%
11.501 to 12.000....................                 124                4,208,695           3.07%
12.001 to 12.500....................                 171                5,604,937           4.09%
12.501 to 13.000....................                  85                2,734,909           2.00%
13.001 to 13.500....................                 114                4,365,480           3.19%
13.501 to 14.000....................                  58                1,953,267           1.43%
14.001 to 14.500....................                  23                  627,734           0.46%
14.501 to 15.000....................                   2                   54,750           0.04%
                                               ---------            -------------      -----------
          Totals.....................              3,809             $136,996,433         100.00%
                                               =========            ==============      ===========
</TABLE>

     The weighted average loan rate is 9.0007%.

                                      S-22
<PAGE>
                                         GROSS MARGINS
<TABLE>
<CAPTION>
                                                                                     PERCENTAGE OF
                                               NUMBER OF                             MORTGAGE POOL
RANGE OF                                      REVOLVING            CUT-OFF DATE       BY CUT-OFF
JUNIOR RATIOS(%)                             CREDIT LOANS            BALANCE         DATE BALANCE
---------------                              ------------            -------         ------------
<S>      <C>                                         <C>              <C>                  <C>
0.00................................             287             $ 11,155,359              8.14%
0.010 to 0.500......................             536               18,559,534             13.55%
0.501 to 1.000......................             586               21,708,531             15.85%
1.001 to 1.500......................             523               19,698,437             14.38%
1.501 to 2.000......................             517               17,388,513             12.69%
2.001 to 2.500......................             372               14,481,214             10.57%
2.501 to 3.000......................             355               12,041,755              8.79%
3.001 to 3.500......................             210                7,412,486              5.41%
3.501 to 4.000......................             254                9,314,123              6.80%
4.001 to 4.500......................             125                4,043,768              2.95%
4.501 to 5.000......................              39                  996,278              0.73%
5.001 to 5.500......................               4                  154,850              0.11%
over 5.5............................               1                   41,587              0.03%
                                               -----             ------------            ------
                     Totals.........           3,809             $136,996,433            100.00%
                                               =====             ============            ======
</TABLE>

         The weighted average gross margin is 1.75%.

                                      S-23
<PAGE>




                         CREDIT LIMIT UTILIZATION RATES


<TABLE>
<CAPTION>

                                                                                PERCENTAGE OF
                                       NUMBER OF                                MORTGAGE POOL
RANGE OF CREDIT LIMIT                  REVOLVING         CUT-OFF DATE             BY CUT-OFF
UTILIZATION RATES (%)                 CREDIT LOANS         BALANCE               DATE BALANCE
---------------------                -------------       ------------           --------------
<S>                                   <C>                 <C>                   <C>
0 ..............................           63                      $0               0.00%
00.01 TO 10.00 .................          143                 389,172               0.28%
10.01 TO 20.00 .................          120               1,118,324               0.82%
20.01 to 30.00 .................          129               1,957,902               1.43%
30.01 to 40.00 .................          141               2,695,916               1.97%
40.01 to 50.00 .................          158               3,689,594               2.70%
50.01 to 60.00 .................          163               4,759,633               3.47%
60.01 to 70.00 .................          218               7,290,085               5.32%
70.01 to 80.00 .................          201               7,670,015               5.60%
80.01 to 90.00 .................          192               7,448,928               5.44%
90.01 to 100.00 ................        2,281              99,967,863              72.97%
                                       ------            ------------            -------
     Totals ....................        3,809            $136,996,433             100.00%
                                       ======            ============            =======
</TABLE>

------------
     The weighted average credit limit utilization rate based on the credit
limits of the revolving credit loans is 74.96%.


                                      S-24


<PAGE>


                                  CREDIT LIMITS


<TABLE>
<CAPTION>

                                                                                 PERCENTAGE OF
                                        NUMBER OF                                MORTGAGE POOL
                                        REVOLVING         CUT-OFF DATE             BY CUT-OFF
RANGE OF CREDIT LIMIT                  CREDIT LOANS         BALANCE               DATE BALANCE
---------------------                 -------------       ------------           --------------
<S>                                     <C>              <C>                   <C>
$      0.01 to  25,000.00 ...........      962             $14,484,357                10.57%
$ 25,000.01 to  50,000.00 ...........    1,764              53,074,061                38.74%
$ 50,000.01 to  75,000.00 ...........      478              23,701,503                17.30%
$ 75,000.01 to 100,000.00 ...........      459              29,762,986                21.73%
$100,000.01 to 125,000.00 ...........       30               2,559,110                 1.87%
$125,000.01 to 150,000.00 ...........       38               3,400,469                 2.48%
$150,000.01 to 175,000.00 ...........       15               2,164,422                 1.58%
$175,000.01 to 200,000.00 ...........       54               6,067,017                 4.43%
$200,000.01 to 225,000.00 ...........        2                 239,275                 0.17%
$225,000.01 to 250,000.00 ...........        4                 796,308                 0.58%
$275,000.01 to 300,000.00 ...........        2                 564,275                 0.41%
Greater than $300,000.00 ............        1                 182,649                 0.13%
                                         -----            ------------               ------
     Totals .........................    3,809            $136,996,433               100.00%
                                         =====            ============               ======
</TABLE>


     The total credit limits are $182,760,093.


                                      S-25

<PAGE>

                               MAXIMUM LOAN RATES

<TABLE>
<CAPTION>

                                                                                PERCENTAGE OF
                                       NUMBER OF                                MORTGAGE POOL
                                       REVOLVING         CUT-OFF DATE             BY CUT-OFF
MAXIMUM LOAN RATES (%)                CREDIT LOANS         BALANCE               DATE BALANCE
----------------------               -------------       ------------           --------------
<S>                                   <C>                 <C>                   <C>

10.00 ............................           1                $62,700                 0.05%
14.00 ............................          13                456,661                 0.33%
16.00 ............................          15                486,008                 0.35%
18.00 ............................       2,801             98,141,564                71.64%
20.00 ............................           2                 54,700                 0.04%
21.00 ............................          21                508,662                 0.37%
21.75 ............................          88              1,588,853                 1.16%
22.20 ............................          21                722,234                 0.53%
24.00 ............................         811             33,485,612                24.44%
25.00 ............................          36              1,489,439                 1.09%
                                        ------           ------------              -------
     Totals ......................       3,809           $136,996,433               100.00%
                                        ======           ============              =======

</TABLE>


     The weighted average maximum loan rate is 19.596%.


                                      S-26


<PAGE>


                     MONTHS REMAINING TO SCHEDULED MATURITY


<TABLE>
<CAPTION>

                                                                                PERCENTAGE OF
                                       NUMBER OF                                MORTGAGE POOL
RANGE OF MONTHS REMAINING TO           REVOLVING         CUT-OFF DATE             BY CUT-OFF
SCHEDULED MATURITY                    CREDIT LOANS         BALANCE               DATE BALANCE
----------------------------         -------------       ------------           --------------
<S>                                   <C>                 <C>                   <C>
109 - 120 ........................           2                $54,017                0.04%
121 - 144 ........................          17                479,246                0.35%
145 - 156 ........................          46              1,106,477                0.81%
157 - 168 ........................          62              1,458,496                1.06%
169 - 180 ........................       2,376             89,825,913               65.57%
181 - 288 ........................         162              3,025,729                2.21%
289 - 300 ........................       1,142             40,997,371               29.93%
301 and Over .....................           2                 49,184                0.04%
                                         -----           ------------              ------
     Totals ......................       3,809           $136,996,433              100.00%
                                         =====           ============              ======

</TABLE>

     The weighted average remaining months to stated maturity is 215 months.


                                      S-27

<PAGE>


                                ORIGINATION YEAR


<TABLE>
<CAPTION>

                                                                                PERCENTAGE OF
                                       NUMBER OF                                MORTGAGE POOL
                                       REVOLVING         CUT-OFF DATE             BY CUT-OFF
ORIGINATION YEAR                      CREDIT LOANS         BALANCE               DATE BALANCE
-----------------                    -------------       ------------           --------------
<S>                                   <C>                 <C>                   <C>
1994 ............................            3               $55,663                 0.04%
1995 ............................           12               288,606                 0.21%
1996 ............................           20               504,615                 0.37%
1997 ............................           41               714,463                 0.52%
1998 ............................          127             2,749,231                 2.01%
1999 ............................          204             5,134,929                 3.75%
2000 ............................        3,402           127,548,927                93.10%
                                        ------          ------------               ------
     Totals .....................        3,809          $136,996,433               100.00%
                                        ======          ============               ======

</TABLE>


                                  LIEN PRIORITY


<TABLE>
<CAPTION>

                                                                                PERCENTAGE OF
                                       NUMBER OF                                MORTGAGE POOL
                                       REVOLVING         CUT-OFF DATE             BY CUT-OFF
LIEN PRIORITY                         CREDIT LOANS         BALANCE               DATE BALANCE
--------------                       -------------       ------------           --------------
<S>                                   <C>                 <C>                   <C>
First Lien .......................           56            $3,286,946                 2.40%
Second Lien ......................        3,753           133,709,487                97.60%
                                         ------          ------------              -------
     Totals ......................        3,809          $136,996,433               100.00%
                                         ======          ============              =======
</TABLE>

                                      S-28


<PAGE>


                                 PROPERTY TYPES


<TABLE>
<CAPTION>

                                                                                PERCENTAGE OF
                                       NUMBER OF                                MORTGAGE POOL
                                       REVOLVING         CUT-OFF DATE             BY CUT-OFF
PROPERTY TYPE                         CREDIT LOANS         BALANCE               DATE BALANCE
--------------                       -------------       ------------           --------------
<S>                                   <C>                 <C>                   <C>
Single Family ......................      2,958           $106,020,017              77.39%
PUD-Detached .......................        517             20,806,404              15.19%
Condominium ........................        184              5,802,234               4.24%
PUD-Attached .......................         78              2,133,646               1.56%
Multifamily (2-4 Units) ............         38              1,216,964               0.89%
Townhouse/Rowhouse Attached ........         25                749,501               0.55%
Site Condominium ...................          4                128,884               0.09%
Manufactured Home ..................          3                 70,554               0.05%
Townhouse/Rowhouse-Detached ........          1                 38,621               0.03%
Modular ............................          1                 29,608               0.02%
                                         ------           ------------             ------
     Totals ........................      3,809           $136,996,433             100.00%
                                         ======           ============             ======

</TABLE>


                                      S-29

<PAGE>


                                 CREDIT SCORES


<TABLE>
<CAPTION>
                                                                                 PERCENTAGE OF
                                       NUMBER OF                                MORTGAGE POOL
                                       REVOLVING         CUT-OFF DATE             BY CUT-OFF
CREDIT SCORE RANGE                    CREDIT LOANS         BALANCE               DATE BALANCE
-------------------                  -------------       ------------           --------------
<S>                                   <C>                 <C>                   <C>
600 to 619 .........................         5              $244,914                  0.18%
620 to 639 .........................        85             1,837,918                  1.34%
640 to 659 .........................       222             6,939,489                  5.07%
660 to 679 .........................       298            10,631,683                  7.76%
680 to 699 .........................       578            21,604,548                 15.77%
700 to 719 .........................       547            21,884,645                 15.97%
720 to 739 .........................       647            23,298,332                 17.01%
740 to 759 .........................       596            21,468,961                 15.67%
760 to 779 .........................       526            18,601,639                 13.58%
780 to 799 .........................       264             8,709,521                  6.36%
Greater than or equal to 800 .......        41             1,774,784                  1.30%
                                         -----          ------------                ------
     Totals ........................     3,809          $136,996,433                100.00%
                                         =====          ============                ======

</TABLE>


         The highest and lowest credit scores are 818 and 610, respectively.

UNDERWRITING STANDARDS

         The following is a brief description of the various underwriting
standards and procedures applicable to the revolving credit loans. For a more
detailed description of the underwriting standards and procedures applicable to
the revolving credit loans, see "Trust Asset Program--Underwriting Standards"
and "Trust Asset Program - Guide Standards" in the prospectus.

         The seller's underwriting standards relating to the revolving credit
loans generally will conform to those published in the client guide, and the
provisions of the guide applicable to the home equity program. The underwriting
standards in the guide are continuously revised based on prevailing conditions
in the residential mortgage market and the market for mortgage securities.

         The underwriting standards require that revolving credit loans
originated or purchased by the seller be fully documented or be supported by
alternative documentation. For fully documented loans, a prospective borrower is
required to complete a detailed application



                                      S-30
<PAGE>

providing pertinent credit information. For alternatively documented loans, a
borrower may demonstrate income and employment directly by providing alternative
documentation in the form of copies of the borrower's own records rather than by
having the originator obtain independent verifications from third parties such
as the borrower's employer or mortgage servicer.

         Residential Funding Corporation relies on a number of guidelines to
assist underwriters in the credit review and decision process. The underwriting
criteria provide for the evaluation of a loan applicant's creditworthiness
through the use of a consumer credit report, verification of employment and a
review of the debt-to-income ratio of the applicant. Income is verified through
various means, including without limitation applicant interviews, written
verifications with employers and review of pay stubs or tax returns. The
borrower must demonstrate sufficient levels of disposable income to satisfy debt
repayment requirements.

         In determining the adequacy of the mortgaged property as collateral for
a revolving credit loan, an appraisal is made of each property considered for
financing or, if permitted by the underwriting standards, the value of the
related mortgaged property will be a statistical valuation or the stated value.
In most cases, the underwriting standards of Residential Funding Corporation as
to the revolving credit loans originated or purchased by it place a greater
emphasis on the creditworthiness and debt service capacity of the borrower than
on the underlying collateral in evaluating the likelihood that a borrower will
be able to repay the related revolving credit loan. The revolving credit loans
included in the mortgage pool generally were originated subject to a maximum
combined loan-to-value ratio of 100% and a maximum total monthly debt to income
ratio of 55%. There can be no assurance that the combined loan-to-value ratio or
the debt to income ratio for any revolving credit loans will not increase from
the levels established at origination.

         The underwriting standards may be varied in appropriate cases. There
can be no assurance that every revolving credit loan in the mortgage pool was
originated in conformity with the applicable underwriting standards in all
material respects, or that the quality or performance of the revolving credit
loans will be equivalent under all circumstances.

REPRESENTATIONS AND WARRANTIES

         Each person that sold revolving credit loans to the seller has made or
will make limited representations and warranties regarding the related revolving
credit loans, as of the date of purchase thereof by the seller. However, those
representations and warranties will not be assigned to the owner trustee or the
indenture trustee for the benefit of the holders of the securities, so a breach
of those representations and warranties will not be enforceable on behalf of the
trust.

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 business day prior to the cut-off date, except as
otherwise noted. Prior to the issuance of the notes, revolving credit loans may
be removed from the mortgage pool as a result of incomplete


                                      S-31
<PAGE>

documentation or otherwise if the depositor deems that removal is necessary or
appropriate. A limited number of other revolving credit loans may be added to
the mortgage pool prior to the issuance of the notes. The depositor believes
that the information in this prospectus supplement will be substantially
representative of the characteristics of the mortgage pool as it will be
constituted a the time the notes are issued although the range of loan rates and
maturities and some other characteristics of the revolving credit loans in the
mortgage pool may vary.

         A Current Report on Form 8-K will be available to purchasers of the
notes and will be filed, together with the servicing agreement, the indenture,
the trust agreement and the revolving credit loan purchase agreement, with the
Commission within fifteen days after the initial issuance of the notes. In the
event revolving credit loans are removed from or added to the mortgage pool as
described in the preceding paragraph, that removal or addition will be noted in
the Current Report on Form 8-K.

                       SERVICING OF REVOLVING CREDIT LOANS

GENERAL

         The master servicer will be responsible for servicing the revolving
credit loans directly or through one or more subservicers in accordance with the
guide and the terms of the servicing agreement. See "Description of the
Securities Servicing and Administration of Trust Assets" in the prospectus.

         Billing statements are mailed monthly by the subservicers. The
statement gives the monthly activity on the related revolving credit loan and
specifies the minimum payment due to the subservicers and the available credit
line. Notice of changes in the applicable loan rate are provided by the related
subservicers to the borrower with such statements. All payments are due by the
20th day of the month.

RELEASE OF LIEN; REFINANCING OF SENIOR LIEN

         The servicing agreement permits the master servicer to release the lien
on the mortgaged property securing a revolving credit loan under certain
circumstances, if the revolving credit loan is current in payment. A release may
be made in any case where the borrower simultaneously delivers a mortgage on a
substitute mortgaged property, if the combined loan-to-value ratio is not
increased. A release may also be made, in connection with a simultaneous
substitution of the mortgaged property, if the combined loan-to-value ratio
would be increased to not more than the lesser of (a) 100% and (b) 105% times
the combined loan-to-value ratio previously in effect, if the master servicer
determines that appropriate compensating factors are present. Furthermore, a
release may also be permitted in cases where no substitute mortgaged property is
provided, causing the revolving credit loan to become unsecured, subject to the
limitations in the servicing agreement. At the time a lien is released, the
terms of the revolving credit loan may be modified, including to increase the
loan rate. The terms of the revolving credit loan also may be modified if the
borrower subsequently delivers a mortgage on a substitute mortgaged property.

         The master servicer may permit the refinancing of any existing lien
senior to a revolving credit loan subject to the terms described in the
servicing agreement.



                                      S-32
<PAGE>

COLLECTION AND LIQUIDATION PRACTICES; LOSS MITIGATION

         Under the servicing agreement, the master servicer may use a wide
variety of loss mitigation practices, including waivers, modifications, payment
forbearances, partial forgiveness, entering into repayment schedule
arrangements, and capitalization of arrearages; provided, however, in any such
case that the master servicer determines that such action is not materially
adverse to the interests of the holders of the securities or the credit enhancer
and is generally consistent with the master servicer's policies relating to
similar loans; and provided further that reductions in the loan rate, partial
forgiveness or maturity extensions may only be taken if the revolving credit
loan is in default or if default is reasonably foreseeable. If a revolving
credit loan is in default, the master servicer may take a variety of actions
including foreclosure upon the mortgaged property, writing off the balance of
the revolving credit loan as a bad debt, taking a deed in lieu of foreclosure,
accepting a short sale, permitting a short refinancing, arranging for a
repayment plan, modifications as described above, or taking an unsecured note.
See "Description of the Securities Servicing and Administration of Trust Assets"
in the prospectus.

OPTIONAL REPURCHASE OF DEFAULTED REVOLVING CREDIT LOANS

         Under the servicing agreement, the master servicer may purchase from
the trust any revolving credit loan which is 60 days or more delinquent at a
purchase price equal to the principal balance thereof plus accrued interest
thereon.

THE MASTER SERVICER

         Residential Funding Corporation, an indirect wholly-owned subsidiary of
GMAC Mortgage Group, Inc. and an affiliate of the depositor, will be responsible
for master servicing the revolving credit loans under the servicing agreement.
Residential Funding Corporation will also be responsible for servicing the
revolving credit loans in accordance with its servicing guide directly or
through one or more subservicers. Responsibilities of Residential Funding
Corporation will include the receipt of funds from subservicers, the
reconciliation of servicing activity, investor reporting and remittances to the
indenture trustee and the owner trustee to accommodate payments to
securityholders. For a general description of Residential Funding Corporation
and its activities, see "Residential Funding Corporation" in the prospectus.

         In addition, Residential Funding Corporation will take over collection
activity and default management of any revolving credit loans currently
subserviced by GMAC Mortgage Corporation, if such home loans become delinquent.
Neither the master servicer nor any subservicer will be required to make
advances relating to delinquent payments of principal and interest on the home
loans.

         For information regarding foreclosure procedures, see "Description of
the Securities -- Servicing and Administration of Trust Assets--Realization Upon
Defaulted Loans" in the prospectus. Servicing and charge-off policies and
collection practices may change over time in accordance with the master
servicer's business judgment, changes in the master servicer's




                                     S-33
<PAGE>

portfolio of real estate secured revolving credit (line) loans that it services
for its clients and applicable laws and regulations.

THE INITIAL SUBSERVICER

         Primary servicing for the revolving credit loans will be provided by
GMAC Mortgage Corporation under a subservicing agreement with the master
servicer. GMAC Mortgage Corporation is an indirect wholly-owned subsidiary of
General Motors Acceptance Corporation, and is an affiliate of the depositor.
GMAC Mortgage Corporation is engaged in the mortgage banking business, including
the origination, purchase, sale and servicing of residential loans.

         GMAC Mortgage Corporation's executive offices are located at 100 Witmer
Road, Horsham, Pennsylvania 19044-0963.

DELINQUENCY AND LOSS EXPERIENCE OF THE MASTER SERVICER'S PORTFOLIO

         The following tables summarize the delinquency and loss experience for
all home equity lines of credit originated or acquired by the master servicer.
The data are presented for illustrative purposes only. There is no assurance
that the delinquency and loss experience of the revolving credit loans will be
similar to that shown in the following tables.

         A loan is considered to be "30 to 59 days" or "30 or more days"
delinquent when a payment due on any due date remains unpaid as of the close of
business on the next following monthly due date. However, since the
determination as to whether a loan falls into this category is made as of the
close of business on the last business day of each month, a loan with a payment
due on July 1 that remained unpaid as of the close of business on July 31 would
still be considered current as of July 31. If that payment remained unpaid as of
the close of business on August 31, the loan would then be considered to be 30
to 59 days delinquent. Delinquency information presented in this prospectus
supplement as of the cut-off date is determined and prepared as of the close of
business on the business day prior to the cut-off date.

         The information in the tables below has not been adjusted to eliminate
the effect of the significant growth in the size of the master servicer's
portfolio of home equity lines of credit during the periods shown. Accordingly,
loss and delinquency as percentages of aggregate principal balance of home
equity lines of credit serviced for each period would be higher than those shown
if a pool of home equity loans were artificially isolated at a point in time and
the information showed the activity only with respect to those loans.



                                     S-34
<PAGE>




                    HOME EQUITY LINE OF CREDIT LOAN PORTFOLIO
<TABLE>
<CAPTION>
                                     HELOC LOAN PORTFOLIO DELINQUENCY EXPERIENCE
                                     -------------------------------------------

                                    AT DECEMBER 31, 1998               AT DECEMBER 31, 1999              AT JUNE 30, 2000
                                    --------------------               --------------------              ----------------
                                                     BY DOLLAR                     BY DOLLAR                       BY DOLLAR
                                    BY NO.           AMOUNT OF         BY NO.      AMOUNT OF         BY NO.         AMOUNT OF
                                   OF LOANS           LOANS           OF LOANS      LOANS           OF LOANS         LOANS
                                  ------------ ------------------- ----------- ------------------ ------------ ------------------
<S>                                    <C>               <C>            <C>            <C>                 <C>           <C>
Total Active HELOC
Total HELOC Portfolio............     37,921        $1,256,527,897       36,167    $1,179,487,803       34,926     $1,148,114,061
Line Amt.........................     77,351        $2,428,492,533       90,837    $2,874,762,652       95,345     $3,044,469,895
  30-59 days.....................        603          $ 19,406,573          255      $  7,997,819          175       $  5,709,338
  60-89 days.....................         95          $  2,940,233           66      $  2,350,318           40       $  1,732,972
  90+ days.......................        215          $  9,546,661          186      $  7,916,966          161       $  6,492,714
Total delinquent loans...........        913          $ 31,893,466          507      $ 18,265,102          376       $ 13,935,024
Percent of Active portfolio......       2.41%                 2.54%        1.40%             1.55%        1.08%             1.21%
Completed Foreclosures...........         34          $  3,016,285           37      $  3,150,204           44       $  3,442,169
Foreclosure % ...................       0.04%                0.12%         0.04%             0.11%        0.05%              0.11%
Completed Chargeoffs.............        748          $ 28,074,931          992      $  36,410,070       1,098       $ 40,626,661
Chargeoff % .....................       0.97%                 1.16%        1.09%              1.27%       1.15%              1.33%
Approved/Pending Foreclosures....         44          $  2,907,936           30      $   1,855,905          48       $  2,676,214
Approved/Pending                                                                                          0.14%              0.23%
Forclosure %                            0.12%                 0.23%        0.08%              0.16%
Approved/Pending Chargeoffs......        166        $    6,190,005          136      $   4,873,139         132       $  4,546,079
Approved/Pending
Chargeoff %                             0.44%                0.49%         0.38%              0.41%       0.38%              0.40%
</TABLE>

-----------------
o        Completed Foreclosures in the table represents the aggregate of the
         outstanding principal balances of the related HELOC loans for which
         foreclosure proceedings have been completed or a deed in lieu of
         foreclosure has been accepted and resulted in an REO property or
         alternative form of disposition.

o        Completed Chargeoffs in the table represents the aggregate of the
         outstanding principal balances of the related HELOC loans actually
         charged-off.

         Because collection activity and default management of the revolving
credit loans subserviced by the initial subservicer will be transferred to
Residential Funding Corporation immediately upon delinquency, the loss and
delinquency experience of the initial subservicer is not relevant to this
transaction and is therefore not included in the tables above.

SERVICING AND OTHER COMPENSATION AND PAYMENT OF EXPENSES

         The servicing fees are payable out of the interest payments on each
revolving credit loan. The weighted average servicing fee as of the cut-off date
will be approximately 0.58% per annum. The servicing fees consist of (a)
servicing compensation payable to the master servicer




                                      S-35
<PAGE>

for its master servicing activities and (b) subservicing and other related
compensation retained by the subservicer. The primary compensation to be paid to
the master servicer relating to its master servicing activities will be 0.08%
per annum of the outstanding principal balance of each revolving credit loan.
The master servicer is obligated to pay some ongoing expenses associated with
the trust and incurred by the master servicer in connection with its
responsibilities under the servicing agreement. See "Description of the
Securities Servicing and Administration of Trust Assets" in the prospectus for
information regarding other possible compensation to the master servicer and the
subservicers and for information regarding expenses payable by the master
servicer.

                                   THE ISSUER

GENERAL

     The Home Equity Loan Trust 2000-HS1 is a business trust formed under the
laws of the State of Delaware under the trust agreement for the purposes
described in this prospectus supplement. The trust agreement constitutes the
governing instrument under the laws of the State of Delaware relating to
business trusts. After its formation, the issuer will not engage in any activity
other than:

     o    acquiring and holding the revolving credit loans and the other assets
          of the issuer and related proceeds;

     o    issuing the notes and the certificates;

     o    making payments on the notes and the certificates; and

     o    engaging in other activities that are necessary, suitable or
          convenient to accomplish the foregoing.

     The issuer's principal offices are in Wilmington, Delaware, in care of
Wilmington Trust Company, as owner trustee, at 1100 N. Market Street,
Wilmington, Delaware 19890-0001.

                                THE OWNER TRUSTEE

     Wilmington Trust Company is the owner trustee under the trust agreement.
The owner trustee is a Delaware banking corporation and its principal offices
are located at Rodney Square North, 1100 North Market Street, Wilmington,
Delaware 19890-0001.

     Neither the owner trustee nor any director, officer or employee of the
owner trustee will be under any liability to the issuer or the securityholders
for any action taken or for refraining from the taking of any action in good
faith under the trust agreement or for errors in judgment. However, none of the
owner trustee and any director, officer or employee thereof will be protected
against any liability which would otherwise be imposed by reason of willful
malfeasance, bad faith or negligence in the performance of duties or by reason
of reckless disregard of obligations and duties under the trust agreement. All
persons into which the owner


                                      S-36
<PAGE>

trustee may be merged or with which it may be consolidated or any person
resulting from such merger or consolidation shall be the successor of the owner
trustee under the trust agreement.

                              THE INDENTURE TRUSTEE

         The Chase Manhattan Bank, a New York banking corporation, is the
indenture trustee under the indenture. The principal offices of the indenture
trustee are located in New York, New York.

                               THE CREDIT ENHANCER

         The following information has been supplied by the credit enhancer,
Ambac Assurance Corporation, for inclusion in this prospectus supplement. No
representation is made by the depositor, the master servicer, the underwriter or
any of their affiliates as to the accuracy or completeness of such information.

         The credit enhancer is a Wisconsin-domiciled stock insurance
corporation regulated by the Office of the Commissioner of Insurance of the
State of Wisconsin and licensed to do business in 50 states, the District of
Columbia, the Commonwealth of Puerto Rico and the Territory of Guam. The credit
enhancer primarily insures newly issued municipal and structured finance
obligations. The credit enhancer is a wholly owned subsidiary of Ambac Financial
Group, Inc. (formerly, AMBAC, Inc.) a 100% publicly-held company. Moody's
Investor Services, Inc., Standard & Poor's Ratings Service, a division of The
McGraw Hill Companies, Inc. and Fitch, Inc., have each assigned a triple-A
financial strength rating to the credit enhancer.

         The consolidated financial statements of the credit enhancer and
subsidiaries as of December 31, 1999 and December 31, 1998, and for each of the
years in the three-year period ended December 31, 1999, prepared in accordance
with generally accepted accounting principles, included in the Annual Report on
Form 10-K of Ambac Financial Group, Inc. (which was filed with the Commission on
March 30, 2000; Commission File Number 1-10777) and the unaudited consolidated
financial statements of the credit enhancer and subsidiaries as of June 30, 2000
and for the periods ending June 30, 2000 and June 30, 1999, included in the
Quarterly Report on Form 10-Q of Ambac Financial Group, Inc. for the period
ended June 30, 2000 (which was filed with the Commission on August 11, 2000),
are hereby incorporated by reference into this prospectus supplement and shall
be deemed to be a part hereof. Any statement contained in a document
incorporated herein by reference shall be modified or superseded for the
purposes of this prospectus supplement to the extent that a statement contained
herein by reference herein also modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this prospectus supplement.

         All financial statements of the credit enhancer and subsidiaries
included in documents filed by Ambac Financial Group, Inc. with the Commission
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 notes shall be deemed




                                      S-37
<PAGE>

to be incorporated by reference into this prospectus supplement and to be a part
hereof from the respective dates of filing such documents.

         The following table sets forth the credit enhancer's capitalization as
of December 31, 1998, December 31, 1999 and June 30, 2000, respectively, in
conformity with generally accepted accounting principles.

                           AMBAC ASSURANCE CORPORATION

                        CONSOLIDATED CAPITALIZATION TABLE
                              (DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
                                               -------------------------------------------------------
                                                 DECEMBER 31,     DECEMBER 31,        JUNE 30, 2000
                                                                  ------------        -------------
                                                    1998              1999
                                                    ----              ----
                                                                                         (UNAUDITED)
<S>                                                   <C>             <C>                  <C>
Unearned premiums............................         $1,303          $1,442               $1,452
Other liabilities............................            548             524                  504
                                                       -----           -----                -----
Total liabilities............................          1,851           1,966                1,956
                                                       -----           -----                -----
Stockholder's equity:
    Common Stock.............................             82              82                   82
    Additional paid-in capital...............            541             752                  753
    Accumulated other comprehensive                      138             (92)                 (46)
      income (loss)..........................
    Retained earnings........................          1,405           1,674                1,834
                                                      ------           -----                -----
Total stockholder's equity...................          2,166           2,416                2,623
                                                      ------           -----                -----
Total liabilities and stockholder's equity...         $4,017          $4,382               $4,579
                                                      ======          ======               ======
</TABLE>

         For additional financial information concerning the credit enhancer,
see the audited and unaudited financial statements of the credit enhancer
incorporated by reference herein. Copies of the financial statements of the
credit enhancer incorporated herein by reference and copies of the credit
enhancer's annual statement for the year ended December 31, 1999 prepared in
accordance with statutory accounting standards are available, without charge,
from the credit enhancer. The credit enhancer's administrative offices are
located at One State Street Plaza, 19th Floor, New York, New York 10004 and its
telephone number is (212) 668-0340.

         The credit enhancer makes no representation regarding the notes or the
advisability of investing in the notes and makes no representation regarding,
nor has it participated in the preparation of, this prospectus supplement other
than the information supplied by the credit enhancer and presented under the
headings "The Credit Enhancer" and "Description of the Policy" in this
prospectus supplement and in the financial statements incorporated herein by
reference.



                                     S-38
<PAGE>



                          DESCRIPTION OF THE SECURITIES

GENERAL

         The term notes and the variable funding notes will be issued under the
indenture. The certificates will be issued under the trust agreement. The
following summaries describe provisions of the securities, the indenture and the
trust agreement. The summaries do not purport to be complete and are subject to,
and qualified in their entirety by reference to, the provisions of the
applicable agreement.

         The term notes and the variable funding notes will be secured by the
assets of the trust pledged by the issuer to the indenture trustee pursuant to
the indenture, which will consist of:

         o   the revolving credit loans;

         o   all amounts on deposit in the payment account;

         o   the policy; and

         o   proceeds of the foregoing.

         The variable funding notes initially will be issued to Residential
Funding Corporation. The security balance of the variable funding notes may be
increased from time to time during the revolving period as long as an
amortization event has not occurred in exchange for additional balances sold to
the trust under the revolving credit loan purchase agreement, if principal
collections are insufficient or unavailable to cover the related draws. On any
payment date after the end of the revolving period, so long as an amortization
event has not occurred, the acquisition of all additional balances will be
reflected in an increase in the security balance of the variable funding notes.
However, the security balance of the variable funding notes may not exceed
$45,763,660 minus any amounts paid as principal on the variable funding notes,
or such greater amount as may be permitted under the indenture. Initially the
variable funding notes will have no security balance.

BOOK-ENTRY NOTES

                  The term notes will initially be issued as book-entry notes.
Term note owners may elect to hold their term notes through DTC in the United
States, or Euroclear or Clearstream Banking, societe anonyme, formerly known as
Cedelbank SA, or Clearstream, in Europe if they are participants of such
systems, or indirectly through organizations which are participants in such
systems. The book-entry notes will be issued in one or more securities which
equal the aggregate principal balance of the term notes and will initially be
registered in the name of Cede & Co., the nominee of DTC. Clearstream and
Euroclear will hold omnibus positions on behalf of their participants through
customers' securities accounts in Clearstream's and Euroclear's names on the
books of their respective depositaries which in turn will hold such positions in
customers' securities accounts in the depositaries' names on the books of DTC.
Investors may hold such beneficial interests in the book-entry notes in minimum
denominations representing security balances of $25,000 and in integral
multiples of $1,000 in excess of $25,000. Except as described below, no
beneficial owner will be entitled to receive a physical certificate, or



                                     S-39
<PAGE>

definitive note, representing the security. Unless and until definitive term
notes are issued, it is anticipated that the only holder of the term notes will
be Cede & Co., as nominee of DTC. Term note owners will not be holders as that
term is used in the indenture.

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

         Term note owners will receive all payments of principal and interest on
the term notes from the indenture trustee through DTC and their participants.
While the term notes are outstanding, except under the circumstances described
below, under the DTC rules, regulations and procedures, DTC is required to make
book-entry transfers among its participants on whose behalf it acts in
connection with the term notes and is required to receive and transmit payments
of principal and interest on the term notes.

         DTC participants and indirect participants with whom term note owners
have accounts for term notes are similarly required to make book-entry transfers
and receive and transmit such payments on behalf of their respective term note
owners. Accordingly, although term note owners will not possess physical
certificates, the rules provide a mechanism by which term note owners will
receive payments and will be able to transfer their interest.

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

         Under a book-entry format, beneficial owners of the book-entry notes
may experience some delay in their receipt of payments, since the payments will
be forwarded by the indenture trustee to Cede & Co. Payments on term notes held
through Clearstream or Euroclear will be credited to the cash accounts of
Clearstream participants or Euroclear participants in accordance with the
relevant system's rules and procedures, to the extent received by the relevant
depositary. Those payments will be subject to tax reporting in accordance with
relevant United States tax laws and regulations. Because DTC can only act on
behalf of financial intermediaries, the ability of a beneficial owner to pledge
book-entry notes to persons or entities that do not participate in the
depositary system, or otherwise take actions relating to book-entry notes, may
be limited due




                                     S-40
<PAGE>

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

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

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

         (a)  the indenture trustee determines that DTC is no longer willing or
              able to discharge properly its responsibilities as nominee and
              depository with respect to the book-entry notes and the indenture
              trustee is unable to locate a qualified successor;

         (b)  the indenture trustee elects to terminate a book-entry system
              through DTC; or

         (c)  after the occurrence of an event of default under the indenture,
              beneficial owners having percentage interests aggregating at least
              a majority of the security balances of the term notes advise DTC
              through the financial intermediaries and the DTC participants in
              writing that the continuation of a book-entry system through DTC
              or a successor thereto is no longer in the best interests of
              beneficial owners.

         Upon the occurrence of any of the events described in the immediately
preceding paragraph, the indenture trustee will be required to notify all
beneficial owners of the occurrence of that event and the availability through
DTC of definitive term notes. Upon surrender by DTC of the global certificate or
certificates representing the book-entry notes and instructions for
re-registration, the indenture trustee will issue and authenticate definitive
term notes, and thereafter the indenture trustee will recognize the holders of
the definitive term notes as holders under the indenture.

         Although DTC, Clearstream and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of term notes among participants of
DTC, Clearstream and Euroclear, they are under no obligation to perform or
continue to perform such procedures and such procedures may be discontinued at
any time. See Annex I to this prospectus supplement.

         None of the depositor, the master servicer or the indenture trustee
will have any liability for any actions taken by DTC or its nominee, including,
without limitation, actions for any aspect




                                     S-41
<PAGE>

of the records relating to or payments made on account of beneficial ownership
interests in the notes held by Cede & Co., as nominee for DTC, or for
maintaining, supervising or reviewing any records relating to the beneficial
ownership interests.

         According to DTC, the foregoing information about DTC has been provided
to its participants and other members of the financial community for
informational purposes only and is not intended to serve as a representation,
warranty, or contract modification of any kind.

         For additional information regarding DTC, Clearstream, Euroclear and
the term notes, see "Description of the Notes -- Form of Notes" in the
prospectus.

PAYMENTS ON THE NOTES

         Payments on the notes will be made by the indenture trustee or the
paying agent on the 20th day of each month or, if that day is not a business
day, then the next succeeding business day, beginning in October 2000. Payments
on the term notes will be made to the persons in whose names the term notes are
registered at the close of business on the day prior to each payment date or, if
the term notes are no longer book-entry notes, on the record date. See
"Description of The Notes--Payments" in the prospectus. Payments will be made by
check or money order mailed or, upon the request of a holder owning term notes
having denominations aggregating at least $1,000,000, by wire transfer or
otherwise, to the address of the person entitled thereto which, in the case of
book-entry notes, will be DTC or its nominee as it appears on the security
register in amounts calculated as described in this prospectus supplement on the
determination date. However, the final payment on the term notes will be made
only upon presentation and surrender of the term notes at the office or the
agency of the indenture trustee specified in the notice to holders of the final
payment. A business day is any day other than a Saturday or Sunday or a day on
which banking institutions in the States of California, Minnesota, New York,
Illinois or Delaware are required or authorized by law to be closed.

GLOSSARY OF TERMS

         The following terms have the meanings given below to help describe the
cashflows on the term notes:

         AMORTIZATION EVENT:  Any of the following:

          o    the occurrence of some events relating to a violation of the
               seller's obligations under the revolving credit loan purchase
               agreement;

          o    the occurrence of some events of insolvency, conservatorship,
               receivership, readjustment of debt, marshalling of assets and
               liabilities and similar proceedings relating to the seller or the
               issuer;

          o    the issuer becomes subject to regulation as an investment company
               within the meaning of the Investment Company Act of 1940, as
               amended;

          o    a servicing default relating to the master servicer occurs under
               the servicing agreement and the master servicer is the seller;


                                     S-42
<PAGE>


          o    if the aggregate of all draws under the policy, other than draws
               relating to any undercollateralization amount, exceeds 1.00% of
               the cut-off date balance; or

          o    the issuer is determined to be an association taxable as a
               corporation for federal income tax purposes.

         BANKRUPTCY LOSS AMOUNT: Initially $100,000. As of any date of
determination, the Bankruptcy Loss Amount shall equal $100,000 less the sum of
any Liquidation Loss Amounts on the revolving credit loans due to Bankruptcy
Losses up to the date of determination.

         BASIS RISK SHORTFALL: On any payment date and with respect to either
the term notes or the variable funding notes, the excess, if any, of (x)
interest accrued on the related notes at the applicable Formula Rate over (y)
interest accrued thereon at the Net Rate Cap.

         COLLECTION PERIOD: As to any payment date, the calendar month
preceding the month of that payment date.

         EXCESS LOSS AMOUNT:  On any payment date, the sum of:

         (a) any Liquidation Loss Amounts other than as described in clauses (b)
through (e) below for the related Collection Period that, when added to the
aggregate of the Liquidation Loss Amounts for all preceding Collection Periods,
exceed $15,412,099;

         (b)  any Special Hazard Losses in excess of the Special Hazard Amount;

         (c)  any Fraud Losses in excess of the Fraud Loss Amount;

         (d)  any Bankruptcy Losses in excess of the Bankruptcy Loss Amount;
and

         (e)  any losses occasioned by war, civil insurrection, certain
governmental actions, nuclear reaction and certain other risks as described in
the indenture.

         FORMULA RATE: The lesser of (x) LIBOR plus 0.24% per annum for the term
notes and LIBOR plus 0.24% per annum for the variable funding notes and (y)
17.25% per annum.

         FRAUD LOSS AMOUNT: Initially $4,109,893. On 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 of the credit limits of the revolving credit loans as
of the cut-off date minus the aggregate of any Liquidation Loss Amounts on the
revolving credit loans due 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 of the
credit limits of the revolving credit loans as of the most recent anniversary of
the cut-off date minus (2) the aggregate of any Liquidation Loss Amounts on the
revolving credit loans due to Fraud Losses since the most recent anniversary of
the cut-off date, up to such date of determination; and

                                      S-43
<PAGE>

         (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 of the
credit limits of the revolving credit loans as of the most recent anniversary of
the cut-off date minus (2) the aggregate of any Liquidation Loss Amounts on the
revolving credit loans due 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.

         INTEREST COLLECTIONS: As to any payment date, the sum of (x) the
amounts collected during the related Collection Period, including Net
Liquidation Proceeds, allocated to interest pursuant to the terms of the credit
line agreements exclusive of the pro rata portion thereof attributable to
additional balances not conveyed to the trust following an Amortization Event,
reduced by the servicing fees for that Collection Period and (y) the interest
portion of the repurchase price for any deleted loans and the cash purchase
price paid in connection with any optional purchase of the revolving credit
loans by the master servicer.

         LIBOR: The London interbank offered rate for United States dollar
deposits determined as described in this prospectus supplement.

         LIQUIDATED REVOLVING CREDIT LOAN: As to any payment date, any revolving
credit loan for which the master servicer has determined, based on the servicing
procedures specified in the servicing agreement, as of the end of the preceding
Collection Period that all Liquidation Proceeds that it expects to recover from
the disposition of the related mortgaged property have been recovered.

         LIQUIDATION LOSS AMOUNT: As to any Liquidated Revolving Credit Loan,
the unrecovered principal balance of that loan at the end of the related
Collection Period in which that revolving credit loan became a Liquidated
Revolving Credit Loan, after giving effect to the Net Liquidation Proceeds
applied in reduction of the principal balance.

         LIQUIDATION LOSS DISTRIBUTION AMOUNT: As to any payment date, an amount
equal to (A) 100% of the Liquidation Loss Amounts, other than any Excess Loss
Amounts, on that payment date, plus (B) any Liquidation Loss Amounts, other than
any Excess Loss Amounts, remaining undistributed from any preceding payment
date, together with interest thereon from the date initially distributable to
the date paid, provided that any Liquidation Loss Amount described in this
clause (B) will not be required to be paid to the extent that the applicable
Liquidation Loss Amount was paid on the term notes and the variable funding
notes by means of a draw on the policy or was reflected in the reduction of the
Outstanding Reserve Amount.

         NET LIQUIDATION PROCEEDS: As to a revolving credit loan, the proceeds,
excluding amounts drawn on the policy, received in connection with the
liquidation of any revolving credit loan, reduced by related expenses, but not
including the portion, if any, of the amount that exceeds the principal balance
of the revolving credit loan at the end of the Collection Period immediately
preceding the Collection Period in which that revolving credit loan became a
Liquidated Revolving Credit Loan, plus accrued and unpaid interest.



                                      S-44
<PAGE>

         NET PRINCIPAL COLLECTIONS: On any payment date, the excess, if any, of
(x) Principal Collections for that payment date over (y) the aggregate amount of
additional balances created during the related Collection Period and conveyed to
the trust.

         NET RATE CAP: As to any payment date, the weighted average of the loan
rates on the revolving credit loans as of the last day of the related billing
cycle minus 0.70% per annum, adjusted to an effective rate reflecting accrued
interest calculated on the basis of the actual number of days in the related
interest period and a year assumed to consist of 360 days.

         OUTSTANDING RESERVE AMOUNT: On any payment date, the amount, if any, by
which (x) the pool balance as of the end of the related Collection Period
exceeds (y) the aggregate security balances of all of the notes on such payment
date after application of Net Principal Collections or Principal Collections, as
the case may be, and increases, if any, in the security balance of the variable
funding notes due to the acquisition of additional balances for such date.

         PRINCIPAL BALANCE: As to any revolving credit loan, other than a
Liquidated Revolving Credit Loan, the cut-off date balance, plus (x) any
additional balances relating to that revolving credit loan conveyed to the trust
minus (y) all collections credited against the principal balance of that
revolving credit loan in accordance with the related credit line agreement prior
to such day, exclusive of the pro rata portion thereof attributable to
additional balances not conveyed to the trust following an Amortization Event.
The principal balance of a Liquidated Revolving Credit Loan after final recovery
of substantially all of the related liquidation proceeds which the master
servicer reasonably expects to receive shall be zero.

         PRINCIPAL COLLECTION DISTRIBUTION AMOUNT: On any payment date, an
amount equal to (x) Net Principal Collections for that payment date, so long as
no Amortization Event has occurred and such payment date is during the Revolving
Period, or (y) Principal Collections for such payment date if an Amortization
Event has occurred or if the payment date is after the end of the Revolving
Period; provided however, on any payment date on which the Outstanding Reserve
Amount that would result without regard to this proviso exceeds the Reserve
Amount Target, the Principal Collection Distribution Amount will be reduced by
the amount of such excess until the Outstanding Reserve Amount equals the
Reserve Amount Target.

         PRINCIPAL COLLECTIONS:  On any payment date, the sum of:

         o    the amount collected during the related Collection Period,
              including Net Liquidation Proceeds, allocated to principal
              pursuant to the terms of the credit line agreements exclusive of
              the pro rata portion thereof attributable to additional balances
              not conveyed to the trust following an Amortization Event;

         o    any substitution adjustment amounts and the principal portion of
              the repurchase price for any deleted loans; and

         o    the cash purchase price paid in connection with any optional
              purchase of the revolving credit loans by the master servicer.

                                      S-45
<PAGE>

         P&I COLLECTIONS: On any payment date, the sum of Interest Collections
for that payment date and so long as an Amortization Event has not occurred and
if during the Revolving Period, Net Principal Collections for that payment date,
or if an Amortization Event has occurred or the Revolving Period has ended,
Principal Collections for the applicable payment date.

         RESERVE AMOUNT TARGET: As to any payment date prior to the Stepdown
Date, an amount equal to 1.75% of the cut-off date balance. As to any payment
date on or after the Stepdown Date, the lesser of (a) the Reserve Amount Target
as of the cut-off date and (b) 3.50% of the pool balance after applying payments
received in the related collection period plus 50% of the outstanding principal
balance of all revolving credit loans 90 or more days delinquent as of such
payment date but not lower than 0.50% of the cut-off date balance; provided
however that any scheduled reduction to the reserve amount target described
above shall not be made as of any payment date unless specified loss and
delinquency tests in the indenture are met.

         In addition, the Reserve Amount Target may be reduced with the prior
written consent of the credit enhancer and notice to the rating agencies.

         RESERVE INCREASE AMOUNT: On any payment date, other than the payment
date in October 2000, the amount, if any, necessary to reduce the aggregate
security balance of the notes to the pool balance as of the end of the related
Collection Period and then to bring the Outstanding Reserve Amount up to the
Reserve Amount Target, and as to the payment date in October 2000, an amount
equal to zero.

         REVOLVING PERIOD: The period commencing on the Closing Date and ending
on September 30, 2005.

         SPECIAL HAZARD AMOUNT: Initially $1,369,964. As of any date of
determination following the cut-off date, the Special Hazard Amount shall equal
$1,369,964 less the sum of (A) the aggregate of any Liquidation Loss Amounts on
the revolving credit loans due to Special Hazard Losses and (B) the adjustment
amount. The adjustment amount will be equal to an amount calculated under the
indenture.

         STEPDOWN DATE: The later of (a) the payment date in September 2002 and
(b) the payment date on which the aggregate principal balance of the revolving
credit loans after applying payments received in the related Collection Period
is less than 50% of the cut-off date balance.

INTEREST PAYMENTS ON THE NOTES

         Interest payments will be made on the notes on each payment date at the
applicable note rate for the related interest period, subject to the limitations
set forth below, which may result in Basis Risk Shortfalls. Each note rate for
an interest period will generally be a floating rate equal to the lesser of the
applicable Formula Rate and the Net Rate Cap. On any payment date on which
interest accrued on the notes during the related interest period at the
applicable Formula Rate exceeds interest accrued on those notes at the Net Rate
Cap, the amount of the resulting Basis Risk Shortfall will not be included as
interest payments on the notes for that payment date. Any Basis Risk Shortfall
will accrue interest at the applicable Formula Rate, as adjusted from


                                      S-46
<PAGE>

time to time, and will be paid on future payment dates on a pro rata basis with
the variable funding notes based on the respective amounts of Basis Risk
Shortfalls only to the extent funds are available therefor as set forth in this
prospectus supplement under " -- Allocation of Payments on the Revolving Credit
Loans." Basis Risk Shortfalls allocated to the notes will not be covered by the
policy and may remain unpaid on the final payment date. In addition, the
securities ratings on the notes do not address the likelihood of the receipt of
any amounts in payment of Basis Risk Shortfalls.

         Interest on the notes will accrue on the applicable security balance
from the preceding payment date, or, in the case of the first payment date, from
the closing date, through the day preceding the applicable payment date on the
basis of the actual number of days in the interest period and a 360-day year.
Interest payments on the notes will be funded from payments on the revolving
credit loans and, if necessary, from draws on the policy.

         LIBOR shall be established by the indenture trustee and as to any
interest period, LIBOR will equal the rate for United States dollar deposits for
one month which appears on the Telerate Screen Page 3750 as of 11:00 A.M.,
London time, on the second LIBOR business day prior to the first day of the
relevant interest period. Telerate Screen Page 3750 means the display designated
as page 3750 on the Bridge Telerate Service or such other page as may replace
page 3750 on that service for the purpose of displaying London interbank offered
rates of major banks. If such rate does not appear on such page, or such other
page as may replace that page on that service, or if such service is no longer
offered, such other service for displaying LIBOR or comparable rates as may be
selected by the indenture trustee after consultation with the master servicer
and the credit enhancer, the rate will be the reference bank rate. The reference
bank rate will be determined on the basis of the rates at which deposits in U.S.
dollars are offered by three major banks that are engaged in transactions in the
London interbank market, selected by the indenture trustee after consultation
with the master servicer and the credit enhancer as of 11:00 A.M., London time,
on the day that is two LIBOR business days prior to the immediately preceding
payment date to prime banks in the London interbank market for a period of one
month in amounts approximately equal to the aggregate security balances of all
of the securities then outstanding. The indenture trustee will request the
principal London office of each of the selected banks to provide a quotation of
its rate. If at least two such quotations are provided, the rate will be the
arithmetic mean of the quotations. If on such date fewer than two quotations are
provided as requested, the rate will be the arithmetic mean of the rates quoted
by one or more major banks in New York City, selected by the indenture trustee
after consultation with the master servicer and the credit enhancer, as of 11:00
A.M., New York City time, on such date for loans in U.S. dollars to leading
European banks for a period of one month in amounts approximately equal to the
aggregate security balances of all of the securities then outstanding. If no
such quotations can be obtained, the rate will be LIBOR for the prior payment
date. LIBOR business day means any day other than a Saturday or a Sunday or a
day on which banking institutions in the city of London, England are required or
authorized by law to be closed.

         In the absence of manifest error, the establishment of LIBOR as to each
interest period by the indenture trustee and the indenture trustee's calculation
of the rate of interest applicable to the notes for the related interest period
shall be final and binding.


                                      S-47
<PAGE>


PRINCIPAL PAYMENTS ON THE NOTES

         On each payment date, other than the final payment date, principal
payments will be due and payable on the notes in an amount equal to the
aggregate of the Principal Collection Distribution Amount, together with any
Reserve Increase Amounts and Liquidation Loss Distribution Amounts for that
payment date, as and to the extent described below. In addition, on each payment
date, the credit enhancer is required under the policy to pay any Excess Loss
Amount for that payment date. On the final payment date, principal will be due
and payable on the notes in amounts equal to the security balance, if any, of
the notes on the final payment date. In no event will principal payments on the
notes on any payment date exceed the security balance of the notes on that date.

ALLOCATION OF PAYMENTS ON THE REVOLVING CREDIT LOANS

         The master servicer on behalf of the trust will establish the payment
account into which the master servicer will deposit P&I Collections for each
payment date on the business day prior thereto. The payment account will be an
eligible account and amounts on deposit in the payment account will be invested
in permitted investments.

         On each payment date, P&I Collections will be allocated from the
payment account in the following order of priority:

                           (a) first, to pay accrued interest due on the
                  applicable security balance of the term notes and the variable
                  funding notes other than any Basis Risk Shortfalls;

                           (b) second, to pay principal in an amount equal to
                  the Principal Collection Distribution Amount for that payment
                  date on the term notes and the variable funding notes;

                           (c) third, to pay as principal on the term notes and
                  the variable funding notes, an amount equal to the Liquidation
                  Loss Distribution Amount;

                           (d) fourth, to pay the credit enhancer the premium
                  for the policy and any previously unpaid premiums for the
                  policy, with interest thereon;

                           (e) fifth, to reimburse the credit enhancer for prior
                  draws made on the policy other than those attributable to
                  Excess Loss Amounts, with interest thereon;

                           (f) sixth, to pay as principal on the term notes and
                  the variable funding notes, an additional amount equal to the
                  Reserve Increase Amount;

                           (g) seventh, to pay the credit enhancer any other
                  amounts owed to it under the insurance agreement;


                                      S-48
<PAGE>


                           (h) eighth, to pay the term notes and the variable
                  funding notes, pro rata based on the related Basis Risk
                  Shortfalls, the Basis Risk Shortfalls not previously paid,
                  with interest thereon; and

                           (i) ninth, to pay any remaining amounts to the
                  holders of the certificates.

         The security balance of any notes on any day is, with respect to the
term notes, the initial balance thereof as of the closing date, and with respect
to the variable funding notes, the aggregate principal amount added to the
variable funding notes prior to such day, in each case reduced by all payments
of principal on such notes prior to and as of that day.

         Payments under clause (a) will be allocated to the term notes and the
variable funding notes pro rata based on the amount of interest each security is
entitled to receive under that clause. Payments under clauses (b), (c) and (f)
will constitute payments of principal and will be allocated among the term notes
and the variable funding notes pro rata based on their outstanding security
balances.

OPTIONAL TRANSFERS OF REVOLVING CREDIT LOANS TO HOLDERS OF CERTIFICATES

         Subject to the conditions specified in the servicing agreement, on any
payment date the issuer may, but will not be obligated to, direct the servicer
to remove certain mortgage loans from the trust fund without prior notice to the
noteholders. Revolving credit loans so designated will be removed only upon
satisfaction of certain conditions specified in the servicing agreement,
including, among other things, that:

         o    as of the applicable payment date, after giving effect to the
              removal of the applicable revolving credit loans, the Outstanding
              Reserve Amount will equal or exceed the Reserve Amount Target;

         o    the servicer represents and warrants that no selection procedures
              that the servicer reasonably believes are adverse to the
              interests of the noteholders or the credit enhancer were used in
              selecting the revolving credit loans to be removed;

         o    the credit enhancer shall have certain approval rights as set
              forth in the servicing agreement; and

         o    notice of the removal of revolving credit loans is given to the
              rating agencies.

OUTSTANDING RESERVE AMOUNT

         As of the closing date, the aggregate security balance of the notes
will exceed the cut-off date balance of the revolving credit loans by
approximately $1,373,567 which is approximately 1.00% of the cut-off date
balance. This amount represents an initial undercollateralization of the notes
relative to the revolving credit loans. On each payment date after the payment
date in October 2000, the Reserve Increase Amount, if any, and to the extent of
available funds, will be used first, in reduction of the undercollateralization
amount by reducing the aggregate security balance of the notes until it is equal
to the pool balance as of the end of the related Collection



                                      S-49
<PAGE>

Period, and then to increase the Outstanding Reserve Amount until such amount is
equal to the Reserve Amount Target. On each payment date, the Outstanding
Reserve Amount as in effect immediately prior to that payment date, if any,
shall be deemed to be reduced by an amount equal to any Liquidation Loss Amounts
other than any Excess Loss Amounts for that payment date, except to the extent
that those Liquidation Loss Amounts were covered on that payment date by a
Liquidation Loss Distribution Amount. Any Liquidation Loss Amounts not so
covered will be covered by draws on the policy to the extent provided in this
prospectus supplement. However, any Excess Loss Amounts are required to be
covered by a draw on the policy in all cases, without regard to the availability
of the Outstanding Reserve Amount, and the Outstanding Reserve Amount will not
be reduced by any Excess Loss Amount so long as a corresponding draw on the
policy is made as so required.

         To the extent that the Outstanding Reserve Amount is insufficient or
not available to absorb Liquidation Loss Amounts that are not covered by the
Liquidation Loss Distribution Amount, and if payments are not made under the
policy as required, a noteholder may incur a loss.

THE PAYING AGENT

         The paying agent shall initially be the indenture trustee, together
with any successor thereto. The paying agent shall have the revocable power to
withdraw funds from the payment account for the purpose of making payments to
the noteholders.

MATURITY AND OPTIONAL REDEMPTION

         The notes will be payable in full on the final payment date, to the
extent of the related security balance on such date, if any. In addition, a
principal payment may be made in partial or full redemption of the notes after
the pool balance is reduced to an amount less than 10% of the cut-off date
balance after applying payments received during the related Collection Period,
upon the exercise by the master servicer of its option to purchase all or a
portion of the revolving credit loans and related assets. If all of the
revolving credit loans are purchased by the master servicer, the purchase price
will be equal to the sum of (x) the outstanding pool balance and accrued and
unpaid interest thereon at the weighted average of the loan rates through the
day preceding the payment date, on which the purchase occurs, together with
Basis Risk Shortfalls and interest thereon, and (y) all amounts due and owing to
the credit enhancer.

         If a portion of the revolving credit loans are purchased by the master
servicer, the purchase price will be equal to the sum of the aggregate principal
balances of the revolving credit loans so purchased and accrued and unpaid
interest thereon at the weighted average of the related loan rates on those
revolving credit loans through the day preceding the payment date on which the
purchase occurs, together with all amounts due and owing to the credit enhancer
relating to the revolving credit loans so purchased. Any purchase will be
subject to satisfaction of the conditions specified in the servicing agreement,
including:

               o    the master servicer shall have delivered to the indenture
                    trustee a schedule containing a list of all revolving credit
                    loans remaining in the trust after the removal;


                                      S-50
<PAGE>


               o    the master servicer shall represent and warrant that no
                    selection procedures reasonably believed by the master
                    servicer to be adverse to the interests of the
                    securityholders or the credit enhancer were used by the
                    master servicer in selecting such revolving credit loans;
                    and

               o    each rating agency shall have been notified of the proposed
                    retransfer and shall not have notified the master servicer
                    that such retransfer would result in a reduction or
                    withdrawal of the ratings of the securities without regard
                    to the policy.

                  In lieu of a cash payment, if an Amortization Event had
previously occurred, all or a portion of the purchase price may be in the form
of additional balances on other revolving credit loans not previously conveyed
to the trust.

                            DESCRIPTION OF THE POLICY

         On the closing date, the credit enhancer will issue the policy in favor
of the indenture trustee on behalf of the issuer for the benefit of the holders
of the notes. The policy will unconditionally and irrevocably guarantee most
payments on the notes. On each payment date, in accordance with the terms of the
policy, a draw will be made on the policy equal to the sum of:

         o    the amount by which accrued interest on the notes at the
              applicable note rate on that payment date exclusive of any Basis
              Risk Shortfalls exceeds the amount on deposit in the payment
              account available for interest distributions on that payment
              date,

         o    any Liquidation Loss Amount other than any Excess Loss Amount for
              that payment date, to the extent not currently covered by a
              Liquidation Loss Distribution Amount or a reduction in the
              Outstanding Reserve Amount and

         o    any Excess Loss Amount for that payment date.

         In addition, on the date which is the earliest of:

         o    the ninth payment date;

         o    the payment date immediately following any optional redemption of
              the notes by the master servicer as described in this prospectus
              supplement; or

         o    the payment date on which the principal balance of the term notes
              is reduced to zero;

                                      S-51
<PAGE>

a draw will be made on the policy to cover the then applicable
undercollateralization amount, if any.

                  For purposes of the foregoing, amounts in the payment account
available for interest distributions on any payment date shall be deemed to
include all amounts in the payment account for that payment date, other than the
Principal Collection Distribution Amount and the Liquidation Loss Distribution
Amount if any. Basis Risk Shortfalls on the term notes will not be covered by
the policy.

                  Under the indenture, draws under the policy relating to any
Liquidation Loss Amount will be paid to the noteholders by the paying agent as
principal, pro rata among each of the term notes and the variable funding notes
based on their security balances. In addition, a draw will be made on the policy
to cover some shortfalls in amounts allocable to the noteholders following the
sale, liquidation or other disposition of the assets of the trust in connection
with the liquidation of the trust as permitted under the indenture following an
event of default thereunder. In addition, the policy will guarantee the payment
of the outstanding security balance of the notes on the final payment date. In
the absence of payments under the policy, noteholders will directly bear the
credit risks associated with their investment to the extent the risks are not
covered by the Outstanding Reserve Amount or otherwise.

               THE POLICY IS NOT COVERED BY THE PROPERTY/CASUALTY
INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW YORK
INSURANCE LAW.

                   CERTAIN YIELD AND PREPAYMENT CONSIDERATIONS

GENERAL

         The yields to maturity and the aggregate amounts of distributions on
the term notes will be affected by the rate and timing of defaults on the
revolving credit loans and the timing of principal payments on the revolving
credit loans. There can be no assurance as to the rate of losses or
delinquencies on any of the revolving credit loans, however, the rate of such
losses and delinquencies are likely to be higher than those of traditional first
lien mortgage loans, particularly in the case of revolving credit loans with
high combined loan-to-value ratios or low junior ratios. In addition, because
borrowers of balloon loans are required to make a relatively large single
payment upon maturity, the default risk associated with balloon loans is greater
than that associated with fully-amortizing revolving credit loans. To the extent
that any losses are incurred on any of the revolving credit loans that are not
covered by the Liquidation Loss Distribution Amount, a reduction in the
Outstanding Reserve Amount or the policy, holders of the term notes will bear
all risk of losses resulting from default by borrowers. Even where the policy
covers all losses incurred on the revolving credit loans, the effect of losses
may be to increase prepayment rates on the revolving credit loans, thus reducing
the weighted average life and affecting the yield to maturity. In addition, the
rate of prepayments of the revolving credit loans and the yield to investors on
the term notes may be affected by certain refinancing programs, which may
include general or targeted solicitations, as described under "Yield and


                                      S-52
<PAGE>

Prepayment Considerations" in the prospectus.

         The servicing agreement permits the issuer, at its option, subject to
the satisfaction of certain conditions specified in the servicing agreement, to
direct the servicer to remove certain revolving credit loans from the trust fund
at any time during the life of the trust fund, so long as after giving effect to
the removal of the applicable revolving credit loans, the Outstanding Reserve
Amount equals or exceeds the Reserve Amount Target. Removals of revolving credit
loans may affect the rate at which principal is distributed to noteholders by
reducing the overall pool balance and thus the amount of Principal Collections.
See "Description of the Securities--Optional Transfers of Mortgage Loans to
Holders of Certificates" in this prospectus supplement.

         There can be no assurance as to the rate of principal payments and
draws on the revolving credit loans. The rate of principal payments and the rate
of draws may fluctuate substantially from time to time. Generally, revolving
credit loans are not viewed by borrowers as permanent financing. Due to the
unpredictable nature of both principal payments and draws, the rates of
principal payments net of draws on the revolving credit loans may be much more
volatile than for typical first lien mortgage loans. See "Yield and Prepayment
Considerations" in the prospectus.

         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 that
security, assuming no losses. The weighted average life of the term notes will
be influenced by, among other things, the rate of principal payments and draws
on the revolving credit loans.

         The model used in this prospectus supplement assumes that the
outstanding principal balance of a pool of home equity line of credit loans
prepays at a specified constant annual rate ("CPR"). In generating monthly cash
flows, this rate is converted to an equivalent constant monthly rate. To assume
35% of CPR or any other CPR percentage is to assume that the stated percentage
of the outstanding principal balance of the pool is prepaid over the course of a
year. No representation is made that the revolving credit loans will prepay at
that or any other rate. In addition, the model assumes that the amount of
additional balances on the revolving credit loans drawn each month is drawn at a
specified annual rate (the constant draw rate or "CDR"). This rate is converted
to a constant monthly rate. To assume a 15% CDR is to assume the stated
percentage of the outstanding principal balance of the pool is drawn on over the
course of the year. No representation is made that draws will be made on the
revolving credit loans at that or any other rate.


                                      S-53
<PAGE>


         The tables set forth below are based on CPR, CDR and other assumptions
as indicated below:

               o    the revolving credit loans have been aggregated into three
                    pools as follows:

<TABLE>
<CAPTION>
                                              Pool 1               Pool 2              Pool 3
                                              ------               ------              ------
<S>                                        <C>                 <C>                  <C>
Principal balance......................    $52,288,694.59      $40,676,204.69       $44,031,534.10
Loan rate..............................            9.3936%             9.2020%              8.3482%
Fully indexed loan rate................           10.9210%            11.8446%             11.0778%
Remaining months to fully indexed......                 2                   2                    2
Credit limit utilization rate..........           73.3576%            80.1861%             72.4755%
Draw months remaining..................               176                  56                  175
Remaining term to maturity.............               177                 176                  295
Aggregate servicing fee rate...........              0.58%               0.58%                0.58%
</TABLE>

               o    payments are made in accordance with the description set
                    forth under "Description of the Securities,"

               o    payments on the notes will be made on the 20th day of each
                    calendar month regardless of the day on which the payment
                    date actually occurs, commencing in October 2000,

               o    no extension past the scheduled maturity date of a revolving
                    credit loan is made,

               o    no delinquencies or defaults occur,

               o    monthly draws are calculated under each of the assumptions
                    as set forth in the tables below before giving effect to
                    prepayments,

               o    the revolving credit loans pay on the basis of a 30-day
                    month and a 360-day year,

               o    there is no restriction on the maximum variable funding note
                    balance,

               o    no Amortization Event occurs,

               o    the scheduled due date for each of the revolving credit
                    loans is the first day of each month,

               o    the closing date is September 26, 2000,


                                      S-54
<PAGE>


               o    for each payment date, the note rate is equal to 6.86% per
                    annum for the term notes,

               o    the initial aggregate security balance of the term notes is
                    $138,370,000,

               o    an optional redemption is exercised on the first payment
                    date when the aggregate principal balance of the revolving
                    credit loans is less than or equal to 10% of the cut-off
                    date (principal) balance,

               o    the CDR is 15%, and

               o    all percentages are rounded to the nearest 1%.

         The actual characteristics and performance of the revolving credit
loans will differ from the assumptions used in constructing the tables set forth
below, which are hypothetical in nature and are provided only to give a general
sense of how the principal cash flows might behave under varying prepayment and
draw scenarios. For example, it is very unlikely that the revolving credit loans
will prepay and experience draws at a constant rate until maturity or that all
of the revolving credit loans will prepay or experience draws at the same rate.
Moreover, the diverse remaining terms to stated maturity and mortgage rates of
the revolving credit loans could produce slower or faster principal
distributions than indicated in the tables at the various assumptions specified,
even if the weighted average remaining terms to stated maturity and weighted
average mortgage rates of the revolving credit loans are as assumed. Any
difference between such assumptions and the actual characteristics and
performance of the revolving credit loans, or actual prepayment experience, will
affect the percentages of initial security balance outstanding over time and the
weighted average life of the term notes.

         Subject to the foregoing discussion and structuring assumptions, the
following table indicates the weighted average life of the term notes, and sets
forth the percentages of the initial security balance of the term notes that
would be outstanding after each of the payment dates shown at various
percentages of CPR and 15% CDR.



                                      S-55
<PAGE>


              PERCENTAGE OF ORIGINAL SECURITY BALANCE OUTSTANDING
                               OF THE TERM NOTES




<TABLE>
<CAPTION>
                                                                               CPR
                                           ---------------------------------------------------------------------------
PAYMENT DATE                                   0%         20%        25%        30%        35%        40%        45%
----------------------------------------   ---------   --------   --------   --------   --------   --------   --------
<S>                                        <C>         <C>        <C>        <C>        <C>        <C>        <C>
Initial Percentage .....................       100        100        100        100        100        100        100
September 2001 .........................        97         92         86         80         74         69         63
September 2002 .........................        97         86         76         66         57         48         40
September 2003 .........................        97         81         67         54         43         34         26
September 2004 .........................        97         76         59         44         33         24         17
September 2005 .........................        97         70         51         36         25         17         11
September 2006 .........................        95         55         37         25         16         10          0
September 2007 .........................        94         43         27         17         10          0          0
September 2008 .........................        92         34         20         12          6          0          0
September 2009 .........................        89         26         15          8          0          0          0
September 2010 .........................        87         21         11          5          0          0          0
September 2011 .........................        84         16          8          0          0          0          0
September 2012 .........................        81         13          6          0          0          0          0
September 2013 .........................        77         10          4          0          0          0          0
September 2014 .........................        73          8          3          0          0          0          0
September 2015 .........................        31          3          0          0          0          0          0
September 2016 .........................        29          0          0          0          0          0          0
September 2017 .........................        27          0          0          0          0          0          0
September 2018 .........................        24          0          0          0          0          0          0
September 2019 .........................        22          0          0          0          0          0          0
September 2020 .........................        19          0          0          0          0          0          0
September 2021 .........................        15          0          0          0          0          0          0
September 2022 .........................        12          0          0          0          0          0          0
September 2023 .........................         8          0          0          0          0          0          0
September 2024 .........................         0          0          0          0          0          0          0
September 2025 .........................         0          0          0          0          0          0          0
September 2026 .........................         0          0          0          0          0          0          0
September 2027 .........................         0          0          0          0          0          0          0
September 2028 .........................         0          0          0          0          0          0          0
September 2029 .........................         0          0          0          0          0          0          0
September 2030 .........................         0          0          0          0          0          0          0
Weighted Average Life in Years .........       15.0        6.9        5.2        4.0        3.1        2.5        2.1
</TABLE>

                                      S-56
<PAGE>

                     WEIGHED AVERAGE LIFE AND FINAL STATED
                   PAYMENT DATE SENSITIVITY OF THE TERM NOTES
                            TO PREPAYMENTS AND DRAWS




<TABLE>
<CAPTION>
     CPR                0%                     20%                    25%                    30%
------------- ----------------------- ---------------------- ---------------------- ----------------------
     CDR          WAL        DATE        WAL        DATE        WAL        DATE        WAL        DATE
------------- ---------- ------------ --------- ------------ --------- ------------ --------- ------------
<S>           <C>        <C>          <C>       <C>          <C>       <C>          <C>       <C>
0% ..........     14.81  03/20/2023       3.82  07/20/2010       3.01  07/20/2008       2.46  02/20/2007
10% .........     15.02  11/20/2023       5.65  06/20/2015       4.27  01/20/2012       3.32  04/20/2009
15% .........     15.03  11/20/2023       6.85  05/20/2016       5.20  06/20/2015       3.98  05/20/2011
20% .........     15.04  11/20/2023       8.53  03/20/2019       6.30  01/20/2016       4.83  06/20/2015
25% .........     15.05  11/20/2023       8.63  02/20/2020       7.85  07/20/2018       5.87  10/20/2015



<CAPTION>
     CPR               35%                     40%                    45%
------------- ---------------------- ----------------------- ---------------------
     CDR         WAL        DATE        WAL         DATE        WAL        DATE
------------- --------- ------------ --------- ------------- --------- -----------
<S>           <C>       <C>          <C>       <C>           <C>       <C>
0% ..........     2.04  01/20/2006       1.74    04/20/2005      1.49  08/20/2004
10% .........     3.67  08/20/2007       2.18    05/20/2006      1.81  06/20/2005
15% .........     3.12  10/20/2008       2.50    02/20/2007      2.05  01/20/2006
20% .........     3.72  09/20/2010       2.93    04/20/2008      2.35  09/20/2006
25% .........     4.51  09/20/2014       3.50    01/20/2010      2.75   0920/2007
</TABLE>

     The above table assumes that an optional redemption is exercised on the
first payment date when the aggregate principal balance of the revolving credit
loans is less than or equal to 10% of the cut-off date balance.




<TABLE>
<CAPTION>
     CPR                0%                     20%                    25%                    30%
------------- ----------------------- ---------------------- ---------------------- ----------------------
     CDR          WAL        DATE        WAL        DATE        WAL        DATE        WAL        DATE
------------- ---------- ------------ --------- ------------ --------- ------------ --------- ------------
<S>           <C>        <C>          <C>       <C>          <C>       <C>          <C>       <C>
0% ..........     14.91  03/20/2025       4.08  05/20/2018       3.26  06/20/2015       2.66  09/20/2014
10% .........     15.07  04/20/2025       5.70  05/20/2022       4.39  06/20/2019       3.48  08/20/2016
15% .........     15.08  04/20/2025       6.90  09/20/2023       5.22  05/20/2021       4.07  07/20/2018
20% .........     15.09  04/20/2025       8.56  07/20/2024       6.33  12/20/2022       4.84  05/20/2020
25% .........     15.10  04/20/2025       8.65  10/20/2024       7.87  01/20/2024       5.88  01/20/2022



<CAPTION>
     CPR               35%                     40%                    45%
------------- ---------------------- ----------------------- ---------------------
     CDR         WAL        DATE        WAL         DATE        WAL        DATE
------------- --------- ------------ --------- ------------- --------- -----------
<S>           <C>       <C>          <C>       <C>           <C>       <C>
0% ..........     2.22  08/20/2012       1.88   11/20/20010      1.62  06/20/2009
10% .........     2.82  06/20/2015       2.33    03/20/2013      1.95  02/20/2011
15% .........     3.24  12/20/2015       2.63    02/20/2015      2.17  05/20/2012
20% .........     3.79  09/20/2017       3.03    06/20/2015      2.46  03/20/2014
25% .........     4.52  06/20/2019       3.55    01/20/2017      2.84  06/20/2015
</TABLE>

     The above table assumes no optional redemption is exercised.

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

In the above tables the weighted average life ("WAL") of the term notes is
determined by:

          o    multiplying the amount of each payment allocated to principal by
               the number of years from the date of issuance to the related
               payment date,

          o    adding the results, and

          o    dividing the sum by the related original security balance.

         The final stated payment date of the term notes is the date on which
the related security balance is reduced to zero.


           DESCRIPTION OF THE REVOLVING CREDIT LOAN PURCHASE AGREEMENT

         The revolving credit loans and related additional balances to be
transferred to the trust by the depositor will be purchased by the depositor
from the seller under a revolving credit loan purchase agreement. The following
summary describes some terms of the revolving credit loan purchase agreement and
is qualified in its entirety by reference to the revolving credit loan purchase
agreement.

TRANSFER OF REVOLVING CREDIT LOANS

         Under the revolving credit loan purchase agreement, the seller will
transfer and assign to the depositor all of its right, title and interest in and
to the revolving credit loans, the related credit line agreement, mortgages and
other related documents and all of the additional balances



                                      S-57

<PAGE>

thereafter created prior to the occurrence of an Amortization Event. The
purchase price of the revolving credit loans is a specified percentage of the
face amount thereof as of the time of transfer and is payable by the depositor
as provided in the revolving credit loan purchase agreement. The purchase price
of each additional balance is the amount of the related new advance and is
payable by the trust, either in cash or in the form of an increase in the
security balance of the variable funding notes or the certificates or, in
certain circumstances, the issuance of additional certificates, as provided in
the trust.

         The revolving credit loan purchase agreement will require that, within
the time period specified therein, the seller deliver to the indenture trustee
the revolving credit loans and the related documents. In lieu of delivery of
original mortgages, the seller may deliver true and correct copies thereof which
have been certified as to authenticity by the appropriate county recording
office where such mortgage is recorded. In addition, under the terms of the
revolving credit loan purchase agreement, the seller will cause the custodian to
record assignments of mortgages relating to the revolving credit loans.

REPRESENTATIONS AND WARRANTIES

         The seller will represent and warrant to the depositor that, among
other things, (a) the information with respect to the revolving credit loans set
forth in the schedule attached to the revolving credit loan purchase agreement
is true and correct in all material respects and (b) immediately prior to the
sale of the revolving credit loans to the depositor, the seller was the sole
owner and holder of the revolving credit loans free and clear of any and all
liens and security interests. The seller will also represent and warrant to the
depositor that, among other things, as of the closing date, (a) the revolving
credit loan purchase agreement constitutes a legal, valid and binding obligation
of the seller and (b) the revolving credit loan purchase agreement constitutes a
valid transfer and assignment to the depositor of all right, title and interest
of the seller in and to the revolving credit loans and the proceeds thereof. The
benefit of the representations and warranties made to the depositor by the
seller in the revolving credit loan purchase agreement will be assigned by the
depositor to the trust.

         Within 90 days of the closing date, Wells Fargo Bank Minnesota, N.A.,
the custodian, will review or cause to be reviewed the revolving credit loans
and the related documents and if any revolving credit loan or related document
is found to be defective in any material respect, which may materially and
adversely affect the value of the related revolving credit loan, or the
interests of the indenture trustee, the securityholders or the credit enhancer
in that revolving credit loan and the defect is not cured within 90 days
following notification of the defect to the seller and the trust by the
custodian, the seller will be obligated under the revolving credit loan purchase
agreement to deposit the repurchase price into the custodial account. In lieu of
any such deposit, the seller may substitute an eligible substitute loan;
provided that the substitution may be subject to the delivery of an opinion of
counsel regarding tax matters. Any such purchase or substitution will result in
the removal of the revolving credit loan required to be removed from the trust.
A removed revolving credit loan is referred to as a deleted loan. The obligation
of the seller to remove deleted loans sold by it to the trust is the sole remedy
regarding any defects in the revolving credit loans and related documents
available against the seller.


                                      S-58
<PAGE>


         As to any revolving credit loan, the repurchase price referred to in
the preceding paragraph is equal to the principal balance of such revolving
credit loan at the time of any removal described above plus accrued and unpaid
interest thereon to the date of removal. In connection with the substitution of
an eligible substitute loan, the seller will be required to deposit in the
custodial account a substitution adjustment amount equal to the excess of the
principal balance of the related deleted loan to be removed from the trust over
the principal balance of the eligible substitute loan.

         An eligible substitute loan is a revolving credit loan substituted by
the seller for a deleted loan which must, on the date of such substitution:

               o    have an outstanding principal balance, or in the case of a
                    substitution of more than one revolving credit loan for a
                    deleted loan, an aggregate principal balance not in excess
                    of the principal balance relating to the deleted loan;

               o    have a loan rate, net loan rate and gross margin no lower
                    than and not more than 1.00% in excess of the loan rate, net
                    loan rate and gross margin, respectively, of the deleted
                    loan;

               o    have a combined loan-to-value ratio at the time of
                    substitution no higher than that of the deleted loan at the
                    time of substitution;

               o    have a remaining term to maturity not more than one year
                    earlier and not later than the remaining term to maturity of
                    the deleted loan;

               o    comply with each representation and warranty as to the
                    revolving credit loans set forth in the revolving credit
                    loan purchase agreement, deemed to be made as of the date of
                    substitution; and

               o    satisfy some other conditions specified in the indenture.

         In addition the seller will be obligated to deposit the repurchase
price or substitute an eligible substitute loan for a revolving credit loan as
to which there is a breach of a representation or warranty in the revolving
credit loan purchase agreement and the breach is not cured by the seller within
the time provided in the revolving credit loan purchase agreement.

                     DESCRIPTION OF THE SERVICING AGREEMENT

         The following summary describes terms of the servicing agreement, dated
as of September 26, 2000, among the trust, the indenture trustee and the master
servicer. The summary does not purport to be complete and is subject to, and
qualified in its entirety by reference to, the provisions of the servicing
agreement. Whenever particular defined terms of the servicing agreement are
referred to, those defined terms are incorporated in this prospectus supplement
by reference. See "Servicing and Administration of Trust Assets" and "The
Agreements" in the prospectus.


                                      S-59
<PAGE>


P&I COLLECTIONS

         The master servicer shall establish and maintain a custodial account in
which the master servicer shall deposit or cause to be deposited any amounts
representing payments on and any collections received relating to the revolving
credit loans received by it subsequent to the cut-off date. The custodial
account shall be an eligible account. On the 15th day of each month or if such
day is not a business day, the next succeeding business day, which is referred
to as the determination date, the master servicer will notify the paying agent
and the indenture trustee of the aggregate amounts required to be withdrawn from
the custodial account and deposited into the payment account prior to the close
of business on the business day next succeeding each determination date.

         Permitted investments are specified in the servicing agreement and are
limited to investments which meet the criteria of the rating agencies from time
to time as being consistent with their then-current ratings of the securities.

         The master servicer will make the following withdrawals from the
custodial account and deposit those amounts as follows:

               o    to the payment account, an amount equal to the P&I
                    Collections on the business day prior to each payment date;
                    and

               o    to pay to itself or the seller various reimbursement amounts
                    and other amounts as provided in the servicing agreement.

         All collections on the revolving credit loans will generally be
allocated in accordance with the credit line agreements between amounts
collected for interest and amounts collected for principal.

                DESCRIPTION OF THE TRUST AGREEMENT AND INDENTURE

         The following summary describes terms of the trust agreement and the
indenture. The summary does not purport to be complete and is subject to, and
qualified in its entirety by reference to, the provisions of the trust agreement
and the indenture. Whenever particular defined terms of the indenture are
referred to, those defined terms are incorporated in this prospectus supplement
by reference. See "The Agreements" in the prospectus.

THE TRUST FUND

         Simultaneously with the issuance of the notes, the issuer will pledge
the trust fund to the indenture trustee as collateral for the notes. As pledgee
of the revolving credit loans, the indenture trustee will be entitled to direct
the issuer in the exercise of all rights and remedies of the depositor against
the seller under the revolving credit loan purchase agreement and against the
master servicer under the servicing agreement.


                                      S-60
<PAGE>


REPORTS TO HOLDERS

         The indenture trustee will mail to each holder of term notes, at its
address listed on the security register maintained with the indenture trustee, a
report setting forth amounts relating to the notes for each payment date, among
other things:

               1.   the amount of principal, if any, payable on that payment
                    date to securityholders;

               2.   the amount of interest payable on that payment date to
                    securityholders, separately stating the portion thereof in
                    respect of overdue accrued interest;

               3.   the security balances of the notes after giving effect to
                    the payment of principal on that payment date;

               4.   P&I Collections for the related Collection Period;

               5.   the aggregate principal balance of the revolving credit
                    loans as of the end of the preceding Collection Period;

               6.   the Outstanding Reserve Amount as of the end of the related
                    Collection Period; and

               7.   the amount paid, if any, under the policy for that payment
                    date.

         In the case of information furnished under clauses (1.) and (2.) above,
the amounts shall be expressed as a dollar amount per $1,000 in face amount of
notes.

CERTAIN COVENANTS

         The indenture will provide that the issuer may not consolidate with or
merge into any other entity, unless:

               o    the entity formed by or surviving the consolidation or
                    merger is organized under the laws of the United States, any
                    state or the District of Columbia;

               o    the entity expressly assumes, by an indenture supplemental
                    to the indenture, the issuer's obligation to make due and
                    punctual payments upon the notes and the performance or
                    observance of any agreement and covenant of the issuer under
                    the indenture;

               o    no event of default shall have occurred and be continuing
                    immediately after the merger or consolidation;

                                      S-61
<PAGE>

               o    the issuer has received consent of the credit enhancer and
                    has been advised that the ratings of the securities, without
                    regard to the policy, then in effect would not be reduced or
                    withdrawn by any rating agency as a result of the merger or
                    consolidation;

               o    any action that is necessary to maintain the lien and
                    security interest created by the indenture is taken;

               o    the issuer has received an opinion of counsel to the effect
                    that the consolidation or merger would have no material
                    adverse tax consequence to the issuer or to any noteholder
                    or certificateholder; and

               o    the issuer has delivered to the indenture trustee an
                    officer's certificate and an opinion of counsel each stating
                    that the consolidation or merger and such supplemental
                    indenture comply with the indenture and that all conditions
                    precedent, as provided in the indenture, relating to such
                    transaction have been complied with.

         The issuer will not, among other things:

               o    except as expressly permitted by the indenture, sell,
                    transfer, exchange or otherwise dispose of any of the assets
                    of the issuer;

               o    claim any credit on or make any deduction from the principal
                    and interest payable on the notes other than amounts
                    withheld under the Internal Revenue Code or applicable state
                    law or assert any claim against any present or former holder
                    of notes because of the payment of taxes levied or assessed
                    upon the issuer;

               o    permit the validity or effectiveness of the indenture to be
                    impaired or permit any person to be released from any
                    covenants or obligations relating to the notes under the
                    indenture except as may be expressly permitted by the
                    indenture; or

               o    permit any lien, charge, excise, claim, security interest,
                    mortgage or other encumbrance to be created on or extend to
                    or otherwise arise upon or burden the assets of the issuer
                    or any part of its assets, or any interest in the issuer or
                    the proceeds thereof.

               The issuer may not engage in any activity other than as specified
          under "The Issuer" in this prospectus supplement.

MODIFICATION OF INDENTURE

         With the consent of the holders of a majority of each of the
outstanding term notes and variable funding notes and the credit enhancer, the
issuer and the indenture trustee may execute a supplemental indenture to add
provisions to, change in any manner or eliminate any provisions of, the
indenture, or modify, except as provided below, in any manner the rights of the
noteholders. Without the consent of the holder of each outstanding note affected
thereby and the




                                      S-62
<PAGE>

credit enhancer, no supplemental indenture will:

               o    change the due date of any installment of principal of or
                    interest on any note or reduce its principal amount or its
                    interest rate or change any place of payment where or the
                    coin or currency in which any note or any of its interest is
                    payable;

               o    impair the right to institute suit for the enforcement of
                    provisions of the indenture regarding payment;

               o    reduce the percentage of the aggregate principal amount of
                    the outstanding notes, the consent of the holders of which
                    is required for any supplemental indenture or the consent of
                    the holders of which is required for any waiver of
                    compliance with some provisions of the indenture or of some
                    defaults thereunder and their consequences as provided for
                    in the indenture;

               o    modify or alter the provisions of the indenture regarding
                    the voting of notes held by the issuer, the depositor or an
                    affiliate of any of them;

               o    decrease the percentage of the aggregate principal amount of
                    notes required to amend the sections of the indenture which
                    specify the applicable percentage of aggregate principal
                    amount of the notes necessary to amend the indenture or some
                    other related agreements;

               o    modify any of the provisions of the indenture in such manner
                    as to affect the calculation of the amount of any payment of
                    interest or principal due on any note including the
                    calculation of any of the individual components of such
                    calculation; or

               o    permit the creation of any lien ranking prior to or on a
                    parity with the lien of the indenture with respect to any of
                    the collateral for the notes or, except as otherwise
                    permitted or contemplated in the indenture, terminate the
                    lien of the indenture on any collateral or deprive the
                    holder of any note of the security afforded by the lien of
                    the indenture.

         The issuer and the indenture trustee may also enter into supplemental
indentures, with the consent of the credit enhancer and without obtaining the
consent of the noteholders, for the purpose of, among other things, curing any
ambiguity or correcting or supplementing any provision in the indenture that may
be inconsistent with any other provision therein.

CERTAIN MATTERS REGARDING THE INDENTURE TRUSTEE AND THE ISSUER

         Neither the indenture trustee nor any director, officer or employee of
the indenture trustee will be under any liability to the issuer or the related
noteholders for any action taken or for refraining from the taking of any action
in good faith pursuant to the indenture or for errors in judgment. None of the
indenture trustee and any director, officer or employee thereof will be
protected against any liability which would otherwise be imposed by reason of
willful


                                      S-63
<PAGE>

malfeasance, bad faith or negligence in the performance of duties or by reason
of reckless disregard of obligations and duties under the indenture. Subject to
the limitations set forth in the indenture, the indenture trustee and any
director, officer, employee or agent of the indenture trustee shall be
indemnified by the issuer and held harmless against any loss, liability or
expense incurred in connection with investigating, preparing to defend or
defending any legal action, commenced or threatened, relating to the indenture
other than any loss, liability or expense incurred by reason of willful
malfeasance, bad faith or negligence in the performance of its duties under the
indenture or by reason of reckless disregard of its obligations and duties under
the indenture. All persons into which the indenture trustee may be merged or
with which it may be consolidated or any person resulting from the merger or
consolidation shall be the successor of the indenture trustee under the
indenture.

                    MATERIAL FEDERAL INCOME TAX CONSEQUENCES

         In the opinion of Orrick, Herrington & Sutcliffe LLP, counsel to the
depositor, for federal income tax purposes, the term notes will be characterized
as indebtedness and the issuer, as created pursuant to the terms and conditions
of the trust agreement, will not be characterized as an association or publicly
traded partnership within the meaning of Section 7704 of the Internal Revenue
Code taxable as a corporation or as a taxable mortgage pool within the meaning
of Section 7701(i) of the Internal Revenue Code.

         While because of the treatment of basis risk shortfall, the federal
income tax characterization of interest on the term notes as "qualified stated
interest" is not entirely clear, the Issuer intends to treat the stated interest
on the term notes as "qualified stated interest", and therefore intends to treat
the term notes as not having been issued with "original issue discount" as
described in the prospectus. See "Material Federal Income Tax Consequences" in
the prospectus.

         The term notes will not be treated as assets described in Section
7701(a)(19)(C) of the Internal Revenue Code or "real estate assets" under
Section 856(c)(4)(A) of the Internal Revenue Code. In addition, interest on the
term notes will not be treated as "interest on obligations secured by mortgages
on real property" under Section 856(c)(3)(B) of the Internal Revenue Code. The
term notes also will not be treated as "qualified mortgages" under Section
860G(a)(3)(C) of the Internal Revenue Code.

         Prospective investors in the notes should see "Material Federal Income
Tax Consequences" and "State and Other Tax Consequences" in the prospectus for a
discussion of the application of federal income and state and local tax laws to
the issuer and purchasers of the term notes.

                              ERISA CONSIDERATIONS

         Any fiduciary or other investor of plan assets that proposes to acquire
or hold the term notes on behalf of or with ERISA plan assets of any ERISA plan
should consult with its counsel



                                      S-64
<PAGE>

with respect to the potential applicability of the fiduciary responsibility
provisions of ERISA and the prohibited transaction provisions of ERISA and the
Internal Revenue Code to the proposed investment. See "ERISA Considerations" in
the prospectus.

         Each purchaser of a term note, by its acceptance of its term note,
shall be deemed to have represented either that a class or individual exemption
under Section 406 of ERISA or Section 4975 of the Internal Revenue Code is
applicable to the acquisition of the term note by that purchaser or the
acquisition of the term note by that purchaser does not constitute or give rise
to a prohibited transaction under Section 406 of ERISA or Section 4975 of the
Internal Revenue Code, for which no statutory, regulatory or administrative
exemption is available. See "ERISA Considerations" in the prospectus.

         The term notes may not be purchased with the assets of a plan if the
depositor, the master servicer, the indenture trustee, the owner trustee or any
of their affiliates:

         (a)  has investment or administrative discretion with respect to the
              ERISA plan assets;

         (b)  has authority or responsibility to give, or regularly gives,
              investment advice with respect to the ERISA plan assets, for a
              fee and pursuant to an agreement or understanding that such
              advice will serve as a primary basis for investment decisions
              with respect to the ERISA plan assets and will be based on the
              particular investment needs for the ERISA plan; or

         (c)  is an employer maintaining or contributing to the ERISA plan.

                                LEGAL INVESTMENT

         The term notes will not constitute "mortgage related securities" for
purposes of SMMEA. Accordingly, many institutions with legal authority to invest
in mortgage related securities may not be legally authorized to invest in the
term notes. No representation is made herein as to whether the term notes
constitute legal investments for any entity under any applicable statute, law,
rule, regulation or order. Prospective purchasers are urged to consult with
their counsel concerning the status of the term notes as legal investments for
the purchasers prior to investing in term notes.

                             METHOD OF DISTRIBUTION

         Subject to the terms and conditions of an underwriting agreement, dated
September 19, 2000, the underwriter has agreed to offer the term notes on a best
efforts basis and the depositor has agreed to sell to the underwriter the term
notes when and if sold by the underwriter. The termination date of the offering
of the term notes is the earlier to occur of September 19, 2001, or the date on
which all of the term notes have been sold. Proceeds of the offering of the term
notes will not be placed in any escrow, trust or similar arrangement. It is
expected that delivery of the term notes will be made only in book-entry form
through the same day funds settlement system of DTC, Clearstream and Euroclear
on or about September 26, 2000, against payment therefor in immediately
available funds.

                                      S-65
<PAGE>

         The underwriter is offering the term notes on a best efforts basis and
will only be obligated to pay for and accept delivery of any of the term notes
at the time, if any, as it sells the term notes. The underwriter is an indirect
wholly-owned subsidiary of the parent of the depositor.

         In addition, the underwriting agreement provides that the obligation of
the underwriter to pay for and accept delivery of the term notes is subject to,
among other things, the receipt of legal opinions and to the conditions, among
others, that no stop order suspending the effectiveness of the depositor'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 term notes will be offered by the underwriter, on a best efforts
basis, from time to time to the public, directly or through dealers, in one or
more negotiated transactions, or otherwise, at varying prices to be determined
at the time of sale. The proceeds to the depositor from any sale of the term
notes will be equal to the purchase price paid by the purchaser thereof, net of
any expenses payable by the depositor and any compensation payable to the
underwriter and any such dealer. The underwriter may effect transactions by
selling its term notes to or through dealers, and dealers may receive
compensation in the form of underwriting discounts, concessions or commissions
from the underwriter. In connection with the sale of the term notes, the
underwriter may be deemed to have received compensation from the depositor in
the form of underwriting compensation. The underwriter and any dealers that
participate with the underwriter in the distribution of the term notes may be
deemed to be underwriters and any profit on the resale of the term notes
positioned by them may be deemed to be underwriting discounts and commissions
under the Securities Act of 1933.

         The underwriting agreement provides that the depositor will indemnify
the underwriter, and that under limited circumstances the underwriter will
indemnify the depositor, against some civil liabilities under the Securities Act
of 1933, or contribute to payments the underwriter may be required to make for
these liabilities.

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

         If and to the extent required by applicable law or regulation, this
prospectus supplement and the prospectus will also be used by Residential
Funding Securities Corporation, an affiliate of the depositor, after the
completion of the offering, in connection with offers and sales related to
market-making transactions in the notes in which Residential Funding Securities
Corporation



                                      S-66
<PAGE>

may act as principal. Sales will be made at negotiated prices determined at the
time of sale.

                                     EXPERTS

         The consolidated financial statements of Ambac Assurance Corporation
and subsidiaries, as of December 31, 1999 and 1998 and for each of the years in
the three-year period ended December 31, 1999 are incorporated by reference in
this prospectus supplement and in the registration statement in reliance upon
the report of KPMG LLP, independent certified public accountants, incorporated
by reference in this prospectus supplement, and upon the authority of said firm
as experts in accounting and auditing.

                                  LEGAL MATTERS

         Legal matters concerning the term notes will be passed upon for the
depositor and the underwriter by Orrick, Herrington & Sutcliffe LLP, New York,
New York.

                                     RATINGS

         It is a condition to issuance that the term notes be rated "AAA" by
Fitch, Inc. and "AAA" by Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc.. The depositor has not requested a rating on the
term notes by any other rating agency. However, there can be no assurance as to
whether any other rating agency will rate the term notes, or, if it does, what
rating would be assigned by any such other rating agency. A rating on the term
notes by another rating agency, if assigned at all, may be lower than the
ratings assigned to the term notes by Fitch, Inc. and Standard & Poor's. A
securities rating addresses the likelihood of the receipt by holders of term
notes of distributions on the revolving credit loans. The rating takes into
consideration the structural and legal aspects associated with the term notes.
The ratings on the term notes do not, however, constitute statements regarding
the possibility that holders might realize a lower than anticipated yield. In
addition, such ratings do not address the likelihood of the receipt of any
amounts in respect of Basis Risk Shortfalls. A securities rating is not a
recommendation to buy, sell or hold securities and may be subject to revision or
withdrawal at any time by the assigning rating organization. Each securities
rating should be evaluated independently of similar ratings on different
securities.

                                      S-67
<PAGE>

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<PAGE>

                                     ANNEX I

GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES

         Except in certain limited circumstances, the globally offered
Residential Funding Mortgage Securities II, Inc., Home Equity Loan-Backed Term
Notes, Series 2000-HS1, which are referred to as the global securities, will be
available only in book-entry form. Investors in the global securities may hold
global securities through any of DTC, Clearstream or Euroclear. The global
securities will be tradeable as home market instruments in both the European and
U.S. domestic markets. Initial settlement and all secondary trades will settle
in same-day funds.

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

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

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

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

INITIAL SETTLEMENT

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

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

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

                                      I-1
<PAGE>


SECONDARY MARKET TRADING

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

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

         Trading between Clearstream and/or Euroclear participants. Secondary
market trading between Clearstream participants or Euroclear participants will
be settled using the procedures applicable to conventional eurobonds in same-day
funds.

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

         Clearstream participants and Euroclear participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to preposition
funds for settlement, either from cash on hand or existing lines of credit, as
they would for any settlement occurring within Clearstream or Euroclear. Under
this approach, they may take on credit exposure to Clearstream or Euroclear
until the global securities are credited to their account one day later. As an
alternative, if Clearstream or Euroclear has extended a line of credit to them,
Clearstream participants or Euroclear participants can elect not to preposition
funds and allow that credit line to be drawn upon to finance settlement. Under
this procedure, Clearstream participants or Euroclear participants purchasing
global securities would incur overdraft charges for one day, assuming they
cleared the overdraft when the global securities were credited to their
accounts. However, interest on the global securities would accrue from the value
date. Therefore, in many cases the investment income on the global securities
earned during that one-day period may substantially


                                      I-2
<PAGE>

reduce or offset the amount of such overdraft charges, although the result will
depend on each Clearstream participant's or Euroclear participant's particular
cost of funds. Since the settlement is taking place during New York business
hours, DTC participants can employ their usual procedures for crediting global
securities to the respective European Depositary for the benefit of Clearstream
participants or Euroclear participants. The sale proceeds will be available to
the DTC seller on the settlement date. Thus, to the DTC participants a
cross-market transaction will settle no differently than a trade between two DTC
participants.

         Trading between Clearstream or Euroclear seller and DTC Purchaser. Due
to time zone differences in their favor, Clearstream participants and Euroclear
participants may employ their customary procedures for transactions in which
global securities are to be transferred by the respective clearing system,
through the respective depositary, to a DTC participant. The seller will send
instructions to Clearstream or Euroclear through a Clearstream participant or
Euroclear participant at least one business day prior to settlement. In these
cases Clearstream or Euroclear will instruct the respective depositary, as
appropriate, to credit the global securities to the DTC participant's account
against payment. Payment will include interest accrued on the global securities
from and including the last coupon payment to and excluding the settlement date
on the basis of the actual number of days in such accrual period and a year
assumed to consist to 360 days. For transactions settling on the 31st of the
month, payment will include interest accrued to and excluding the first day of
the following month. The payment will then be reflected in the account of
Clearstream participant or Euroclear participant the following day, and receipt
of the cash proceeds in the Clearstream participant's or Euroclear participant's
account would be back-valued to the value date, which would be the preceding
day, when settlement occurred in New York. Should the Clearstream participant or
Euroclear participant have a line of credit with its respective clearing system
and elect to be in debt in anticipation of receipt of the sale proceeds in its
account, the back-valuation will extinguish any overdraft incurred over that
one-day period. If settlement is not completed on the intended value date, that
is, the trade fails, receipt of the cash proceeds in the Clearstream
participant's or Euroclear participant's account would instead be valued as of
the actual settlement date.

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

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

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

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


                                      I-3
<PAGE>

CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS

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

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

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

               o    Exemption for Non-U.S. Persons--Form W-8 or Form W-8BEN.
                    Beneficial holders of global securities that are Non-U.S.
                    persons can obtain a complete exemption from the withholding
                    tax by filing a signed Form W-8, or Certificate of Foreign
                    Status, or Form W-8BEN, or Certificate of Foreign Status of
                    Beneficial Owner for United States Tax Withholding. If the
                    information shown on Form W-8 or Form W-8BEN changes, a new
                    Form W-8 or Form W-8BEN must be filed within 30 days of the
                    change. After December 31, 2000, only Form W-8BEN will be
                    acceptable.

               o    Exemption for Non-U.S. persons with effectively connected
                    income--Form 4224 or Form W-8ECI. A Non-U.S. person,
                    including a non-U.S. corporation or bank with a U.S. branch,
                    for which the interest income is effectively connected with
                    its conduct of a trade or business in the United States, can
                    obtain an exemption from the withholding tax by filing Form
                    4224, or Exemption from Withholding of Tax on Income
                    Effectively Connected with the Conduct of a Trade or
                    Business in the United States, or Form W-8ECI, or
                    Certificate of Foreign Person's Claim for Exemption from
                    Withholding on Income Effectively Connected with the Conduct
                    of a Trade or Business in the United States.

               o    Exemption or reduced rate for Non-U.S. persons resident in
                    treaty countries--Form 1001 or Form W-8BEN. Non-U.S. persons
                    residing in a country that has a tax treaty with the United
                    States can obtain an exemption or reduced tax rate,
                    depending on the treaty terms, by filing Form 1001, or
                    Holdership, Exemption or Reduced Rate Certificate, or Form
                    W-8BEN. Form 1001 or Form W-8BEN may be filed by Bond
                    Holders or their agent. After December 31, 2000, only Form
                    W-8BEN will be acceptable.


                                   I-4
<PAGE>


               o    Exemption for U.S. Persons--Form W-9. U.S. persons can
                    obtain a complete exemption from the withholding tax by
                    filing Form W-9, or Payer's Request for Taxpayer
                    Identification Number and Certification.

         U.S. Federal Income Tax Reporting Procedure. The holder of a global
security or, in the case of a Form 1001 or a Form 4224 filer, his agent, files
by submitting the appropriate form to the person through whom it holds the
security--the clearing agency, in the case of persons holding directly on the
books of the clearing agency. Form W-8, Form 1001 and Form 4224 are effective
until December 31, 2000. Form W-8BEN and Form W-8ECI are effective until the
third succeeding calendar year from the date the form is signed. The term "U.S.
person" means:

          o    a citizen or resident of the United States;

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

          o    an estate that is subject to U.S. federal income tax regardless
               of the source of its income; or

          o    a trust if a court within the United States is able to exercise
               primary supervision of the administration of the trust and one or
               more United States persons have the authority to control all
               substantial decisions of the trust.

Certain trusts not described in the final bullet of the preceding sentence in
existence on August 20, 1996 that elect to be treated as a United States Person
will also be a U.S. person. The term "Non-U.S. person" means any person who is
not a U.S. person. This summary does not deal with all aspects of U.S. Federal
income tax withholding that may be relevant to foreign holders of the global
securities. Investors are advised to consult their own tax advisors for specific
tax advice concerning their holding and disposing of the global securities.

                                       I-5
<PAGE>













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<PAGE>





<PAGE>
PROSPECTUS

HOME EQUITY LOAN PASS-THROUGH CERTIFICATES AND ASSET-BACKED NOTES

RESIDENTIAL FUNDING MORTGAGE SECURITIES II, INC.
Depositor

<TABLE>
<CAPTION>
The depositor may periodically form separate trusts to issue certificates or notes in
series, backed by the assets of that trust.
<S>                     <C>
OFFERED SECURITIES      The securities of any series will consist of certificates or
                        notes representing interests in a trust and will be paid only
                        from the assets of that trust. Each series may include multiple
                        classes of securities with differing payment terms and
                        priorities. Credit enhancement will be provided for all offered
                        securities.

TRUST ASSETS            Each trust will consist primarily of:

                        o    home equity revolving lines of credit secured by first or
                             junior liens on one-to four-family residential properties
                             acquired under the home equity program;

                        o    closed end home equity loans secured by first or junior
                             liens on one-to four-family residential properties
                             acquired under the home equity program or under the 125
                             loan program;

                        o    home improvement installment sales contracts and loan
                             agreements, either unsecured or secured;

                        o    manufactured housing installment sales contracts and loan
                             agreements;

                        o    partial balances of these assets; and

                        o    securities and whole or partial interests in these assets.
</TABLE>

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

                          June 21, 2000


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

   We provide information to you about the securities in two separate
documents that provide progressively more detail:

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

   o  the accompanying prospectus supplement, which describes the specific
      terms of your series of securities.

IF THE DESCRIPTION OF YOUR SECURITIES IN THE ACCOMPANYING PROSPECTUS
SUPPLEMENT DIFFERS FROM THE RELATED DESCRIPTION IN THIS PROSPECTUS, YOU
SHOULD RELY ON THE INFORMATION IN THAT PROSPECTUS SUPPLEMENT.

You should rely only on the information provided in this prospectus and the
accompanying prospectus supplement, including the information incorporated by
reference. See "Additional Information," "Reports to Securityholders" and
"Incorporation of Certain Information by Reference" in this Prospectus. You
can request information incorporated by reference from Residential Funding
Mortgage Securities II, Inc. by calling us at (612) 832-7000 or writing to us
at 8400 Normandale Lake Boulevard, Suite 600, Minneapolis, Minnesota 55437.
We have not authorized anyone to provide you with different information. We
are not offering the securities in any state where the offer is not
permitted.

Some capitalized terms used in this prospectus are defined in the Glossary
beginning on page 126.

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


                                        2
<PAGE>
                              TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                          PAGE
                                         ------
<S>                                      <C>
Introduction............................     4
The Trusts .............................     4
  General ..............................     4
  Characteristics of the Loans..........     7
  Revolving Credit Loans................     9
  The Contracts.........................    12
  The Mortgaged Properties .............    13
  The Agency Securities ................    14
  Private Securities ...................    15
Trust Asset Program ....................    15
  Underwriting Standards................    16
  Guide Standards.......................    17
  Qualifications of Sellers.............    20
Description of the Securities...........    22
  Form of Securities ...................    23
  Assignment of the Trust Assets .......    25
  Review of Trust Assets................    26
  Representations Relating to Loans ....    27
  Repurchases of Loans..................    28
  Limited Right of Substitution.........    29
  Certain Insolvency and Bankruptcy
   Issues ..............................    30
  Assignment of Agency or Private
   Securities ..........................    31
  Excess Spread and Excluded Spread ....    31
  Subservicing..........................    31
  Payments on Trust Assets..............    32
  Withdrawals from the Custodial
   Account .............................    34
  Distributions of Principal and
   Interest on the Securities...........    35
  Funding Account.......................    36
  Reports to Securityholders............    36
  Servicing and Administration of Trust
   Assets...............................    37
Description of Credit Enhancement ......    46
  General...............................    46
  Financial Guaranty Insurance
   Policies; Surety Bonds...............    47
  Letters of Credit.....................    48
  Subordination ........................    48
  Overcollateralization ................    49
  Reserve Funds.........................    50
  Mortgage Pool Insurance Policies .....    50
  Special Hazard Insurance Policies ....    52
  Bankruptcy Bonds .....................    53
  Maintenance of Credit Enhancement ....    53
  Reduction or Substitution of Credit
   Enhancement..........................    54
Other Financial Obligations Related To
 The Securities.........................    54
  Swaps and Yield Supplement Agreements     54
  Purchase Obligations..................    55
Insurance Policies on Loans.............    55

<PAGE>

  Hazard Insurance and Related Claims ..    55
  Description of FHA Insurance Under
   Title I..............................    56
The Depositor...........................    58
Residential Funding Corporation.........    59
The Agreements..........................    59
  Events of Default; Rights Upon Event
   of Default...........................    59
  Amendment.............................    62
  Termination; Redemption of Securities     63
  The Trustee...........................    64
  The Owner Trustee ....................    65
  The Indenture Trustee.................    65
Yield and Prepayment Considerations  ...    66
Certain Legal Aspects of the Trust
 Assets and Related Matters.............    73
  Trust Assets Secured by Mortgages on
   Mortgaged Property...................    73
  Manufactured Housing Contracts  ......    82
  The Home Improvement Contracts .......    87
  Enforceability of Certain Provisions .    89
  Applicability of Usury Laws...........    91
  Environmental Legislation ............    91
  Alternative Mortgage Instruments .....    92
  Leasehold Considerations..............    92
  Soldiers' and Sailors' Civil Relief
   Act of 1940..........................    93
  Forfeitures in Drug and RICO
   Proceedings..........................    93
  Junior Mortgages; Rights of Senior
   Mortgagees...........................    93
Material Federal Income Tax
 Consequences ..........................    95
  General...............................    95
  REMICs and FASITs.....................    96
  Notes ................................   114
State and Other Tax Consequences .......   115
ERISA Considerations ...................   115
  Plan Asset Regulations................   115
  Considerations for ERISA Plans
   Regarding the Purchase of
   Certificates.........................   117
  Considerations for ERISA Plans
   Regarding the Purchase of Notes .....   121
  Tax Exempt Investors .................   122
  Consultation with Counsel ............   122
Legal Investment Matters................   123
Use of Proceeds ........................   123
Methods of Distribution ................   123
Legal Matters...........................   124
Financial Information...................   124
Additional Information..................   125
Reports to Securityholders..............   125
Incorporation of Certain Information by
 Reference..............................   125
Glossary................................   126
</TABLE>

                                        3
<PAGE>
                                 INTRODUCTION

   The securities offered may be sold from time to time in series. The
securities will consist of certificates or notes. Each series of certificates
will represent in the aggregate the entire beneficial ownership interest in,
and each series of notes in the aggregate will represent indebtedness of, a
trust consisting primarily of the trust assets described in the following
section. The trust assets will have been acquired by the depositor from one
or more affiliated or unaffiliated institutions. Each series of certificates
will be issued under a pooling and servicing agreement among the depositor,
the trustee and the master servicer, or a trust agreement between the
depositor and the trustee, all as specified in the accompanying prospectus
supplement. Each series of notes will be issued under an indenture between
the related trust and the indenture trustee specified in the accompanying
prospectus supplement. Unless the context indicates otherwise, references in
this prospectus to the trustee refer to the indenture trustee in the case of
a series of notes. The trust assets for each series of notes will be held in
a trust under a trust agreement and pledged under the indenture to secure a
series of notes as described in this prospectus and in the accompanying
prospectus supplement. The ownership of the trust fund for each series of
notes will be evidenced by certificates issued under the trust agreement,
which certificates are not offered by this prospectus.

                                  THE TRUSTS

GENERAL

   As specified in the accompanying prospectus supplement, the trust for a
series of securities will consist primarily of a segregated pool of assets.
The trust assets will primarily include one of, or any combination of, the
following:

   o  revolving credit loans, which are first or junior lien home equity
      revolving lines of credit acquired under the home equity program;

   o  home equity loans, which are first or junior lien closed end home
      equity loans acquired under the home equity program;

   o  home loans, which are first or junior lien closed end home loans
      acquired under the 125 loan program;

   o  home improvement contracts, which are home improvement installment
      sales contracts and installment loan agreements, that are either
      unsecured or secured by first or junior liens on one-to four-family
      residential properties or by purchase money security interests in the
      home improvements financed by those home improvement contracts;

   o  manufactured housing contracts, which are manufactured housing
      installment sales contracts and installment loan agreements, secured by
      security interests in manufactured homes;

   o  partial balances of any of the assets described above;

   o  Agency Securities and private securities, which as used in this
      prospectus, are mortgage-backed or asset-backed securities issued by
      entities other than Freddie Mac, Fannie Mae or Ginnie Mae that
      represent interests in any of the assets described above, including
      pass-through certificates or other instruments evidencing interests in
      or that are secured by these assets, or all or a portion of balances of
      any of these assets;

   o  all payments and collections derived from the trust assets described
      above after the related cut-off date, other than Excluded Spread or
      other interest retained by the depositor or any of its affiliates with
      respect to any trust asset, as from time to time are identified as
      deposited in the Custodial Account and in the related Payment Account;

   o  property acquired by foreclosure on the mortgaged properties or other
      security for the trust assets or deed in lieu of foreclosure; and/or

   o  any one or a combination, if applicable and to the extent specified in
      the accompanying prospectus supplement, of a letter of credit, purchase
      obligation, mortgage pool insurance policy, contract pool

                                        4
<PAGE>
      insurance policy, special hazard insurance policy, bankruptcy bond,
      financial guaranty insurance policy, derivative products, surety bond
      or other type of credit enhancement as described under "Description of
      Credit Enhancement" in this prospectus.

   Unless the context indicates otherwise, as used in this prospectus
supplement:

   o  contracts refer to manufactured housing contracts and home improvement
      contracts;

   o  closed end loans refer to home equity loans or home loans; and

   o  loans refer to revolving credit loans, closed-end loans and contracts.

In connection with a series of securities backed by revolving credit loans,
if the accompanying prospectus supplement indicates that the pool consists of
specified balances of the revolving credit loans, then the term revolving
credit loans in this prospectus refers only to those balances. To the extent
specified in the accompanying prospectus supplement, the contracts may be
partially insured by the Federal Housing Administration, or the FHA, under
Title I of the National Housing Act, or Title I. The home equity program and
the 125 loan program are described in this prospectus under "Trust Asset
Program--Underwriting Standards."

   The loans and, if applicable, contracts will be evidenced by mortgage
notes secured by mortgages or deeds of trust or other similar security
instruments creating first or junior liens on one-to four-family residential
properties. In addition, if specified in the accompanying prospectus
supplement relating to a series of securities, a pool may contain Cooperative
Loans evidenced by Cooperative Notes that are secured by security interests
in shares issued by Cooperatives and in the related proprietary leases or
occupancy agreements granting exclusive rights to occupy specific dwelling
units in the related buildings. As used in this prospectus, unless otherwise
specified:

   o  revolving credit loans, home loans, home equity loans and, if
      applicable, contracts may include Cooperative Loans;

   o  mortgaged properties may include shares in the related Cooperative and
      the related proprietary leases or occupancy agreements securing
      Cooperative Notes;

   o  mortgage notes may include Cooperative Notes; and

   o  mortgages may include a security agreement relating to a Cooperative
      Note.

   If specified in the accompanying prospectus supplement, the trust securing
a series of securities may include Agency Securities or private securities.
For any series of securities backed by Agency Securities or private
securities, the entity that administers the private securities or Agency
Securities may be referred to as the manager, if stated in the accompanying
prospectus supplement. The private securities may have been issued previously
by the depositor or an affiliate, a financial institution or other entity
engaged in the business of mortgage lending or a limited purpose corporation
organized for the purpose of, among other things, acquiring and depositing
loans into trusts, and selling beneficial interests in trusts. In this case,
the accompanying prospectus supplement will include a description of any
private securities and any related credit enhancement, and the assets
underlying the private securities will be described together with any other
trust assets included in the pool relating to the series.

   In addition, as to any series of securities secured by private securities,
the private securities may consist of an ownership interest in a structuring
entity formed by the depositor for the limited purpose of holding the trust
assets relating to the series of securities. This special purpose entity may
be organized in the form of a trust, limited partnership or limited liability
company, and will be structured in a manner that will insulate the holders of
securities from liabilities of the special purpose entity. The provisions
governing the special purpose entity will restrict the special purpose entity
from engaging in or conducting any business other than the holding of trust
assets and any related assets and the issuance of ownership interests in the
trust assets and some incidental activities. Any ownership interest will
evidence an ownership interest in the related trust assets as well as the
right to receive specified cash flows derived from the trust assets, as
described in the accompanying prospectus supplement. The obligations of the
depositor as to any ownership interest will be limited to some
representations and warranties relating to

                                        5
<PAGE>
the trust assets, as described in this prospectus. Credit support of any of
the types described in this prospectus under "Description of Credit
Enhancement" may be provided for the benefit of any ownership interest, if so
specified in the accompanying prospectus supplement.

   Each trust asset will be selected by the depositor for inclusion in a pool
from among those purchased by the depositor from any of the following
sources:

   o  directly or through its affiliates, including Residential Funding
      Corporation;

   o  sellers who are affiliates of the depositor, including HomeComings
      Financial Network, Inc., Residential Money Centers, Inc. and GMAC
      Mortgage Corporation; or

   o  savings banks, savings and loan associations, commercial banks, credit
      unions, insurance companies or similar institutions that are supervised
      and/or examined by a federal or state authority, lenders approved by
      the United States Department of Housing and Urban Development, known as
      HUD, mortgage bankers, investment banking firms, the Federal Deposit
      Insurance Corporation, known as the FDIC, state or local government
      housing finance agencies and other regulated and unregulated loan
      originators or sellers, including brokers, not affiliated with the
      depositor.

   If described in the accompanying prospectus supplement, the depositor may
issue one or more classes of securities to a seller as consideration for the
purchase of trust assets securing that series of securities. If a pool is
composed of trust assets acquired by the depositor directly from sellers
other than Residential Funding Corporation, the accompanying prospectus
supplement will specify the extent of trust assets so acquired.

   The trust assets may be delivered either directly or indirectly to the
depositor under a Designated Seller Transaction. These securities may be sold
in whole or in part to any designated seller identified in the accompanying
prospectus supplement in exchange for the related trust assets, or may be
offered under any of the other methods described in this prospectus under
"Methods of Distribution." The accompanying prospectus supplement for a
Designated Seller Transaction will include information provided by the
related designated seller about the designated seller, the trust assets and
the underwriting standards applicable to these trust assets. None of the
depositor, Residential Funding Corporation, GMAC Mortgage Group, Inc. or any
of their affiliates will make any representation or warranty as to these
trust assets, or any representation as to the accuracy or completeness of the
information provided by the designated seller.

   Any seller, including any designated seller, or Residential Funding
Corporation may retain or acquire any Excluded Balances with respect to any
related revolving credit loans, or any loan secured by a mortgage senior or
subordinate to any loan included in any pool of trust assets backing a series
of securities.

   The depositor will cause the trust assets constituting each pool to be
assigned without recourse to the trustee named in the accompanying prospectus
supplement, for the benefit of the holders of all of the securities of a
series. See "Description of the Securities--Assignment of the Trust Assets"
in this prospectus. For a series of notes, the trust assets will be assigned
to the owner trustee by the depositor, and then pledged to the indenture
trustee by the issuer. The master servicer named in the accompanying
prospectus supplement will service the trust assets, either directly or
through subservicers under a servicing agreement and will receive a fee for
its services. See "Trust Asset Program" and "Description of the Securities"
in this prospectus. As to those trust assets serviced by the master servicer
through a subservicer, the master servicer will remain liable for its
servicing obligations under the related servicing agreement as if the master
servicer alone were servicing the trust assets. In addition to or in place of
the master servicer for a series of securities, the accompanying prospectus
supplement may identify an Administrator for the trust. The Administrator may
be an affiliate of the depositor. All references in this prospectus to the
master servicer and any discussions of the servicing and administration
functions of the master servicer will also apply to the Administrator to the
extent applicable.

   The master servicer's obligations relating to the trust assets will
consist principally of its contractual servicing obligations under the
related pooling and servicing agreement or servicing agreement, including

                                        6
<PAGE>
its obligation to use its best efforts to enforce purchase obligations of
Residential Funding Corporation or any designated seller and other
obligations of subservicers, as described in this prospectus under
"Description of the Securities--Representations Relating to Loans,"
"--Servicing and Administration of Trust Assets--Subservicing" and
"--Assignment of the Trust Assets" or under the terms of any private
securities included in the trust.

   Residential Funding Corporation, or another entity specified in the
accompanying prospectus supplement, will be obligated to advance funds to
borrowers for Draws made after the related cut-off date subject to
reimbursement. If the master servicer is obligated to make principal and
interest advances on the closed-end loans, that obligation will be limited to
amounts which the master servicer believes ultimately would be reimbursable
out of the proceeds of liquidation of the closed-end loans or any applicable
form of credit support. See "Description of the Securities--Servicing and
Administration of Trust Assets--Advances" in this prospectus.

   The proceeds of the loans may be used by the borrower to purchase or
improve the related mortgaged properties, may be retained by the related
borrowers or may be used for purposes unrelated to the mortgaged properties.

   A mortgaged property securing a loan and, if applicable, a contract may be
subject to the senior liens of one or more conventional loans at the time of
origination and may be subject to one or more junior liens at the time of
origination or after that origination. It is unlikely that more than one loan
secured by a single mortgaged property will be included in the same pool, but
the depositor, an affiliate of the depositor or an unaffiliated seller may
have an interest in the loan. Loans and contracts that are secured by junior
liens will not be required by the depositor to be covered by a primary
mortgage guaranty insurance policy insuring against default on the trust
assets.

CHARACTERISTICS OF THE LOANS

   The accompanying prospectus supplement for each series of securities will
provide information concerning the types and characteristics of the loans
that will be included in the related pool. Each prospectus supplement
applicable to a series of securities will include information to the extent
then available to the depositor, as of the related cut-off date, if
appropriate, on an approximate basis. No more than five percent (5%) of the
trust assets that comprise the trust as of the cut-off date by aggregate
principal balance will have characteristics that deviate from those
characteristics described in the accompanying prospectus supplement. Other
trust assets available for purchase by the depositor may have characteristics
that would make them eligible for inclusion in a pool but were not selected
for inclusion in a pool at that time. The information may include, if
applicable:

   o  the aggregate principal balance of the trust assets;

   o  the type of property securing the trust assets and related lien
      priority, if any;

   o  the original or modified and/or remaining terms to maturity of the
      trust assets;

   o  the range of principal balances of the loans at origination or
      modification;

   o  the range of the years of origination of the trust assets;

   o  the earliest origination or modification date and latest maturity date
      of the trust assets;

   o  the loan-to-value ratios, known as LTV ratios, or combined LTV ratios
      of the trust assets, as applicable;

   o  the loan rate or range of loan rates borne by the trust assets;

   o  the applicable index, the range of Gross Margins, the weighted average
      Gross Margin, the frequency of adjustments and maximum loan rate;

   o  the geographical distribution of the mortgaged properties;

   o  the aggregate credit limits and the range of credit limits of the
      related credit line agreements;

                                        7
<PAGE>
   o  the weighted average junior ratio and credit utilization rate;

   o  the number and percentage of contracts that are partially insured by
      the FHA under Title I;

   o  the range of debt-to-income ratios;

   o  the distribution of loan purposes; and

   o  the range of Credit Scores.

   A Current Report on Form 8-K will be available upon request to holders of
the related series of securities and will be filed, together with the related
pooling and servicing agreement or trust agreement, for each series of
certificates, or the related home loan purchase agreement, servicing
agreement, trust agreement and indenture, for each series of notes, with the
Securities and Exchange Commission, known as the Commission, within fifteen
days after the initial issuance of the securities. The composition and
characteristics of a pool that contains revolving credit loans may change
from time to time as a result of any Draws made after the related cut-off
date under the related credit line agreements. If trust assets are added to
or deleted from the trust after the date of the accompanying prospectus
supplement other than as a result of any Draws relating to the revolving
credit loans, the addition or deletion will be noted in the Current Report on
Form 8-K. Additions or deletions of this type, if any, will be made prior to
the closing date.

 Prepayments on the Loans

   Some closed-end loans may provide for payment of a prepayment charge if
the related borrower prepays the loan within a specified time period. In most
cases, revolving credit loans may be prepaid in full or in part at any time
and without penalty, and the related borrower will have the right during the
related Draw Period to make a Draw in the amount of any prepayment made with
respect to the loan. The mortgage note or mortgage related to each revolving
credit loan will usually contain a customary "due-on-sale" clause. The
prospectus supplement will disclose whether a material portion of the loans
provide for payment of a prepayment charge if the borrower prepays within a
specified time period. This charge may affect the rate of prepayment. The
master servicer will be entitled to all prepayment charges and late payment
charges received on the loans and those amounts will not be available for
payment on the securities. However, some states' laws restrict the imposition
of prepayment charges even when the loans expressly provide for the
collection of those charges. As a result, it is possible that prepayment
charges may not be collected even on loans that provide for the payment of
these charges.

 Modified Loans

   A pool may include trust assets that have been modified subsequent to
their origination. If a trust asset is a modified trust asset, references to
origination shall be deemed to be references to the date of modification.

 Balloon Loans

   As specified in the prospectus supplement, a pool may include Balloon
Loans. Balloon Loans generally require a monthly payment of a pre-determined
amount that will not fully amortize the loan until the maturity date, at
which time the Balloon Amount will be due and payable. Payment of the Balloon
Amount, which, based on the amortization schedule of those loans, may be a
substantial amount, will typically depend on the borrower's ability to obtain
refinancing of the related 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
borrower's financial situation, the level of available loan interest rates,
the borrower's equity in the related mortgaged property, tax laws, prevailing
general economic conditions and the terms of any related first lien loan.
Neither the depositor, the master servicer, the trustee nor any of their
affiliates will be obligated to refinance or repurchase any loan or to sell
the mortgaged property.

                                        8
<PAGE>
 Actuarial Loans

   Monthly payments made by or on behalf of the borrower for some closed-end
loans will be one-twelfth of the applicable loan rate times the unpaid
principal balance, with any remainder of the payment applied to principal.
These types of closed end loans are known as actuarial loans.

 Simple Interest Loans

   Some loans may be simple interest loans. A simple interest loan provides
the amortization of the amount financed under the loan over a series of equal
monthly payments except, in the case of a Balloon Loan, the final payment.
Each monthly payment consists of an installment of interest which is
calculated on the basis of the outstanding principal balance of the loan
multiplied by the stated loan rate and further multiplied by a fraction, with
the numerator equal to the number of days in the period elapsed since the
preceding payment of interest was made and the denominator equal to the
number of days in the annual period for which interest accrues on the loan.
As payments are received under a simple interest loan, the amount received is
applied first to interest accrued to the date of payment and then the
remaining amount is applied to pay any unpaid fees and then to reduce the
unpaid principal balance. Accordingly, if a borrower pays a fixed monthly
installment on a simple interest loan before its scheduled due date, the
portion of the payment allocable to interest for the period since the
preceding payment was made will be less than it would have been had the
payment been made as scheduled, and the portion of the payment applied to
reduce the unpaid principal balance will be correspondingly greater.
Conversely, if a borrower pays a fixed monthly installment after its
scheduled due date, the portion of the payment allocable to interest for the
period since the preceding payment was made will be greater than it would
have been had the payment been made as scheduled, and the remaining portion,
if any, of the payment applied to reduce the unpaid principal balance will be
correspondingly less. If each scheduled payment under a simple interest loan
is made on or prior to its scheduled due date, the principal balance of the
loan will amortize more quickly than scheduled. However, if the borrower
consistently makes scheduled payments after the scheduled due date, the loan
will amortize more slowly than scheduled. If a simple interest loan is
prepaid, the borrower is required to pay interest only to the date of
prepayment. Those variable allocations among principal and interest of a
simple interest loan may affect the distributions of principal and interest
on the securities, as described in the accompanying prospectus supplement.

REVOLVING CREDIT LOANS

   The revolving credit loans will be originated under credit line agreements
subject to a credit limit. Interest on each revolving credit loan will be
calculated based on the average daily balance outstanding during the billing
cycle and the billing cycle, in most cases, will be the calendar month
preceding a due date. Each revolving credit loan will have a loan rate that
is subject to adjustment on the day specified in the related mortgage note,
which may be daily or monthly. As specified in the related mortgage note and
described in the accompanying prospectus supplement, the loan rate will be
equal to the sum of (a) the index as of that day and (b) the Gross Margin
which may vary under some circumstances, subject to the maximum rate
specified in the mortgage note and permitted by applicable law. If specified
in the accompanying prospectus supplement, some revolving credit loans, known
as teaser loans, may have an introductory rate that is lower than the rate
that would be in effect if the applicable index and Gross Margin were used to
determine the loan rate. As a result of the introductory rate, interest
collections on these loans will initially be lower than expected. Commencing
on their first adjustment date, the loan rates on the teaser loans will be
based on the applicable index and Gross Margin.

   The index for a particular pool will be specified in the accompanying
prospectus supplement and may include one of the following indexes:

   o  the weekly average yield on U.S. Treasury securities adjusted to a
      constant maturity of either six months or one year;

   o  the weekly auction average investment yield of U.S. Treasury bills of
      six months;

   o  the daily bank prime loan rate made available by the Federal Reserve
      Board;

   o  the cost of funds of member institutions for the Federal Home Loan Bank
      of San Francisco;

                                        9
<PAGE>
   o  the interbank offered rates for U.S. dollar deposits in the London
      market, each calculated as of a date prior to each scheduled note rate
      adjustment date which will be specified in the accompanying prospectus
      supplement; or

   o  the weekly average of secondary market note rates on six-month
      negotiable certificates of deposit.

   Unless specified in the accompanying prospectus supplement, each revolving
credit loan will have a term to maturity from the date of origination of not
more than 25 years. The borrower under each revolving credit loan may make
Draws under the related credit line agreement at any time during the Draw
Period. In most cases, the Draw Period will not be more than 15 years. If the
Draw Period is less than the full term of the revolving credit loan, the
related borrower will not be permitted to make any Draw during the period
from the end of the related Draw Period to the related maturity date, known
as the repayment period. The borrower under each revolving credit loan will
be obligated to make monthly payments on the revolving credit loan in a
minimum amount as specified in the related mortgage note, which usually will
not be less than the finance charge for the related billing cycle. The
borrower under each revolving credit loan will be obligated to pay off the
remaining account balance on the related maturity date, which may be a
substantial principal amount. The maximum amount of any Draw is equal to the
excess, if any, of the credit limit over the principal balance outstanding
under the mortgage note at the time of the Draw. Draws will be funded by the
master servicer or another entity specified in the accompanying prospectus
supplement.

   Unless specified in the accompanying prospectus supplement:

   o  the finance charge for any billing cycle, in most cases, will be equal
      to interest accrued on the average daily principal balance of the
      revolving credit loan for the billing cycle at the related loan rate;

   o  the account balance on any day, in most cases, will be the aggregate of
      the unpaid principal of the revolving credit loan outstanding at the
      beginning of the day, plus all related Draws funded on that day, plus
      the sum of any unpaid finance charges and any unpaid fees, insurance
      premiums and other charges that are due on the revolving credit loan
      minus the aggregate of all payments and credits that are applied to the
      repayment of any Draws on that day; and

   o  the principal balance on any day usually will be the related account
      balance minus the sum of any unpaid finance charges and additional
      charges that are due on the revolving credit loan.

   Payments made by or on behalf of the borrower for each revolving credit
loan, in most cases, will be applied, first, to any unpaid finance charges
that are due on the revolving credit loan, second, to any unpaid additional
charges that are due thereon, and third, to any principal outstanding.

   As to each revolving credit loan, the borrower's rights to receive Draws
during the Draw Period may be suspended, or the credit limit may be reduced,
for cause under a limited number of circumstances, including, but not limited
to:

   o  a materially adverse change in the borrower's financial circumstances;

   o  a decline in the value of the mortgaged property significantly below
      its appraised value at origination; or

   o  a payment default by the borrower.

However, as to each revolving credit loan, the suspension or reduction
usually will not affect the payment terms for previously drawn balances. The
master servicer will have no obligation to investigate as to whether any of
those circumstances have occurred or may have no knowledge of their
occurrence. Therefore, there can be no assurance that any borrower's ability
to receive Draws will be suspended or reduced if the foregoing circumstances
occur. In the event of default under a revolving credit loan, at the
discretion of the master servicer, the revolving credit loan may be
terminated and declared immediately due and payable in full. For this
purpose, a default includes but is not limited to:

                                       10
<PAGE>
   o  the borrower's failure to make any payment as required;

   o  any action or inaction by the borrower that materially and adversely
      affects the mortgaged property or the rights in the mortgaged property;
      or

   o  any fraud or material misrepresentation by a borrower in connection
      with the revolving credit loan.

   The master servicer will have the option to allow an increase in the
credit limit or an extension of the Draw Period applicable to any revolving
credit loan subject to the limitations described in the related agreement.

   The mortgaged property securing each revolving credit loan will be subject
to the lien created by the related mortgage in respect of any related
Excluded Balance, whether made on or prior to the related cut-off date or
thereafter. The lien will be the same rank as the lien created by the
mortgage in respect of the revolving credit loan, and monthly payments,
collections and other recoveries under the credit line agreement related to
the revolving credit loan will be allocated as described in the accompanying
prospectus supplement among the revolving credit loan and the Excluded
Balance. The depositor, an affiliate of the depositor or an unaffiliated
seller may have an interest in any Draw or portion thereof excluded from the
pool. If any entity with an interest in a Draw or portion thereof excluded
from the pool or any other Excluded Balance were to become a debtor under the
Bankruptcy Code and regardless of whether the transfer of the related
revolving credit loan constitutes an absolute assignment, a bankruptcy
trustee or creditor of such entity or such entity as a debtor-in-possession
could assert that such entity retains rights in the related revolving credit
loan and therefore compel the sale of such revolving credit loan, including
any Trust Balance, over the objection of the trust and the securityholders.
If that occurs, delays and reductions in payments to the trust and the
securityholders could result.

 Allocation of Revolving Credit Loan Balances

   With respect to any series of securities backed by revolving credit loans,
the related trust may include either:

   o  the entire principal balance of each revolving credit loan outstanding
      at any time, including balances attributable to Draws made after the
      related cut-off date; or

   o  the Trust Balance of each revolving credit loan.

   The accompanying prospectus supplement will describe the specific
provisions by which payments and losses on any revolving credit loan will be
allocated as between the Trust Balance and any Excluded Balance. Typically,
the provisions:

   o  may provide that principal payments made by the borrower will be
      allocated between the Trust Balance and any Excluded Balance either:

     o      on a pro rata basis;

     o      first to the Trust Balance until reduced to zero, then to the
            Excluded Balance; or

     o      in accordance with other priorities specified in the accompanying
            prospectus supplement; and

   o  may provide that interest payments, as well as liquidation proceeds or
      similar proceeds following a default and any Realized Losses, will be
      allocated between the Trust Balance and any Excluded Balance on a pro
      rata basis or according to other priorities specified in the
      accompanying prospectus supplement.

   Even where a trust initially includes the entire principal balance of the
revolving credit loans, the pooling and servicing agreement may provide that
after a specified date or upon the occurrence of specified events, the trust
may not include balances attributable to additional Draws made after that
time. The accompanying prospectus supplement will describe these provisions
as well as the related allocation provisions that would be applicable.

                                       11
<PAGE>
THE CONTRACTS

 Home Improvement Contracts

   The trust for a series may include a contract pool evidencing interests in
home improvement contracts. The home improvement contracts may be
conventional home improvement contracts or, to the extent specified in the
accompanying prospectus supplement, the home improvement contracts may be
partially insured by the FHA under Title I.

   In most cases, the home improvement contracts will be fully amortizing and
may have fixed loan rates or adjustable loan rates and may provide for other
payment characteristics as described in the accompanying prospectus
supplement.

   As specified in the accompanying prospectus supplement, the home
improvement contracts will either be unsecured or secured primarily by:

   o  mortgages on one-to four-family residential properties that are
      typically subordinate to other mortgages on the same mortgaged
      property; or

   o  purchase money security interests in the home improvements financed by
      those home improvement contracts.

   The home improvements securing the home improvement contracts may include,
but are not limited to, replacement windows, house siding, new roofs,
swimming pools, satellite dishes, kitchen and bathroom remodeling goods and
solar heating panels. The proceeds of contracts under the Title I Program may
be used only for permitted purposes, including, but not limited to, the
alteration, repair or improvement of residential property, the purchase of a
manufactured home and/or lot on which to place that home, or cooperative
interest in the home and/or lot.

   Home improvements, unlike mortgaged properties, in most cases, depreciate
in value. Consequently, at any time after origination it is possible,
especially in the case of home improvement contracts with high LTV ratios at
origination, that the market value of a home improvement may be lower than
the principal amount outstanding under the related contract. In addition,
because the home improvement contracts included in the trust are typically
subordinate to other mortgages on the same mortgaged property, the rights of
the related securityholders, as mortgagee under that junior mortgage, are
subordinate to those of the mortgagees under any senior mortgage. See
"Certain Legal Aspects of the Trust Assets and Related Matters--Trust Assets
Secured by Mortgages on Mortgaged Property--Junior Mortgages; Rights of
Senior Mortgagees".

 Manufactured Housing Contracts

   The trust for a series may include a contract pool evidencing interests in
manufactured housing contracts originated by one or more manufactured housing
dealers, or the other entity or entities described in the accompanying
prospectus supplement. The manufactured housing contracts may be conventional
manufactured housing contracts or manufactured housing contracts partially
insured by the FHA under Title I. Each manufactured housing contract will be
secured by a manufactured home. The manufactured housing contracts will be
fully amortizing or, if specified in the accompanying prospectus supplement,
Balloon Loans.

   The manufactured homes securing the manufactured housing contracts will
consist of "manufactured homes" within the meaning of 42 U.S.C. Section
5402(6), which are treated as "single family residences" for the purposes of
the REMIC provisions of the Internal Revenue Code of 1986, or Internal
Revenue 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 8 1/2 feet, 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 in that manufactured home.

   Manufactured homes, unlike mortgaged properties, in most cases, depreciate
in value. Consequently, at any time after origination it is possible,
especially in the case of manufactured housing contracts with high LTV ratios
at origination, that the market value of a manufactured home may be lower
than the principal amount outstanding under the related contract.

                                       12
<PAGE>
THE MORTGAGED PROPERTIES

   The mortgaged properties will consist primarily of attached or detached
individual dwellings, Cooperative dwellings, individual or adjacent
condominiums, townhouses, duplexes, row houses, modular housing, manufactured
homes, individual units or two-to four-unit dwellings in planned unit
developments and two-to four-family dwellings. Each mortgaged property, other
than a Cooperative dwelling, will be located on land owned by the borrower
or, if specified in the accompanying prospectus supplement, land leased by
the borrower. Attached dwellings may include structures where each borrower
owns the land on which the unit is built with the remaining adjacent land
owned in common. Mortgaged properties may also include dwelling units subject
to a proprietary lease or occupancy agreement in an apartment building owned
by a Cooperative. The proprietary lease or occupancy agreement securing a
Cooperative Loan is subordinate, in most cases, 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 may be terminated and the cooperative shares may be
cancelled by the Cooperative if the tenant-stockholder fails to pay
maintenance or other obligations or charges owed by the tenant-stockholder.
See "Certain Legal Aspects of the Trust Assets and Related Matters" in this
prospectus.

   Mortgaged properties consisting of modular housing, also known as
pre-assembled, pre-fabricated, sectional or pre-built homes, are factory
built and constructed in two or more three dimensional sections, including
interior and exterior finish, plumbing, wiring and mechanical systems. On
completion, the modular home is transported to the property site to be joined
together on a permanent foundation.

   Mortgaged properties consisting of manufactured homes must be legally
classified as real estate, have the wheels and axles removed and be attached
to a permanent foundation and may not be located in a mobile home park. The
manufactured homes will also have other characteristics as specified in the
prospectus supplement.

   The mortgaged properties may be located in any of the fifty states, the
District of Columbia or the Commonwealth of Puerto Rico.

   The mortgaged properties may be owner occupied or non-owner occupied and
may include vacation homes, second homes and investment properties. The
percentage of loans secured by mortgaged properties that are owner-occupied
will be disclosed in the accompanying prospectus supplement. The basis for
any statement that a given percentage of the loans are secured by mortgaged
properties that are owner-occupied will be one of the following:

   o  the making of a representation by the borrower at origination of a loan
      that the borrower intends to use the mortgaged property as a primary
      residence for at least the first six months of occupancy;

   o  a representation by the originator of the loan, which may be based
      solely on the above clause; or

   o  the fact that the mailing address for the borrower is the same as the
      address of the mortgaged property.

   Any representation and warranty regarding owner-occupancy may be based
solely on this information. 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 loans.

   A mortgaged property securing a loan may be subject to the senior liens
securing one or more conventional loans at the time of origination and may be
subject to one or more junior liens at the time of origination or after that
origination. Loans evidencing liens junior or senior to the loans in the
trust will likely not be included in the same trust, but the depositor, an
affiliate of the depositor or an unaffiliated seller may have an interest in
the junior or senior loan.

                                       13
<PAGE>
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, referred to in this prospectus as the Housing Act,
authorizes Ginnie Mae to guarantee the timely payment of the principal of and
interest on securities representing interests in a pool of mortgages insured
by the FHA, under the Housing Act or under Title V of the Housing Act of
1949, or 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 that 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

   In most cases, 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 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
for a series of securities will be described in the accompanying prospectus
supplement.

 Federal Home Loan Mortgage Corporation

   Freddie Mac is a corporate instrumentality of the United States created
under Title III of the Emergency Home Finance Act of 1970, as amended, or 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 loans or participation
interests in loans and reselling the loans so purchased in the form of
guaranteed private securities, primarily Freddie Mac securities. In 1981,
Freddie Mac initiated its Home Mortgage Guaranty Program under which it
purchases loans from sellers with Freddie Mac securities representing
interests in the loans so purchased. All 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, loans that it deems to be of
the quality and type that generally meets 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

   In most cases, each Freddie Mac security relating to a series will
represent an undivided interest in a pool of loans that typically consists of
conventional loans, but may include FHA loans and VA loans, purchased by
Freddie Mac, except any stripped mortgage backed securities issued by Freddie
Mac. Each of those pools will consist of loans, substantially all of which
are secured by one-to four-family residential properties or, if specified in
the accompanying prospectus supplement, are secured by multi-family
residential properties. The characteristics of any Freddie Mac securities
included in the trust for a series of securities will be described in the
accompanying 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. Section 1716 et seq.). It is the nation's largest

                                       14
<PAGE>
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 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

   In most cases, each Fannie Mae security relating to a series will
represent a fractional undivided interest in a pool of loans formed by Fannie
Mae, except any stripped mortgage backed securities issued by Fannie Mae.
Loans underlying Fannie Mae securities will consist of fixed, variable or
adjustable rate conventional loans or fixed-rate FHA loans or VA loans. Those
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 for a series of securities will be described in the accompanying
prospectus supplement.

PRIVATE SECURITIES

   Any private securities underlying any securities will (i) either (a) have
been previously registered under the Securities Act of 1933, as amended, or
the Securities Act, or (b) will be eligible for sale under Rule 144(k) under
the Securities Act, and (ii) will be acquired in secondary market
transactions from persons other than the issuer or its affiliates.
Alternatively, if the private securities were acquired from their issuer or
its affiliates, or were issued by the depositor or any of its affiliates,
then the private securities will be registered under the Securities Act, at
the same time as the securities.

   References in this prospectus to Advances to be made and other actions to
be taken by the master servicer in connection with the loans may include
advances made and other actions taken under the terms of the private
securities. Each security offered by this prospectus will evidence an
interest in only the related pool and corresponding trust described in the
accompanying prospectus supplement for an offered security, and not in any
other pool or trust related to securities issued in this prospectus.

   In addition, as to any series of securities secured by private securities,
the private securities may consist of an ownership interest in a structuring
entity formed by the depositor for the limited purpose of holding the trust
assets relating to a series of securities. This special purpose entity may be
organized in the form of a trust, limited partnership or limited liability
company, and will be structured in a manner that will insulate the holders of
securities from liabilities of the special purpose entity. The provisions
governing the special purpose entity will restrict the special purpose entity
from engaging in or conducting any business other than the holding of trust
assets and the issuance of ownership interests in the trust assets and some
incidental activities. Any ownership interest will evidence an ownership
interest in the related trust assets as well as the right to receive
specified cash flows derived from the trust assets, as described in the
accompanying prospectus supplement. The obligations of the depositor as to
any ownership interest will be limited to some representations and warranties
relating to the trust assets, as described in this prospectus. Credit support
of any of the types described in this prospectus under "Description of Credit
Enhancement" may be provided for the benefit of any ownership interest, if
stated in the accompanying prospectus supplement.

                             TRUST ASSET PROGRAM

   Except in the case of a Designated Seller Transaction, the trust assets
will have been purchased by the depositor, either directly or indirectly
through Residential Funding Corporation from sellers. In the case of a
Designated Seller Transaction, the depositor may purchase the trust assets
directly from the designated seller. The loans will, in most cases, have been
originated in accordance with the depositor's underwriting standards or
alternative underwriting criteria as described under "--Underwriting Stan-

                                       15
<PAGE>
dards" in this prospectus or as described in the accompanying prospectus
supplement. The contracts, in most cases, will have been originated in
accordance with the underwriting standards described in the accompanying
prospectus supplement.

UNDERWRITING STANDARDS

 General Standards

   The depositor's underwriting standards for the loans will, in most cases,
conform to those published in Residential Funding Corporation's Client Guide,
referred to as the Guide, as modified from time to time, including the
provisions of the Guide applicable to the depositor's home equity program or
the 125 loan program, as applicable. The home equity program may include
revolving credit loans and home equity loans. The 125 loan program may
include home loans and contracts. The underwriting standards contained in the
Guide are continuously revised based on opportunities and prevailing
conditions in the residential mortgage market, the consumer lending market
and the market for private securities. The loans may be underwritten by
Residential Funding Corporation or by a designated third party. In some
circumstances, however, the loans may be underwritten only by the seller with
little or no review performed by Residential Funding Corporation. See
"Underwriting Standards--Guide Standards" and "Qualifications of Sellers" in
this prospectus. Residential Funding Corporation or a designated third party
may perform only sample quality assurance reviews to determine whether the
loans in any pool were underwritten in accordance with applicable standards.

   The depositor's underwriting standards, as well as any other underwriting
standards that may be applicable to any loans, generally include a set of
specific criteria under which the underwriting evaluation is made. However,
the application of the underwriting standards does not imply that each
specific criterion was satisfied individually. Rather, a 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 the underwriting standards. For example, a loan
may be considered to comply with a set of underwriting standards, even if one
or more specific criteria included in the underwriting standards were not
satisfied, if other factors compensated for the criteria that were not
satisfied.

   In addition, the depositor purchases loans that do not conform to the
underwriting standards contained in the Guide. A portion of the loans may be
purchased in negotiated transactions, and those negotiated transactions may
be governed by agreements, known as master commitments, relating to ongoing
purchases of loans by Residential Funding Corporation, from sellers who will
represent that the loans have been originated in accordance with underwriting
standards agreed to by Residential Funding Corporation. Residential Funding
Corporation, on behalf of the depositor or a designated third party, will
normally review only a limited portion of the loans in any delivery from the
related seller for conformity with the applicable underwriting standards. A
portion of loans may be purchased from sellers who may represent that the
loans were originated under underwriting standards acceptable to Residential
Funding Corporation.

   The level of review, if any, by Residential Funding Corporation or the
depositor of any loan for conformity with the applicable underwriting
standards will vary depending on a number of factors, including factors
relating to the experience and status of the seller, and factors relating to
the specific loan, including:

   o  the original principal balance or credit limit, as applicable;

   o  the LTV or combined LTV ratio;

   o  the loan type or loan program; and

   o  the applicable Credit Score of the related borrower used in connection
      with the origination of the loan, as determined based on a credit
      scoring model acceptable to the depositor.

   Credit scoring models provide a means for evaluating the information about
a prospective borrower that is available from a credit reporting agency. The
underwriting criteria applicable to any program under which the loans may be
originated may provide that qualification for the loan, the level of review
of the

                                       16
<PAGE>
loan's documentation, or the availability of various loan features, including
maximum loan amount, maximum LTV ratio, property type and use, and
documentation level may depend on the borrower's Credit Score. See "--Guide
Standards" in this prospectus.

   The underwriting standards used in negotiated transactions and master
commitments and the underwriting standards applicable to loans underlying
private securities may vary substantially from the underwriting standards
contained in the Guide. Those underwriting standards are, in most cases,
intended to provide an underwriter with information to evaluate the
borrower's repayment ability and the value of the mortgaged property as
collateral. Due to the variety of underwriting standards and review
procedures that may be applicable to the loans included in any pool, the
accompanying prospectus supplement, in most cases, will not distinguish among
the various underwriting standards applicable to the loans nor describe any
review for compliance with applicable underwriting standards performed by the
depositor or Residential Funding Corporation. Moreover, there can be no
assurance that every loan was originated in conformity with the applicable
underwriting standards in all material respects, or that the quality or
performance of loans underwritten under varying standards as described above
will be equivalent under all circumstances. In the case of a Designated
Seller Transaction, the applicable underwriting standards will be those of
the designated seller or of the originator of the loans, and will be
described in the accompanying prospectus supplement.

   The depositor, either directly or indirectly through Residential Funding
Corporation, will also purchase loans from its affiliates, including
HomeComings Financial Network, Inc., Residential Money Centers, Inc. and GMAC
Mortgage Corporation, with underwriting standards in accordance with the
Guide or as otherwise agreed to by the depositor. However, in some limited
circumstances, the loans may be employee or preferred customer loans for
which, in accordance with the affiliate's loan programs, income, asset and
employment verifications and appraisals may not have been required. As to
loans made under any employee loan program maintained by Residential Funding
Corporation, or its affiliates, in limited circumstances preferential note
rates may be allowed. Neither the depositor nor Residential Funding
Corporation will review any affiliate's loans for conformity with the
underwriting standards contained in the Guide.

GUIDE STANDARDS

 Loan Documentation

   The following is a brief description of the underwriting standards under
both the home equity program and the 125 loan program described in the Guide
for full documentation loan programs. Initially, a prospective borrower,
other than a borrower that is a trust, is required to fill out a detailed
application providing pertinent credit information. As part of the
description of the borrower's financial condition, the borrower will have
furnished information, which may or may not be verified, describing the
borrower's assets, liabilities, income, credit history and employment
history, and furnished an authorization to apply for a credit report that
summarizes the borrower's available credit history with local merchants and
lenders and any record of bankruptcy. The borrower may also have been
required to authorize verifications of deposits at financial institutions
where the borrower 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 borrower
from other sources. For mortgaged property consisting of vacation or second
homes, no income derived from the property will typically have been
considered for underwriting purposes. Under the home equity program, the
borrower normally must show, among other things, a minimum of two years'
credit history reported on the credit report and under the 125 loan program,
the borrower normally must show a minimum of three years' credit history.
Under both programs, the borrower normally must show that no mortgage
delinquencies, which are thirty days or greater, in the past 12 months
existed. Under both programs, borrowers who have less than a 12 month first
mortgage payment history may be subject to additional lending restrictions.
In addition, borrowers with a previous foreclosure or bankruptcy within the
past seven years may not be allowed and a borrower generally must satisfy all
judgments, liens and other legal actions with an original amount of $1,000 or
greater prior to closing. In addition, an employment verification is obtained
which may report the borrower's current salary and contain the length of
employment and an indication as to

                                       17
<PAGE>
whether it is expected that the borrower will continue that employment in the
future. If a prospective borrower is self-employed, the borrower may be
required to submit copies of signed tax returns. The borrower may also be
required to authorize verification of deposits at financial institutions
where the borrower has accounts. In the case of a loan secured by a property
owned by a trust, the foregoing procedures may be waived where the mortgage
note is executed on behalf of the trust.

   The underwriting standards presented in the Guide also allow for loans to
be supported by alternative documentation. For alternatively documented
loans, a borrower may demonstrate income and employment directly by providing
alternative documentation in the form of copies of the borrower's own records
relating to income and employment, rather than by having the originator
obtain independent verifications from third parties, such as the borrower's
employer or mortgage servicer.

   The underwriting standards contained in the Guide may be varied in
appropriate cases, including in "limited" or "reduced loan documentation"
loan programs. Limited documentation programs normally permit fewer
supporting documents to be obtained or waive income, asset and employment
documentation requirements, and normally compensate for increased credit risk
by placing greater emphasis on either the review of the property to be
financed or the borrower's ability to repay the loan. For example, under
Residential Funding Corporation's stated income limited loan documentation
program, some submission requirements regarding income verification and
debt-to-income ratios are removed, but the seller is still required to
perform a thorough credit underwriting of the loan. Normally, in order to be
eligible for a reduced loan documentation program, a borrower must have a
good credit history, and other compensating factors, including a relatively
low combined LTV ratio or other favorable underwriting factors, must be
present. The borrower's eligibility for the program may also be determined by
use of a credit scoring model.

 Appraisals

   In most cases, the value of the mortgaged property securing each loan will
be determined by either an appraisal, or if permitted by the Guide, a
statistical valuation or the stated value. Appraisals may be performed by
appraisers independent from or affiliated with the depositor, Residential
Funding Corporation or their affiliates. The appraiser is required to inspect
the property and verify that it is in good condition and that construction,
if new, has been completed. In some circumstances, the appraiser is only
required to perform an exterior inspection of the property. The appraisal is
based on various factors, including the market value of comparable homes and
the cost of replacing the improvements. Under both programs, each appraisal
is required to be dated no more than 360 days prior to the date of
origination of the loan; provided that, depending on the original principal
balance or the credit limit, as applicable, an earlier appraisal may be used
if the appraisal was made not earlier than two years prior to the date of
origination of the loan and the related appraiser certifies that the value of
the related mortgaged property has not declined since the date of the
original appraisal or if a field review or statistical valuation is obtained.
However, appraisals, statistical valuations, or stated values will not
establish that the mortgaged properties provide assurance of repayment of the
loans. See "Risk Factors" in the accompanying prospectus supplement. Title
searches are undertaken in most cases, and title insurance is required on all
loans with an original principal balance or credit limit in excess of
$100,000.

   The appraised value for any loan will be the appraised value of the
related mortgaged property determined in the appraisal used in the
origination of the loan, which may have been obtained at an earlier time.
However, if the loan was originated simultaneously with or not more than 12
months after a senior lien on the related mortgaged property, the appraised
value will be the lesser of the appraised value at the origination of the
senior lien and the sales price for the mortgaged property. The statistical
valuation will be the value of the property as determined by a form of
appraisal which uses a statistical model to estimate the value of a property.
The stated value will be value of the property as stated by the related
borrower in his or her application.

 Loan-to-Value, Combined Loan-to-Value and Junior Ratios

   As to each loan, LTV ratio, in most cases, will be the ratio, expressed as
a percentage, of (A) the original principal balance or the credit limit, as
applicable, to (B) the appraised value of the related mortgaged property
loan, or, if permitted by the Guide, a statistical valuation or the stated
value.

                                       18
<PAGE>
   As to each loan, the combined LTV ratio, in most cases, will be the ratio,
expressed as a percentage, of (A) the sum of (1) the original principal
balance or the credit limit, as applicable, and (2) the principal balance of
any related senior loan at origination of the loan together with any loan
subordinate to it, to (B) the appraised value of the related mortgaged
property, or, if permitted by the Guide, a statistical valuation or the
stated value.

   As to each loan, the junior ratio will be the ratio, expressed as a
percentage, of the original principal balance or the credit limit, as
applicable, of the loan to the sum of (1) the original principal balance or
the credit limit, as applicable, of the loan and (2) the principal balance of
any related senior loan at origination of the loan. As to each contract, the
combined LTV ratio and junior ratio will be computed in the manner described
in the accompanying prospectus supplement. The credit utilization rate for
any revolving credit loan is determined by dividing the cut-off date
principal balance of the revolving credit loan by the credit limit of the
related credit line agreement.

 Credit Scores

   The Credit Scores for a portion of the loans underlying each series of
securities may be supplied in the accompanying prospectus supplement. Credit
Scores are obtained by many lenders in connection with loan applications to
help assess a borrower's creditworthiness. In addition, Credit Scores may be
obtained by Residential Funding Corporation after the origination of a loan
if the seller does not provide to Residential Funding Corporation a current
Credit Score. Credit Scores are obtained from credit reports provided by
various credit reporting organizations, each of which may employ differing
computer models and methodologies.

   The Credit Score is designed to assess a borrower's credit history at a
single point in time, using objective information currently on file for the
borrower at a particular credit reporting organization. Information used to
create a Credit Score may include, among other things, payment history,
delinquencies on accounts, levels of outstanding indebtedness, length of
credit history, types of credit, and bankruptcy experience. Although each
scoring model varies, typically Credit Scores range from approximately 350 to
approximately 840, with higher scores indicating an individual with a more
favorable credit history compared to an individual with a lower score.
However, a Credit Score purports only to be a measurement of the relative
degree of risk a borrower represents to a lender, that is, a borrower with a
higher score is statistically expected to be less likely to default in
payment than a borrower with a lower score. In addition, it should be noted
that Credit Scores were developed to indicate a level of default probability
over a two-year period, which in most cases does not correspond to the life
of a loan. Furthermore, many Credit Scores were not developed specifically
for use in connection with the types of loans described in this prospectus,
but for consumer loans in general, and assess only the borrower's past credit
history. Therefore, in many cases, a Credit Score may not take into
consideration the differences between the types of loans described in this
prospectus and consumer loans in general, or the specific characteristics of
the related loan, including the LTV ratio or combined LTV ratio, as
applicable, the collateral for the loan, or the debt-to-income ratio of the
borrower. There can be no assurance that the Credit Scores of the borrowers
will be an accurate predictor of the likelihood of repayment of the related
loans or that any borrower's Credit Score would not be lower if obtained as
of the date of the accompanying prospectus supplement.

 Application of Underwriting Standards

   Once all applicable employment, credit and property information is
received, a determination is made by the original lender as to whether the
prospective borrower has sufficient monthly income available to meet the
borrower's monthly obligations on the proposed loan and other expenses
related to the home if applicable, such as property taxes, hazard insurance
and maintenance fees or other levies assessed by a Cooperative, if
applicable, as well as other financial obligations, including debt service on
any loan secured by a senior lien on the related mortgaged property. In most
cases, the monthly payment used to qualify borrowers for a revolving credit
loan will be assumed to be an amount equal to 1.00% times the applicable
credit limit. In many cases, the loan rate in effect from the origination
date of a revolving credit loan to the first adjustment date will be lower,
and may be significantly lower, than the sum of the then applicable index and
Gross Margin. The monthly payment used to qualify borrowers for a closed-end

                                       19
<PAGE>
loan is a fully amortized fixed payment which is added to the housing
expenses and other monthly debt to calculate the debt-to-income ratio. The
loans, in most cases, do not, but may provide for negative amortization. For
these loans or Balloon Loans, payment of the full outstanding principal
balance, if any, at maturity may depend on the borrower's ability to obtain
refinancing or to sell the mortgaged property prior to the maturity of the
loan, and there can be no assurance that refinancing will be available to the
borrower or that a sale will be possible.

   In some circumstances, the loans have been made to employees or preferred
customers of the originator for which, in accordance with the originator's
loan programs, income, asset and employment verifications and appraisals may
not have been required. As to loans made under any employee loan program
maintained by Residential Funding Corporation, GMAC Mortgage Corporation or
any of their affiliates, in limited circumstances preferential loan rates may
be allowed.

   The home equity program provides some limitations on the combined LTV
ratio for the loans and restrictions on any related underlying first lien
loan. The underwriting guidelines for the home equity program normally permit
combined LTV ratio's as high as 100%; however, the maximum permitted combined
LTV ratio may be reduced due to various underwriting criteria. In areas where
property values are considered to be declining, the maximum permitted
combined LTV ratio is 75%. The underwriting guidelines for the 125 Loan
Program normally permit combined LTV ratios as high as 125%; however, the
maximum permitted combined LTV ratio may be reduced due to various
underwriting criteria. The underwriting guidelines for both programs also
include restrictions based on the borrower's debt-to-income ratio. In
addition to the conditions described above, an evaluation of the prospective
borrower's credit quality will be made based on a credit scoring model
approved by Residential Funding Corporation. Underwriting guidelines for both
programs include minimum credit score levels that may apply depending on
other factors relating to the loan. The required yields for fixed-rate
closed-end loans and required Gross Margins for revolving credit loans
purchased under the home equity program, as announced from time to time, vary
based on a number of factors including combined LTV ratio, original principal
balance or credit limit, documentation level, property type, and borrower
debt-to-income ratio and credit score.

   In its evaluation of loans that have twenty-four or more months of payment
experience, Residential Funding Corporation generally places greater weight
on payment history and may take into account market and other economic trends
while placing less weight on underwriting factors generally applied to newly
originated loans.

QUALIFICATIONS OF SELLERS

   Except in the case of Designated Seller Transactions or as specified in
the accompanying prospectus supplement, each seller, other than the Federal
Deposit Insurance Corporation, or the FDIC, and investment banking firms,
will have been approved by Residential Funding Corporation for participation
in Residential Funding Corporation's loan purchase program. In determining
whether to approve a seller for participation in the loan purchase program,
Residential Funding Corporation will consider, among other things:

   o  the financial status, including the net worth, of the seller;

   o  the previous experience of the seller in originating home equity,
      revolving credit, home improvement, manufactured housing or first
      loans;

   o  the prior delinquency and loss experience of the seller;

   o  the underwriting standards and the quality control procedures employed
      by the seller; and

   o  if applicable, servicing operations established by the seller.

There can be no assurance that any seller presently meets any qualifications
or will continue to meet any qualifications at the time of inclusion of loans
sold by it in the trust for a series of securities, or thereafter. If a
seller becomes subject to the direct or indirect control of the FDIC, or if a
seller's net worth, financial performance or delinquency and foreclosure
rates deteriorate, that institution may continue to be treated as a seller.
Any event of this type may adversely affect the ability of any seller to
repurchase the trust asset

                                       20
<PAGE>
in the event of a breach of a representation or warranty which has not been
cured. To the extent the seller fails to or is unable to repurchase the trust
asset due to a breach of representation and warranty, neither the depositor,
Residential Funding Corporation nor any other entity will have assumed the
representations and warranties, and any related losses will be borne by the
securityholders or by the credit enhancement, if any.

   Residential Funding Corporation monitors sellers that it knows to be under
control of the FDIC or are insolvent, otherwise in receivership or
conservatorship or financially distressed. Any seller that is under control
of the FDIC or insolvent may make no representations and warranties relating
to trust assets sold by it. The FDIC, either in its corporate capacity or as
receiver for a depository institution, may also be a seller of trust assets,
in which event neither the FDIC nor the related depository institution may
make representations and warranties relating to the trust assets sold, or
only limited representations and warranties may be made, for example, that
the related legal documents are enforceable. The FDIC may have no obligation
to repurchase any trust asset for a breach of a representation and warranty.

   As specified in the accompanying prospectus supplement, the qualifications
required of sellers for approval by Residential Funding Corporation as
participants in its loan purchase programs may not apply to designated
sellers. To the extent the designated seller fails to or is unable to
repurchase the trust asset due to a breach of representation and warranty,
neither the depositor, Residential Funding Corporation nor any other entity
will have assumed the representations and warranties, and any related losses
will be borne by the securityholders or by the credit enhancement, if any.

                                       21
<PAGE>
                        DESCRIPTION OF THE SECURITIES

   The securities will be issued in series. Each series of certificates or,
in some instances, two or more series of certificates, will be issued under a
pooling and servicing agreement or, in the case of certificates backed by
private securities, a trust agreement, similar to one of the forms filed as
an exhibit to the registration statement for these securities. Each series of
notes will be issued under an indenture between the related trust and the
entity named in the accompanying prospectus supplement as indenture trustee
for the series. A form of indenture has been filed as an exhibit to the
registration statement for these securities. In the case of each series of
notes, the depositor, the related trust and the entity named in the
accompanying prospectus supplement as master servicer for the series will
enter into a separate servicing agreement. Each pooling and servicing
agreement, trust agreement, servicing agreement and indenture will be filed
with the Securities and Exchange Commission as an exhibit to a Form 8-K.

   The following summaries, together with additional summaries under "The
Agreements" in this prospectus, describe all material terms and provisions
relating to the securities common to each agreement. All references to an
"agreement" and any discussion of the provisions of any agreement applies to
pooling and servicing agreements, trust agreements, servicing agreements and
indentures, as applicable. 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 related agreement for each trust and the accompanying
prospectus supplement.

   Each series of securities may consist of any one or a combination of the
following:

   o     a single class of securities;

   o     one or more classes of senior securities, of which one or more
         classes of securities may be senior in right of payment to any other
         class or classes of securities subordinate to it, and as to which
         some classes of senior or subordinate securities may be senior to
         other classes of senior or subordinate securities, as described in
         the accompanying prospectus supplement;

   o     one or more classes of mezzanine securities which are subordinate
         securities but which are senior to other classes of subordinate
         securities in terms of distributions or losses;

   o     one or more classes of strip securities 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;

   o     two or more classes of securities 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" and "very accurately defined maturity
         classes," or on the basis of collections from designated portions of
         the pool, which series may include one or more classes of accrual
         securities for which some accrued interest will not be distributed
         but rather will be added to the principal balance of those classes
         of securities on the distribution date specified in the accompanying
         prospectus supplement; or

   o     other types of classes of securities, as described in the
         accompanying prospectus supplement.

   Credit support for each series of securities will be provided by any one
or a combination of the following:

   o     subordination of one or more classes of securities;

   o     financial guaranty insurance policies;

   o     excess spread;

   o     overcollateralization;

   o     surety bonds;

                                       22
<PAGE>
   o     reserve funds;

   o     purchase obligations;

   o     derivative products;

   o     bankruptcy bonds;

   o     special hazard insurance policies;

   o     letters of credit;

   o     mortgage pool insurance policies; or

   o     other credit enhancement as described under "Description of Credit
         Enhancement" in this prospectus.

FORM OF SECURITIES

   As specified in the accompanying prospectus supplement, the securities of
each series will be issued either as physical certificates or in book-entry
form. If issued as physical certificates, the securities will be in fully
registered form only in the denominations specified in the accompanying
prospectus supplement, and will be transferrable and exchangeable at the
corporate trust office of the securities registrar who is appointed under the
related agreement to register the securities. No service charge will be made
for any registration of exchange or transfer of securities, but the trustee
may require payment of a sum sufficient to cover any tax or other
governmental charge. The term securityholder as used in this prospectus
refers to the entity whose name appears on the records of the securities
registrar or, if applicable, a transfer agent, as the registered holder of a
note.

   If issued in book-entry form, the classes of a series of securities will
be initially issued through the book-entry facilities of The Depository Trust
Company, or DTC, or Clearstream Banking, societe anonyme, formerly known as
Cedelbank SA, or Clearstream, or the Euroclear System in Europe known as
Euroclear. Securityholders may hold book entry securities directly through
these facilities if they are participants of those systems, or indirectly
through organizations which are participants in those systems, or through any
other depository or facility as may be specified in the accompanying
prospectus supplement. Any class of book entry securities will list DTC's
nominee as the record holder. Clearstream and Euroclear will hold omnibus
positions on behalf of their participants through customers' securities
accounts in Clearstream's and Euroclear's names on the books of their
respective depositaries, which in turn will hold those 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 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 other
organizations. Other institutions that are not participants but clear through
or maintain a custodial relationship with participants, known as indirect
participants, have indirect access to DTC's clearance system.

   Unless specified in the accompanying prospectus supplement, no beneficial
owner of book-entry securities will be entitled to receive a security
representing that interest in registered, certificated form, unless either:

   o     DTC ceases to act as depository for that security and a successor
         depository is not obtained; or

   o     the trustee elects in its sole discretion to discontinue the
         registration of the securities through DTC.

Prior to any of these events, beneficial owners will not be recognized by the
trustee or the master servicer as holders of the related securities for
purposes of the related agreement, and beneficial owners will be able to
exercise their rights as owners of their securities only indirectly through
DTC participants and indirect participants. Any beneficial owner that desires
to purchase, sell or otherwise transfer any interest

                                       23
<PAGE>
in book-entry securities may do so only through DTC, either directly if the
beneficial owner is a participant or indirectly through participants and, if
applicable, indirect participants. Under the procedures of DTC, transfers of
the beneficial ownership of any book-entry securities will be required to be
made in minimum denominations specified in the accompanying prospectus
supplement. The ability of a beneficial owner to pledge book-entry securities
to persons or entities that are not participants in the DTC system, or to
otherwise act as to the securities, may be limited because of the lack of
physical certificates evidencing the securities and because DTC may act only
on behalf of participants.

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

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

   Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Clearstream
participants or Euroclear participants, on the other, will be effected in DTC
in accordance with DTC rules on behalf of the relevant European international
clearing system by the relevant depositaries; however, these cross market
transactions will require delivery of instructions to the relevant European
international clearing system by the counterparty in that system in
accordance with its rules and procedures and within its established
deadlines, 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. Clearstream participants and Euroclear
participants may not deliver instructions directly to the depositaries.

   Clearstream, as a professional depository, holds securities for its
participants and facilitates the clearance and settlement of securities
transactions between Clearstream participants through electronic book-entry
changes in accounts of Clearstream participants, thereby eliminating the need
for physical movement of certificates. As a professional depository,
Clearstream is subject to regulation by the Luxembourg Monetary Institute.

   Euroclear was created to hold securities for participants of Euroclear and
to clear and settle transactions between Euroclear participants through
simultaneous electronic book-entry delivery against payment, thereby
eliminating the need for physical movement of certificates and any risk from
lack of simultaneous transfers of securities and cash. 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 referred to as the clearance 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 clearance cooperative.

   The clearance cooperative establishes policy for Euroclear on behalf of
Euroclear participants. The Euroclear operator is the Belgian branch of a New
York banking corporation which is a member bank of the Federal Reserve
System. As a result, 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. The Terms and Conditions
govern transfers of securities

                                       24
<PAGE>
and cash within Euroclear, withdrawals of securities and cash from Euroclear,
and receipts of payments relating to securities in Euroclear. All securities
in Euroclear are held on a fungible basis without attribution of specific
certificates to specific securities clearance accounts.

   Distributions on the book-entry securities will be forwarded by the
trustee to DTC, and DTC will be responsible for forwarding those payments to
participants, each of which will be responsible for disbursing the payments
to the beneficial owners it represents or, if applicable, to indirect
participants. Accordingly, beneficial owners may experience delays in the
receipt of payments on their securities. Under DTC's procedures, DTC will
take actions permitted to be taken by holders of any class of book-entry
securities under the related agreement only at the direction of one or more
participants to whose account the book-entry securities 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 regarding any action of securityholders of any class to
the extent that participants authorize those actions. None of the master
servicer, the depositor, the trustee, the owner 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 securities, or for maintaining, supervising or reviewing any
records relating to those beneficial ownership interests.

ASSIGNMENT OF THE TRUST ASSETS

   At the time of issuance of a series of securities, the depositor will
cause the trust assets and any other assets being included in the related
trust to be assigned without recourse to the trustee or its nominee, which
may be the custodian on behalf of the related trust. This assignment will
include, unless specified in the accompanying prospectus supplement, all
principal and interest received on the trust assets after the cut-off date,
other than principal and interest due on or before the cut-off date and any
Excluded Spread. In the case of a series of notes, the depositor's assignment
will be made to the owner trustee and, concurrently with that assignment, the
owner trustee will grant a security interest in the related trust to the
indenture trustee to secure the notes. Each trust asset will be identified in
a schedule appearing as an exhibit to the related agreement. The schedule
will include, among other things, information as of the cut-off date for each
loan regarding the principal balance, the loan rate, the amount of the
monthly payment of principal and interest, the maturity of the mortgage note
and the LTV or combined LTV ratio and junior mortgage ratio, as applicable,
at origination or modification.

   If so specified in the accompanying prospectus supplement, and subject to
the rules of membership of Merscorp, Inc. and/or Mortgage Electronic
Registration Systems, Inc., referred to together as MERS, assignments of the
mortgages for any trust asset in the related trust will be registered
electronically through Mortgage Electronic Registration Systems, Inc. known
as the MERS(Registered Trademark) System. As to trust assets registered
through the MERS(Registered Trademark) System, MERS shall serve as mortgagee
of record solely as a nominee in an administrative capacity on behalf of the
trustee and shall not have any interest in any of those trust assets.

   Except as provided below for some securities backed by Trust Balances of
revolving credit loans, the depositor will, as to each loan that is a trust
asset other than loans underlying any private securities, deliver to an
entity specified in the accompanying prospectus supplement, which may be the
trustee, a custodian or another entity appointed by the trustee, the legal
documents relating to those trust assets that are in possession of the
depositor. The legal documents may include, as applicable, depending upon
whether that trust asset is secured by a lien on mortgaged property:

   o     the mortgage note and any modification or amendment made to the
         mortgage note, endorsed without recourse either in blank or to the
         order of the trustee or the owner trustee or a nominee, or a lost
         note affidavit, together with a copy of the related mortgage note;

   o     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;

   o     an assignment, except for any assignment not returned from the
         public recording office, in recordable form of the mortgage, or
         evidence that the mortgage is held for the related trustee

                                       25
<PAGE>
         through the MERS(Registered Trademark) System or, as 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;

   o     if applicable, any riders or modifications to the mortgage note and
         mortgage, together with any other documents at those times described
         in the related agreement; and

   o     if applicable, the original contract and copies of documents and
         instruments related to each contract and, other than in the case of
         unsecured contracts, the security interest in the property securing
         the contract.

   Assignments of the loans and contracts secured by a lien on mortgaged
property will be recorded in the appropriate public recording office, except
for mortgages held under the MERS(Registered Trademark) System or in states
where, in the opinion of counsel acceptable to the trustee, the owner trustee
or the rating agencies, the recording is not required to protect the
trustee's or owner trustee's interests in the loans and contracts against the
claim of any subsequent transferee or any successor to or creditor of the
depositor or the originator of the loans or contracts, or except as otherwise
specified in the accompanying prospectus supplement.

   The assignments may be blanket assignments covering mortgages secured by
mortgaged properties located in the same county, if permitted by law. If so
specified in the accompanying prospectus supplement, the depositor may not be
required to deliver one or more of the documents if those documents are
missing from the files of the party from whom the revolving credit loans,
home equity loans and contracts were purchased.

   In the case of contracts, the depositor or the master servicer will cause
a financing statement to be executed by the depositor identifying the trustee
as the secured party and identifying all contracts as collateral. However,
unless otherwise specified in the accompanying prospectus supplement, the
contracts will not be stamped or otherwise marked to reflect their assignment
from the depositor to the trust and no recordings or filings will be made in
the jurisdictions in which the manufactured homes are located. See "Certain
Legal Aspects of the Trust Assets and Related Matters--Manufactured Housing
Contracts" and "--The Home Improvement Contracts" in this prospectus.

   As to any Puerto Rico trust assets, the mortgages for those trust assets
either secure a specific obligation for the benefit of a specified person,
referred to as direct Puerto Rico mortgage or secure an instrument
transferable by endorsement, referred to as endorsable Puerto Rico mortgage.
Endorsable Puerto Rico Mortgages do not require an assignment to transfer the
related lien. Rather, transfer of those mortgages follows an effective
endorsement of the related mortgage note and, therefore, delivery of an
assignment of mortgage would be inapplicable. Direct Puerto Rico Mortgages,
however, require an assignment to be recorded for any transfer of the related
lien and the assignment would be delivered to the trustee, or the custodian.

   If, as to any loan or contract secured by a lien on mortgaged property,
the depositor cannot deliver the mortgage or any assignment with evidence of
recording on that mortgage or assignment concurrently with the execution and
delivery of the related agreement because of a delay caused by the public
recording office, the depositor will deliver or cause to be delivered to the
trustee, the custodian or another entity appointed by the trustee a true and
correct photocopy of the mortgage or assignment. The depositor will deliver
or cause to be delivered to the trustee or the custodian the mortgage or
assignment with evidence of recording indicated thereon after receipt thereof
from the public recording office or from the master servicer.

REVIEW OF TRUST ASSETS

   The trustee will be authorized to appoint one or more custodians under a
custodial agreement to maintain possession of and review documents relating
to the trust assets as the agent of the trustee or, following payment in full
of the securities and discharge of the related agreement, the owner trustee
or the master servicer, as applicable. The identity of the custodian, if any,
will be described in the accompanying prospectus supplement.

                                       26
<PAGE>
   The trustee or the custodian will hold these documents in trust for the
benefit of the securityholders and, in most cases will review those documents
within 90 days after receipt. The trustee or the custodian shall notify the
master servicer and the depositor of any omissions or defects in respect of
its review. If any omission or defect reported materially and adversely
affects the interests of the securityholders in the related loan, the master
servicer or the depositor shall notify Residential Funding Corporation or the
designated seller. If Residential Funding Corporation or, in a Designated
Seller Transaction, the designated seller cannot cure the defect within the
period specified in the accompanying prospectus supplement after notice of
the defect is given to Residential Funding Corporation or, if applicable, the
designated seller, Residential Funding Corporation or, if applicable, the
designated seller is required to, within the period specified in the
accompanying prospectus supplement, either repurchase the related loan or any
property acquired from it from the trustee, or if permitted, substitute for
that loan a new loan in accordance with the standards described in this
prospectus. The master servicer will be obligated to enforce this obligation
of Residential Funding Corporation or the designated seller to the extent
described under "Description of the Securities--Representations Relating to
Loans" in this prospectus, but that obligation is subject to the provisions
described under "Description of the Securities--Servicing and Administration
of Trust Assets--Realization Upon Defaulted Loans" in this prospectus. There
can be no assurance that the applicable designated seller will fulfill its
obligation to purchase any loan as described in the second preceding
sentence. In most cases, neither Residential Funding Corporation, the master
servicer nor the depositor will be obligated to purchase or substitute for
that loan if the designated seller defaults on its obligation to do so. The
obligation to repurchase or substitute for a loan constitutes the sole remedy
available to the securityholders or the trustee for a material defect in a
constituent document. Any loan not so purchased or substituted for shall
remain in the related trust.

   For any series of securities backed by Trust Balances of revolving credit
loans, the foregoing documents in most cases will have been delivered to an
entity specified in the accompanying prospectus supplement, which may be the
trustee, a custodian or another entity appointed by the trustee. That entity
shall hold those documents as or on behalf of the trustee for the benefit of
the securityholders, with respect to the Trust Balances of these loans, and
on behalf of any other applicable entity with respect to any Excluded Balance
of these loans, as their respective interests may appear. In those cases, the
review of the related documents need not be performed if a similar review has
previously been performed by the entity holding the documents for an Excluded
Balance and that review covered all documentation for the Trust Balance.

   Under some circumstances, as to any series of securities, the depositor
may have the option to repurchase trust assets from the trust for cash, or in
exchange for other trust assets or Permitted Investments. Alternatively, for
any series of securities secured by private securities, the depositor may
have the right to repurchase loans and/or contracts from the entity that
issued the private securities. All provisions relating to these optional
repurchase provisions will be described in the accompanying prospectus
supplement.

REPRESENTATIONS RELATING TO LOANS

   Except as described in the second paragraph under "Trust Asset
Program--Qualification of Sellers", each seller will have made
representations and warranties to Residential Funding Corporation relating to
the loans sold by it. However, unless provided in the accompanying prospectus
supplement, the representations and warranties of the seller will not be
assigned to the trustee for the benefit of the holders of the related series
of securities, and therefore a breach of the representations and warranties
of the seller, in most cases, will not be enforceable on behalf of the trust.

   In the case of a pool consisting of loans purchased by the depositor from
sellers through Residential Funding Corporation, Residential Funding
Corporation, except in the case of a Designated Seller Transaction or as to
loans underlying any private securities or as specified in the accompanying
prospectus supplement, will have made limited representations and warranties
regarding the loans to the depositor at the time that they are sold to the
depositor. The representations and warranties will, in most cases, include,
among other things, that:

                                       27
<PAGE>
   o     as of the cut-off date, the information contained in a listing of
         the related loans is true and correct in all material respects;

   o     Residential Funding Corporation was the sole holder and owner of the
         loans free and clear of any and all liens and security interests;

   o     each loan complied in all material respects with all applicable
         local, state and federal laws at the time of origination;

   o     except as otherwise indicated in the accompanying prospectus
         supplement, no loan is one month or more delinquent in payment of
         principal and interest;

   o     to the best of Residential Funding Corporation's knowledge, there is
         no delinquent tax or assessment lien against any mortgaged property;
         and

   o     to the best of Residential Funding Corporation's knowledge, any
         contract that is partially insured by the FHA under Title I was
         originated in accordance with applicable FHA regulations and is
         insured, without set-off, surcharge or defense by the FHA.

   In a Designated Seller Transaction, as specified in the accompanying
prospectus supplement, the designated seller will have made specific
representations and warranties regarding the loans to the depositor generally
similar to those made in the preceding paragraph by Residential Funding
Corporation.

REPURCHASES OF LOANS

   The depositor will assign to the trustee all of its right, title and
interest in each agreement by which it purchased a loan from Residential
Funding Corporation or a designated seller, insofar as the agreement relates
to the representations and warranties made by a designated seller or
Residential Funding Corporation, as the case may be, regarding the loan and
any remedies provided for any breach of the representations and warranties.
If a designated seller or Residential Funding Corporation, as the case may
be, cannot cure a breach of any representation or warranty made by it
relating to a loan that materially and adversely affects the interests of the
securityholders in the loan, within 90 days after notice from the master
servicer, the designated seller or Residential Funding Corporation, as the
case may be, will be obligated to repurchase the loan at a repurchase price
contained in the related agreement, which repurchase price, in most cases,
will be equal to the principal balance of that loan as of the date of
repurchase plus accrued and unpaid interest to the first day of the month
following the month of repurchase at the loan rate, less the amount,
expressed as a percentage per annum, payable for master servicing
compensation or subservicing compensation, as applicable, and if applicable,
the Excluded Spread.

   In addition, except in the case of a Designated Seller Transaction, unless
otherwise specified in the accompanying prospectus supplement, Residential
Funding Corporation will be obligated to repurchase or substitute for any
loan secured by a lien on mortgaged property as to which it is discovered
that the related mortgage is not a valid lien on the related mortgaged
property having at least the priority maintained for the loan, as applicable,
in the listing of related loans, subject only to:

   o     liens of real property taxes and assessments not yet due and
         payable;

   o     covenants, conditions and restrictions, rights of way, easements and
         other matters of public record as of the date of recording of the
         mortgage and other permissible title exceptions;

   o     other matters to which like properties are commonly subject which do
         not materially adversely affect the value, use, enjoyment or
         marketability of the mortgaged property; and

   o     if applicable, the liens of the related senior loans.

For any loan as to which the depositor delivers to the trustee or the
custodian an affidavit certifying that the original mortgage note has been
lost or destroyed, if the loan subsequently is in default and the enforcement
of that default or of the related mortgage is materially adversely affected
by the absence of the original mortgage note, Residential Funding Corporation
will be obligated to repurchase or substitute

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<PAGE>
for the loan, in the manner described in the preceding paragraph. However,
Residential Funding Corporation will not be required to repurchase or
substitute for any loan as described above if the circumstances giving rise
to the requirement also constitute fraud in the origination of the related
loan. Furthermore, because the listing of the related loans, in most cases,
contains information about the loans as of the cut-off date, prepayments and,
in some limited circumstances, modifications to the note rate and principal
and interest payments may have been made on one or more of the related loans
between the cut-off date and the closing date. Residential Funding
Corporation will not be required to purchase or substitute for any loan as a
result of the prepayment or modification.

LIMITED RIGHT OF SUBSTITUTION

   In the case of a loan required to be repurchased by Residential Funding
Corporation as provided in "Repurchases of Loans" in this prospectus,
Residential Funding Corporation may, at its sole option, rather than purchase
the loan, remove the loan from the trust, or from the assets underlying any
private securities, if applicable, and cause the depositor to substitute in
its place another loan of like kind. The accompanying prospectus supplement
will describe the conditions of any eligible substitute loan. Any
substitution must be effected within 120 days of the date of the initial
issuance of the securities of a trust for which no REMIC election is made. In
the case of a trust for which a REMIC election is made, except as otherwise
provided in the accompanying prospectus supplement, substitution of a
defective loan must be effected within two years of the date of the initial
issuance of the securities, and may not be made if the substitution would
cause the trust to not qualify as a REMIC or result in a prohibited
transaction tax under the Internal Revenue Code. In most cases, any qualified
substitute loan will, on the date of substitution:

   o     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 deleted loan--the amount of any shortfall to be deposited in the
         related Custodial Account in the month of substitution for
         distribution to the securityholders;

   o     have a loan rate and a Net Loan Rate not less than, and not more
         than one percentage point greater than, the loan rate and Net Loan
         Rate, respectively, of the deleted loan as of the date of
         substitution;

   o     have a LTV ratio or a combined LTV ratio at the time of substitution
         no higher than that of the deleted loan at the time of substitution;

   o     have a remaining term to maturity not greater than, and not more
         than one year less than, that of the deleted loan; and

   o     comply with all of the applicable representations and warranties
         contained in the related pooling and servicing agreement or loan
         purchase agreement as to individual loans as of the date of
         substitution.

   The related pooling and servicing agreement or loan purchase agreement may
include additional requirements relating to revolving credit loans or other
specific types of loans, 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 accompanying
prospectus supplement, a designated seller will have no option to substitute
for a loan that it is obligated to repurchase in connection with a breach of
a representation and warranty.

   The master servicer will be required under the related agreement to use
its best reasonable efforts to enforce this purchase or substitution
obligation for the benefit of the trustee and the securityholders, using
practices it would employ in its good faith business judgment and which are
normal and usual in its general mortgage servicing activities. However, this
purchase or substitution obligation will not become an obligation of the
master servicer if the designated seller or Residential Funding Corporation,
as the case may be, fails to honor its obligation.

   The master servicer will be entitled to reimbursement for any costs and
expenses incurred in pursuing a purchase or substitution obligation,
including but not limited to any costs or expenses associated with

                                       29
<PAGE>
litigation. In instances where a designated seller is unable, or disputes its
obligation, to purchase affected loans, the master servicer, employing the
standards contained in the preceding sentence, may negotiate and enter into
one or more settlement agreements with the designated seller that may provide
for, among other things, the purchase of only a portion of the affected loans
or coverage of only some loss amounts. Any settlement could lead to losses on
the loans that would be borne by the credit enhancement supporting the
related series of securities, and to the extent not available, by the
securityholders of the series.

   Furthermore, if applicable, the master servicer may pursue foreclosure, or
similar remedies, concurrently with pursuing any remedy for a breach of a
representation and warranty. However, the master servicer is not required to
continue to pursue both remedies if it determines that one remedy is more
likely to result in a greater recovery. In accordance with the above
described practices, the master servicer will not be required to enforce any
purchase of a designated seller arising from any misrepresentation by the
designated seller, if the master servicer determines in the reasonable
exercise of its business judgment that the matters related to the
misrepresentation did not directly cause or are not likely to directly cause
a loss on the related loan. If the designated seller fails to repurchase and
no breach of either the depositor's or Residential Funding Corporation's
representations has occurred, the designated seller's purchase obligation
will not become an obligation of the depositor or Residential Funding
Corporation. In most cases, the foregoing obligations will constitute the
sole remedies available to securityholders or the trustee for a breach of any
representation by a designated seller or by Residential Funding Corporation
in its capacity as a seller of trust assets to the depositor, or for any
other event giving rise to the obligations as described in this paragraph.

   Neither the depositor nor the master servicer will be obligated to
purchase a loan if a designated seller defaults on its obligation to do so,
and no assurance can be given that a designated seller will carry out its
obligations relating to loans. The default by a designated seller is not a
default by the depositor or by the master servicer. Any loan not so purchased
or substituted for shall remain in the related trust and any losses related
to that loan shall be allocated to the related credit enhancement, and to the
extent not available to the related securities.

   However, if any designated seller requests Residential Funding
Corporation's consent to transfer subservicing rights for any related trust
assets to a successor subservicer, Residential Funding Corporation may
release the designated seller from liability under its representations and
warranties described in the second preceding paragraph, upon the assumption
of the successor subservicer of the designated seller's liability for the
representations and warranties as of the date they were made. In that event,
Residential Funding Corporation's rights under the instrument by which the
successor subservicer assumes the designated seller's liability will be
assigned to the trustee or the owner trustee, or the special purpose entity,
if applicable, and the successor subservicer will be deemed to be the
designated seller for purposes of the foregoing provisions.

CERTAIN INSOLVENCY AND BANKRUPTCY ISSUES

   Each seller, including a designated seller, and the depositor will
represent and warrant that its respective transfer of trust assets
constitutes a valid sale and assignment of all of its right, title and
interest in and to such trust assets, except to the extent that the seller or
the depositor retains any security. Nevertheless, if a seller were to become
a debtor in a bankruptcy case and a creditor or bankruptcy trustee of that
seller, or the seller as a debtor-in-possession, were to assert that the sale
of the trust assets from that seller to the depositor should be
recharacterized as a pledge of the trust assets to secure a borrowing by such
seller, then delays in payments to the depositor (and therefore to the trust
and the securityholders) could occur and possible reductions in the amount of
such payments could result. In addition, if a court were to recharacterize
the transfer as a pledge and a subsequent assignee were to take physical
possession of any mortgage notes, through negligence, fraud or otherwise, the
trustee's interest in such mortgage notes could be defeated.

   If an entity with an interest in a loan of which only a partial balance
has been transferred to the trust were to become a debtor under the
Bankruptcy Code and regardless of whether the transfer of the related loan
constitutes an absolute assignment, a bankruptcy trustee or creditor of such
entity or such entity as

                                       30
<PAGE>
a debtor-in-possession could assert that such entity retains rights in the
related loan and therefore compel the sale of such loan, including any
partial balance included in the trust, over the objection of the trust and
the securityholders. If that occurs, delays and reductions in payments to the
trust and the securityholders could result.

   The depositor has been structured such that (i) the filing of a voluntary
or involuntary petition for relief by or against the depositor under the
Bankruptcy Code and (ii) the substantive consolidation of the assets and
liabilities of the depositor with those of an affiliated seller is unlikely.
The certificate of incorporation of the depositor restricts the nature of the
depositor's business and the ability of the depositor to commence a voluntary
case or proceeding under such laws without the prior unanimous consent of all
directors.

ASSIGNMENT OF AGENCY OR PRIVATE SECURITIES

   The depositor will transfer, convey and assign to the trustee or its
nominee, which may be the custodian, all right, title and interest of the
depositor in the Agency Securities or private securities and other property
to be included in the trust for a series. The assignment will include all
principal and interest due on or for the Agency Securities or private
securities after the cut-off date specified in the accompanying prospectus
supplement, except for any Excluded Spread. The depositor will cause the
Agency Securities or private securities to be registered in the name of the
trustee or its nominee, and the trustee will concurrently authenticate and
deliver the securities. Unless otherwise specified in the accompanying
prospectus supplement, the trustee will not be in possession of or be
assignee of record of any underlying assets for an Agency Security or private
security. Each Agency Security or private security will be identified in a
schedule appearing as an exhibit to the related agreement, which will specify
as to each Agency Security or private security information regarding the
original principal amount and outstanding principal balance of each Agency
Security or private security as of the cut-off date, as well as the annual
pass-through rate or interest rate for each Agency Security or private
security conveyed to the trustee.

EXCESS SPREAD AND EXCLUDED SPREAD

   The depositor, the master servicer or any of their affiliates, or any
other entity specified in the accompanying prospectus supplement may retain
or be paid a portion of interest due on the related trust assets. The payment
of any portion of interest in this manner will be disclosed in the
accompanying prospectus supplement. This payment may be in addition to any
other payment, including a servicing fee, that any specified entity is
otherwise entitled to receive in connection with the trust assets. Any of
these payments generated from the trust assets will represent the Excess
Spread. Those excluded from the assets transferred to the related trust are
referred to as the Excluded Spread. The interest portion of a Realized Loss
or extraordinary loss and any partial recovery of interest on the trust
assets will be allocated between the owners of any Excess Spread or Excluded
Spread and the securityholders entitled to payments of interest as provided
in the applicable agreement.

SUBSERVICING

   In most cases, the servicing for each loan will either be retained by the
seller, or its designee approved by the master servicer, as subservicer, or
will be released by the seller to the master servicer and will be
subsequently transferred to a subservicer approved by the master servicer,
and in either case will then be serviced by the subservicer under a
subservicing agreement between the master servicer and the subservicer. The
master servicer may, but is not obligated to, assign the subservicing to
designated subservicers which will be qualified sellers and which may include
GMAC Mortgage Corporation or its affiliates. While the subservicing agreement
will be a contract solely between the master servicer and the subservicer,
the servicing agreement applicable to any series of securities will provide
that, if for any reason the master servicer for the series of securities is
no longer the master servicer of the related trust assets, any successor
master servicer must recognize the subservicer's rights and obligations under
the subservicing agreement. For further information relating to subservicing
see "Description of the Securities--Servicing and Administration of Trust
Assets--Subservicing" in this prospectus.

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<PAGE>
PAYMENTS ON TRUST ASSETS

 Collection of Payments on Loans

   Each subservicer servicing a trust asset under a subservicing agreement
will establish and maintain a Subservicing Account. A subservicer is required
to deposit into its Subservicing Account on a daily basis all amounts that
are received by it relating to the trust assets, less its servicing or other
compensation.

   As specified in the subservicing agreement, the subservicer must remit or
cause to be remitted to the master servicer all funds held in the
Subservicing Account for trust assets that are required to be so remitted on
a periodic basis not less frequently than monthly. If specified in the
accompanying prospectus supplement, the subservicer may also be required to
advance on the scheduled date of remittance any monthly installment of
principal and interest, or interest only, in the case of simple interest
loans, less its servicing or other compensation, on any closed-end loan for
which payment was not received from the borrower.

   The master servicer will deposit or will cause to be deposited into a
Custodial Account payments and collections received by it subsequent to the
cut-off date, other than payments due on or before the cut-off date, as
described in the related agreement, which, in most cases, will include the
following:

   o     payments on account of principal on the loans comprising a trust;

   o     payments on account of interest on the loans comprising that trust,
         net of the portion of each payment of interest retained by the
         master servicer, subservicer or other specified entity, if any, as
         Excluded Spread, or as servicing or other compensation;

   o     Liquidation Proceeds, net of any unreimbursed liquidation expenses
         and insured expenses incurred, and unreimbursed servicing advances,
         if any, made by any subservicer, including all Insurance Proceeds or
         proceeds from any alternative arrangements established in lieu of
         that insurance and described in the accompanying prospectus
         supplement, other than proceeds to be applied to the restoration of
         the related property or released to the borrower in accordance with
         the master servicer's normal servicing procedures;

   o     proceeds of any loan in the trust purchased, or, in the case of a
         substitution, amounts representing a principal adjustment, by the
         master servicer, the depositor, Residential Funding Corporation, any
         subservicer, seller or designated seller or any other person under
         the terms of the related agreement. See "Description of the
         Securities--Representations Relating to Loans," and "--Assignment of
         the Trust Assets";

   o     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 in the fifth paragraph below; and

   o     any amounts required to be transferred from the Payment Account to
         the Custodial Account.

   In addition to the Custodial Account, the master servicer will establish
and maintain, in the name of the trustee for the benefit of the holders of
each series of securities, a Payment Account for the disbursement of payments
on the trust assets evidenced by each series of securities. Both the
Custodial Account and the Payment Account must be either:

   o     maintained with a depository institution whose debt obligations at
         the time of any deposit to the account are rated by any rating
         agency that rated any securities of the related series not less than
         a specified level comparable to the rating category of the
         securities;

   o     an account or accounts the deposits in which are fully insured to
         the limits established by the FDIC. Any deposits not so insured
         shall be otherwise maintained such that, as evidenced by an opinion
         of counsel, the securityholders have a claim as to the funds in
         those accounts or a perfected first priority security interest in
         any collateral securing those funds that is superior to the claims
         of any other depositors or creditors of the depository institution
         with which those accounts are maintained;

   o     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 various rating criteria;

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<PAGE>
   o     in the case of the Payment Account, a trust account or accounts
         maintained with the trustee; or

   o     any other Eligible Account.

The collateral that is eligible to secure amounts in an Eligible Account is
limited to Permitted Investments.

   A Payment Account may be maintained as an interest-bearing or
non-interest-bearing account. The Custodial Account may contain funds
relating to more than one series of securities as well as payment received on
other loans and assets master serviced by the master servicer that have been
deposited into the Custodial Account.

   On the day described in the accompanying prospectus supplement, the master
servicer will withdraw from the Custodial Account and deposit into the
applicable Payment Account, in immediately available funds, the amount to be
paid from that account to securityholders on the distribution date, except as
otherwise provided in the accompanying prospectus supplement. The master
servicer or the trustee will also deposit or cause to be deposited into the
Payment Account:

   o     any payments under any letter of credit, financial guaranty
         insurance policy, derivative product, and any amounts required to be
         transferred to the Payment Account from a reserve fund, as described
         under "Credit Enhancement" in this prospectus;

   o     any amounts required to be paid by the master servicer out of its
         own funds due to the operation of a deductible clause in any blanket
         policy maintained by the master servicer to cover hazard losses on
         the loans as described under "Insurance Policies on Loans--Hazard
         Insurance and Related Claims" in this prospectus;

   o     any payments received on any Agency Securities or private securities
         included in the trust;

   o     the amount of any Advances on closed-end loans, if applicable, made
         by the master servicer as described in this prospectus under
         "Description of the Securities--Servicing and Administration of
         Trust Assets--Advances"; or

   o     any other amounts as described in the related agreement.

   The portion of any payment received by the master servicer for a trust
asset that is allocable to Excess Spread or Excluded Spread, as applicable,
will, in most cases, be deposited into the Custodial Account, but any
Excluded Spread will not be deposited in the Payment Account for the related
series of securities and will be paid as provided in the related 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 Payment Account
may be invested in Permitted Investments maturing, in general, no later than
the distribution date. In most cases, all income and gain realized from any
investment will be for the account of the master servicer as additional
servicing compensation. The amount of any loss incurred in connection with
these investments must be deposited in the Custodial Account or in the
Payment Account, as the case may be, by the master servicer out of its own
funds upon realization of the loss.

 Collection of Payments on Agency Securities or Private Securities

   The trustee will deposit in the Payment Account all payments on the Agency
Securities or private securities as they are received after the cut-off date.
If the trustee has not received a distribution for any Agency Security or
private 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 or private security to make such
payment as promptly as possible and legally permitted. The trustee may take
any legal action against the related issuer or guarantor as is 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 any legal action will be
reimbursable to the trustee out of the proceeds of the action and will be
retained by the trustee prior to the deposit of any remaining proceeds in the
Payment Account pending distribution thereof to the securityholders of the

                                       33
<PAGE>
affected series. If the trustee has reason to believe that the proceeds of
the legal action may be insufficient to cover its projected legal fees and
expenses, the trustee will notify the related securityholders that it is not
obligated to pursue any available remedies unless adequate indemnity for its
legal fees and expenses is provided by the securityholders.

WITHDRAWALS FROM THE CUSTODIAL ACCOUNT

   The master servicer may, from time to time, make withdrawals from the
Custodial Account for various purposes, as specifically described in the
related agreement, which in most cases will include the following:

   o     to make deposits to the Payment Account in the amounts and in the
         manner provided in the related agreement and described above under
         "--Payments on Trust Assets; Collection of Payments on Loans" or in
         the accompanying prospectus supplement;

   o     to reimburse itself or any subservicer for any Advances or any
         Servicing Advances as to any mortgaged property, out of late
         payments, Insurance Proceeds, Liquidation Proceeds or collections on
         the loan for which those Advances or Servicing Advances were made;

   o     to pay to itself or any subservicer unpaid servicing fees and
         subservicing fees, out of payments or collections of interest on
         each loan;

   o     to pay to itself as additional servicing compensation any investment
         income on funds deposited in the Custodial Account, any amounts
         remitted by subservicers as interest for partial prepayments on the
         trust assets, and, if so provided in the 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 agreement;

   o     to pay to itself, a subservicer, Residential Funding Corporation,
         the depositor, the seller or the designated seller all amounts
         received in connection with each trust asset purchased, repurchased
         or removed under the terms of the related agreement and not required
         to be paid as of the date on which the related repurchase price is
         determined;

   o     to pay the depositor or its assignee, or any other party named in
         the accompanying prospectus supplement all amounts allocable to the
         Excluded Spread, if any, out of collections or payments which
         represent interest on each trust asset, including any loan as to
         which title to the underlying mortgaged property was acquired;

   o     to reimburse itself or any subservicer for any Nonrecoverable
         Advance, limited by the terms of the related agreement as described
         in the accompanying prospectus supplement;

   o     to reimburse itself or the depositor for other expenses incurred for
         which it or the depositor is entitled to reimbursement, including
         reimbursement in connection with enforcing any repurchase,
         substitution or indemnification obligation of any designated seller,
         or against which it or the depositor is indemnified under the
         related agreement;

   o     to reimburse itself or the depositor for payment of FHA insurance
         premiums, if applicable;

   o     to withdraw any amount deposited in the Custodial Account that was
         not required to be deposited in that Custodial Account;

   o     to pay to itself or any subservicer for the funding of any Draws
         made on the revolving credit loans, if applicable;

   o     to make deposits to the funding account in the amounts and in the
         manner provided in the related agreement, if applicable; and

   o     to clear the Custodial Account of amounts relating to the
         corresponding trust assets in connection with the termination of the
         trust, as described in "The Agreements--Termination; Redemption of
         Securities" in this prospectus.

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<PAGE>
DISTRIBUTIONS OF PRINCIPAL AND INTEREST ON THE SECURITIES

   Beginning on the distribution date in the month after the month in which
the cut-off date occurs, or any other date specified in the accompanying
prospectus supplement, for a series of securities, distributions of principal
and interest, or, where applicable, of principal only or interest only, on
each class of securities entitled to such payments will be made either by the
trustee or the master servicer acting on behalf of the trustee, or by a
paying agent appointed by the trustee. The distributions will be made to the
persons who are registered as the holders of the securities at the close of
business on the last business day of the preceding month or on any other day
specified in the accompanying prospectus supplement.

   Distributions will be made in immediately available funds, by wire
transfer or otherwise, to the account of a securityholder at a bank or other
entity having appropriate facilities, if the securityholder has so notified
the trustee, the master servicer, or the paying agent, as the case may be,
and the applicable agreement provides for that form of payment, or by check
mailed to the address of the person entitled to such payment as it appears on
the securities register. Except as otherwise provided in the related
agreement, the final distribution in retirement of the securities will be
made only on the presentation and surrender of the securities at the office
or agency of the trustee specified in the notice to the securityholders.
Distributions will be made to each securityholder in accordance with that
holder's percentage interest in a particular class.

   The method of determining, and the amount of, payments of principal and
interest, or, where applicable, of principal only or interest only, on a
particular series of securities will be described in the accompanying
prospectus supplement. Distributions of interest on each class of securities
will be made prior to distributions of principal. Each class of securities,
other than classes of principal only securities, may have a different
specified interest rate, or pass-through rate, which may be a fixed, variable
or adjustable pass-through rate, or any combination of two or more
pass-through rates. The accompanying prospectus supplement will specify the
pass-through rate or rates for each class, or the initial pass-through rate
or rates, the interest accrual period and the method for determining the
pass-through rate or rates. Unless otherwise specified in the accompanying
prospectus supplement, interest on the securities will accrue during each
calendar month and will be payable on the distribution date in the following
calendar month. If stated in the accompanying prospectus supplement, interest
on any class of securities for any distribution date may be limited to the
extent of available funds for that distribution date. Interest on the
securities will be calculated on the basis of a 360-day year consisting of
twelve 30-day months or, if specified in the accompanying prospectus
supplement, the actual number of days in the related interest period and a
360 or 365/366-day year.

   On each distribution date for a series of securities, the trustee or the
master servicer, 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 securities specified in the accompanying prospectus
supplement, an amount equal to the percentage interest represented by the
security held by that holder multiplied by that class's Distribution Amount.

   In the case of a series of securities which includes two or more classes
of securities, the timing, sequential order, priority of distribution or
amount of distributions of principal, and any schedule or formula or other
provisions applicable to that determination, including distributions among
multiple classes of senior securities or subordinate securities, will be
described in the accompanying prospectus supplement. Distributions of
principal on any class of securities will be made on a pro rata basis among
all of the securities of that class unless otherwise described in the
accompanying prospectus supplement. In addition, as specified in the
accompanying prospectus supplement, payments of principal on the notes will
be limited to monthly principal payments on the loans, any excess interest,
if applicable, applied as principal payments on the notes and any amount paid
as a payment of principal under the related form of credit enhancement. If
stated in the accompanying prospectus supplement, a series of notes may
provide for a revolving period during which all or a portion of the principal
collections on the loans otherwise available for payment to the notes are
reinvested in additional balances or additional loans or accumulated in a
trust account pending the commencement of an amortization period specified in
the accompanying prospectus supplement or the occurrence of events specified
in the accompanying

                                       35
<PAGE>
prospectus supplement. To the extent the trust contains Balloon Loans that
require no monthly payments and non-amortizing mortgage loans that require
only small principal payments in proportion to the principal balance of the
mortgage loan, the amount of principal distributions on the securities
generally will be less than the amount that would otherwise be distributable
on a similar pool of conventional loans.

   On the day of the month specified in the accompanying prospectus
supplement as the determination date, the master servicer will determine the
amounts of principal and interest which will be paid to securityholders on
the immediately succeeding distribution date. Prior to the close of business
on the business day next succeeding each determination date, the master
servicer will furnish a statement to the trustee, setting forth, among other
things, the amount to be paid on the next succeeding distribution date.

FUNDING ACCOUNT

   The pooling and servicing agreement, trust agreement or other agreement
may provide for the transfer by the sellers of additional trust assets to the
related trust after the closing date. Those additional trust assets will be
required to conform to the requirements provided in the related agreement
providing for the transfer. If specified in the accompanying prospectus
supplement, the transfer may be funded by the establishment of a funding
account. If a funding account is established, all or a portion of the
proceeds of the sale of one or more classes of securities of the related
series or a portion of collections on the trust assets relating to principal
will be deposited in the funding account to be released as additional trust
assets are transferred. Unless specified in the accompanying prospectus
supplement, a funding account will be required to be maintained as an
Eligible Account. All amounts in the funding account will be required to be
invested in Permitted Investments and the amount held in the account shall at
no time exceed 25% of the aggregate outstanding principal balance of the
securities. Unless specified in the accompanying prospectus supplement, the
related agreement providing for the transfer of additional trust assets will
provide that all the transfers must be made within a specified period, and
that amounts set aside to fund those transfers, whether in a funding account
or otherwise, and not so applied within the required period of time will be
deemed to be Principal Prepayments and applied in the manner described in the
prospectus supplement.

REPORTS TO SECURITYHOLDERS

   On each distribution date, the master servicer will forward or cause to be
forwarded to each securityholder of record a statement or statements for the
related trust listing the information described in the related agreement.
Except as otherwise provided in the related agreement, that information will
in most cases, include the following, as applicable:

   o     the aggregate amount of interest collections and principal
         collections;

   o     the amount, if any, of the distribution allocable to principal;

   o     the amount, if any, of the distribution allocable to interest, and
         the amount of any shortfall in the amount of interest and principal;

   o     the aggregate unpaid principal balance of the trust assets after
         giving effect to the distribution of principal on the distribution
         date;

   o     the outstanding principal balance or notional amount of each class
         of securities after giving effect to the payment of principal on the
         distribution date;

   o     based on the most recent reports furnished by subservicers, the
         number and aggregate principal balance of loans in the related pool
         that are delinquent (a) one month, (b) two months and (c) three
         months, and that are in foreclosure;

   o     the book value of any property acquired by the trust through
         foreclosure or grant of a deed in lieu of foreclosure;

   o     the balance of the reserve fund, if any, at the close of business on
         the distribution date;

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<PAGE>
   o     the amount of credit enhancement remaining or credit enhancement
         payments made to cover default risk as of the close of business on
         the applicable determination date and a description of any credit
         enhancement substituted therefor;

   o     the percentage of the outstanding principal balance of the senior
         securities, if applicable, after giving effect to the distributions
         on the distribution date;

   o     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 those amounts, as well as the aggregate amount of each type of
         loss;

   o     in the case of securities benefitting from alternative credit
         enhancement arrangements described in a prospectus supplement, the
         amount of coverage under alternative arrangements as of the close of
         business on the applicable determination date;

   o     the aggregate amount of Draws;

   o     the servicing fee payable to the master servicer and any
         subservicers;

   o     the FHA insurance amount; and

   o     any additional information required under the related agreement for
         any series of securities which includes Agency Securities or private
         securities as trust assets.

Each amount listed under the second and third clauses above will be expressed
both as an aggregate amount per each class of securities, and for all classes
in aggregate, and as a dollar amount per single security. As to a particular
class of securities, a single security, in most cases, will evidence a
percentage interest obtained by dividing $1,000 by the initial principal
balance or notional balance of all the securities of a class, except as
otherwise provided in the related agreement. In addition to the information
described above, reports to securityholders will contain other information as
is listed in the applicable agreement, which may include, without limitation,
information as to Advances, reimbursements to subservicers and the master
servicer and losses borne by the related trust.

   In addition, to the extent described in the related agreement, within a
reasonable period of time after the end of each calendar year, the master
servicer will furnish a report to each holder of record of a class of
securities at any time during that calendar year. The report will include
information describing the aggregate principal and interest distributions for
that calendar year or, in the event that person was a holder of record of a
class of securities during a portion of the calendar year, for the applicable
portion of the year.

SERVICING AND ADMINISTRATION OF TRUST ASSETS

 General

   The master servicer will be required to service and administer the trust
assets in a manner consistent with the terms of the related agreement. The
master servicer may be an affiliate of the depositor.

   For any series of securities secured by Agency Securities or private
securities, the applicable procedures for servicing of the related underlying
assets will be described in the accompanying prospectus supplement.

 Subservicing

   In connection with any series of securities the master servicer may enter
into subservicing agreements with one or more subservicers who will agree to
perform certain functions for the master servicer relating to the servicing
and administration of the loans included in the trust relating to the
subservicing agreement. A subservicer may be an affiliate of the depositor.
See "Trust Asset Program--Subservicing" in this prospectus. Each subservicer
typically will be required to perform the customary functions of a servicer,
including but not limited to:

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<PAGE>
   o     collection of payments from borrowers and remittance of those
         collections to the master servicer;

   o     maintenance of escrow or impoundment accounts of borrowers for
         payment of taxes, insurance and other items required to be paid by
         the borrower under the trust asset, if applicable;

   o     processing of assumptions or substitutions, although, as specified
         in the accompanying prospectus supplement, the master servicer is,
         in most cases, required to exercise due-on-sale clauses to the
         extent that exercise is permitted by law and would not adversely
         affect insurance coverage;

   o     attempting to cure delinquencies;

   o     supervising foreclosures;

   o     inspection and management of mortgaged properties under various
         circumstances; and

   o     maintaining accounting records relating to the trust assets.

   The subservicer may be required to make Advances as described under
"--Servicing and Administration of Trust Assets--Advances" in this
prospectus. In addition, the subservicer generally shall be responsible for
collection activity and default management with respect to any delinquent
loan unless undertaken by the master servicer as described in the
accompanying prospectus supplement. The master servicer will remain liable
for its obligations that are delegated to a subservicer as if the master
servicer alone were servicing those loans.

   A subservicer may, in most cases, transfer its servicing obligations to
another entity that has been approved for participation in Residential
Funding Corporation's loan purchase programs, but only with the approval of
the master servicer.

   Each subservicer will be required to agree to indemnify the master
servicer for any liability or obligation sustained by the master servicer in
connection with any act or failure to act by the subservicer in its servicing
capacity. Each subservicer is required to maintain a fidelity bond and an
errors and omissions policy for its employees and other persons acting on its
behalf or on behalf of the master servicer.

   Each subservicer will be required to service each trust asset under the
terms of the subservicing agreement for the entire term of that trust asset,
unless the subservicing agreement is earlier terminated by the master
servicer or unless servicing is released to the master servicer. Subject to
applicable law, the master servicer may have the right to terminate a
subservicing agreement immediately upon giving notice upon specified events,
including the violation of that subservicing agreement by the subservicer, or
up to ninety days' notice to the subservicer without cause upon payment of
specified amounts described in the subservicing agreement. Upon termination
of a subservicing agreement, the master servicer may act as servicer of the
related trust assets or enter into one or more new subservicing agreements.
The master servicer may agree with a subservicer to amend a subservicing
agreement. Any amendments to a subservicing agreement or to a new
subservicing agreement may contain provisions different from those described
above which are in effect in the original subservicing agreements. However,
any pooling and servicing agreement or servicing agreement relating to a
trust will provide that any amendment or new agreement may not be
inconsistent with or violate the pooling and servicing agreement or servicing
agreement in a manner which would materially and adversely affect the
interest of the securityholders.

   The master servicer may either assume the primary servicing responsibility
from the related subservicer, and may perform all collections, loss
mitigation and other servicing functions relating to any delinquent loan or
foreclosure proceeding, or may review the loss mitigation procedures
conducted for any delinquent loan, as well as the management and liquidation
of any delinquent mortgaged properties acquired by foreclosure or
deed-in-lieu of foreclosure.

   In the event of a bankruptcy, receivership or conservatorship of the
master servicer or any subservicer, the bankruptcy court or the receiver or
conservator may have the power to prevent both the appointment of a successor
to service the trust assets and the transfer of collections commingled with
funds of the master servicer or subservicer at the time of its bankruptcy,
receivership or conservatorship.

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<PAGE>
In addition, if the master servicer or any subservicer were to become a
debtor in a bankruptcy case, its rights under the related agreement,
including the right to service the trust assets, would be property of its
bankruptcy estate and therefore, under the Bankruptcy Code, subject to its
right to assume or reject such agreement.

 Collection and Other Servicing Procedures

   The master servicer, directly or through subservicers, as the case may be,
will make reasonable efforts to collect all payments called for under the
trust assets and will, consistent with the related pooling and servicing
agreement or servicing agreement and any applicable insurance policy, FHA
insurance or other credit enhancement, follow the collection procedures which
shall be normal and usual in its general loan servicing activities relating
to loans comparable to those included in the trust. Consistent with the
previous sentence, the master servicer may in its discretion waive any
prepayment charge in connection with the prepayment of a loan or extend the
due dates for payments due on a mortgage note, provided that the insurance
coverage for that loan or any coverage provided by any alternative credit
enhancement will not be adversely affected by that waiver or extension. The
master servicer may also waive or modify any term of a loan so long as the
master servicer has determined that the waiver or modification is not
materially adverse to any securityholders, taking into account any estimated
loss that may result absent that action. The master servicer will have the
option to allow a credit limit increase or an extension of the Draw Period
applicable to any revolving credit loan subject to the limitations described
in the related agreement. The master servicer may be subject to restrictions
under the pooling and servicing agreement or servicing agreement for the
refinancing of a lien senior to a loan or a contract secured by a lien on the
related mortgaged property. For any series of securities as to which the
trust includes private securities, the master servicer's servicing and
administration obligations will be governed by the terms of those private
securities.

   The master servicer, in its discretion, may, or may allow a subservicer
to, extend relief to borrowers whose payments become delinquent. The master
servicer or subservicer, without the prior approval of the master servicer,
may grant a period of temporary indulgence, in most cases, up to three
months, to a borrower or may enter into a liquidating plan providing for
repayment by the borrower of delinquent amounts within six months from the
date of execution of the plan. Other types of forbearance generally require
master servicer approval. Neither indulgence nor forbearance as to a trust
asset will affect the interest rate or rates used in calculating payments to
securityholders. See "Description of the Securities--Payments on Trust
Assets" in this prospectus.

   Under some circumstances, as to any series of securities, the master
servicer may have the option to repurchase loans from the trust for cash, or
in exchange for other loans or Permitted Investments. All provisions relating
to these optional repurchase provisions will be described in the accompanying
prospectus supplement.

   In instances in which a loan is in default, or if default is reasonably
foreseeable, and if determined by the master servicer to be in the best
interests of the related securityholders, the master servicer may engage in a
wide variety of loss mitigation practices including waivers, modifications,
payment forbearances, partial forgiveness, entering into repayment schedule
arrangements, and capitalization of arrearages rather than proceeding with
foreclosure or repossession, if applicable. In making that determination, the
estimated Realized Loss that might result if the loan were liquidated would
be taken into account. These modifications may have the effect of reducing
the loan rate or extending the final maturity date of the loan. Any modified
loan may remain in the related trust, and the reduction in collections
resulting from a modification may result in reduced distributions of interest
or other amounts on, or may extend the final maturity of, one or more classes
of the related securities.

   In connection with any significant partial prepayment of a loan, the
master servicer, to the extent not inconsistent with the terms of the
mortgage note and local law and practice, may permit the loan to be
re-amortized so that the monthly payment is recalculated as an amount that
will fully amortize its remaining principal amount by the original maturity
date based on the original loan rate, provided that the re-amortization shall
not be permitted if it would constitute a significant modification of the
loan for federal income tax purposes.

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<PAGE>
 Advances

   If specified in the accompanying prospectus supplement, the master
servicer will agree to make Advances on specified closed-end loans, either
out of its own funds, funds advanced to it by subservicers or funds being
held in the Custodial Account for future payment, for the benefit of the
securityholders, on or before each distribution date, of monthly payments on
the loans that were delinquent as of the close of business on the business
day preceding the determination date on the loans in the related pool.
Advances will be made only to the extent that the Advances would, in the
judgment of the master servicer be recoverable out of late payments by the
borrowers, Liquidation Proceeds, Insurance Proceeds or otherwise. Advances
will not be made in connection with revolving credit loans, except as
otherwise provided in the accompanying prospectus supplement. As specified in
the accompanying prospectus supplement for any series of securities as to
which the trust includes private securities, the master servicer's advancing
obligations will be under the terms of such private securities, as may be
supplemented by the terms of the applicable agreement, and may differ from
the provisions relating to Advances described in this prospectus. Unless
specified in the accompanying prospectus supplement, the master servicer will
not make any advance with respect to principal on any simple interest loan,
or the Balloon Amount in the case of a Balloon Loan.

   The amount of any Advance will be determined based on the amount payable
under the loan as adjusted from time to time and as may be modified as
described in this prospectus under "Description of the Securities--Servicing
and Administration of Trust Assets--Collection and Other Servicing
Procedures," and no Advance will be required in connection with any reduction
in amounts payable under the Relief Act or as a result of actions taken by a
bankruptcy court.

   Advances are intended to maintain a regular flow of scheduled interest
and, if applicable, principal payments to related securityholders. Advances
do not represent an obligation of the master servicer to guarantee or insure
against losses. If Advances have been made by the master servicer from cash
being held for future payment to securityholders, those funds will be
required to be replaced on or before any future distribution date to the
extent that funds in the Payment Account on that distribution date would be
less than payments required to be made to securityholders. Any Advances will
be reimbursable to the master servicer out of recoveries on the related loans
for which those amounts were advanced, including, for example, late payments
made by the related borrower, any related Liquidation Proceeds and Insurance
Proceeds, proceeds of any applicable form of credit enhancement, or proceeds
of any other loans included in the trust.

   Advances will also be reimbursable from cash otherwise distributable to
securityholders to the extent that the master servicer determines that any
Advances previously made are not ultimately recoverable as described in the
preceding paragraph. For any senior/subordinate series, so long as the
related subordinate securities remain outstanding and except for Special
Hazard Losses, Fraud Losses, Bankruptcy Losses and Extraordinary Losses, the
Advances may also be reimbursable out of amounts otherwise distributable to
holders of the subordinate securities, if any.

   No assurance can be given that the subservicers will carry out their
Advance or payment obligations relating to the trust assets. The master
servicer will remain liable for its advancing obligations that are delegated
to a subservicer as if the master servicer alone were servicing those loans.

   The master servicer's obligation to make Advances may be supported by
another entity, the trustee, a financial guaranty insurance policy, a letter
of credit or other method as may be described in the related agreement. If
the short-term or long-term obligations of the provider of the support are
downgraded by a rating agency rating the related securities or if any
collateral supporting such obligation is not performing or is removed under
the terms of any agreement described in the accompanying prospectus
supplement, the securities may also be downgraded.

   The master servicer may also be obligated to make Servicing Advances, to
the extent recoverable out of Liquidation Proceeds or otherwise, relating to
real estate taxes and insurance premiums not paid by borrowers on a timely
basis, or for expenses to acquire, preserve, restore or dispose of the
related mortgaged property. In addition, the master servicer may be obligated
to make Servicing Advances to the

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<PAGE>
holders of any related first lien loan or cure any delinquencies to the
extent that doing so would be prudent and necessary to protect the interests
of the securityholders. Servicing Advances will be reimbursable to the master
servicer to the extent permitted by the related agreement.

   In the case of revolving credit loans, the master servicer is required to
advance funds to cover any Draws made on a revolving credit loan, subject to
reimbursement by the entity specified in the accompanying prospectus
supplement, provided that as specified in the accompanying prospectus
supplement during any revolving period associated with the related series of
securities, Draws may be covered first from principal collections on the
other loans in the pool.

 Enforcement of "Due on Sale" Clauses

   In any case in which property subject to a loan, is being conveyed by the
borrower, the master servicer, directly or through a subservicer, shall, in
most cases, be obligated, to the extent it has knowledge of the conveyance,
to exercise its rights to accelerate the maturity of that loan under any
due-on-sale clause applicable to that loan, but only if the exercise of those
rights is permitted by applicable law and only to the extent it would not
adversely affect or jeopardize coverage under any applicable credit
enhancement arrangements. If the master servicer or subservicer is prevented
from enforcing the due-on-sale clause under applicable law or if the master
servicer or subservicer determines that it is reasonably likely that a legal
action would be instituted by the related borrower to avoid enforcement of
the due-on-sale clause, the master servicer or subservicer will enter into an
assumption and modification agreement with the person to whom the property
has been or is about to be conveyed, under which the person will become
liable under the mortgage note subject to specified conditions. The original
borrower may be released from liability on a loan if the master servicer or
subservicer shall have determined in good faith that the release will not
adversely affect the likelihood of full and timely collections on the related
loan. Any fee collected by the master servicer or subservicer for entering
into an assumption or substitution of liability agreement will be retained by
the master servicer or subservicer as additional servicing compensation
unless otherwise described in the accompanying prospectus supplement. See
"Certain Legal Aspects of Trust Assets and Related Matters--Trust Assets
Secured by Mortgages on Mortgaged Property--Enforceability of Certain
Provisions" in this prospectus. In connection with any assumption, the loan
rate borne by the related mortgage note may not be altered.

   Borrowers 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 or the related subservicer may
approve that request if it has determined, exercising its good faith business
judgment in the same manner as it would if it were the owner of the related
loan, that the approval will not adversely affect the security for, and the
timely and full collectability of, the related loan. Any fee collected by the
master servicer or the subservicer for processing that request will be
retained by the master servicer or subservicer as additional servicing
compensation.

 Realization Upon Defaulted Loans

   If a loan or a contract secured by a lien on a mortgaged property is in
default, the master servicer or the related subservicer may take a variety of
actions including foreclosing upon the mortgaged property relating to that
loan, writing off the principal balance of the loan as a bad debt, taking a
deed in lieu of foreclosure, accepting a short sale, permitting a short
refinancing, arranging for a repayment plan or modification as described
above, or taking an unsecured note. Realization on other defaulted contracts
may be accomplished through repossession and subsequent resale of the
underlying manufactured home or home improvement. In connection with that
decision, the master servicer or the related subservicer will, following
usual practices in connection with senior and junior mortgage servicing
activities or repossession and resale activities, estimate the proceeds
expected to be received and the expenses expected to be incurred in
connection with that foreclosure or repossession and resale to determine
whether a foreclosure proceeding or a repossession and resale is appropriate.
To the extent that a loan or a contract secured by a lien on a mortgaged
property is junior to another lien on the related mortgaged property,
following any default thereon, unless foreclosure proceeds for that trust
asset are expected to at least satisfy the related senior loan in full and to
pay foreclosure costs, it is likely that the trust asset will be written off
as bad debt with no foreclosure proceeding. If title to any mortgaged
property is

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<PAGE>
acquired in foreclosure or by deed in lieu of foreclosure, the deed or
certificate of sale will be issued to the trustee or to its nominee on behalf
of securityholders and, if applicable, the holder of any Excluded Balance.
Any REO Loan or REO Contract secured by a lien on a mortgaged property will
be considered for most purposes to be an outstanding trust asset held in the
trust until such time as the mortgaged property, manufactured home or home
improvement is sold and the REO Loan or REO Contract has been converted into
a Liquidated Loan.

   If a REMIC election has been made, any mortgaged property so acquired by
the trust must be disposed of in accordance with applicable federal income
tax regulations and consistent with the status of the trust as a REMIC. To
the extent provided in the related agreement, any income, net of expenses and
other than gains described in the second paragraph below, received by the
subservicer or the master servicer on the mortgaged property prior to its
disposition will be deposited in the Custodial Account upon receipt and will
be available at that time for making payments to securityholders.

   For a loan or a contract secured by a lien on a mortgaged property in
default, the master servicer may pursue foreclosure or similar remedies,
subject to any senior lien positions and other restrictions pertaining to
junior loans as described under "Certain Legal Aspects of Trust Assets and
Related Matters--Trust Assets Secured by Mortgages on Mortgage
Property--Foreclosure on Loans and Certain Contracts" concurrently with
pursuing any remedy for a breach of a representation and warranty. However,
the master servicer is not required to continue to pursue both remedies if it
determines that one remedy is more likely to result in a greater recovery.

   Upon the first to occur of final liquidation and a repurchase or
substitution under a breach of a representation and warranty, the loan will
be removed from the related trust. The master servicer may elect to treat a
defaulted loan as having been finally liquidated if substantially all amounts
expected to be received in connection with that liquidation have been
received. Any additional liquidation expenses relating to that trust asset
incurred after the initial liquidation will be reimbursable to the master
servicer, or any subservicer, from any amounts otherwise distributable to the
related securityholders, or may be offset by any subsequent recovery related
to that loan. Alternatively, for purposes of determining the amount of
related Liquidation Proceeds to be distributed to securityholders, the amount
of any Realized Loss or the amount required to be drawn under any applicable
form of credit enhancement, the master 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
the defaulted loan. Upon foreclosure of a revolving credit loan, the related
Liquidation Proceeds will be allocated among the Trust Balances and Excluded
Balances as described in the prospectus supplement.

   For some series of securities, the applicable form of credit enhancement
may provide, to the extent of coverage, that a defaulted loan or REO Loan
will be removed from the trust prior to its final liquidation. In addition,
the master servicer or the holder of the most subordinate class of securities
in a series may have the option to purchase from the trust any defaulted loan
after a specified period of delinquency. If a defaulted trust asset or REO
Loan is not so removed from the trust, then, upon its final liquidation, if a
loss is realized which is not covered by any applicable form of credit
enhancement or other insurance, the securityholders will bear that loss.
However, if a gain results from the final liquidation of an REO Loan which is
not required by law to be remitted to the related borrower, the master
servicer will be entitled to retain that gain as additional servicing
compensation unless the accompanying prospectus supplement provides
otherwise. For a description of the master servicer's obligations to maintain
and make claims under applicable forms of credit enhancement and insurance
relating to the trust assets, see "Description of Credit Enhancement" and
"Insurance Policies on Loans--Hazard Insurance and Related Claims" in this
prospectus. If a final liquidation of a loan resulted in a Realized Loss and
within two years thereafter the master servicer receives a subsequent
recovery specifically related to that loan, in connection with a related
breach of a representation or warranty or otherwise, the subsequent recovery
shall be distributed to the then-current securityholders of any outstanding
class to which the 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 securities of any class in excess of the total amount
of the Realized Loss that was allocated to that class.

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<PAGE>
 Special Servicing and Special Servicing Agreements

   The pooling and servicing agreement or servicing agreement for a series of
securities may name a Special Servicer, which will be responsible for the
servicing of some delinquent trust assets. The Special Servicer may have
discretion to extend relief to some borrowers whose payments become
delinquent. The Special Servicer may be permitted to grant a period of
temporary indulgence to a borrower or may enter into a repayment plan
providing for repayment of arrearages by that borrower, in each case without
the prior approval of the master servicer or the subservicer. Other types of
forbearance generally may require the approval of the master servicer or
subservicer, as applicable.

   In addition, the master servicer may enter into various agreements with
holders of one or more classes of subordinate securities or of a class of
securities representing interests in one or more classes of subordinate
securities. Under the terms of these agreements, the holder may, as to some
delinquent loans:

   o     instruct the master servicer to commence or delay foreclosure
         proceedings, provided that the holder deposits a specified amount of
         cash with the master servicer which will be available for
         distribution to securityholders in the event that liquidation
         proceeds are less than they otherwise may have been had the master
         servicer acted under its normal servicing procedures;

   o     instruct the master servicer to purchase those loans from the trust
         prior to the commencement of foreclosure proceedings at the
         repurchase price and to resell those trust assets to that holder, in
         which case any subsequent loss on those loans will not be allocated
         to the securityholders;

   o     become, or designate a third party to become, a subservicer for the
         trust assets so long as (a) the master servicer has the right to
         transfer the subservicing rights and obligations of those trust
         assets to another subservicer at any time or (b) that holder or its
         servicing designee is required to service the trust assets according
         to the master servicer's servicing guidelines; or

   o     the accompanying prospectus supplement may provide for the other
         types of special servicing arrangements.

 Servicing Compensation and Payment of Expenses

   The master servicer will be paid monthly compensation for the performance
of its servicing obligations at the percentage per annum of the outstanding
principal balance of each loan as described in the accompanying prospectus
supplement. Any subservicer will also be entitled to a monthly servicing fee
which may vary under some circumstances from amounts as described in the
accompanying prospectus supplement. Except as otherwise provided in the
accompanying prospectus supplement, the master servicer will deduct the
servicing fee for the loans underlying the securities of a series in the
amount specified in the accompanying prospectus supplement. The servicing
fees may be fixed or variable. In addition, the master servicer or the
relevant subservicers, if any, will be entitled to servicing compensation in
the form of assumption fees, late payment charges or excess proceeds
following disposition of property in connection with defaulted loans and any
earnings on investments held in the Payment Account or any Custodial Account.
Any Excess Spread or Excluded Spread retained by a seller or the master
servicer will not constitute part of the servicing fee. However, for a series
of securities as to which the trust includes private securities, the
compensation payable to the master servicer for servicing and administering
such private securities on behalf of the holders of such securities may be
based on a percentage per annum described in the accompanying prospectus
supplement of the outstanding balance of such private securities and may be
retained from distributions of interest thereon, if stated in the
accompanying prospectus supplement. In addition, some reasonable duties of
the master servicer may be performed by an affiliate of the master servicer
who will be entitled to compensation for performance of those duties.

   The master servicer or, if specified in the related agreement, the trustee
on behalf of the applicable trust, will pay or cause to be paid various
ongoing expenses associated with each trust and incurred by it in connection
with its responsibilities under the related agreement. This includes, without
limitation, payment of any fee or other amount payable for credit enhancement
arrangements, payment of any FHA insurance premiums, if applicable, payment
of the fees and disbursements of any trustee, any custodian appointed by the
trustee, the security registrar and any paying agent, and payment of expenses
incurred

                                       43
<PAGE>
in enforcing the obligations of subservicers and sellers. The master servicer
will be entitled to reimbursement of expenses incurred in enforcing the
obligations of subservicers and designated sellers under limited
circumstances. In addition, as indicated under "Realization upon Defaulted
Loans," the master servicer will be entitled to reimbursements for expenses
incurred by it in connection with Liquidated Loans and in connection with the
restoration of mortgaged properties, the right of reimbursement being prior
to the rights of securityholders to receive any related Liquidation Proceeds,
including Insurance Proceeds.

 Evidence as to Compliance

   Unless otherwise provided in the accompanying prospectus supplement, each
pooling and servicing agreement or servicing agreement will provide that, for
each series of securities, the master servicer will deliver to the trustee,
on or before the date in each year specified in the related agreement, an
annual statement signed by an officer of the master servicer to the effect
that the master servicer has fulfilled in all material respects the minimum
servicing standards described in the audit guide for audits of non-supervised
lenders approved by the HUD for use by independent public accountants, the
Uniform Single Attestation Program for Mortgage Bankers or the Audit Program
for mortgages serviced for Federal Home Loan Mortgage Corporation, each
referred to as an Audit Guide, throughout the preceding year or, if there has
been a material default in the fulfillment of any obligation, the statement
will specify each known default and the nature and status of that default.
The statement may be provided as a single form making the required statements
for more than one servicing agreement.

   Unless otherwise provided in the accompanying prospectus supplement, each
pooling and servicing agreement or servicing agreement will also provide that
on or before a specified date in each year, beginning the first date that is
at least a specified number of months after the cut-off date, a firm of
independent public accountants will furnish a statement to the depositor and
the trustee to the effect that, on the basis of an examination by that firm
conducted substantially in compliance with the standards established by the
American Institute of Certified Public Accountants, the servicing of loans
under agreements, including the related pooling and servicing agreement or
servicing agreement, was conducted substantially in compliance with the
minimum servicing standards described in the related Audit Guide, to the
extent that procedures in that Audit Guide are applicable to the servicing
obligations described in those agreements, except for those significant
exceptions or errors in records that shall be reported in that statement. In
rendering its statement that firm may rely, as to the matters relating to the
direct servicing of loans by subservicers, upon comparable statements for
examinations conducted substantially in compliance with the related Audit
Guide described above, rendered within one year of that statement, of firms
of independent public accountants for those subservicers which also have been
the subject of that examination.

   Copies of the annual statement of an officer of the master servicer may be
obtained by securityholders without charge upon written request to the master
servicer, at the address indicated in the monthly statement to
securityholders.

 Certain Matters Regarding the Master Servicer and the Depositor

   The master servicer may not resign from its obligations and duties under
the pooling and servicing agreement or servicing agreement for each series of
securities except upon a determination that performance of its duties is no
longer permissible under applicable law or except in connection with a
permitted transfer of servicing. No resignation will become effective until
the trustee or a successor master servicer has assumed the master servicer's
obligations and duties under the related pooling and servicing agreement or
servicing agreement.

   Each pooling and servicing agreement or servicing agreement will also
provide that, except as described in this paragraph, neither the master
servicer, the depositor nor any director, officer, employee or agent of the
master servicer or the depositor will be under any liability to the trust or
the securityholders for any action taken or for refraining from the taking of
any action in good faith under the related agreement, or for errors in
judgment. However, neither the master servicer, the depositor nor any such
person will be protected against any liability which would otherwise be
imposed by reason of willful

                                       44
<PAGE>
misfeasance, bad faith or gross negligence in the performance of duties or by
reason of reckless disregard of obligations and duties under the related
agreement. Each pooling and servicing agreement or servicing agreement will
further provide that the master servicer, the depositor and any director,
officer, employee or agent of the master servicer or the depositor is
entitled to indemnification by the trust, or the special purpose entity, if
applicable, and will be held harmless against any loss, liability or expense
incurred in connection with any legal action relating to the pooling and
servicing agreement or servicing agreement or the related series of
securities, other than any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or gross negligence in the performance of
duties under the related agreement or by reason of reckless disregard of
obligations and duties under related agreement. Any indemnification provided
by the trust as described in the preceding sentence will result in the
application of a loss to the offered securities if the amount of
indemnification exceeds the amount of available credit enhancement. In
addition, each pooling and servicing agreement or servicing agreement will
provide that the master servicer and the depositor will not be under any
obligation to appear in, prosecute or defend any legal or administrative
action that is not incidental to its respective duties under the related
agreement and which in its opinion may involve it in any expense or
liability. The master servicer or the depositor may, however, in its
discretion undertake any action which it may deem necessary or desirable for
the related agreement and the rights and duties of the parties to that
pooling and servicing agreement or servicing agreement and the interests of
the securityholders under that agreement. In that event, the legal expenses
and costs of an action and any liability resulting from that action will be
expenses, costs and liabilities of the trust, or the special purpose entity,
if applicable, and the master servicer or the depositor, as the case may be
will be entitled to be reimbursed for that action out of funds otherwise
distributable to securityholders.

   The master servicer is required to maintain a fidelity bond and errors and
omissions policy for 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 or servicing agreement.

   Any person into which the master servicer may be merged or consolidated,
any person resulting from any merger or consolidation to which the master
servicer is a party or any person succeeding to the business of the master
servicer will be the successor of the master servicer under the pooling and
servicing agreement or servicing agreement, provided that the person meets
the requirements described in the related agreement. In addition,
notwithstanding the prohibition on its resignation, the master servicer may
assign its rights and delegate its duties and obligations under a pooling and
servicing agreement or servicing agreement to any person reasonably
satisfactory to the depositor and the trustee and meeting the requirements
described in the related agreement. In the case of an assignment, the master
servicer will be released from its obligations under the related agreement,
exclusive of liabilities and obligations incurred by it prior to the time of
the assignment.

                                       45
<PAGE>
                      DESCRIPTION OF CREDIT ENHANCEMENT

GENERAL

   As described in the accompanying prospectus supplement, the credit support
provided for each series of securities will include one or any combination of
the following:

   o     subordination provided by any class of subordinated securities
         related to a series of securities;

   o     overcollateralization;

   o     a reserve fund;

   o     a financial guaranty insurance policy or surety bond;

   o     derivatives products;

   o     a letter of credit;

   o     a mortgage repurchase bond, mortgage pool insurance policy, special
         hazard insurance policy, bankruptcy bond or other types of insurance
         policies, or a secured or unsecured corporate guaranty, as described
         in the accompanying prospectus supplement; or

   o     another form of credit support as may be described in the
         accompanying prospectus supplement.

If specified in the accompanying prospectus supplement, the contracts may be
partially insured by the FHA under Title I.

   The credit support may also be provided by an assignment of the right to
receive 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 accompanying prospectus supplement.

   As to each series of securities, each element of the credit support will
cover losses or shortfalls incurred on the trust assets, or losses or
shortfalls allocated to or borne by the securities, as and to the extent
described in the accompanying prospectus supplement and at the times
described in that prospectus supplement. If so provided in the accompanying
prospectus supplement, any element of the credit support may be subject to
limitations relating to the specific type of loss or shortfall incurred as to
any trust asset. Alternatively, if so provided in the accompanying prospectus
supplement, the coverage provided by any element of the credit support may be
comprised of one or more of the components described in this section. Each
component may have a dollar limit and will, in most cases, provide coverage
for Realized Losses that are, as applicable:

   o     Defaulted Loan Losses;

   o     Special Hazard Losses;

   o     Bankruptcy Losses; and

   o     Fraud Losses.

   Most forms of credit support will not provide protection against all risks
of loss and will not guarantee repayment of the entire outstanding principal
balance of the securities and interest thereon. If losses occur which exceed
the amount covered by credit support or which are not covered by the credit
support, securityholders will bear their allocable share of deficiencies. In
particular, if so provided in the accompanying prospectus supplement,
Extraordinary Losses will not be covered. To the extent that the credit
enhancement for any series of securities is exhausted or unavailable for any
reason, the securityholders will bear all further risks of loss not otherwise
insured against.

   For any series of securities backed by Trust Balances of revolving credit
loans, the credit enhancement provided with respect to the securities will
cover any portion of any Realized Losses allocated to the Trust Balances,
subject to any limitations described in this prospectus and in the
accompanying prospectus supplement. See "The Trust--Characteristics of the
Loans--Revolving Credit Loans--Allocation of Revolving Credit Loan Balances"
in this prospectus.

                                       46
<PAGE>
   For any defaulted trust asset that is finally liquidated, the Realized
Loss, if any as described in the related agreement, will equal the portion of
the Stated Principal Balance remaining after application of all amounts
recovered, net of expenses allocable to the trust, towards interest and
principal owing on the trust asset. As to a trust asset the principal balance
of which has been reduced in connection with bankruptcy proceedings, the
amount of that reduction will be treated as a Realized Loss.

   Each prospectus supplement will include a description of:

   o     the amount payable under the credit enhancement arrangement, if any,
         provided for a series;

   o     any conditions to payment thereunder not otherwise described in this
         prospectus;

   o     the conditions under which the amount payable under the credit
         support may be reduced and under which the credit support may be
         terminated or replaced; and

   o     the material provisions of any agreement relating to the credit
         support.

   Additionally, each prospectus supplement will contain information for the
issuer of any third-party credit enhancement, if applicable. The related
agreement or other documents may be modified in connection with the
provisions of any credit enhancement arrangement to provide for reimbursement
rights, control rights or other provisions that may be required by the credit
enhancer. To the extent provided in the applicable agreement, the credit
enhancement arrangements may be periodically modified, reduced and
substituted for based on the performance of or on the aggregate outstanding
principal balance of the loans covered thereby. See "Description of Credit
Enhancement--Reduction or Substitution of Credit Enhancement" in this
prospectus. If specified in the applicable prospectus supplement, credit
support for a series of securities may cover one or more other series of
securities.

   The descriptions of any insurance policies, bonds or other instruments
described in this prospectus or any prospectus supplement and the coverage
they provide do not include all terms of these instruments, but will reflect
all relevant terms material to an investment in the securities. Copies of the
instruments will be included as exhibits to the Form 8-K to be filed with the
Commission in connection with the issuance of the related series of
securities.

FINANCIAL GUARANTY INSURANCE POLICIES; SURETY BONDS

   The depositor may obtain and maintain one or more financial guaranty
insurance policies or guarantees, or one or more surety bonds, or one or more
guarantees issued by insurers or other parties acceptable to the rating
agency or agencies rating the securities offered insuring the holders of one
or more classes of securities the payment of specified amounts due in
accordance with the terms of that class or those classes of securities. Any
financial guaranty insurance policy, surety bond or guaranty will have the
characteristics, and will be in accordance with any limitations and
expectations, described in the accompanying prospectus supplement. The
insurer of the financial guaranty insurance policy will be described in the
accompanying prospectus supplement and a copy of the form of financial
guaranty insurance policy will be filed with the related Current Report on
Form 8-K.

   Unless specified in the accompanying prospectus supplement, a financial
guaranty insurance policy will be unconditional and irrevocable and will
guarantee to holders of the applicable securities that an amount equal to the
full amount of payments due to these holders will be received by the trustee
or its agent on behalf of the holders for payment on each distribution date.
The specific terms of any financial guaranty insurance policy will be
described in the accompanying prospectus supplement. A financial guaranty
insurance policy may have limitations and, in most cases, will not insure the
obligation of the sellers or the master servicer to purchase or substitute
for a defective trust asset and will not guarantee any specific rate of
Principal Prepayments or cover specific interest shortfalls. In most cases,
the insurer will be subrogated to the rights of each holder to the extent the
insurer makes payments under the financial guaranty insurance policy.

                                       47
<PAGE>
LETTERS OF CREDIT

   If any component of credit enhancement as to any series of securities is
to be provided by a letter of credit from a bank, the bank issuing the letter
of credit will deliver to the trustee an irrevocable letter of credit. The
letter of credit may provide direct coverage for the trust assets. The bank
issuing the letter of credit, the amount available under the letter of credit
for 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 accompanying prospectus supplement. On or before each
distribution date, the letter of credit bank after notification from the
trustee will be required to make payments, to be deposited in the related
Payment Account relating to the coverage provided by that letter of credit.

SUBORDINATION

   A senior/subordinate series of securities will consist of one or more
classes of senior securities and one or more classes of subordinate
securities, as described in the accompanying prospectus supplement.
Subordination of the subordinate securities of any senior/subordinate series
will be effected by the following method, unless an alternative method is
specified in the accompanying prospectus supplement. In addition, some
classes of senior or subordinate securities may be senior to other classes of
senior subordinate securities, as specified in the accompanying prospectus
supplement.

   For any senior/subordinate series, the total amount available for
distribution on each distribution date, as well as the method for allocating
the available amount among the various classes of securities included in the
series, will be described in the accompanying prospectus supplement. In most
cases, for any senior/subordinate series, the amount available for
distribution will be allocated first to interest on the senior securities of
the series, and then to principal of the senior securities up to the amounts
described in the accompanying prospectus supplement, prior to allocation of
any amounts to the subordinate securities of the series.

   In the event of any Realized Losses not in excess of the limitations
described below (other than Extraordinary Losses), the rights of the
subordinate securityholders to receive distributions will be subordinate to
the rights of the senior securityholders and the owner of Excluded Spread
and, as to certain classes of subordinated securities, may be subordinate to
the rights of other subordinate securityholders.

   Except as noted in the following paragraph, Realized Losses will be
allocated to the subordinate securities of the related series in the order
specified in the accompanying prospectus supplement until the outstanding
principal balance of each specified class has been reduced to zero.
Additional Realized Losses, if any, will be allocated to the senior
securities. If the series includes more than one class of senior securities,
the additional Realized Losses will be allocated either on a pro rata basis
among all of the senior securities in proportion to their respective
outstanding principal balances or as otherwise described in the accompanying
prospectus supplement.

   The respective amounts of specified types of losses, including Special
Hazard Losses, Fraud Losses and Bankruptcy Losses, that may be borne solely
by the subordinate securities may be limited to amounts described in the
accompanying prospectus supplement. The subordinate securities may provide no
coverage for Extraordinary Losses or other types of losses specified in the
accompanying prospectus supplement. In these cases, losses in excess of these
amounts would be allocated on a pro rata basis among all outstanding classes
of securities in proportion to their outstanding principal balances, or as
otherwise described in the accompanying prospectus supplement. 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 securityholders, on the written
confirmation from each applicable rating agency that the then-current rating
of the classes of the related series of securities will not be adversely
affected.

   In most cases, any allocation of a Realized Loss including a Special
Hazard Loss, Fraud Loss or Bankruptcy Loss to a class of securities in a
senior/subordinate series will be made by reducing the outstanding principal
balance of that class as of the distribution date following the calendar
month in which the Realized Loss was incurred.

                                       48
<PAGE>
   The rights of holders of the various classes of securities of any series
to receive distributions of principal and interest are determined by the
aggregate outstanding principal balance of each class or, if applicable, the
related notional amount. The outstanding principal balance of any security
will be reduced by all amounts previously distributed on that security
representing principal, and by any Realized Losses allocated to that
security. If there are no Realized Losses or Principal Prepayments on any
loan, the respective rights of the holders of securities of any series to
future distributions in most cases would not change. However, to the extent
described in the accompanying prospectus supplement, holders of senior
securities may be entitled to receive a disproportionately larger amount of
prepayments received during specified periods, which will have the effect,
absent offsetting losses, of accelerating the amortization of the senior
securities and increasing the respective percentage ownership interest
evidenced by the subordinate securities in the related trust, with a
corresponding decrease in the percentage of the outstanding principal
balances of the senior securities, thereby preserving the availability of the
subordination provided by the subordinate securities. In addition, some
Realized Losses will be allocated first to subordinate securities by
reduction of their outstanding principal balance, which will have the effect
of increasing the respective ownership interest evidenced by the senior
securities in the related trust.

   If so provided in the related agreement, the master servicer may be
permitted, under some circumstances, to purchase any loan that is two or more
months delinquent in payments of principal and interest, at the repurchase
price. Any Realized Loss subsequently incurred in connection with any such
loan or the related Trust Balance may be borne by the then current
securityholders of the class or classes that would have borne that Realized
Loss if the loan or Trust Balance had not been so purchased, unless that
purchase was made upon the request of the holder of the most junior class of
securities of the related series. See "Description of the
Securities--Servicing and Administration of Trust Assets--Special Servicing
and Special Servicing Agreements" in this prospectus.

   To the extent provided in the accompanying prospectus supplement, amounts
otherwise payable on any distribution date to holders of subordinate
securities may be deposited into a reserve fund. Amounts held in any reserve
fund may be applied as described under "Description of Credit
Enhancement--Reserve Funds" in the accompanying prospectus supplement.

   In lieu of the foregoing provisions, subordination may be effected in the
following manner, or in any other manner as may be described in the
accompanying prospectus supplement. The rights of the holders of subordinate
securities to receive the Subordinate Amount will be limited to the extent
described in the accompanying prospectus supplement. As specified in the
accompanying prospectus supplement, the Subordinate Amount may be reduced
based on the amount of losses borne by the holders of the subordinate
securities as a result of the subordination, a specified schedule or other
method of reduction as the prospectus supplement may specify.

   For any senior/subordinate series, the terms and provisions of the
subordination may vary from those described above. Any variation and any
additional credit enhancement will be described in the accompanying
prospectus supplement.

OVERCOLLATERALIZATION

   If specified in the accompanying prospectus supplement, interest
collections on the trust assets may exceed the interest payments required to
be made on the securities and other fees and expenses of the trust for the
related distribution date. The amount of this excess is referred to as excess
interest. The excess interest may be deposited into a reserve fund or applied
as a payment of principal on the securities. To the extent excess interest is
applied as principal payments on the securities, the effect will be a
reduction of the principal balance of the securities relative to the
outstanding balance of the trust assets, creating overcollateralization and
additional protection to the securityholders, as specified in the
accompanying prospectus supplement.

                                       49
<PAGE>
RESERVE FUNDS

   If specified in the accompanying prospectus supplement, the depositor will
deposit or cause to be deposited in 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 the
accompanying prospectus supplement and related agreement. In the alternative
or in addition to that deposit, to the extent described in the accompanying
prospectus supplement, a reserve fund may be funded through application of
all or a portion of amounts otherwise payable on any related subordinate
securities, from the Excess Spread or otherwise. A reserve fund for a series
of securities which is funded over time by depositing in that reserve fund a
portion of the interest payment on each trust asset may be referred to as a
spread account in the accompanying prospectus supplement and related
agreement. To the extent that the funding of the reserve fund is dependent on
amounts otherwise payable on related subordinate securities, Excess Spread or
other cash flows attributable to the related trust assets or on reinvestment
income, the reserve fund may provide less coverage than initially expected if
the cash flows or reinvestment income on which the funding is dependent are
lower than anticipated. For any series of securities as to which credit
enhancement includes a letter of credit, under circumstances specified in the
accompanying prospectus supplement, 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 securityholders, or
applied to reimburse the master servicer for outstanding Advances, or may be
used for other purposes, in the manner and to the extent specified in the
accompanying prospectus supplement. In most cases, that reserve fund will not
be deemed to be part of the related trust. A reserve fund may provide
coverage to more than one series of securities if described in the
accompanying prospectus supplement. If specified in the accompanying
prospectus supplement, reserve funds may be established to provide limited
protection against only specific types of losses and shortfalls. Following
each distribution date amounts in a reserve fund in excess of any amount
required to be maintained in that reserve fund may be released from the
reserve fund under the conditions and to the extent specified in the
accompanying prospectus supplement and will not be available for further
application to the securities.

   The trustee will have a perfected security interest for the benefit of the
securityholders in the assets of the reserve fund, unless the assets are
owned by the related trust. However, to the extent that the depositor, any
affiliate of the depositor or any other entity has an interest in any reserve
fund, in the event of the bankruptcy, receivership or insolvency of that
entity, there could be delays in withdrawals from the reserve fund and the
corresponding payments to the securityholders. These delays could adversely
affect the yield to investors on the related securities.

   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 the
master servicer or any other person named in the accompanying prospectus
supplement. As specified in the accompanying prospectus supplement, any
reinvestment income or other gain from those investments will be credited to
the related reserve fund for the series, and any loss resulting from those
investments will be charged to that reserve fund. However, the reinvestment
income may be payable to the master servicer or another service provider as
additional compensation.

MORTGAGE POOL INSURANCE POLICIES

   Any insurance policy covering losses on a loan pool obtained by the
depositor for a trust will be issued by the mortgage pool insurer. Each
mortgage pool insurance policy, in accordance with the limitations described
in this prospectus and in the prospectus supplement, if any, will cover
Defaulted Mortgage Losses in an amount specified in the prospectus
supplement. As described under "--Maintenance of Credit Enhancement," the
master servicer will use its best reasonable efforts to maintain the mortgage
pool insurance policy and to present claims under that policy to the pool
insurer on behalf of itself, the trustee and the securityholders. The
mortgage pool insurance policies, however, are not blanket policies against
loss, since claims under those policies may only be made respecting
particular defaulted loans and

                                       50
<PAGE>
only on satisfaction of specified conditions precedent described in the
succeeding paragraph. Unless specified in the accompanying 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 under the policy unless, among other things:

   o     any required primary insurance policy is in effect for the defaulted
         loan and a claim under the policy has been submitted and settled;

   o     hazard insurance on the property securing the loan has been kept in
         force and real estate taxes and other protection and preservation
         expenses have been paid by the master servicer;

   o     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

   o     the insured has acquired good and merchantable title to the
         mortgaged property free and clear of liens except permitted
         encumbrances.

   On satisfaction of these conditions, the pool insurer will have the option
either (a) to purchase the property securing the defaulted loan at a price
equal to its outstanding principal balance plus accrued and unpaid interest
at the applicable loan rate to the date of purchase and some expenses
incurred by the master servicer on behalf of the trustee and securityholders,
or (b) to pay the amount by which the sum of the outstanding principal
balance of the defaulted loan plus accrued and unpaid interest at the loan
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 some amounts paid or assumed to have been
paid under any related primary insurance policy.

   Securityholders may experience a shortfall in the amount of interest
payable on the related securities 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 the claim is paid. In addition,
the securityholders may also experience losses for the related securities in
connection with payments made under a mortgage pool insurance policy to the
extent that the master 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 the policy and will be reimbursable to the master servicer
from funds otherwise payable to the securityholders. If any mortgaged
property securing a defaulted loan is damaged and proceeds, if any (see
"--Special Hazard Insurance Policies" in this prospectus for risks which are
not covered by those policies), from the related hazard insurance policy or
applicable special hazard insurance policy are insufficient to restore the
damaged property to a condition sufficient to permit recovery under the
mortgage pool insurance policy, the master servicer is not required to expend
its own funds to restore the damaged property unless it determines that (a)
restoration will increase the proceeds to securityholders on liquidation of
the mortgage loan after reimbursement of the master servicer for its expenses
and (b) the expenses will be recoverable by it through Liquidation Proceeds
or Insurance Proceeds.

   A mortgage pool insurance policy and some primary insurance policies will
likely not insure against loss sustained by reason of a default arising from,
among other things, fraud or negligence in the origination or servicing of a
mortgage loan, including misrepresentation by the borrower, the seller or
other persons involved in the origination thereof, failure to construct a
mortgaged property in accordance with plans and specifications or bankruptcy,
unless, if specified in the accompanying prospectus supplement, an
endorsement to the mortgage pool insurance policy provides for insurance
against that type of loss. Depending on the nature of the event, a breach of
representation made by a seller may also have occurred. That breach, if it
materially and adversely affects the interests of securityholders and cannot
be cured, would give rise to a repurchase obligation on the part of the
seller, as described under "Description of the Securities--Repurchases of
Loans" in this prospectus. However, such an event would not give rise to a
breach of a representation and warranty or a repurchase obligation on the
part of the depositor or Residential Funding Corporation.

                                       51
<PAGE>
   The original amount of coverage under each mortgage pool insurance policy
will be reduced over the life of the related series of securities by the
aggregate amount of claims paid less the aggregate of the net amounts
realized by the pool insurer on disposition of all foreclosed properties. The
amount of claims paid includes some expenses incurred by the master servicer
as well as accrued interest on delinquent mortgage loans to the date of
payment of the claim. See "Certain Legal Aspects of the Trust Assets and
Related Matters" in this prospectus. 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 securityholders. In
addition, unless the master servicer determines that an Advance relating to a
delinquent mortgage loan would be recoverable to it from the proceeds of the
liquidation of the mortgage loan or otherwise, the master servicer would not
be obligated to make an Advance respecting any 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
Securities--Servicing and Administration of Trust Assets--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, the policy will not provide
coverage against hazard losses. As described under "Insurance Policies on
Loans--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 those losses. Additionally, no coverage for 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" in this prospectus. As a result, certain hazard risks
will not be insured against and may be borne by securityholders.

   Contract pools may be covered by pool insurance policies that are similar
to the mortgage pool insurance policies described above.

SPECIAL HAZARD INSURANCE POLICIES

   Any insurance policy covering Special Hazard Losses obtained by the
depositor for a trust will be issued by the insurer named in the accompanying
prospectus supplement. Each special hazard insurance policy will, subject to
limitations described in the accompanying prospectus supplement, if any,
protect the related securityholders from Special Hazard Losses.

   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 borrower. Aggregate claims
under a special hazard insurance policy will be limited to the amount
described in the related agreement and will be subject to reduction as
described in that 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 loan has been kept in force and other protection
and preservation expenses have been paid by the master servicer.

   In accordance with the foregoing limitations, a special hazard insurance
policy will provide that, where there has been damage to property securing a
foreclosed loan, title to which has been acquired by the insured, and to the
extent the damage is not covered by the hazard insurance policy or flood
insurance policy, if any, maintained by the borrower or the master servicer,
the insurer will pay the lesser of (i) the cost of repair or replacement of
the related property or (ii) on transfer of the property to the insurer, the
unpaid principal balance of the loan at the time of acquisition of the
related property by foreclosure or deed in lieu of foreclosure, plus accrued
interest at the loan rate to the date of claim settlement and certain
expenses incurred by the master servicer for the related property.

   To the extent described in the accompanying prospectus supplement,
coverage in respect of Special Hazard Losses for a series of securities 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
depositor or Residential Funding Corporation.

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<PAGE>
BANKRUPTCY BONDS

   In the event of a personal bankruptcy of a borrower, a bankruptcy court
may establish a Deficient Valuation. The amount of the secured debt could
then be reduced to that value, and, thus, the holders of the first and junior
loans would become unsecured creditors to the extent the outstanding
principal balance of those loans exceeds the value assigned to the mortgaged
property by the bankruptcy court.

   In addition, other modifications of the terms of a loan can result from a
bankruptcy proceeding, including a Debt Service Reduction. See "Certain Legal
Aspects of Trust Assets and Related Matters--Trust Assets Secured by
Mortgages on Mortgaged Property--Anti-Deficiency Legislation and Other
Limitations on Lenders" in this prospectus. Any bankruptcy bond to provide
coverage for Bankruptcy Losses resulting from proceedings under the federal
Bankruptcy Code obtained by the depositor for a trust will be issued by an
insurer named in the accompanying prospectus supplement. The level of
coverage under each bankruptcy bond will be stated in the accompanying
prospectus supplement.

MAINTENANCE OF CREDIT ENHANCEMENT

   If credit enhancement has been obtained for a series of securities, the
master servicer, as specified in the related agreement, will be obligated to
exercise its best reasonable efforts to keep or cause to be kept the credit
enhancement in full force and effect throughout the term of the applicable
agreements, unless coverage under that credit enhancement has been exhausted
through payment of claims or otherwise, or substitution for that credit
enhancement is made, as described below under "--Reduction or Substitution of
Credit Enhancement" in this prospectus. The master servicer, on behalf of
itself, the trustee and securityholders, will provide the information
required for the trustee to draw any applicable credit enhancement.

   The master servicer or any other entity specified in the accompanying
prospectus supplement will agree to pay the premiums for each mortgage pool
insurance policy, special hazard insurance policy, bankruptcy policy,
financial guaranty insurance policy or surety bond, as applicable, on a
timely basis, unless the premiums are paid directly by the trust. As to
mortgage pool insurance policies generally, if the related insurer ceases to
be a Qualified Insurer, the master servicer or another entity specified in
the accompanying prospectus supplement 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 the policy or bond. If the cost of the replacement policy is greater than
the cost of the existing policy or bond, the coverage of the replacement
policy or bond will, unless otherwise agreed to by the depositor, be reduced
to a level so that its premium rate does not exceed the premium rate on the
original insurance policy. If the insurer under a mortgage pool insurance
policy ceases to be a Qualified Insurer because it ceases to be approved as
an insurer by Freddie Mac or Fannie Mae or any successor entity, the master
servicer or another entity specified in the accompanying prospectus
supplement 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 are jeopardized for reasons related to the
financial condition of the pool insurer. If the master servicer or the other
entity specified in the accompanying prospectus supplement 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, at the same cost limit. For all forms of credit enhancement
other than a mortgage pool insurance policy, the master servicer will have no
obligation to replace or substitute the credit enhancement for any reason,
including the non-performance or downgrading of the provider of the credit
enhancement. Any losses in market value of the securities associated with any
reduction or withdrawal in rating by an applicable rating agency shall be
borne by the securityholders.

   If any property securing a defaulted loan is damaged and proceeds, if any,
from the related hazard insurance policy are insufficient to restore the
damaged property to a condition sufficient to permit recovery under any
letter of credit, the master servicer is not required to expend its own funds
to restore the damaged property unless it determines:

   o     that restoration will increase the proceeds to one or more classes
         of securityholders on liquidation of that trust asset after
         reimbursement of the master servicer for its expenses; and

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<PAGE>
   o     that the expenses will be recoverable by it through Liquidation
         Proceeds or Insurance Proceeds.

If recovery under any letter of credit or other credit enhancement is not
available because the master servicer has been unable to make the above
determinations, has made the determinations incorrectly or recovery is not
available for any other reason, the master servicer is nevertheless obligated
to follow whatever normal practices and procedures, subject to the preceding
sentence, as it deems necessary or advisable to realize upon the defaulted
trust asset and in the event this determination has been incorrectly made, is
entitled to reimbursement of its expenses in connection with that
restoration.

REDUCTION OR SUBSTITUTION OF CREDIT ENHANCEMENT

   The amount of credit support provided for any series of securities and
relating to various types of losses incurred may be reduced under 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 described in the related agreement. Additionally, in
most cases, the credit support may be replaced, reduced or terminated, and
the formula used in calculating the amount of coverage for Bankruptcy Losses,
Special Hazard Losses or Fraud Losses may be changed, without the consent of
the securityholders, upon the written assurance from each applicable rating
agency that the then-current rating of the related series of securities will
not be adversely affected thereby.

   Furthermore, if the credit rating of any obligor under any applicable
credit enhancement is downgraded or the amount of credit enhancement is no
longer sufficient to support the rating on the related securities, the credit
rating of each class of the related securities may be downgraded to a
corresponding level, and, unless specified in the accompanying prospectus
supplement, neither the master servicer nor the depositor will be obligated
to obtain replacement credit support in order to restore the rating of the
securities. The master servicer will also be permitted to replace any credit
support with other credit enhancement instruments issued by obligors whose
credit ratings are equivalent to the downgraded level and in lower amounts
which would satisfy the downgraded level, provided that the then-current
rating of each class of the related series of securities 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 depositor, the master servicer or
any other person that is entitled to those assets. Any assets so released and
any amount by which the credit enhancement is reduced will not be available
for payments in future periods.

            OTHER FINANCIAL OBLIGATIONS RELATED TO THE SECURITIES

SWAPS AND YIELD SUPPLEMENT AGREEMENTS

   The trustee on behalf of the trust may enter into interest rate swaps and
related caps, floors and collars, collectively referred to as swaps, to
minimize the risk to securityholders of adverse changes in interest rates,
and other yield supplement agreements, similar yield maintenance arrangements
or other notional principal contracts, that do not involve swap agreements,
collectively referred to as yield supplement agreements.

   An interest rate swap is an agreement between two parties to exchange a
stream of interest payments on an agreed hypothetical or "notional" principal
amount. No principal amount is exchanged between the counterparties to an
interest rate swap. In the typical swap, one party agrees to pay a fixed rate
on a notional principal amount, while the counterparty pays a floating rate
based on one or more reference interest rates including the London Interbank
Offered Rate, or LIBOR, a specified bank's prime rate or U.S. Treasury Bill
rates. Interest rate swaps also permit counterparties to exchange a floating
rate obligation based upon one reference interest rate, such as LIBOR, for a
floating rate obligation based upon another referenced interest rate, such as
U.S. Treasury Bill rates.

   Yield supplement agreements may be entered into to supplement the interest
rate or other rates on one or more classes of the securities of any series.
Additionally, agreements relating to other types of derivative products that
are designed to provide credit enhancement to the related series may be
entered into by a trust and one or more counterparties.

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<PAGE>
   There can be no assurance that the trust will be able to enter into or
offset swaps or enter into yield supplement agreements or derivative product
agreements at any specific time or at prices or on other terms that are
advantageous. In addition, although the terms of the swaps and yield
supplement agreements may provide for termination under various
circumstances, there can be no assurance that the trust will be able to
terminate a swap or yield supplement agreement when it would be economically
advantageous to the trust to do so.

PURCHASE OBLIGATIONS

   Some types of trust assets and some classes of securities of any series,
as specified in the accompanying prospectus supplement, may be subject to a
purchase obligation that would become applicable on one or more specified
dates, or upon the occurrence of one or more specified events, or on demand
made by or on behalf of the applicable securityholders. A purchase obligation
may be in the form of a conditional or unconditional purchase commitment,
liquidity facility, remarketing agreement, maturity guaranty, put option or
demand feature. The terms and conditions of each purchase obligation,
including the repurchase price, timing and payment procedure, will be
described in the accompanying prospectus supplement. A purchase obligation
relating to trust assets may apply to those trust assets or to the related
securities. Each purchase obligation may be a secured or unsecured obligation
of its provider, which may include a bank or other financial institution or
an insurance company. Each purchase obligation will be evidenced by an
instrument delivered to the trustee for the benefit of the applicable
securityholders of the related series. Unless specified in the accompanying
prospectus supplement, each purchase obligation relating to trust assets will
be payable solely to the trustee for the benefit of the securityholders of
the related series. Other purchase obligations may be payable to the trustee
or directly to the holders of the securities to which that obligation
relates.

                         INSURANCE POLICIES ON LOANS

HAZARD INSURANCE AND RELATED CLAIMS

   The terms of each loan and contract that is secured by a lien on a
mortgaged property, other than a Cooperative Loan, require each borrower to
maintain a hazard insurance policy covering the related mortgaged property as
described in the next paragraph.

   The following summary, as well as other pertinent information included
elsewhere in this prospectus, does not describe all terms of a hazard
insurance policy but will reflect all material terms of the policy relevant
to an investment in the securities. The insurance is subject to underwriting
and approval of individual trust assets by the respective insurers.

   In most cases, the servicing agreement will require the master servicer to
cause to be maintained for each mortgaged property a hazard insurance policy
providing for no less than the coverage of the standard form of fire
insurance policy with extended coverage customary in the state in which the
property is located. That coverage, in most cases, will be in an amount equal
to the lesser of:

   o     the maximum insurable value of the mortgaged property; or

   o     the sum of the outstanding balance of the related loan or contract
         plus the outstanding balance on any loan senior to that loan or
         contract.

   The ability of the master 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 or upon the extent to
which information in this regard is furnished to the master servicer by
borrowers or subservicers.

   All amounts collected by the master servicer under any hazard policy,
except for amounts to be applied to the restoration or repair of the
mortgaged property or released to the borrower in accordance with the master
servicer's normal servicing procedures, will be deposited initially in the
Custodial Account and ultimately in the Payment Account. If loans secured by
junior liens on the related mortgaged property

                                       55
<PAGE>
are included within any trust, investors should consider the application of
hazard insurance proceeds discussed in this prospectus under "Certain Legal
Aspects of the Trust Assets and Related Matters--Trust Assets Secured by
Mortgages on Mortgaged Property--Junior Mortgages; Rights of Senior
Mortgagees."

   The master servicer may satisfy its obligation to cause hazard policies to
be maintained by maintaining a blanket policy insuring against losses on
those trust assets. If that blanket policy contains a deductible clause, the
master servicer will deposit in the Custodial Account or the applicable
Payment Account all amounts which would have been deposited in that account
but for that clause.

   Unless otherwise specified in the accompanying prospectus supplement, the
master servicer shall also cause to be maintained on property acquired upon
foreclosure, or deed in lieu of foreclosure, of any loan, fire insurance with
extended coverage in an amount which is at least equal to the amount
necessary to avoid the application of any co-insurance clause contained in
the related hazard insurance policy. 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, in accordance with 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 of which are dictated by
respective state laws. These 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 some cases, vandalism. The
foregoing list is merely indicative of some kinds of uninsured risks and is
not intended to be all-inclusive. Where the improvements securing a loan or
contract are located in a federally designated flood area at the time of
origination of that loan or contract, the pooling and servicing agreement or
servicing agreement typically requires the master servicer to cause to be
maintained for each such loan or contract serviced, flood insurance, to the
extent available, in an amount equal 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 borrowers are required to
maintain on the improvements securing the loans and contracts 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 "Description of Credit
Enhancement--Subordination" in this prospectus for a description of when
subordination is provided, the protection, limited to the Special Hazard
Amount as described in the accompanying prospectus supplement, afforded by
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.

DESCRIPTION OF FHA INSURANCE UNDER TITLE I

   Some of the contracts contained in a trust may be Title I loans which are
insured under the Title I Program as described in this section and in the
accompanying prospectus supplement. The regulations, rules and procedures
promulgated by the FHA under the Title I, or FHA Regulations, contain the
requirements under which lenders approved for participation in the Title I
Program may obtain insurance against a portion of losses incurred on eligible
loans that have been originated and serviced in accordance with FHA
Regulations, subject to the amount of insurance coverage available in that
Title I lender's FHA reserve, as described in this section and in the
accompanying prospectus supplement, and subject to the terms and conditions
established under the National Housing Act and FHA Regulations. FHA
Regulations permit the Secretary of HUD, subject to statutory limitations, to
waive a Title I lender's noncompliance with FHA Regulations if enforcement
would impose an injustice on the lender, provided the Title I lender
substantially complied with FHA Regulations in good faith and has credited
the borrower for any excess charges. In general, an insurance claim against
the FHA will be denied if the Title I loan to which it relates does not
strictly satisfy the requirements of the National Housing Act and FHA
Regulations.

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<PAGE>
   Unlike some other government loan insurance programs, loans under the
Title I Program other than loans in excess of $25,000, are not subject to
prior review by the FHA. Under the Title I Program, the FHA disburses
insurance proceeds for defaulted loans for which insurance claims have been
filed by a Title I lender prior to any review of those loans. A Title I
lender is required to repurchase a Title I loan from the FHA that is
determined to be ineligible for insurance after insurance claim payments for
that loan have been paid to that lender. Under the FHA Regulations, if the
Title I lender's obligation to repurchase the Title I loan is unsatisfied,
the FHA is permitted to offset the unsatisfied obligation against future
insurance claim payments owed by the FHA to that lender. FHA Regulations
permit the FHA to disallow an insurance claim for any loan that does not
qualify for insurance for a period of up to two years after the claim is made
and to require the Title I lender that has submitted the insurance claim to
repurchase the loan.

   The proceeds of loans under the Title I Program may be used only for
permitted purposes, including, but not limited to, the alteration, repair or
improvement of residential property, the purchase of a manufactured home
and/or lot, or cooperative interest in a manufactured home and/or lot, on
which to place that home.

   Subject to the limitations described below, eligible Title I loans are
generally insured by the FHA for 90% of an amount equal to the sum of:

   o     the net unpaid principal amount and the uncollected interest earned
         to the date of default;

   o     interest on the unpaid loan obligation from the date of default to
         the date of the initial submission of the insurance claim, plus 15
         calendar days, the total period not to exceed nine months, at a rate
         of 7% per annum;

   o     uncollected court costs;

   o     amount of attorney's fees on an hourly basis for time actually
         expended and billed not to exceed $500; and

   o     amount of expenses for recording the assignment of the security to
         the United States.

However, the insurance coverage provided by the FHA is limited to the extent
of the balance in the Title I lender's FHA reserve maintained by the FHA.
Accordingly, if sufficient insurance coverage is available in that FHA
reserve, then the Title I lender bears the risk of losses on a Title I loan
for which a claim for reimbursement is paid by the FHA of at least 10% of the
unpaid principal, uncollected interest earned to the date of default,
interest from the date of default to the date of the initial claim submission
and various expenses. Unlike most other FHA insurance programs, the
obligation of the FHA to reimburse a Title I lender for losses in the
portfolio of insured loans held by that Title I lender is limited to the
amount in an FHA reserve maintained on a lender-by-lender basis and not on a
loan-by-loan basis.

   Under Title I, the FHA maintains an FHA insurance coverage reserve
account, referred to as an FHA reserve, for each Title I lender. The amount
in each Title I lender's FHA reserve is a maximum of 10% of the amounts
disbursed, advanced or expended by a Title I lender in originating or
purchasing eligible loans registered with the FHA for Title I insurance, with
some adjustments permitted or required by FHA Regulations. The balance of
that FHA reserve is the maximum amount of insurance claims the FHA is
required to pay to the related Title I lender.

   Title I Loans to be insured under Title I will be registered for insurance
by the FHA. Following either the origination or transfer of loans eligible
under Title I, the Title I lender will submit those loans for FHA insurance
coverage within its FHA reserve by delivering a transfer report or through an
electronic submission to the FHA in the form prescribed under the FHA
Regulations. The increase in the FHA insurance coverage available for those
loans in the Title I lender's FHA reserve will occur on the date following
the receipt and acknowledgment by the FHA of the transfer report for those
loans. The insurance available to any trust will be subject to the
availability, from time to time, of amounts in each Title I lender's FHA
reserve, which will initially be limited to the FHA insurance amount as
specified in the accompanying prospectus supplement. For each eligible loan
reported and acknowledged for insurance, the FHA charges a fee, the FHA
insurance premium. If a loan is prepaid during the year, the FHA will not
refund the FHA insurance premium paid for that year.

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<PAGE>
   Under the Title I, the FHA will reduce the insurance coverage available in
a Title I lender's FHA reserve relating to loans insured under that Title I
lender's contract of insurance by:

   o     the amount of FHA insurance claims approved for payment related to
         those loans; and

   o     the amount of reserves related to a loan which have been:

         o sold, assigned or transferred; or

         o prepaid during the first year they were registered for insurance
           under the Title I lender's contract.

This insurance coverage also may be reduced for any FHA insurance claims
previously disbursed to the Title I lender that are subsequently rejected by
the FHA.

   As a result, for any Title I Loans backing any series of securities, the
availability of FHA insurance may be reduced or eliminated due to losses on
other loans or other actions by the related Title I lender.

   In most cases, the FHA will insure home improvement contracts up to
$25,000 for a single-family property, with a maximum term of 20 years. The
FHA will insure loans of up to $17,500 for manufactured homes which qualify
as real estate under applicable state law and loans of up to $60,000 or an
average amount of $12,000 per family unit for owner-occupied multiple-family
homes. If the loan amount is $15,000 or more, the FHA requires a drive-by
appraisal, the current tax assessment value, or a full Uniform Residential
Appraisal Report dated within 12 months of the closing to verify the
property's value. The maximum loan amount on transactions requiring an
appraisal is the amount of equity in the property shown by the market value
determination of the property.

   Following a default on a home improvement contract partially insured by
the FHA, the master servicer, either directly or through a subservicer, may,
subject to various conditions, either commence foreclosure proceedings
against the improved property securing the loan, if applicable, or submit a
claim to FHA, but may submit a claim to FHA after proceeding against the
improved property only with the prior approval of the Secretary of HUD. The
availability of FHA insurance following a default on a contract is subject to
a number of conditions, including strict compliance with FHA Regulations in
originating and servicing the contract. Failure to comply with FHA
Regulations may result in a denial of or surcharge on the FHA insurance
claim. Prior to declaring a contract in default and submitting a claim to
FHA, the master servicer must take steps to attempt to cure the default,
including personal contact with the borrower either by telephone or in a
meeting and providing the borrower with 30 days' written notice prior to
declaration of default. FHA may deny insurance coverage if the borrower's
nonpayment is related to a valid objection to faulty contractor performance.
In that event, the master servicer or other entity as specified in the
accompanying prospectus supplement will seek to obtain payment by or a
judgment against the borrower, and may resubmit the claim to FHA following
that judgment.

                                THE DEPOSITOR

   The depositor is an indirect wholly-owned subsidiary of GMAC Mortgage
Group, Inc., which is a wholly-owned subsidiary of General Motors Acceptance
Corporation. The depositor was incorporated in the State of Delaware on May
5, 1995. The depositor was organized for the limited purpose of acquiring
first or junior lien home equity loans, home improvement contracts, home
loans, manufactured housing contracts, Agency Securities and private
securities and issuing securities backed by these loans, contracts, Agency
Securities and private securities. The depositor anticipates that it will in
many cases have acquired trust assets indirectly through Residential Funding
Corporation, which is also an indirect wholly-owned subsidiary of GMAC
Mortgage Group, Inc. The depositor does not have, nor is it expected in the
future to have, any significant assets.

   The securities do not represent an interest in or an obligation of the
depositor. The depositor's only obligations relating to a series of
securities will be limited to specific representations and warranties made by
the depositor or as otherwise provided in the accompanying prospectus
supplement.

   The depositor maintains its principal office at 8400 Normandale Lake
Boulevard, Suite 600, Minneapolis, Minnesota 55437. Its telephone number is
(612) 832-7000.

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<PAGE>
                       RESIDENTIAL FUNDING CORPORATION

   If specified in the accompanying prospectus supplement, Residential
Funding Corporation, an affiliate of the depositor, will act as the master
servicer or Administrator for a series of securities.

   Residential Funding Corporation, either directly or through affiliates,
buys loans under several loan purchase programs from loan originators or
sellers nationwide, including affiliates, that meet its seller/servicer
eligibility requirements and services loans for its own account and for
others. Residential Funding Corporation's principal executive offices are
located at 8400 Normandale Lake Boulevard, Suite 600, Minneapolis, Minnesota
55437. Its telephone number is (612) 832-7000. Residential Funding
Corporation conducts operations from its headquarters in Minneapolis and
primarily from offices located in California, Maryland, Pennsylvania and
Texas.

   Residential Funding Corporation's delinquency, foreclosure and loan loss
experience as of the end of the most recent calendar quarter for which
information is available on the portfolio of loans for which it acts as
master servicer, including loans that were originated under its modified loan
purchase criteria, will be summarized in each prospectus supplement relating
to a mortgage pool for which Residential Funding Corporation will act as
master servicer. There can be no assurance that this experience will be
representative of the results that may be experienced as to any particular
series of securities.

                                THE AGREEMENTS

   As described in this prospectus under "Introduction" and "Description of
the Securities," each series of certificates will be issued under a pooling
and servicing agreement or trust agreement, as applicable, and each series of
notes will be issued under an indenture, each as described in that section.
In the case of each series of notes, the provisions relating to the servicing
of the trust assets will be contained in the related servicing agreements.
The following summaries describe additional provisions common to each pooling
and servicing agreement and trust agreement relating to a series of
certificates, and each indenture and servicing agreement relating to a series
of notes.

EVENTS OF DEFAULT; RIGHTS UPON EVENT OF DEFAULT

 Pooling and Servicing Agreement; Servicing Agreement

   Events of default under the related pooling and servicing agreement or
servicing agreement for a series of securities will include:

   o     any failure by the master servicer to make a required deposit to the
         Custodial Account or the Payment Account or, if the master servicer
         is the paying agent, to distribute to the holders of any class of
         securities of a series any required distribution, and the failure
         continues unremedied for five business days after the giving of
         written notice of that failure to the master servicer by the trustee
         or the depositor, or to the master servicer, the depositor and the
         trustee by the holders of securities of that class evidencing not
         less than 25% of the aggregate percentage interests constituting
         that class or the credit enhancer, if applicable;

   o     any failure by the master servicer duly to observe or perform in any
         material respect any other of its covenants or agreements in the
         related agreement for that series of securities which continues
         unremedied for 45 days, or 15 days in the case of a failure to pay
         the premium for any insurance policy which is required to be
         maintained under the related pooling and servicing agreement or
         servicing agreement, after the giving of written notice of failure
         to the master servicer by the trustee or the depositor, or to the
         master servicer, the depositor and the trustee be, by the holders of
         securities of that class evidencing not less than 25%, 33% in the
         case of a trust including private securities, or a majority in the
         case of a series of notes, of the aggregate percentage interests
         constituting that class, or the credit enhancer, if applicable;

   o     specified events of insolvency, readjustment of debt, marshalling of
         assets and liabilities or similar proceedings regarding the master
         servicer and specified actions by the master servicer indicating its
         insolvency or inability to pay its obligations; and

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<PAGE>
   o     any other servicing default as described in the pooling and
         servicing agreement or servicing agreement.

A default under the terms of any pooling and servicing agreement or servicing
agreement relating to any private securities included in any trust will not
constitute an event of default under the related agreement.

   So long as an event of default remains unremedied, either the depositor or
the trustee may, except as otherwise provided for in the related agreement as
to the special purpose entity or the credit enhancer, if applicable, and, in
the case of an event of default under a pooling and servicing agreement, at
the direction of the holders of securities evidencing not less than 51% of
the aggregate voting rights in the related trust, the trustee, shall, by
written notification to the master servicer and to the depositor or the
trustee terminate all of the rights and obligations of the master servicer
under the related agreement, other than any right of the master servicer as
securityholder, and, in the case of termination under a servicing agreement,
other than the right to receive servicing compensation, expenses for
servicing the trust assets during any period prior to the date of that
termination, and other reimbursement of amounts the master servicer is
entitled to withdraw from the Custodial Account. The trustee or, on notice to
the depositor and with the depositor's consent, its designee, will succeed to
all responsibilities, duties and liabilities of the master servicer under the
related agreement, other than the obligation to purchase loans under some
circumstances, and will be entitled to similar compensation arrangements. If
the trustee would be obligated to succeed the master servicer but is
unwilling to act, it may appoint, or if it is unable to act, it shall
appoint, or petition a court of competent jurisdiction for the appointment of
an approved mortgage servicing institution with a net worth of at least
$10,000,000 to act as successor to the master servicer under the related
agreement unless otherwise described in the agreement. Pending any
appointment, the trustee is obligated to act in that capacity. The trustee
and any successor may agree upon the servicing compensation to be paid, which
in no event may be greater than the compensation to the initial master
servicer under the related agreement.

   No securityholder will have any right under a pooling and servicing
agreement, except as otherwise provided for in the related pooling and
servicing agreement with respect to the credit enhancer, to institute any
proceeding with respect to the pooling and servicing agreement unless:

   o     such holder previously has given to the trustee written notice of
         default and the continuance thereof;

   o     the holders of securities of any class evidencing not less than 25%
         of the aggregate percentage interests constituting that class:

         o have made written request upon the trustee to institute the
           proceeding in its own name as trustee under the agreement; and

         o have offered to the trustee reasonable indemnity and

   o     the trustee has neglected or refused to institute any proceeding of
         this sort for 60 days after receipt of the request and indemnity.

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 under the agreement or in
relation to that agreement at the request, order or direction of any of the
securityholders covered by the pooling and servicing agreement, unless the
securityholders have offered to the trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred by or in
connection with that agreement.

 Indenture

   An event of default under the indenture for each series of notes, in most
cases, will include:

   o     a default for five days or more in the distribution of any principal
         of or interest on any note of the series;

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   o     failure to perform any other covenant of the depositor or the trust
         in the indenture which continues for a period of thirty days after
         notice of that failure is given in accordance with the procedures
         described in the accompanying prospectus supplement;

   o     any representation or warranty made by the depositor or the trust in
         the indenture or in any certificate or other writing delivered under
         or in connection with the indenture relating to or affecting the
         series, having been incorrect in a material respect as of the time
         made, and the breach is not cured within thirty days after notice of
         that error is given in accordance with the procedures described in
         the accompanying prospectus supplement;

   o     some events of bankruptcy, insolvency, or similar events relating to
         the depositor or the trust; or

   o     any other event of default provided for notes of that series.

   If an event of default as to the notes of any series at the time
outstanding occurs and is continuing, either the trustee, the credit
enhancer, if applicable, or the holders of a majority of the then aggregate
outstanding amount of the notes of the series, with the written consent of
the credit enhancer, may declare the principal amount, or, if the notes of
that series are accrual notes, that portion of the principal amount as may be
specified in the terms of that series, of all the notes of the series to be
due and payable immediately. That declaration may, under some circumstances,
be rescinded and annulled by the holders of a majority in aggregate
outstanding amount of the related notes.

   If, following an event of default for any series of notes, the notes of
the series have been declared to be due and payable, the indenture trustee,
with the consent of the credit enhancer, if applicable, may, in its
discretion, notwithstanding that acceleration, elect to maintain possession
of the collateral securing the notes of that series and to continue to apply
payments on that collateral as if there had been no declaration of
acceleration if that collateral continues to provide sufficient funds for the
payment of principal of and interest on the notes of the series as they would
have become due if there had not been a declaration. In addition, the
indenture trustee may not sell or otherwise liquidate the collateral securing
the notes of a series following an event of default, unless:

   o     the holders of 100% of the then aggregate outstanding amount of the
         notes of the series consent to that sale;

   o     the proceeds of the sale or liquidation are sufficient to pay in
         full the principal of and accrued interest, due and unpaid, on the
         outstanding notes of the series, and to reimburse the credit
         enhancer, if applicable, at the date of that sale; or

   o     the indenture trustee determines that the collateral would not be
         sufficient on an ongoing basis to make all payments on those notes
         as those payments would have become due if those notes had not been
         declared due and payable, and the indenture trustee obtains the
         consent of the holders of 66 2/3% of the then aggregate outstanding
         amount of the notes of the series and the credit enhancer, if
         applicable.

   In the event that the indenture trustee liquidates the collateral in
connection with an event of default, the indenture provides that the
indenture trustee will have a prior lien on the proceeds of that liquidation
for unpaid fees and expenses. As a result, upon the occurrence of that event
of default, the amount available for distributions to the securityholders
would be less than would otherwise be the case. However, the indenture
trustee may not institute a proceeding for the enforcement of its lien except
in connection with a proceeding for the enforcement of the lien of the
indenture for the benefit of the securityholders after the occurrence of an
event of default.

   If specified in the accompanying prospectus supplement, in the event the
principal of the notes of a series is declared due and payable, as described
in the second preceding paragraph, the holders of any notes issued at a
discount from par may be entitled to receive no more than an amount equal to
the unpaid principal amount of those notes less the amount of the discount
that is unamortized.

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   In most cases, no securityholder will have any right under an indenture to
institute any proceeding in connection with the agreement unless:

   o     the holder previously has given to the indenture trustee written
         notice of default and the continuance of that default;

   o     the holders of securities of any class evidencing not less than 25%
         of the aggregate percentage interests constituting the class (1)
         have made written request upon the indenture trustee to institute
         that proceeding in its own name as indenture trustee and (2) have
         offered to the indenture trustee reasonable indemnity;

   o     the indenture trustee has neglected or refused to institute that
         proceeding for 60 days after receipt of that request and indemnity;
         and

   o     no direction inconsistent with that written request has been given
         to the indenture trustee during that 60 day period by the holders of
         a majority of the security balances of that class, except as
         otherwise provided for in the related agreement regarding the credit
         enhancer.

However, the indenture trustee will be under no obligation to exercise any of
the trusts or powers vested in it by the applicable agreement or to
institute, conduct or defend any litigation under or in relation to the
indenture at the request, order or direction of any of the securityholders
covered by the agreement, unless the securityholders have offered to the
indenture trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred in or by exercise of that
power.

AMENDMENT

   In most cases, each agreement may be amended by the parties to the
agreement, except as otherwise provided for in the related agreement as to
the credit enhancer, without the consent of the related securityholders to:

   o     cure any ambiguity;

   o     correct or supplement any provision in that agreement which may be
         inconsistent with any other provision in that agreement or to
         correct any error;

   o     change the timing and/or nature of deposits in the Custodial Account
         or the Payment Account or to change the name in which the Custodial
         Account is maintained, except that (a) deposits to the Payment
         Account may not occur later than the related distribution date, (b)
         the change may not adversely affect in any material respect the
         interests of any securityholder, as evidenced by an opinion of
         counsel, and (c) the change may not adversely affect the
         then-current rating of any rated classes of securities, as evidenced
         by a letter from each applicable rating agency, unless specified in
         the accompanying prospectus supplement;

   o     if an election to treat the related trust as a "real estate mortgage
         investment conduit" or REMIC has been made, modify, eliminate or add
         to any of its provisions

         o to the extent necessary to maintain the qualification of the trust
           as a REMIC or to avoid or minimize the risk of imposition of any
           tax on the related trust, provided that the trustee has received an
           opinion of counsel to the effect that

           o the action is necessary or desirable to maintain the
             qualification or to avoid or minimize the risk; and

           o the action will not adversely affect in any material respect the
             interests of any related securityholder; or

         o to modify the provisions regarding the transferability of the REMIC
           Residual Certificates, provided that the depositor has determined
           that the change would not adversely affect the applicable ratings
           of any classes of the securities, as evidenced by a letter from
           each applicable rating agency, and that any amendment will not give
           rise to any tax with respect to the transfer of the REMIC Residual
           Certificates to a non-permitted transferee;

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<PAGE>
   o     make any other provisions for matters or questions arising under
         that agreement which are not materially inconsistent with the
         provisions of that agreement, so long as that action will not
         adversely affect in any material respect the interests of any
         securityholder; or

   o     amend any provision that is not material to holders of any class of
         related securities.

   In most cases, each agreement may also be amended by the parties to the
agreement, except as otherwise provided for in the related agreement as to
the credit enhancer, with the consent of the holders of securities of each
class affected thereby evidencing, in each case, not less than 66%, in the
case of a series of securities issued under a pooling and servicing
agreement, or a majority, in the case of a series of securities issued under
an indenture, of the aggregate percentage interests constituting the class
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of the related agreement or of modifying in
any manner the rights of the related securityholders, except that no
amendment may:

   o     reduce in any manner the amount of, or delay the timing of, payments
         received on trust assets which are required to be distributed on a
         security of any class without the consent of the holder of the
         security;

   o     impair the right of any securityholder to institute suit for the
         enforcement of the provisions of the agreements (in the case of an
         indenture);

   o     adversely affect in any material respect the interests of the
         holders of any class of securities in a manner other than as
         described in the first clause above, without the consent of the
         holders of securities of that class evidencing not less than 66%, in
         the case of a series of securities issued under a pooling and
         servicing agreement, or a majority, in the case of a series of
         securities issued under an indenture, of the aggregate outstanding
         principal amount of the securities of each class of that series
         affected by that amendment; or

   o     reduce the percentage of securities of any class the holders of
         which are required to consent to any amendment unless the holders of
         all securities of that class have consented to the change in the
         percentage.

   Regardless of the foregoing, if a REMIC election has been made with
respect to the related trust, 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 the amendment or the
exercise of any power granted to the master servicer, the depositor or the
trustee in accordance with the amendment will not result in the imposition of
a tax on the related trust or cause the trust to fail to qualify as a REMIC.

TERMINATION; REDEMPTION OF SECURITIES

   The primary obligations created by the trust agreement or pooling and
servicing agreement for each series of securities, including the securities
issued under any related indenture in the case of a series of notes, other
than some limited payment and notice obligations of the trustee and the
depositor, respectively, will terminate upon the distribution to the related
securityholders, of all amounts held in the Payment Account or by the master
servicer and required to be paid to those securityholders following the
earlier of:

   o     the final payment or other liquidation or disposition, or any
         related Advance, of the last trust asset subject to the related
         agreement and all property acquired upon foreclosure or deed in lieu
         of foreclosure of any loan; and

   o     the purchase by the master servicer or the depositor, or, if
         specified in the accompanying prospectus supplement, by the holder
         of the REMIC Residual Certificates from the trust, or from the
         special purpose entity, if applicable for a series, of all remaining
         trust assets and all property acquired relating to the trust assets.
         See "Material Federal Income Tax Consequences" in this prospectus.

   Any option to purchase described in the second item above will be limited
to cases in which the aggregate Stated Principal Balance of the remaining
trust assets is less than or equal to ten percent (10%) of the initial
aggregate Stated Principal Balance of the trust assets. In addition to the
foregoing, the master

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servicer or the depositor may have the option to purchase, in whole but not
in part, the securities specified in the accompanying prospectus supplement
in the manner described in the accompanying prospectus supplement. At the
time of the purchase of the securities or at any time after the purchase, at
the option of the master servicer or the depositor, the loans may be sold,
thereby effecting a retirement of the securities and the termination of the
trust, or the securities so purchased may be held or resold by the master
servicer or the depositor. Written notice of termination of the related
agreement will be given to each securityholder, and the final distribution
will be made only at the time of the surrender and cancellation of the
securities at an office or agency appointed by the trustee which will be
specified in the notice of termination. If the securityholders are permitted
to terminate the trust under the applicable agreement, a penalty may be
imposed on the securityholders based on the fee that would be foregone by the
master servicer because of the related termination.

   Any purchase of loans and property acquired from the loans evidenced by a
series of securities shall be made at the option of the master servicer, the
depositor or, if applicable, the holder of the REMIC Residual Certificates at
the price specified in the accompanying prospectus supplement. The exercise
of that right will effect early retirement of the securities of that series,
but the right of any entity to purchase the loans and related property will
be subject to the criteria, and will be at the price, indicated in the
accompanying prospectus supplement. Any early termination may adversely
affect the yield to holders of some classes of the securities. If a REMIC
election has been made, the termination of the related trust will be effected
in a manner consistent with applicable federal income tax regulations and its
status as a REMIC.

   In addition to the optional repurchase of the property in the related
trust, if stated in the accompanying prospectus supplement, a holder of the
Call Class will have the right, solely at its discretion, to terminate the
related trust and thereby effect early retirement of the securities of the
series, on any distribution date after the distribution date specified in the
accompanying prospectus supplement and until the date when the optional
termination rights of the master servicer and the depositor become
exercisable. The Call Class will not be offered by the prospectus supplement.
Any such call will be of the entire trust at one time; multiple calls for any
series of securities will not be permitted. In the case of a call, the
holders of the securities will be paid a price equal to the Call Price. To
exercise the call, the holder of the Call Security must remit to the related
trustee for distribution to the securityholders, funds equal to the Call
Price. If those funds are not deposited with the related trustee, the
securities of that series will remain outstanding. In addition, in the case
of a trust for which a REMIC election or elections have been made, this
termination will be effected in a manner consistent with applicable Federal
income tax regulations and its status as a REMIC. In connection with a call
by the holder of a Call Security, the final payment to the securityholders
will be made at the time of surrender of the related securities to the
trustee. Once the securities have been surrendered and paid in full, there
will not be any further liability to securityholders.

   The indenture will be discharged as to a series of notes, except for some
continuing rights specified in the indenture, upon the distribution to
noteholders of all amounts required to be distributed under the indenture.

THE TRUSTEE

   The trustee under each pooling and servicing agreement will be named in
the accompanying prospectus supplement. The commercial bank or trust company
serving as trustee may have normal banking relationships with the depositor
and/or its affiliates, including Residential Funding Corporation.

   The trustee may resign at any time, in which event the depositor will be
obligated to appoint a successor trustee. The depositor may also remove the
trustee if the trustee ceases to be eligible to continue as trustee under the
pooling and servicing agreement or if the trustee becomes insolvent. After
becoming aware of those circumstances, the depositor will be obligated to
appoint a successor trustee. The trustee may also be removed at any time by
the holders of securities evidencing not less than 51% of the aggregate
voting rights in the related trust. 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.

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THE OWNER TRUSTEE

   The owner trustee under each trust agreement will be named in the
accompanying prospectus supplement. The commercial bank or trust company
serving as owner trustee may have normal banking relationships with the
depositor and/or its affiliates, including Residential Funding Corporation.

   The owner trustee may resign at any time, in which case the Administrator
or the indenture trustee will be obligated to appoint a successor owner
trustee as described in the agreements. The Administrator or the indenture
trustee may also remove the owner trustee if the owner trustee ceases to be
eligible to continue as owner trustee under the trust agreement or if the
owner trustee becomes insolvent. After becoming aware of those circumstances,
the Administrator or the indenture trustee will be obligated to appoint a
successor owner trustee. Any resignation or removal of the owner trustee and
appointment of a successor owner trustee will not become effective until
acceptance of the appointment by the successor owner trustee.

THE INDENTURE TRUSTEE

   The indenture trustee under the indenture will be named in the
accompanying prospectus supplement. The commercial bank or trust company
serving as indenture trustee may have normal banking relationships with the
depositor and/or its affiliates, including Residential Funding Corporation.

   The indenture trustee may resign at any time, in which case the depositor,
the owner trustee or the Administrator will be obligated to appoint a
successor indenture trustee as described in the indenture. The depositor, the
owner trustee or the Administrator as described in the indenture may also
remove the indenture trustee if the indenture trustee ceases to be eligible
to continue as indenture trustee under the indenture or if the indenture
trustee becomes insolvent. After becoming aware of those circumstances, the
depositor, the owner trustee or the Administrator will be obligated to
appoint a successor indenture trustee. If so specified in the indenture, the
indenture trustee may also be removed at any time by the holders of a
majority by principal balance of the notes. Any resignation or removal of the
indenture trustee and appointment of a successor indenture trustee will not
become effective until acceptance of the appointment by the successor
indenture trustee.

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                     YIELD AND PREPAYMENT CONSIDERATIONS

   The yield to maturity of a security will depend on various factors,
including:

   o     the price paid by the holder for the security;

   o     the interest rate, referred to as the security rate, on any security
         entitled to payments of interest, which may vary if specified in the
         accompanying prospectus supplement; and

   o     the rate and timing of principal payments on the trust assets,
         including payments in excess of required installments, prepayments
         or terminations, liquidations and repurchases, the rate and timing
         of Draws, if applicable, and the allocation of principal payments to
         reduce the principal or notional balance of the security.

   The amount of interest payments on a trust asset made, or accrued in the
case of accrual securities, monthly to holders of a class of securities
entitled to payments of interest will be calculated on the basis of that
class' specified percentage of each payment of interest, or accrual amounts
in the case of accrual securities, and will be expressed as a fixed,
adjustable or variable security rate payable on the outstanding principal or
notional balance of that security, or any combination of those security
rates, calculated as described in this prospectus and in the accompanying
prospectus supplement. See "Description of the Securities--Distributions of
Principal and Interest on the Securities" in this prospectus. A variable
security rate may be calculated based on the weighted average of the Net Loan
Rates of the related loans or certain balances of the loans, which may be
weighted in accordance with the balances for the month preceding the
distribution date. An adjustable security rate may be calculated by reference
to an index or otherwise. Holders of interest only securities or a class of
securities having a security rate that varies based on the weighted average
loan rate of the underlying loans will be affected by disproportionate
prepayments and repurchases of loans having higher Net Loan Rates or higher
rates applicable to the interest only securities, as applicable.

   The effective yield to maturity to each holder of securities entitled to
payments of interest may be below that otherwise produced by the applicable
security rate and purchase price of the security because, while interest will
accrue on each loan during the calendar month or a specified period preceding
a distribution date, the distribution of interest will be made on the
distribution date in the month following the month of accrual as specified in
the accompanying prospectus supplement.

   The aggregate payments of interest on a class of securities, and the yield
to maturity on a class of securities, will be affected by the rate of payment
of principal on the securities, or the rate of reduction in the notional
amount of securities entitled to payments of interest only and, in the case
of securities evidencing interests in revolving credit loans, by changes in
the Net Loan Rates on the revolving credit loans due to fluctuations in the
related index or changes in the Gross Margin. See "The Trust--Characteristics
of the Loans--Revolving Credit Loans" in this prospectus. The yield on the
securities will also be affected by liquidations of loans following borrower
defaults and by repurchases of loans in the event of breaches of
representations made for those loans. See "Description of the
Securities--Representations Relating to Loans" and "--Assignment of the Trust
Assets" in this prospectus. In addition, if the index used to determine the
note rate for the securities is different than the index applicable to the
loan rates, the yield on the securities will be sensitive to changes in the
index related to the note rate and the yield on the securities may be reduced
by application of a cap on the note rate based on the weighted average of the
Net Loan Rates or other formulas as may be described in the accompanying
prospectus supplement.

   In most cases, if a security is purchased at a premium over its face
amount and payments of principal on that security occur at a rate faster than
anticipated at the time of purchase, the purchaser's actual yield to maturity
will be lower than assumed at the time of purchase. Conversely, if a security
is purchased at a discount from its face amount and payments of principal on
that security occur at a rate slower than that anticipated at the time of
purchase, the purchaser's actual yield to maturity will be lower than assumed
at the time of purchase. If strip securities are issued evidencing a right to
payments of interest only or disproportionate payments of interest, Principal
Prepayments on the loans, net of Draws, if applicable, liquidations,
purchases and repurchases will negatively affect the total return to
investors in any of those

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securities. In addition, the total return to investors in securities
evidencing a right to payments of interest at a rate that is based on the
weighted average Net Loan Rate from time to time will be adversely affected
by principal payments on loans with loan rates higher than the weighted
average loan rate on the loans. In most cases, loans with higher loan rates
or Gross Margins are likely to prepay at a faster rate than loans with lower
loan rates or Gross Margins. In some circumstances, rapid principal payments
on the trust assets, net of Draws, if applicable, may result in the failure
of those holders to recoup their original investment. If strip securities 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 trust assets, net of Draws, if applicable, could negatively affect the
anticipated yield on those strip securities. In addition, the yield to
maturity on other types of classes of securities, including accrual
securities, securities with a security rate that fluctuates inversely with or
at a multiple of an index or other classes in a series including more than
one class of securities, may be relatively more sensitive to the rate of
principal payments on the related trust assets, net of Draws if applicable,
than other classes of securities.

   The outstanding principal balances of manufactured housing contracts, home
equity loans, revolving credit loans, home improvement loans and home
improvement contracts are, in most cases, much smaller than traditional first
lien loan balances, and the original terms to maturity of those loans and
contracts are often shorter than those of traditional first lien loans. As a
result, changes in interest rates will not affect the monthly payments on
those loans or contracts to the same degree that changes in mortgage interest
rates will affect the monthly payments on traditional first lien loans.
Consequently, the effect of changes in prevailing interest rates on the
prepayment rates on shorter-term, smaller balance loans and contracts may not
be similar to the effects of those changes on traditional first lien loan
prepayment rates, or those effects may be similar to the effects of those
changes on loan prepayment rates, but to a smaller degree.

   The timing of changes in the rate of principal payments on a class of
securities entitled to principal 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 most
cases, the earlier a payment of principal on a class of securities entitled
to principal, 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 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
securities would not be fully offset by a subsequent like reduction, or
increase, in the rate of principal payments.

   The rate and timing of defaults on the trust assets will also affect the
rate and timing of principal payments on the trust assets and thus the yield
on the related securities. There can be no assurance as to the rate of losses
or delinquencies on any of the trust assets, however, those losses and
delinquencies may be expected to be higher than those of traditional first
lien loans. To the extent that any losses are incurred on any of the trust
assets that are not covered by the applicable credit enhancement, holders of
securities of the series evidencing interests in the related pool, or other
classes of the series, will bear all risk of those losses resulting from
default by borrowers. Even where the applicable credit enhancement covers all
losses incurred on the trust assets, the effect of losses may be to increase
prepayment experience on the trust assets, thus reducing average weighted
life and affecting yield to maturity.

   In general, defaults on loans are expected to occur with greater frequency
in their early years. The rate of default on cash out or limited
documentation loans, and on loans with high LTV ratios or combined LTV
ratios, as applicable, may be higher than for other types of loans. A trust
may include, if specified in the accompanying prospectus, loans that are one
month or more delinquent at the time of offering of the related series of
securities or which have recently been several months delinquent. The rate of
default on delinquent loans or loans with a recent history of delinquency is
more likely to be higher than the rate of default on loans that have a
current payment status. In addition, the rate and timing of prepayments,
defaults and liquidations on the loans 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. The yield on any class of
securities and the timing of principal payments on that

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<PAGE>
class may also be affected by modifications or actions that may be taken or
approved by the master servicer or any of its affiliates as described in this
prospectus under "Description of the Securities--Servicing and Administration
of Trust Assets," in connection with a loan that is in default, or if a
default is reasonably foreseeable.

   The risk of loss on loans secured by mortgaged properties located in
Puerto Rico may be greater than on loans that are made to borrowers who are
United States residents and citizens or that are secured by properties
located in the United States. See "Certain Legal Aspects of the Trust Assets
and Related Matters" in this prospectus.

   If credit enhancement for a series of securities is provided by a third
party as described under "Description of Credit Enhancement" in this
prospectus that subsequently suffers financial difficulty, such credit
enhancement may not provide the level of support that was anticipated at the
time an investor purchased its security. In the event of a default by the
third party credit enhancer, any Realized Losses on the loans not covered by
the credit enhancement will be applied to a series of securities in the
manner described in the accompanying prospectus supplement and may reduce an
investor's anticipated yield to maturity.

   The accompanying prospectus supplement may set forth other factors
concerning the loans securing a series of securities or the structure of such
series that will affect the yield on the securities.

   When a full prepayment is made on a loan, the borrower is charged interest
on the principal amount of the loan for the number of days in the month
actually elapsed up to the date of the prepayment, at a daily rate determined
by dividing the loan rate by 365. As a result, prepayments in full or final
liquidations of loans may reduce the amount of interest collections available
to the trust in the following month to holders of securities entitled to
distributions of interest. See "Description of the Securities--Distributions
of Principal and Interest on the Securities" in this prospectus. A partial
prepayment of principal is applied so as to reduce the outstanding principal
balance on a loan, other than a simple interest loan or a revolving credit
loan, as of the first day of the month in which the partial prepayment is
received. A partial prepayment on a simple interest loan or a revolving
credit loan is applied as of the day the partial prepayment is received. As a
result, the effect of a partial prepayment on a loan, other than a simple
interest loan, will be to reduce the amount of interest collections available
to the trust in the month following the receipt of the partial prepayment by
an amount equal to one month's interest at the applicable pass-through rate
or Net Loan Rate, as the case may be, on the prepaid amount. See "Description
of the Securities--Payment on Trust Assets" in this prospectus. Neither full
or partial Principal Prepayments nor Liquidation Proceeds will be distributed
until the distribution date in the month following receipt.

   For some loans, the loan 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, borrowers are, in most cases,
qualified based on an assumed payment which reflects a rate significantly
lower than the maximum rate. The repayment of any trust asset may thus be
dependent on the ability of the borrower to make larger interest payments
following the adjustment of the loan rate.

   Some of the revolving credit loans are not expected to significantly
amortize prior to maturity. As a result, a borrower will, in most cases, be
required to pay a substantial principal amount at the maturity of a revolving
credit loan. Similarly, a borrower under a Balloon Loan will be required to
pay the Balloon Amount at maturity. Those loans pose a greater risk of
default than fully-amortizing revolving credit loans, because the borrower's
ability to make such a substantial payment at maturity will generally depend
on the borrower's ability to obtain refinancing of those loans or to sell the
mortgaged property prior to the maturity of the 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, the
borrower's personal economic circumstances, the borrower's equity in the
related mortgaged property, real estate values, prevailing market interest
rates, tax laws and national and regional economic conditions. Neither the
depositor, Residential Funding Corporation, GMAC Mortgage Group, Inc. nor any
of their affiliates will be obligated to refinance or repurchase any loan or
to sell any mortgaged property, unless that obligation is specified in the
accompanying prospectus supplement.

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   For any loans and any contracts secured by junior liens on the related
mortgaged property, any inability of the borrower to pay off the balance of
those junior liens may also affect the ability of the borrower to obtain
refinancing of any related senior loan, which may prevent a potential
improvement in the borrower's circumstances. Furthermore, as specified in the
accompanying prospectus supplement, under the related agreement the master
servicer may be restricted or prohibited from consenting to any refinancing
of any related senior loan, which in turn could adversely affect the
borrower's circumstances or result in a prepayment or default under the
corresponding junior loan or contract, as applicable.

   The holder of a loan secured by a junior lien on the related mortgaged
property will be subject to a loss of its mortgage if the holder of a senior
mortgage is successful in foreclosure of its mortgage and its claim,
including any related foreclosure costs, is not paid in full, since no junior
liens or encumbrances survive such a foreclosure. Also, due to the priority
of the senior mortgage, the holder of a loan secured by a junior lien on the
related mortgaged property 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 relating to any loans secured by junior liens on the
related mortgaged property will be available to satisfy the outstanding
balance of such loans only to the extent that the claims of the holders of
the senior mortgages have been satisfied in full, including any related
foreclosure costs. For loans secured by junior liens that have low junior
mortgage ratios, foreclosure costs may be substantial relative to the
outstanding balance of the loan, and therefore the amount of any Liquidation
Proceeds available to securityholders may be smaller as a percentage of the
outstanding balance of the loan than would be the case in a typical pool of
first lien residential loans. In addition, the holder of a loan secured by a
junior lien on the related mortgaged property may only foreclose on the
property securing the related loan subject to any senior mortgages, in which
case the 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.

   As indicated under "The Trusts--Characteristics of the Loans," the
original terms to maturity of the loans in a given trust will vary depending
on the type of loans included in the trust. The prospectus supplement for a
series of securities will contain information for the types and maturities of
the loans in the related trust. The prepayment experience, the timing and
rate of repurchases and the timing and amount of liquidations for the related
loans will affect the life and yield of the related series of securities.

   Prepayments on loans are commonly measured relative to a prepayment
standard or model. The prospectus supplement for each series of securities
may describe one or more prepayment standard or model and may contain tables
describing the projected yields to maturity on each class of securities or
the weighted average life of each class of securities and the percentage of
the original principal amount of each class of securities of that series that
would be outstanding on specified payment dates for the series based on the
assumptions stated in the accompanying prospectus supplement, including
assumptions that prepayments on the loans are made at rates corresponding to
various percentages of the prepayment standard or model. There is no
assurance that prepayment of the loans underlying a series of securities will
conform to any level of the prepayment standard or model specified in the
accompanying prospectus supplement.

   In addition to the borrower's personal economic circumstances, the
following is a list of factors that may affect the rate and timing of
principal payments on the trust assets or Draws on the revolving credit
loans:

   o     homeowner mobility;

   o     job transfers;

   o     changes in the borrower's housing needs;

   o     the borrower's net equity in the mortgaged property;

   o     changes in the value of the mortgaged property;

   o     national and regional economic conditions;

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   o     enforceability of due-on-sale clauses;

   o     prevailing market interest rates;

   o     servicing decisions;

   o     solicitations and the availability of mortgage funds;

   o     seasonal purchasing and payment habits of borrowers; or

   o     changes in the deductibility for federal income tax purposes of
         interest payments on home equity loans.

   All statistics known to the depositor that have been compiled for
prepayment experience on loans indicate that while some loans may remain
outstanding until their stated maturities, a substantial number will be paid
significantly earlier than their respective stated maturities. In general,
however, if prevailing interest rates fall significantly below the loan rates
on the loans underlying a series of securities, the prepayment rate of such
loans is likely to be significantly higher than if prevailing rates remain at
or above the rates borne by those loans. Conversely, when prevailing interest
rates increase, borrowers are less likely to prepay their loans.

   Depending on the borrower's use of the revolving credit loan and payment
patterns, during the repayment period, a borrower under a revolving credit
loan may be obligated to make payments that are higher than that for which
the borrower originally qualified.

   There can be no assurance as to the rate of principal payments or Draws on
the revolving credit loans. In most cases, the revolving credit loans may be
prepaid in full or in part without penalty. The closed-end loans may provide
for a prepayment charge. The prospectus supplement will specify whether trust
assets may not be prepaid in full or in part without penalty. The depositor
has no significant experience regarding the rate of Principal Prepayments on
home improvement contracts or manufactured housing contracts, but in most
cases expects that Principal Prepayments on home improvement contracts will
be higher than other trust assets due to the possibility of increased
property value resulting from the home improvement and more refinance
options. The depositor generally expects that prepayments on manufactured
housing contracts will be lower than on other trust assets because
manufactured housing contracts may have fewer refinance options. The rate of
principal payments and the rate of Draws, if applicable, may fluctuate
substantially from time to time. In most cases, home equity loans are not
viewed by borrowers as permanent financing. Accordingly, closed-end loans may
experience a higher rate of prepayment than typical first lien loans. For
revolving credit loans, due to the unpredictable nature of both principal
payments and Draws, the rates of principal payments net of Draws for those
loans may be much more volatile than for typical first lien loans.

   The yield to maturity of the securities of any series, or the rate and
timing of principal payments or Draws, if applicable, on the related loans,
may also be affected by a wide variety of specific terms and conditions
applicable to the respective programs under which the loans were originated.
For example, the revolving credit loans may provide for future Draws to be
made only in specified minimum amounts, or alternatively may permit Draws to
be made by check or through a credit card in any amount. A pool of revolving
credit loans subject to the latter provisions may be likely to remain
outstanding longer with a higher aggregate principal balance than a pool of
revolving credit loans with the former provisions, because of the relative
ease of making new Draws. Furthermore, the loans may provide for interest
rate changes on a daily or monthly basis, or may have Gross Margins that may
vary under some circumstances over the term of the loan. In extremely high
market interest rate scenarios, securities backed by revolving credit loans
with rates subject to substantially higher maximum rates than typically apply
to revolving credit loans may experience rates of default and liquidation
substantially higher than those that have been experienced on other revolving
credit loan pools.

   The yield to maturity of the securities of any series, or the rate and
timing of principal payments on the trust assets or Draws on the related
revolving credit loans and corresponding payments on the securities, will
also be affected by the specific terms and conditions applicable to the
securities. For example, if the index used to determine the note rates for a
series of securities is different from the index

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applicable to the loan rates of the underlying trust assets, the yield on the
securities may be reduced by application of a cap on the note rates based on
the weighted average of the loan rates. Depending on applicable cash flow
allocation provisions, changes in the relationship between the two indexes
may also affect the timing of some principal payments on the securities, or
may affect the amount of any overcollateralization, or the amount on deposit
in any reserve fund, which could in turn accelerate the payment of principal
on the securities if so provided in the prospectus supplement.

   For any series of securities backed by revolving credit loans, provisions
governing whether future Draws on the revolving credit loans will be included
in the trust will have a significant effect on the rate and timing of
principal payments on the securities. The yield to maturity of the securities
of any series, or the rate and timing of principal payments on the trust
assets may also be affected by the risks associated with other trust assets.
As a result of the payment terms of the revolving credit loans or of the note
provisions relating to future Draws, there may be no principal payments on
those securities in any given month. In addition, it is possible that the
aggregate Draws on revolving credit loans included in a pool may exceed the
aggregate payments of principal on those revolving credit loans for the
related period. If specified in the accompanying prospectus supplement, a
series of securities may provide for a period during which all or a portion
of the principal collections on the revolving credit loans are reinvested in
additional balances or are accumulated in a trust account pending
commencement of an amortization period relating to the securities.

   The loans, in most cases, will contain due-on-sale provisions permitting
the mortgagee to accelerate the maturity of that loan upon sale or various
transfers by the borrower of the underlying mortgaged property. Unless the
accompanying prospectus supplement indicates otherwise, the master servicer
will usually enforce any due-on-sale clause to the extent it has knowledge of
the conveyance or proposed conveyance of the underlying mortgaged property
and it is entitled to do so under applicable law. However, the master
servicer will not be permitted to take any action in relation to the
enforcement of any due-on-sale provision that would adversely affect or
jeopardize coverage under any applicable insurance policy. While most
manufactured housing contracts will contain "due-on-sale" provisions
permitting the holder of the manufactured housing contract to accelerate the
maturity of the manufactured housing contract on conveyance by the borrower,
the master servicer may permit assumptions of manufactured housing contracts
where the proposed buyer of the manufactured home meets the underwriting
standards described under "Trust Asset Program--Underwriting Standards" in
this prospectus. Such assumption would have the effect of extending the
average life of the manufactured housing contract. The extent to which trust
assets are assumed by purchasers of the mortgaged properties rather than
prepaid by the related borrowers in connection with the sales of the
mortgaged properties may affect the weighted average life of the related
series of securities. See "Description of the Securities--Servicing and
Administration of Trust Assets--Collection and Other Servicing Procedures"
and "Certain Legal Aspects of the Trust Assets and Related Matters--Trust
Assets Secured by Mortgages on Mortgaged Property--Enforceability of Certain
Provisions" for a description of provisions of the related agreement and
other legal developments that may affect the prepayment experience on the
trust assets.

   In addition, some private securities included in a pool may be backed by
underlying trust assets having differing interest rates. Accordingly, the
rate at which principal payments are received on the related securities will,
to an extent, depend on the interest rates on those underlying trust assets.

   A subservicer, the master servicer, or an affiliate of the master
servicer, may also, from time to time, implement refinancing or modification
programs designed to encourage refinancing. These programs could require
little or no cost and decreased documentation from the borrower. In addition,
these programs may include, without limitation, general or targeted
solicitations, the offering of pre-approved applications, reduced origination
fees or closing costs, or other financial incentives. Targeted solicitations
may be based on a variety of factors, including the credit of the borrower,
the location of the mortgaged property, or the subservicer's or master
servicer's judgment as to the likelihood of a borrower refinancing. In
addition, subservicers or the master servicer may encourage assumptions of
loans, including defaulted loans, under which creditworthy borrowers assume
the outstanding indebtedness of those loans which may be removed from the
related pool. As a result of these programs, as to the pool underlying any
trust:

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   o     the rate of Principal Prepayments of the loans in the pool may be
         higher than would otherwise be the case;

   o     the average credit or collateral quality of the loans remaining in
         the pool may decline; and

   o     the weighted average interest rate on the loans that remain in the
         trust may be lower, thus reducing the rate of prepayments on the
         loans in the future.

In addition, the master servicer or a subservicer may allow the refinancing
of a trust asset by accepting Principal Prepayments on that trust asset and
permitting a new loan or contract secured by a mortgage on the same property,
which may be originated by the subservicer or the master servicer or any of
their respective affiliates or by an unrelated entity. In the event of that
refinancing, the new loan or contract would not be included in the related
trust and, therefore, the refinancing would have the same effect as a
prepayment in full of the related trust assets.

   If the applicable agreement for a series of securities provides for a
funding account or other means of funding the transfer of additional trust
assets to the related trust, as described under "Description of the
Securities--Funding Account" in this prospectus, and the trust is unable to
acquire those additional trust assets within any applicable time limit, the
amounts set aside for that purpose may be applied as principal distributions
on one or more classes of securities of that series. In addition, if the
trust for a series of securities includes additional balances and the rate at
which those additional balances are generated decreases, the rate and timing
of principal payments on the securities will be affected and the weighted
average life of the securities will vary accordingly. The rate at which
additional balances are generated may be affected by a variety of factors.

   Although the loan rates on revolving credit loans will and some other
trust assets may be subject to periodic adjustments, those adjustments, in
most cases:

   o     will not increase those loan rates over a fixed maximum rate during
         the life of any trust asset; and

   o     will be based on an index, which may not rise and fall consistently
         with prevailing market interest rates, plus the related Gross
         Margin, which may vary under some circumstances, and which may be
         different from margins being used at the time for newly originated
         revolving credit loans.

As a result, the loan rates on the trust assets in any pool at any time may
not equal the prevailing rates for similar, newly originated home equity
loans, lines of credit, home improvement loans, home improvement contracts or
manufactured housing contracts and accordingly the rate of principal payments
and Draws, if applicable, may be lower or higher than would otherwise be
anticipated. In some rate environments, the prevailing rates on fixed-rate
loans may be sufficiently low in relation to the then-current loan rates on
trust assets that the rate of prepayment may increase as a result of
refinancings. There can be no certainty as to the rate of principal payments
on the trust assets or Draws on the revolving credit loans during any period
or over the life of any series of securities.

   For any index used in determining the note rates for a series of
securities or loan rates of the underlying trust assets, a number of factors
affect the performance of that index and may cause that index to move in a
manner different from other indices. To the extent that the index may reflect
changes in the general level of interest rates less quickly than other
indices, in a period of rising interest rates, increases in the yield to
securityholders due to those rising interest rates may occur later than
increases which would be produced by other indices, and in a period of
declining rates, that index may remain higher than other market interest
rates which may result in a higher level of prepayments of the trust assets,
which adjust in accordance with that index, than of loans which adjust in
accordance with other indices.

   No assurance can be given that the value of the mortgaged property
securing a loan 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
loans and any subordinate financing on the mortgaged properties in a
particular 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. The value of property

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securing Cooperative Loans and the delinquency rates for 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 the Trust Assets and Related Matters" in this prospectus.

   To the extent that losses resulting from delinquencies, foreclosures or
repossession of mortgaged property for loans included in a trust for a series
of securities are not covered by the methods of credit enhancement described
in this prospectus under "Description of Credit Enhancement" or in the
accompanying prospectus supplement, the losses will be borne by holders of
the securities of the related 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 loans, thus reducing average weighted life and
affecting yield to maturity.

   Under some circumstances, the master servicer, the depositor or, if
specified in the accompanying prospectus supplement, another person may have
the option to purchase the trust assets in a trust, thus resulting in the
early retirement of the related securities. See "The Agreements--Termination;
Redemption of Securities" in this prospectus.

                  CERTAIN LEGAL ASPECTS OF THE TRUST ASSETS
                             AND RELATED MATTERS

   The following discussion contains summaries of various legal aspects of
the trust assets that are general in nature. Because those legal aspects are
governed in part by state law, and 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
trust assets may be situated. These legal aspects are in addition to the
requirements of any applicable FHA Regulations described in "Insurance
Policies on Loans--Description of FHA Insurance under Title I" in this
prospectus and in the accompanying prospectus supplement regarding the
contracts partially insured by FHA under Title I. The summaries are qualified
in their entirety by reference to the applicable federal and state laws
governing the trust assets.

TRUST ASSETS SECURED BY MORTGAGES ON MORTGAGED PROPERTY

 General

   The loans will and, if applicable, contracts, in each case 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 and may have first, second or third
priority. Mortgages, deeds of trust and deeds to secure debt are referred to
in this prospectus as "mortgages." Manufactured housing contracts evidence
both the obligation of the obligor to repay the loan evidenced by those
contracts and grant a security interest in the related manufactured homes to
secure repayment of the loan. However, as manufactured homes have become
larger and often have been attached to their sites without any apparent
intention by the borrowers to move them, courts in many states have held that
manufactured homes may, under some circumstances become subject to real
estate title and recording laws. See "--Manufactured Housing Contracts" in
this section. In some states, a mortgage, deed of trust or deed to secure
debt creates a lien upon the real property encumbered by the mortgage, deed
of trust or deed to secure debt. However, in other states, the mortgage or
deed of trust conveys legal title to the property respectively, to the
mortgagee or to a trustee for the benefit of the mortgagee subject to a
condition subsequent, that is, the payment of the indebtedness secured by
that mortgage or deed of trust. The lien created by the mortgage, deed of
trust or deed to secure debt is not prior to the lien for real estate taxes
and assessments and other charges imposed under governmental police powers.
Priority between mortgages depends on their terms or on the terms of separate
subordination or inter-creditor agreements, the knowledge of the parties in
some cases and mostly on the order of recordation of the mortgage in the
appropriate recording office.

   There are two parties to a mortgage, the borrower, who is the borrower and
homeowner, and the mortgagee, who is the lender. Under the mortgage
instrument, the borrower delivers to the mortgagee a note or bond and the
mortgage. In some states, three parties may be involved in a mortgage
financing

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when title to the property is held by a land trustee who is the land trustee
under a land trust agreement of which the borrower is the beneficiary. At
origination of a loan, the land trustee, as fee owner of the property,
executes the mortgage and the borrower executes a separate undertaking to
make payments on the mortgage note and an assignment of leases and rents.
Although a deed of trust is similar to a mortgage, a deed of trust has three
parties:

   o     the trustor who is the borrower-homeowner;

   o     the beneficiary who is the lender; and

   o     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, typically, with a power of sale, to the trustee
to secure payment of the obligation. A deed to secure debt typically has two
parties, under which the borrower, or grantor, conveys title to the real
property to the grantee, or lender, typically with a power of sale, until the
time when the debt is repaid. The trustee's authority under a deed of trust,
the grantee's authority under a deed to secure debt and the mortgagee's
authority under a mortgage 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 some deed of trust transactions,
the directions of the beneficiary.

 Cooperative Loans

   If specified in the prospectus supplement relating to a series of
securities, the loans and contracts may include Cooperative Loans. Each
Cooperative Note evidencing a Cooperative Loan will be secured by a security
interest in shares issued by the Cooperative that owns the related apartment
building, which is a 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, among
other things, the terms of the particular security agreement as well as the
order of recordation and/or filing of the agreement, or the filing of related
financing statements, 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. This type of lien or security interest is
not, general, prior to liens in favor of the cooperative corporation for
unpaid assessments or common charges.

   In most cases, 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 in the building. 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 an
underlying mortgage, or mortgages, on the Cooperative's building or
underlying land, as is typically the case, or an underlying lease of the
land, as is the case in some instances, the Cooperative, as borrower or
lessee, as the case may be, is also responsible for fulfilling the mortgage
or rental obligations.

   An underlying loan is ordinarily obtained by the Cooperative in connection
with either the construction or purchase of the Cooperative's 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, in most cases, subordinate to the interest of the holder of
an underlying mortgage and to the interest of the holder of a land lease. If
the Cooperative is unable to meet the payment obligations:

   o     arising under an underlying mortgage, the mortgagee holding an
         underlying mortgage could foreclose on that mortgage and terminate
         all subordinate proprietary leases and occupancy agreements; or

   o     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, an underlying 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

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maturity. The inability of the Cooperative to refinance a mortgage and its
consequent inability to make the final payment could lead to foreclosure by
the mortgagee. Similarly, a land lease has an expiration date and the
inability of the Cooperative to extend its term or, in the alternative, to
purchase the land, could lead to termination of the Cooperative's interest in
the property and termination of all proprietary leases and occupancy
agreements. In either event, a foreclosure by the holder of an underlying
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 shares of the
Cooperative or, in the case of the revolving credit loans and the home equity
loans, the collateral securing the Cooperative Loans.

   Each Cooperative is owned by shareholders, referred to as
tenant-stockholders, who, through ownership of stock or shares in the
Cooperative, receive proprietary leases or occupancy agreements which confer
exclusive rights to occupy specific dwellings. In most cases, a
tenant-stockholder of a Cooperative must make a monthly rental payment to the
Cooperative under the proprietary lease, which rental payment represents the
tenant-stockholder's pro rata share of the Cooperative's payments for its
underlying mortgage, real property taxes, maintenance expenses and other
capital or ordinary expenses. An ownership interest in a Cooperative and
accompanying occupancy rights 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 shares of the related Cooperative. The
lender usually 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" in this prospectus.

 Tax Aspects of Cooperative Ownership

   In general, a "tenant-stockholder," as defined in Section 216(b)(2) of the
Internal Revenue Code, of a corporation that qualifies as a "cooperative
housing corporation" within the meaning of Section 216(b)(1) of the Internal
Revenue Code is allowed a deduction for amounts paid or accrued within his
taxable year to the corporation representing his proportionate share of
various interest expenses and real estate taxes allowable as a deduction
under Section 216(a) of the Internal Revenue Code to the corporation under
Sections 163 and 164 of the Internal Revenue Code. In order for a corporation
to qualify under Section 216(b)(1) of the Internal Revenue Code for its
taxable year in which those items are allowable as a deduction to the
corporation, the section requires, among other things, that at least 80% of
the gross income of the corporation be derived from its tenant-stockholders.
By virtue of this requirement, the status of a corporation for purposes of
Section 216(b)(1) of the Internal Revenue Code must be determined on a
year-to-year basis. Consequently, there can be no assurance that Cooperatives
relating to the Cooperative Loans will qualify under this section for any
particular year. If a Cooperative fails to qualify for one or more years, the
value of the collateral securing any related Cooperative Loans could be
significantly impaired because no deduction would be allowable to
tenant-stockholders under Section 216(a) of the Internal Revenue Code as to
those years. In view of the significance of the tax benefits accorded
tenant-stockholders of a corporation that qualifies under Section 216(b)(1)
of the Internal Revenue Code, the likelihood that this type of failure would
be permitted to continue over a period of years appears remote.

 Foreclosure on Loans and Certain Contracts

   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 typically accomplished by a non-judicial trustee's or grantee's sale, as
applicable, under a specific provision in the deed of trust or a deed to
secure debt which authorizes the trustee or grantee, as applicable, to sell
the property upon any default by the

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borrower under the terms of the note or deed of trust or deed to secure debt.
In addition to any notice requirements contained in a deed of trust or deed
to secure debt, in some states, prior to a sale the trustee or grantee, as
applicable, 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, prior to
the sale, the trustee or grantee, 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 or deed to secure debt 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 a specified manner prior to the date of trustee's
sale. 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.

   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
most cases, in those 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.

   Foreclosure of a mortgage generally is accomplished by judicial action. In
most cases, 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 and serving necessary parties, including borrowers located outside
the jurisdiction in which the mortgaged property is located. If the
mortgagee's right to foreclose is contested, the legal proceedings necessary
to resolve the issue can be time consuming.

   In the case of foreclosure under a mortgage, a deed of trust, or a deed to
secure debt the sale by the referee or other designated officer or by the
trustee or grantee, as applicable, is a public sale. However, because of the
difficulty a potential third-party buyer at the sale might 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, or grantee, as applicable, for a credit bid less than or equal to
the unpaid principal amount of note plus the accrued and unpaid interest and
the expense of foreclosure, in which case the borrower's debt will be
extinguished unless the lender purchases the property for a lesser amount in
order to preserve its right against a borrower to seek a deficiency judgment
and the remedy is available under state law and the related loan documents.
In the same states, there is a statutory minimum purchase price which the
lender may offer for the property and generally, state law controls the
amount of foreclosure costs and expenses, including attorneys' fees, which
may be recovered by a lender. After that redemption period, 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, paying taxes and making repairs at its own
expense that are necessary to render the property suitable for sale. In most
cases, 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 securities. See "Description of Credit
Enhancement" in this prospectus.

 Foreclosure on Junior Loans

   A junior mortgagee may not foreclose on the property securing a junior
mortgage unless it forecloses subject to the senior mortgages, in which case
it must either pay the entire amount due on the senior mortgages to the
senior mortgagees prior to or at the time of the foreclosure sale or
undertake the obligation to make payments on the senior mortgages in the
event the borrower 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

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may be required to pay the full amount of the senior mortgages to the senior
mortgagees to avoid foreclosure. Accordingly, if the junior lender purchases
the property, the lender's title will be subject to all senior liens and
claims and some governmental liens. The proceeds received by the referee or
trustee from the sale are applied first to the costs, fees and expenses of
sale 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
in most cases 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 usually payable to the
borrower 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 "Description of
the Securities--Servicing and Administration of Trust Assets--Realization
Upon Defaulted Loans" in this prospectus.

 Foreclosure on Mortgaged Properties Located in the Commonwealth of Puerto
Rico

   Under the laws of the Commonwealth of Puerto Rico the foreclosure of a
real estate mortgage usually follows an ordinary "civil action" filed in the
Superior Court for the district where the mortgaged property is located. If
the defendant does not contest the action filed, a default judgment is
rendered for the plaintiff and the mortgaged property is sold at public
auction, after publication of the sale for two weeks, by posting written
notice in three public places in the municipality where the auction will be
held, in the tax collection office and in the public school of the
municipality where the borrower resides, if known. If the residence of the
borrower is not known, publication in one of the newspapers of general
circulation in the Commonwealth of Puerto Rico must be made at least once a
week for two weeks. There may be as many as three public sales of the
mortgaged property. If the defendant contests the foreclosure, the case may
be tried and judgment rendered based on the merits of the case.

   There are no redemption rights after the public sale of a foreclosed
property under the laws of the Commonwealth of Puerto Rico. Commonwealth of
Puerto Rico law provides for a summary proceeding for the foreclosure of a
mortgage, but it is very seldom used because of concerns regarding the
validity of those actions. The process may be expedited if the mortgagee can
obtain the consent of the defendant to the execution of a deed in lieu of
foreclosure.

   Under Commonwealth of Puerto Rico law, in the case of the public sale upon
foreclosure of a mortgaged property that (a) is subject to a loan that was
obtained for a purpose other than the financing or refinancing of the
acquisition, construction or improvement of the property and (b) is occupied
by the borrower as his principal residence, the borrower of the property has
a right to be paid the first $1,500 from the proceeds obtained on the public
sale of the property. The borrower can claim this sum of money from the
mortgagee at any time prior to the public sale or up to one year after the
sale. This payment would reduce the amount of sales proceeds available to
satisfy the loan and/or contract and may increase the amount of the loss.

 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 described 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 canceled by the Cooperative for failure by the tenant-stockholder to
pay rent or other obligations or charges owed by the tenant-stockholder,
including mechanics' liens against the Cooperative's building incurred by the
tenant-stockholder.

   In most cases, 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,
in most cases, permits the Cooperative to terminate the lease or agreement in
the event the borrower defaults in the performance of covenants under that
proprietary lease or occupancy agreement. Typically, the lender and the
Cooperative enter into a recognition agreement which, together with any
lender protection provisions contained in the proprietary lease or occupancy
agreement, establishes the rights and

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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.

   In most cases, the recognition agreement provides that, in the event that
the tenant-stockholder has defaulted under the proprietary lease or occupancy
agreement, the Cooperative will take no action to terminate the lease or
agreement until the lender has been provided with notice of and an
opportunity to cure the default. The recognition agreement typically provides
that if the proprietary lease or occupancy agreement is terminated, the
Cooperative will recognize the lender's lien against proceeds from a sale of
the shares and the proprietary lease or occupancy agreement allocated to the
dwelling, subject, however, to the Cooperative's right to sums due under the
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,
in most cases, 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 its accrued and unpaid interest.

   In most cases, recognition agreements also 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 board
of directors of the Cooperative as required by the proprietary lease before
transferring the Cooperative shares and/or assigning the proprietary lease.
This 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. In most cases, the
lender is not limited in any rights it may have to dispossess the
tenant-stockholder.

   Because of the nature of Cooperative Loans, lenders do not require the
tenant-stockholder, that is, the borrower, to obtain title insurance of any
type. Consequently, the existence of any prior liens or other imperfections
of title affecting the Cooperative's building or real estate also may
adversely affect the marketability of the shares allocated to the dwelling
unit in the event of foreclosure.

   Foreclosure on the Cooperative shares is accomplished by public sale in
accordance with the provisions of Article 9 of the Uniform Commercial Code,
or 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. In most cases, a sale
conducted according to the usual practice of banks selling similar collateral
in the same area will be considered reasonably conducted.

   Article 9 of the UCC provides that the proceeds of the sale will be
applied first to pay the costs and expenses of the sale and then to satisfy
the indebtedness secured by the lender's security interest. The recognition
agreement, however, in most cases, 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" in this
prospectus.

 Rights of Redemption

   In some states, after sale under a deed of trust or a deed to secure debt
or foreclosure of a mortgage, the borrower and foreclosed junior lienors or
other parties are given a statutory period, typically 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

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a portion of the sums due. In some states, the right to redeem is an
equitable right. The equity of redemption, which is a non-statutory right
that must be exercised prior to a foreclosure sale, should be distinguished
from statutory rights of redemption. 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.

 Notice of Sale; Redemption Rights with Respect to Manufactured Housing
Contracts

   While state laws do not usually require notice to be given to debtors
prior to repossession, many states require delivery of a notice of default
and notice of the debtor's right to cure defaults before repossession. The
law in most states also requires that the debtor be given notice of sale
prior to the resale of the home so that the owner may redeem at or before
resale. In addition, the sale must comply with the requirements of the UCC.

 Anti-Deficiency Legislation and Other Limitations on Lenders

   Some states have imposed statutory prohibitions which limit the remedies
of a beneficiary under a deed of trust, a mortgagee under a mortgage or a
grantee under a deed to secure debt. In some states, including California,
statutes limit the right of the beneficiary, mortgagee or grantee 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 loan
and a contract 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 or deed to secure debt,
even if obtainable under applicable law, may be of little value to the
beneficiary, grantee or mortgagee if there are no trust assets against which
the deficiency judgment may be executed. Some state statutes require the
beneficiary, grantee 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 other states, the lender has the option of bringing a personal action
against the borrower on the debt without first exhausting the security;
however, in some of these states, the lender, following judgment on the
personal action, may be deemed to have elected a remedy and may be precluded
from exercising remedies as to the security. Consequently, the practical
effect of the election requirement, in those states permitting this election,
is that lenders will usually proceed against the security first rather than
bringing a personal action against the borrower.

   Finally, in other states, statutory provisions limit any deficiency
judgment against the borrower following a foreclosure to the excess of the
outstanding debt over the fair market value of the property at the time of
the public sale. The purpose of these statutes is generally to prevent a
beneficiary, grantee 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 most cases, Article 9 of the UCC governs foreclosure on Cooperative
shares and the related proprietary lease or occupancy agreement. Some courts
have interpreted Article 9 to prohibit or limit a deficiency award in some
circumstances, including circumstances where the disposition of the
collateral, which, in the case of a Cooperative Loan, would be the shares of
the Cooperative and the related proprietary lease or occupancy agreement, was
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 its
collateral and/or enforce a deficiency judgment. For example, under the
federal bankruptcy law, all actions by the secured mortgage lender against
the debtor, the debtor's property and any co-debtor are automatically stayed
upon the filing of a bankruptcy petition. Moreover, a court having federal
bankruptcy jurisdiction may permit a debtor through its Chapter 11 or Chapter
13 rehabilitative plan to cure a monetary default

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relating to a loan on the debtor's residence by paying arrearages within a
reasonable time period and reinstating the original loan payment schedule,
even though the lender accelerated the 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 loan default
by permitting the borrower to pay arrearages over a number of years.

   Courts with federal bankruptcy jurisdiction have also indicated that the
terms of a loan secured by property which is not the principal residence 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. In most cases, however, the terms of a loan secured only by a
mortgage on real property that is the debtor's principal residence may not be
modified under a plan confirmed under Chapter 13 except for mortgage payment
arrearages, which may be cured within a reasonable time period. Courts with
federal bankruptcy jurisdiction similarly may be able to modify the terms of
a Cooperative Loan.

   Some tax liens arising under the Internal Revenue Code may, in some
circumstances, have priority over the lien of a mortgage, deed to secure debt
or deed of trust. This may have the effect of delaying or interfering with
the enforcement of rights as to a defaulted revolving credit loan, home
equity loan or a contract. In addition, substantive requirements are imposed
upon mortgage lenders in connection with the origination and the servicing of
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 loans and who fail to comply
with the provisions of the law. In some cases, this liability may affect
assignees of the loans. In particular, an originators' failure to comply with
the federal Truth-in-Lending Act could subject the trust fund (and other
assignees of the home loans) to monetary penalties and could result in the
borrowers rescinding the loans against either the trust fund or subsequent
holders of the loans.

 High Cost Loans

   Some loans and contracts, known as High Cost Loans, may be subject to
special rules, disclosure requirements and other provisions that were added
to the federal Truth-in-Lending Act by the Home Ownership and Equity
Protection Act of 1994, or Homeownership Act, if such trust assets were
originated on or after October 1, 1995, are not loans made to finance the
purchase of the mortgaged property and have interest rates or origination
costs in excess of certain prescribed levels. The Homeownership Act requires
certain additional disclosures, specifies the timing of those disclosures and
limits or prohibits inclusion of certain provisions in mortgages subject to
the Homeownership Act. Purchasers or assignees of any High Cost Loan,
including any trust fund, could be liable under federal law for all claims
and subject to all defenses that the borrower could assert against the
originator of the High Cost Loan, under the federal Truth-in-Lending Act or
any other law, unless the purchaser or assignee did not know and could not
with reasonable diligence have determined that the loan was subject to the
provisions of the Homeownership Act. Remedies available to the borrower
include monetary penalties, as well as recission rights if appropriate
disclosures were not given as required or if the particular mortgage includes
provisions prohibited by the law. The maximum damages that may be recovered
under these provisions from an assignee, including the trust, is the
remaining amount of indebtedness plus the total amount paid by the borrower
in connection with the home loan. In addition to federal law, some states
have enacted, or may enact, laws or regulations that prohibit inclusion of
some provisions in home loans that have interest rates or origination costs
in excess of prescribed levels, and require that borrowers be given certain
disclosures prior to the consummation of the home loans. An originators'
failure to comply with these laws could subject the trust fund (and other
assignees of the home loans) to monetary penalties and could result in the
borrowers rescinding the home loans against either the trust fund or
subsequent holders of the home loans.

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 Alternative Mortgage Instruments

   Alternative mortgage instruments, including adjustable rate loans and
adjustable rate cooperative loans, and early ownership loans, originated by
non-federally chartered lenders have historically been subjected to a variety
of restrictions. These restrictions differed from state to state, resulting
in difficulties in determining whether a particular alternative mortgage
instrument originated by a state-chartered lender 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, or Title VIII.
Title VIII provides that, notwithstanding any state law to the contrary:

   o     state-chartered banks may originate alternative mortgage instruments
         in accordance with regulations promulgated by the Comptroller of the
         Currency relating to the origination of alternative mortgage
         instruments by national banks;

   o     state-chartered credit unions may originate alternative mortgage
         instruments in accordance with regulations promulgated by the
         National Credit Union Administration relating to origination of
         alternative mortgage instruments by federal credit unions; and

   o     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 OTS, relating 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 these
provisions. Some states have taken this action.

 Junior Mortgages; Rights of Senior Mortgagees

   The loans, as well as some contracts or private securities, included in
the trust fund for a series will be secured by mortgages or deeds of trust
which in most cases will be junior to other mortgages or deeds of trust held
by other lenders or institutional investors. The rights of the trust fund,
and therefore the securityholders, 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 loan or contract
to be sold upon default of the borrower, which may extinguish the junior
mortgagee's lien unless the junior mortgagee asserts its subordinate interest
in the property in foreclosure litigation and, in some cases, either
reinitiates 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 the 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 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 or
deed of trust do not require notice of default to the junior mortgagee, the
lack of any 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 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 the proceeds and
awards to any indebtedness secured by the mortgage or deed of trust, in the
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 or deed of trust used
by institutional lenders obligates the borrower to:

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   o     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;

   o     to provide and maintain fire insurance on the property;

   o     to maintain and repair the property and not to commit or permit any
         waste of the property; and

   o     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 borrower to perform any of these obligations, the
mortgagee or beneficiary is given the right under some mortgages or deeds of
trust to perform the obligation itself, at its election, with the borrower
agreeing to reimburse the mortgagee for any sums expended by the mortgagee on
behalf of the borrower. All sums so expended by a senior mortgagee become
part of the indebtedness secured by the senior mortgage.

   The form of credit line trust deed or mortgage used by most institutional
lenders which make revolving credit loans typically contains a "future
advance" clause, which provides, in essence, that additional amounts advanced
to or on behalf of the borrower by the beneficiary or lender are to be
secured by the deed of trust or mortgage. The priority of the lien securing
any advance made under the clause may depend in most states on whether the
deed of trust or mortgage is designated as a credit line deed of trust or
mortgage. If the beneficiary or lender advances additional amounts, the
advance is entitled to receive the same priority as amounts initially
advanced under the trust deed or mortgage, notwithstanding the fact that
there may be junior trust deeds or mortgages and other liens which intervene
between the date of recording of the trust deed or mortgage and the date of
the future advance, and notwithstanding that the beneficiary or lender had
actual knowledge of these intervening junior trust deeds or mortgages and
other liens at the time of the advance. In most states, the trust deed or
mortgage lien securing loans of the type which includes revolving credit
loans applies retroactively to the date of the original recording of the
trust deed or mortgage, provided that the total amount of advances under the
credit limit does not exceed the maximum specified principal amount of the
recorded trust deed or mortgage, except as to advances made after receipt by
the lender of a written notice of lien from a judgment lien creditor of the
trustor.

   When the borrower encumbers mortgaged property with one or more junior
liens, the senior lender is subjected to additional risk. First, the borrower
may have difficulty servicing and repaying multiple loans. In addition, if
the junior loan permits recourse to the borrower (as junior loans often do)
and the senior loan does not, a borrower may be more likely to repay sums due
on the junior loan than those on the senior loan. Second, acts of the senior
lender that prejudice the junior lender or impair the junior lender's
security may create a superior equity in favor of the junior lender. For
example, if the borrower and the senior lender agree to an increase in the
principal amount of or the interest rate payable on the senior loan, the
senior lender may lose its priority to the extent an existing junior lender
is harmed or the borrower is additionally burdened. Third, if the borrower
defaults on the senior loan and/or any junior loan or loans, the existence of
junior loans and actions taken by junior lenders can impair the security
available to the senior lender and can interfere with or delay the taking of
action by the senior lender. Moreover, the bankruptcy of a junior lender may
operate to stay foreclosure or similar proceeds by the senior lender.

MANUFACTURED HOUSING CONTRACTS

   Except as described in the next paragraph, under the laws of most states,
manufactured housing constitutes personal property and is subject to the
motor vehicle registration laws of the state or other jurisdiction in which
the unit is located. In the few states in which certificates of title are not
required for manufactured homes, security interests are perfected by the
filing of a financing statement under Article 9 of the UCC, which has been
adopted by all states. Those financing statements are effective for five
years and must be renewed prior to the end of each five year period. The
certificate of title laws adopted by the majority of states provide that
ownership of motor vehicles and manufactured housing shall be evidenced by a
certificate of title issued by the motor vehicles department, or a similar
entity, of the state. In the states that have enacted certificate of title
laws, a security interest in a unit of manufactured housing, so

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long as it is not attached to land in so permanent a fashion as to become a
fixture, is, in most cases, perfected by the recording of the interest on the
certificate of title to the unit in the appropriate motor vehicle
registration office or by delivery of the required documents and payment of a
fee to the office, depending on state law.

   The master servicer will be required under the related agreement to effect
the notation or delivery of the required documents and fees, and to obtain
possession of the certificate of title, as appropriate under the laws of the
state in which any manufactured home is registered. In the event the master
servicer fails, due to clerical errors or otherwise, to effect the notation
or delivery, or files the security interest under the wrong law, for example,
under a motor vehicle title statute rather than under the UCC, in a few
states, the trustee may not have a first priority perfected security interest
in the manufactured home securing a manufactured housing contract. As
manufactured homes have become larger and often have been attached to their
sites without any apparent intention by the borrowers to move them, courts in
many states have held that manufactured homes may, under some circumstances,
become subject to real estate title and recording laws. As a result, a
security interest in a manufactured home could be rendered subordinate to the
interests of other parties claiming an interest in the manufactured home
under applicable state real estate law. In order to perfect a security
interest in a manufactured home under real estate laws, the holder of the
security interest must file either a "fixture filing" under the provisions of
the UCC or a real estate mortgage under the real estate laws of the state
where the home is located. These filings must be made in the real estate
records office of the county where the home is located. Substantially all of
the manufactured housing contracts will contain provisions prohibiting the
obligor from permanently attaching the manufactured home to its site. So long
as the obligor does not violate this agreement, a security interest in the
manufactured home will be governed by the certificate of title laws or the
UCC, and the notation of the security interest on the certificate of title or
the filing of a UCC financing statement will be effective to maintain the
priority of the security interest in the manufactured home. If, however, a
manufactured home is permanently attached to its site, other parties could
obtain an interest in the manufactured home that is prior to the security
interest originally retained by the seller and transferred to the depositor.

   The depositor will assign or cause to be assigned a security interest in
the manufactured homes to the trustee, on behalf of the securityholders. In
most cases, neither the depositor, the master servicer nor the trustee will
amend the certificates of title, or file UCC-3 statements, to identify the
trustee, on behalf of the securityholders, as the new secured party, and
neither the depositor nor the master servicer will deliver the certificates
of title to the trustee or note thereon the interest of the trustee.
Accordingly, the depositor or the seller will continue to be named as the
secured party on the certificates of title relating to the manufactured
homes. In most states, the assignment is an effective conveyance of the
security interest without amendment of any lien noted on the related
certificate of title and the new secured party succeeds to the depositor's
rights as the secured party. However, in some states there exists a risk
that, in the absence of an amendment to the certificate of title, or the
filing of a UCC-3 statement, the assignment of the security interest in the
manufactured home might not be held to be effective or the security interest
may not be perfected. In the absence of the notation or delivery to the
trustee, the assignment of the security interest in the manufactured home may
not be effective against creditors of the depositor or seller or a trustee in
bankruptcy of the depositor or seller.

   In the absence of fraud, forgery, permanent affixation of the manufactured
home to its site, or administrative error by state recording officials, the
notation of the lien of the depositor on the certificate of title or delivery
of the required documents and fees would be sufficient to protect the trustee
against the rights of subsequent purchasers of a manufactured home or
subsequent lenders who take a security interest in the manufactured home. If
there are any manufactured homes as to which the depositor has failed to
perfect or cause to be perfected the security interest assigned to the trust
fund, the security interest would be subordinate to, among others, subsequent
purchasers for value of the manufactured home and holders of perfected
security interests in the manufactured home. There also exists a risk in not
identifying the trustee, on behalf of the securityholders, as the new secured
party on the certificate of title that, through fraud or negligence, the
security interest of the trustee could be released.

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   In the event that the owner of a manufactured home moves the house to a
state other than the state in which the manufactured home initially is
registered, under the laws of most states the perfected security interest in
the manufactured home would continue for four months after the relocation and
after that period only if and after the owner re-registers the manufactured
home in the new state. If the owner were to relocate a manufactured home to
another state and re-register the manufactured home in that state, and if the
depositor did not take steps to re-perfect its security interest in that
state, the security interest in the manufactured home would cease to be
perfected. A majority of states generally require surrender of a certificate
of title to re-register a manufactured home; accordingly, the depositor must
surrender possession if it holds the certificate of title to the manufactured
home or, in the case of manufactured homes registered in states that provide
for notation of lien, the depositor would receive notice of surrender if the
security interest in the manufactured home is noted on the certificate of
title. Accordingly, the depositor would have the opportunity to re-perfect
its security interest in the manufactured home in the state of relocation. In
states that do not require a certificate of title for registration of a
manufactured home, re-registration could defeat perfection. In the ordinary
course of servicing the manufactured housing contracts, the master servicer
takes steps to effect the re-perfection upon receipt of notice of
re-registration or information from the obligor as to relocation. Similarly,
when an obligor under a manufactured housing conditional sales contract sells
a manufactured home, the obligee must surrender possession of the certificate
of title or it will receive notice as a result of its lien noted thereon and
accordingly will have an opportunity to require satisfaction of the related
manufactured housing conditional sales contract before release of the lien.
Under each related agreement, the master servicer will be obligated to take
steps, at the master servicer's expense, necessary to maintain perfection of
security interests in the manufactured homes.

   Under the laws of most states, liens for repairs performed on a
manufactured home and liens for personal property taxes take priority even
over a prior perfected security interest in the manufactured home. The
depositor will obtain the representation of the seller that it has no
knowledge of any liens on any manufactured home securing a manufactured
housing contract. However, these liens could arise at any time during the
term of a manufactured housing contract. No notice will be given to the
trustee or securityholders in the event this type of lien arises.

 Repossession with Respect to Manufactured Housing Contracts

   Repossession of manufactured housing is governed by state law. A few
states have enacted legislation that requires that the debtor be given an
opportunity to cure its default, typically 30 days to bring the account
current, before repossession can commence. So long as a manufactured home has
not become so attached to real estate that it would be treated as a part of
the real estate under the law of the state where it is located, repossession
of the home in the event of a default by the obligor will generally be
governed by the UCC, except in Louisiana. Article 9 of the UCC provides the
statutory framework for the repossession of manufactured housing units. While
the UCC as adopted by the various states may vary in some small particulars,
the general repossession procedure established by the UCC is as follows:

   o     except in those states where the debtor must receive notice of the
         right to cure a default, repossession can commence immediately upon
         default without prior notice. Repossession may be effected either
         through self-help, which is peaceable retaking without court order,
         voluntary repossession or through judicial process, which is
         repossession under court-issued order. The self-help and/or
         voluntary repossession methods are more commonly employed, and are
         accomplished simply by retaking possession of the manufactured home.
         In cases in which the debtor objects or raises a defense to
         repossession, a court order must be obtained from the appropriate
         state court, and the manufactured home must then be repossessed in
         accordance with that order. Whether the method employed is
         self-help, voluntary repossession or judicial repossession, the
         repossession can be accomplished either by an actual physical
         removal of the manufactured home to a secure location for
         refurbishment and resale or by removing the occupants and their
         belongings from the manufactured home and maintaining possession of
         the manufactured home on the location where the occupants were
         residing. Various factors may affect whether the manufactured home
         is physically removed or left on location, such as the nature and
         term of any lease of the site on which it is located and the
         condition of the unit. In many cases, leaving the

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         manufactured home on location is preferable, in the event that the
         home is already constructed, in order to avoid the cost of removing
         the structure. However, in cases where the home is not moved,
         expenses for site rentals will usually be incurred;

   o     once repossession has been achieved, preparation for the subsequent
         disposition of the manufactured home can commence. This disposition
         may be by public or private sale provided the method, manner, time,
         place and terms of the sale are commercially reasonable; and

   o     sale proceeds will be applied first to repossession expenses,
         including expenses incurred in repossessing, storing, preparing for
         sale, refurbishing and selling costs, and then to satisfaction of
         the indebtedness. While some states impose prohibitions or
         limitations on deficiency judgments if the net proceeds from resale
         do not cover the full amount of the indebtedness, the remainder may
         be sought from the debtor in the form of a deficiency judgment in
         those states that do not prohibit or limit those judgments. The
         deficiency judgment is a personal judgment against the debtor for
         the deficiency. Occasionally, after resale of a manufactured home
         and payment of all expenses and indebtedness, there is a surplus of
         funds. In this event, the UCC requires the party suing for the
         deficiency judgment to remit the surplus to the debtor. Because the
         defaulting owner of a manufactured home, in most cases, has very
         little capital or income available following repossession, a
         deficiency judgment is generally not sought or, if obtained, will be
         settled at a significant discount in light of the defaulting owner's
         limited financial condition.

   Louisiana Law. Any contract secured by a manufactured home located in
Louisiana will be governed by Louisiana law rather than Article 9 of the UCC.
Louisiana laws provide similar mechanisms for perfection and enforcement of
security interests in manufactured housing used as collateral for an
installment sale contract or installment loan agreement.

   Under Louisiana law, a manufactured home that has been permanently affixed
to real estate will nevertheless remain subject to the motor vehicle
registration laws unless the obligor and any holder of a security interest in
the property execute and file in the real estate records for the parish in
which the property is located a document converting the unit into real
property. A manufactured home that is converted into real property but is
then removed from its site can be converted back to personal property
governed by the motor vehicle registration laws if the obligor executes and
files various documents in the appropriate real estate records and all
mortgagees under real estate mortgages on the property and the land to which
it was affixed file releases with the motor vehicle commission.

   So long as a manufactured home remains subject to the Louisiana motor
vehicle laws, liens are recorded on the certificate of title by the motor
vehicle commissioner and repossession can be accomplished by voluntary
consent of the obligor, executory process, repossession proceedings which
must be initiated through the courts but which involve minimal court
supervision, or a civil suit for possession. In connection with a voluntary
surrender, the obligor must be given a full release from liability for all
amounts due under the contract. In executory process repossessions, a
sheriff's sale without court supervision is permitted, unless the obligor
brings suit to enjoin the sale, and the lender is prohibited from seeking a
deficiency judgment against the obligor unless the lender obtained an
appraisal of the manufactured home prior to the sale and the property was
sold for at least two-thirds of its appraised value.

 Consumer Protection Laws with Respect to Manufactured Housing Contracts

   Numerous federal and state consumer protection laws impose substantial
requirements upon creditors involved in consumer finance. These laws include
the federal Truth-in-Lending Act, Regulation "Z", the Equal Credit
Opportunity Act, Regulation "B", the Fair Credit Reporting Act and related
statutes. These laws can impose specific statutory liabilities upon creditors
who fail to comply with their provisions. In some cases, this liability may
affect an assignee's ability to enforce the related contract. In addition,
some of the contracts may be subject to special rules, disclosure
requirements and other provisions that are applicable to High Cost Loans as
discussed under "--Anti-Deficiency Legislation and Other Limitations on
Lenders" in this prospectus.

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   Manufactured housing contracts often contain provisions requiring the
obligor to pay late charges if payments are not timely made. In some cases,
federal and state law may specifically limit the amount of late charges that
may be collected. Unless otherwise provided in the accompanying prospectus
supplement, under the related agreement, late charges will be retained by the
master servicer as additional servicing compensation and any inability to
collect these amounts will not affect payments to securityholders.

   Courts have imposed general equitable principles upon repossession and
litigation involving deficiency balances. These equitable principles are
generally designed to relieve a consumer from the legal consequences of a
default.

   In several cases, consumers have asserted that the remedies provided to
secured parties under the UCC and related laws violate the due process
protections provided under the 14th Amendment to the Constitution of the
United States. For the most part, courts have upheld the notice provisions of
the UCC and related laws as reasonable or have found that the repossession
and resale by the creditor does not involve sufficient state action to afford
constitutional protection to consumers.

   The so-called "Holder-in-Due-Course" Rule of the Federal Trade Commission,
or the FTC Rule has the effect of subjecting a seller, and some related
creditors and their assignees, in a consumer credit transaction and any
assignee of the creditor to all claims and defenses that the debtor in the
transaction could assert against the seller of the goods. Liability under the
FTC Rule is limited to the amounts paid by a debtor on the contract, and the
holder of the contract may also be unable to collect amounts still due under
that contract.

   Most of the manufactured housing contracts in a trust fund will be subject
to the requirements of the FTC Rule. Accordingly, the trustee, as holder of
the manufactured housing contracts, will be subject to any claims or defenses
that the purchaser of the related manufactured home may assert against the
seller of the manufactured home, subject to a maximum liability equal to the
amounts paid by the obligor on the manufactured housing contract. If an
obligor is successful in asserting any claim or defense, and if the seller
had or should have had knowledge of the claim or defense, the master servicer
will have the right to require the seller to repurchase the manufactured
housing contract because of a breach of its seller's representation and
warranty that no claims or defenses exist that would affect the obligor's
obligation to make the required payments under the manufactured housing
contract. The seller would then have the right to require the originating
dealer to repurchase the manufactured housing contract from it and might also
have the right to recover from the dealer any losses suffered by the seller
for which the dealer would have been primarily liable to the obligor.

 Transfer of Manufactured Housing Contracts

   In most cases, manufactured housing contracts contain provisions
prohibiting the sale or transfer of the related manufactured homes without
the consent of the obligee on the contract and permitting the acceleration of
the maturity of the contracts by the obligee on the contract upon any sale or
transfer to which consent has not been given. Unless otherwise provided in
the accompanying prospectus supplement, the master servicer will, to the
extent it has knowledge of the conveyance or proposed conveyance, exercise or
cause to be exercised its rights to accelerate the maturity of the related
manufactured housing contracts through enforcement of due-on-sale clauses,
subject to applicable state law. In some cases, the transfer may be made by a
delinquent obligor in order to avoid a repossession proceeding for a
manufactured home.

   In the case of a transfer of a manufactured home as to which the master
servicer desires to accelerate the maturity of the related contract, the
master servicer's ability to do so will depend on the enforceability under
state law of the related due-on-sale clause. The Garn-St Germain Act
preempts, subject to some exceptions and conditions, state laws prohibiting
enforcement of due-on-sale clauses applicable to the manufactured homes.
Consequently, in some cases the master servicer may be prohibited from
enforcing a due-on-sale clause relating to some manufactured homes.

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 Formaldehyde Litigation with Respect to Manufactured Housing Contracts

   A number of lawsuits are pending in the United States alleging personal
injury from exposure to the chemical formaldehyde, which is present in many
building materials, including components of manufactured housing such as
plywood flooring and wall paneling. Some of these lawsuits are pending
against manufacturers of manufactured housing, suppliers of component parts
and related persons in the distribution process. The depositor is aware of a
limited number of cases in which plaintiffs have won judgments in these
lawsuits.

   Under the FTC Rule, which is described under "--Consumer Protection Laws"
and "Consumer Protection Laws with Respect to Manufactured Housing
Contracts," the holder of any contract secured by a manufactured home for
which a formaldehyde claim has been successfully asserted may be liable to
the obligor for the amount paid by the obligor on the related contract and
may be unable to collect amounts still due under the contract. The successful
assertion of this type of claim constitutes a breach of a representation or
warranty of the seller, and the related trust fund would suffer a loss only
to the extent that:

   o     the seller breached its obligation to repurchase the contract in the
         event an obligor is successful in asserting this type of claim; and

   o     the seller, the depositor or the trustee were unsuccessful in
         asserting any claim of contribution or subrogation on behalf of the
         securityholders against the manufacturer or other persons who were
         directly liable to the plaintiff for the damages.

Typical products liability insurance policies held by manufacturers and
component suppliers of manufactured homes may not cover liabilities arising
from formaldehyde in manufactured housing, with the result that recoveries
from manufacturers, suppliers or other persons may be limited to their
corporate assets without the benefit of insurance.

THE HOME IMPROVEMENT CONTRACTS

 General

   The home improvement contracts, other than those home improvement
contracts that are unsecured or secured by mortgages on real estate, in most
cases, are "chattel paper" or constitute "purchase money security interests"
each as defined in the UCC. Those home improvement contracts are referred to
in this section as "contracts". Under the UCC, the sale of chattel paper is
treated in a manner similar to perfection of a security interest in chattel
paper. Under the related agreement, the depositor will transfer physical
possession of the contracts to the trustee or a designated custodian or may
retain possession of the contracts as custodian for the trustee. In addition,
the depositor 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 specified in the accompanying prospectus supplement, the
contracts will not be stamped or otherwise marked to reflect their assignment
from the depositor to the trustee. Therefore, if through negligence, fraud or
otherwise, a subsequent purchaser were able to take physical possession of
the contracts without notice of the assignment, the trustee's interest in the
contracts could be defeated.

 Security Interests in Home Improvements

   The contracts that are secured by the home improvements financed by those
contracts grant to the originator of the contracts a purchase money security
interest in the home improvements to secure all or part of the purchase price
of the home improvements and related services. A financing statement
generally is not required to be filed to perfect a purchase money security
interest in consumer goods. These purchase money security interests are
assignable. In most cases, a purchase money security interest grants to the
holder a security interest that has priority over a conflicting security
interest in the same collateral and the proceeds of the collateral. However,
to the extent that the collateral subject to a purchase money security
interest becomes a fixture, in order for the related purchase money security
interest to take priority over a conflicting interest in the fixture, the
holder's interest in the home improvement must generally be perfected by a
timely fixture filing. In most cases, under the UCC, a security interest does
not exist under the UCC in ordinary building material incorporated into an

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improvement on land. Home improvement contracts that finance lumber, bricks,
other types of ordinary building material or other goods that are deemed to
lose this characterization, upon incorporation of these materials into the
related property, will not be secured by a purchase money security interest
in the home improvement being financed.

 Enforcement of Security Interest in Home Improvements

   So long as the home improvement has not become subject to the real estate
law, a creditor can repossess a home improvement securing a contract by
voluntary surrender, "self-help" repossession that is "peaceful", that is,
without breach of the peace, or, in the absence of voluntary surrender and
the ability to repossess without breach of the peace, judicial process. The
holder of a contract must give the debtor a number of days' notice, which
varies from 10 to 30 days or more depending on the state, prior to
commencement of any repossession. The UCC and consumer protection laws in
most states restrict repossession sales, including requiring prior notice to
the debtor and commercial reasonableness in effecting this type of sale. The
law in most states also requires that the debtor be given notice of any sale
prior to resale of the related property so that the debtor may redeem it at
or before the resale.

   Under the laws applicable in most states, a creditor is entitled to obtain
a deficiency judgment from a debtor for any deficiency on repossession and
resale of the property securing the debtor's loan. However, some states
impose prohibitions or limitations on deficiency judgments and in many cases
the defaulting borrower would have no assets with which to pay a judgment.

   Some other statutory provisions, including federal and state bankruptcy
and insolvency laws and general equity principles, may limit or delay the
ability of a lender to repossess and resell collateral or enforce a
deficiency judgment.

 Consumer Protection Laws

   The FTC Rule is intended to defeat the ability of the transferor of a
consumer credit contract that is the seller of goods which gave rise to the
transaction, and some related lenders and assignees, to transfer the contract
free of notice of claims by the debtor under that contract. The effect of
this rule is to subject the assignee of this type of 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 obligor also may be able to assert the rule to set off remaining
amounts due as a defense against a claim brought by the trustee against the
obligor. Numerous other federal and state consumer protections laws impose
requirements applicable to the origination and lending under the contracts,
including the Truth in Lending Act, the Federal Trade Commission Act, the
Fair Credit Billing Act, the Fair Credit Reporting Act, the Equal Credit
Opportunity Act, the Fair Debt Collection Practices Act and the Uniform
Consumer Credit Code. In the case of some of these laws, the failure to
comply with their provisions may affect the ability of the related contract.

 Applicability of Usury Laws

   Title V of the Depository Institutions Deregulation and Monetary Control
Act of 1980, or Title V, provides that, subject to the following conditions,
state usury limitations shall not apply to any contract that is secured by a
first lien on some kinds of consumer goods. The contracts would be covered if
they satisfy some conditions, among other things, governing the terms of any
prepayments, late charges and deferral fees and requiring a 30-day notice
period prior to instituting any action leading to repossession of the related
unit.

   Title V authorized any state to reimpose limitations on interest rates and
finance charges by adopting before April 1, 1983 a law or constitutional
provision that expressly rejects application of the federal law. Fifteen
states adopted this type of law prior to the April 1, 1983 deadline. In
addition, even where Title V was not so rejected, any state is authorized by
the law to adopt a provision limiting discount points or other charges on
loans covered by Title V.

   Title V also provides that, subject to the following conditions, state
usury limitations shall not apply to any loan that is secured by a first lien
on some kinds of manufactured housing. The contracts would be covered if they
satisfy some conditions, among other things, governing the terms of any
prepayments, late

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charges and deferral fees and requiring a 30-day notice period prior to
instituting any action leading to repossession of or foreclosure of the
related unit. Title V authorized any state to reimpose limitations on
interest rates and finance charges by adopting before April 1, 1983 a law or
constitutional provision which expressly rejects application of the federal
law. Fifteen states adopted such a law prior to the April 1, 1983 deadline.
In addition, even where Title V was not so rejected, any state is authorized
by the law to adopt a provision limiting discount points or other charges on
loans covered by Title V. In any state in which application of Title V was
expressly rejected or a provision limiting discount points or other charges
has been adopted, no contract that imposes finance charges or provides for
discount points or charges in excess of permitted levels has been included in
the trust fund.

 Installment Contracts

   The trust assets may also consist of installment sales contracts. Under an
installment contract the seller, referred to in this section as the "lender",
retains legal title to the property and enters into an agreement with the
purchaser, referred to in this section as the "borrower", for the payment of
the purchase price, plus interest, over the term of the contract. Only after
full performance by the borrower of the installment contract is the lender
obligated to convey title to the property to the purchaser. As with mortgage
or deed of trust financing, during the effective period of the installment
contract, the borrower is in most cases responsible for the maintaining the
property in good condition and for paying real estate taxes, assessments and
hazard insurance premiums associated with the property.

   The method of enforcing the rights of the lender under an installment
contract varies on a state-by-state basis depending upon the extent to which
state courts are willing, or able under state statute, to the contract
strictly according to its terms. The terms of installment contracts generally
provide that upon a default by the borrower, the borrower loses his or her
right to occupy the property, the entire indebtedness is accelerated and the
buyer's equitable interest in the property is forfeited. The lender in this
situation is not required to foreclose in order to obtain title to the
property, although in some cases a quiet title action is in order if the
borrower has filed the installment contract in local land records and an
ejectment action may be necessary to recover possession. In a few states,
particularly in cases of borrower default during the early years of an
installment contract, the courts will permit ejectment of the buyer and a
forfeiture of his or her interest in the property. However, most state
legislatures have enacted provisions by analogy to mortgage law protecting
borrowers under installment contracts from the harsh consequences of
forfeiture. Under those statutes, a judicial or nonjudicial foreclosure may
be required, the lender may be required to give notice of default and the
borrower may be granted some grace period during which the installment
contract may be reinstated upon full payment of the defaulted amount and the
borrower may have a post-foreclosure statutory redemption right. In other
states, courts in equity may permit a borrower with significant investment in
the property under an installment contract for the sale of real estate to
share in the proceeds of sale of the property after the indebtedness is
repaid or may otherwise refuse to enforce the forfeiture clause.
Nevertheless, the lender's procedures for obtaining possession and clear
title under an installment contract in a given state are simpler and less
time consuming and costly than are the procedures for foreclosing and
obtaining clear title to a property subject to one or more liens.

ENFORCEABILITY OF CERTAIN PROVISIONS

   The loans and, as applicable, contracts typically contain due-on-sale
clauses. These clauses permit the lender to accelerate the maturity of the
loan if the borrower sells, transfers or conveys the property without the
prior consent of the mortgagee. 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, or the Garn-St Germain
Act, subject to some exceptions, preempts state constitutional, statutory and
case law that prohibits the enforcement of due-on-sale clauses and permits
lenders to enforce these clauses in accordance with their terms. 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.

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   The Garn-St Germain Act also describes 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, some transfers by
operation of law, leases of fewer than three years and the creation of a
junior encumbrance. Regulations promulgated under the Garn-St Germain Act
also prohibit the imposition of a prepayment penalty upon the acceleration of
a loan under a due-on-sale clause.

   The inability to enforce a due-on-sale clause may result in a 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 related trust assets and the number of trust assets which may be
outstanding until maturity.

   Forms of notes and mortgages used by lenders may contain provisions
obligating the borrower to pay a late charge or additional interest if
payments are not timely made, and in some circumstances may provide for
prepayment fees or yield maintenance penalties if the obligation is paid
prior to maturity. In addition to limitations imposed by FHA Regulations
relating to contracts partially insured by the FHA under Title I, in some
states, there are or may be specific limitations upon the late charges that a
lender may collect from a borrower for delinquent payments. Some states also
limit the amounts that a lender may collect from a borrower as an additional
charge if the loan is prepaid. 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
loans may be prepaid in full or in part without penalty. The regulations of
the Federal Home Loan Bank Board, as succeeded by the Office of Thrift
Supervision, or 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 relating to loans and/or contracts having higher
interest rates, may increase the likelihood of refinancing or other early
retirements of the revolving credit loans, home equity loans and/or
contracts.

   Some state laws restrict the imposition of prepayment charges even when
the loans expressly provide for the collection of those charges. Although the
Alternative Mortgage Transactions Parity Act permits the collection of
prepayment charges in connection with some types of eligible loans preempting
any contrary state law prohibitions, some states may not recognize the
preemptive authority of the Parity Act. As a result, it is possible that
prepayment charges may not be collected even on loans that provide for the
payment of these charges. The master servicer will be entitled to all
prepayment charges and late payment charges received on the loans and these
amounts will not be available for payment on the securities.

   In foreclosure actions, courts have imposed general equitable principles.
These equitable principles are, in most cases, 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 or the borrower
executing a second mortgage or deed of trust affecting 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
grantee under a deed to secure debt, or a mortgagee having a power of sale,
does not involve sufficient state action to afford constitutional protections
to the borrower.

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APPLICABILITY OF USURY LAWS

   Title V provides that state usury limitations shall not apply to some
types of residential first loans, including cooperative loans originated by
some lenders after March 31, 1980. A similar federal statute was in effect
for loans made during the first three months of 1980. The OTS is authorized
to issue rules and regulations and to publish interpretations governing
implementation of Title V. The statute authorized any state to 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 loans covered by Title V. Some states have taken action to
reimpose interest rate limits or to limit discount points or other charges.

   Usury limits apply to junior loans in many states. Any applicable usury
limits in effect at origination will be reflected in the maximum interest
rates for the trust assets, as described in the accompanying prospectus
supplement.

   In most cases, each seller of a loan and a contract will have represented
that the loan or contract was originated in compliance with then applicable
state laws, including usury laws, in all material respects. However, the
interest rates on the loans will be subject to applicable usury laws as in
effect from time to time.

ENVIRONMENTAL LEGISLATION

   Under the federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, or CERCLA, and under state law in some
states, a secured party which takes a deed-in-lieu of foreclosure, purchases
a mortgaged property at a foreclosure sale, or operates a mortgaged property
may become liable in some circumstances for the costs of cleaning up
hazardous substances regardless of whether they have contaminated the
property. CERCLA imposes strict, as well as joint and several, liability on
several classes of potentially responsible parties, including current owners
and operators of the property who did not cause or contribute to the
contamination. Furthermore, liability under CERCLA is not limited to the
original or unamortized principal balance of a loan or to the value of the
property securing a loan. Lenders may be held liable under CERCLA as owners
or operators unless they qualify for the secured creditor exemption to
CERCLA. This exemption exempts from the definition of owners and operators
those who, without participating in the management of a facility, hold
evidence of ownership primarily to protect a security interest in the
facility.

   The Asset Conservation, Lender Liability and Deposit Insurance Act of
1996, as amended, or the Conservation Act, among other things, the provisions
of CERCLA relating to lender liability and the secured creditor exemption.
The Conservation Act offers substantial protection to lenders by defining the
activities in which a lender can engage and still have the benefit of the
secured creditor exemption. In order for a lender to be deemed to have
participated in the management of a mortgaged property, the lender must
actually participate in the operational affairs of the mortgaged property.
The Conservation Act provides that "merely having the capacity to influence,
or unexercised right to control" operations does not constitute participation
in management. A lender will lose the protection of the secured creditor
exemption only if it exercises decision-making control over the borrower's
environmental compliance and hazardous substance handling and disposal
practices, or assumes day-to-day management of substantially all of the
operational functions of the mortgaged property. The Conservation Act also
provides that a lender will continue to have the benefit of the secured
creditor exemption even if it forecloses on a mortgaged property, purchases
it at a foreclosure sale or accepts a deed-in-lieu of foreclosure provided
that the lender seeks to sell the mortgaged property at the earliest
practicable commercially reasonable time on commercially reasonable terms.

   Other federal and state laws in some circumstances may impose liability on
a secured party which takes a deed-in-lieu of foreclosure, purchases a
mortgaged property at a foreclosure sale, or operates a mortgaged property on
which contaminants other than CERCLA hazardous substances are present,
including petroleum, agricultural chemicals, hazardous wastes, asbestos,
radon, and lead-based paint. These cleanup costs may be substantial. It is
possible that the cleanup costs could become a liability of a

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trust fund and reduce the amounts otherwise distributable to the holders of
the related series of securities. Moreover, some federal statutes and some
states by statute impose an Environmental Lien for any cleanup costs incurred
by that state on the property that is the subject of the cleanup costs. All
subsequent liens on that property usually are subordinated to an
Environmental Lien and, in some states, even prior recorded liens are
subordinated to Environmental Liens. In the latter states, the security
interest of the trustee in a related parcel of real property that is subject
to an Environmental Lien could be adversely affected.

   Traditionally, many residential mortgage lenders have not taken steps to
evaluate whether contaminants are present on any mortgaged property prior to
the origination of the loan or prior to foreclosure or accepting a
deed-in-lieu of foreclosure. Accordingly, the depositor has not made and will
not make these evaluations prior to the origination of the secured contracts.
Neither the depositor nor any replacement servicer will be required by any
agreement to undertake any of these evaluations prior to foreclosure or
accepting a deed-in-lieu of foreclosure. The depositor does not make any
representations or warranties or assume any liability for the absence or
effect of contaminants on any related real property or any casualty resulting
from the presence or effect of contaminants. However, the depositor will not
be obligated to foreclose on related real property or accept a deed-in-lieu
of foreclosure if it knows or reasonably believes that there are material
contaminated conditions on the property. A failure so to foreclose may reduce
the amounts otherwise available to securityholders of the related series.

ALTERNATIVE MORTGAGE INSTRUMENTS

   Alternative mortgage instruments, including adjustable rate loans and
adjustable rate cooperative loans, and early ownership loans, originated by
non-federally chartered lenders have historically been subjected to a variety
of restrictions. These restrictions differed from state to state, resulting
in difficulties in determining whether a particular alternative mortgage
instrument originated by a state-chartered lender 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, or Title VIII.
Title VIII provides that, notwithstanding any state law to the contrary:

   o     state-chartered banks may originate alternative mortgage instruments
         in accordance with regulations promulgated by the Comptroller of the
         Currency relating to the origination of alternative mortgage
         instruments by national banks;

   o     state-chartered credit unions may originate alternative mortgage
         instruments in accordance with regulations promulgated by the
         National Credit Union Administration relating to origination of
         alternative mortgage instruments by federal credit unions; and

   o     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 OTS, relating 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 these
provisions. Some states have taken this action.

LEASEHOLD CONSIDERATIONS

   The loans may contain leasehold mortgages which are each secured by a lien
on the related borrower's leasehold interest in the related mortgaged
property. Loans secured by a lien on the borrower's leasehold interest under
a ground lease are subject to certain risks not associated with loans secured
by a lien on the fee estate of the borrower. The most significant of these
risks is that if the borrower's leasehold were to be terminated (for example,
as a result of a lease default or the bankruptcy of the ground lessor or the
borrower/ground lessee), the leasehold mortgagee would be left without its
security. In the case of each loan secured by a lien on the related
borrower's leasehold interest under a ground

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lease, the ground lease contains provisions protective of the leasehold
mortgagee, such as a provision that requires the ground lessor to give the
leasehold mortgagee notices of lessee defaults and an opportunity to cure
them, a provision that permits the leasehold estate to be assigned to the
leasehold mortgagee or the purchaser at a foreclosure sale and thereafter to
be assigned by the leasehold mortgagee or the related purchaser at a
foreclosure sale to any financially responsible third party that executes an
agreement obligating itself to comply with the terms and conditions of the
ground lease and a provision that gives the leasehold mortgagee the right to
enter into a new ground lease with the ground lessor on the same terms and
conditions as the old ground lease upon any termination of the old ground
lease.

SOLDIERS' AND SAILORS' CIVIL RELIEF ACT OF 1940

   Under the terms of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended, or the Relief Act, a borrower who enters military service after the
origination of the borrower's loan and some contracts, including a borrower
who was in reserve status and is called to active duty after origination of
the loan and some contracts, may not be charged interest, including fees and
charges, above an annual rate of 6% during the period of the borrower's
active duty status, unless a court orders otherwise upon application of the
lender. The Relief Act applies to borrowers who are members of the Air Force,
Army, Marines, Navy, National Guard, Reserves, Coast Guard, and officers of
the U.S. Public Health Service assigned to duty with the military. Because
the Relief Act applies to borrowers who enter military service, including
reservists who are called to active duty, after origination of the related
loan and related contract, no information can be provided as to the number of
loans that may be affected by the Relief Act. Application of the Relief Act
would adversely affect, for an indeterminate period of time, the ability of
the master servicer to collect full amounts of interest on some of the loans
and contracts. 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 loans and contracts, would result
in a reduction of the amounts payable to the holders of the related
securities, and may not be covered by the applicable form of credit
enhancement provided in connection with the related series of securities. In
addition, the Relief Act imposes limitations that would impair the ability of
the master servicer to foreclose on an affected loan or contract during the
borrower's period of active duty status, and, under some circumstances,
during an additional three month period after the period of active duty
status. Thus, in the event that the Relief Act or similar legislation or
regulations applies to any loan and contract which goes into default, there
may be delays in payment and losses on the related securities in connection
therewith. Any other interest shortfalls, deferrals or forgiveness of
payments on the loans and contracts resulting from similar legislation or
regulations may result in delays in payments or losses to securityholders of
the related series.

FORFEITURES IN DRUG AND RICO PROCEEDINGS

   Federal law provides that property owned by persons convicted of
drug-related crimes or of criminal violations of the Racketeer Influenced and
Corrupt Organizations, or RICO, statute can be seized by the government if
the property was used in, or purchased with the proceeds of, those crimes.
Under procedures contained in the Comprehensive Crime Control Act of 1984, or
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 loans.

   A lender may avoid forfeiture of its interest in the property if it
establishes that:

   o     its mortgage was executed and recorded before commission of the
         crime upon which the forfeiture is based; or

   o     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.

JUNIOR MORTGAGES; RIGHTS OF SENIOR MORTGAGEES

   The loans, as well as some contracts or private securities, included in
the trust fund for a series will be secured by mortgages or deeds of trust
which in most cases will be junior to other mortgages or deeds

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of trust held by other lenders or institutional investors. The rights of the
trust fund, and therefore the securityholders, 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 loan or contract to be sold upon default of the borrower, which may
extinguish the junior mortgagee's lien unless the junior mortgagee asserts
its subordinate interest in the property in foreclosure litigation and, in
some cases, either reinitiates 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 the 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 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 or deed of trust do not require notice of default to the
junior mortgagee, the lack of any 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 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 the proceeds and
awards to any indebtedness secured by the mortgage or deed of trust, in the
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 or deed of trust used
by institutional lenders obligates the borrower to:

   o     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;

   o     to provide and maintain fire insurance on the property;

   o     to maintain and repair the property and not to commit or permit any
         waste of the property; and

   o     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 borrower to perform any of these obligations, the
mortgagee or beneficiary is given the right under some mortgages or deeds of
trust to perform the obligation itself, at its election, with the borrower
agreeing to reimburse the mortgagee for any sums expended by the mortgagee on
behalf of the borrower. All sums so expended by a senior mortgagee become
part of the indebtedness secured by the senior mortgage.

   The form of credit line trust deed or mortgage used by most institutional
lenders which make revolving credit loans typically contains a "future
advance" clause, which provides, in essence, that additional amounts advanced
to or on behalf of the borrower by the beneficiary or lender are to be
secured by the deed of trust or mortgage. The priority of the lien securing
any advance made under the clause may depend in most states on whether the
deed of trust or mortgage is designated as a credit line deed of trust or
mortgage. If the beneficiary or lender advances additional amounts, the
advance is entitled to receive the same priority as amounts initially
advanced under the trust deed or mortgage, notwithstanding the fact that
there may be junior trust deeds or mortgages and other liens which intervene
between the date of recording of the trust deed or mortgage and the date of
the future advance, and notwithstanding that the beneficiary or lender had
actual knowledge of these intervening junior trust deeds or mortgages and
other liens at the time of the advance. In most states, the trust deed or
mortgage lien securing loans of the type which includes revolving credit
loans applies retroactively to the date of the original recording of the
trust deed or mortgage, provided that the total amount of advances under the
credit limit does not exceed the maximum specified principal amount of the
recorded trust deed or mortgage, except as to advances made after receipt by
the lender of a written notice of lien from a judgment lien creditor of the
trustor.

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   When the borrower encumbers mortgaged property with one or more junior
liens, the senior lender is subjected to additional risk. First, the borrower
may have difficulty servicing and repaying multiple loans. In addition, if
the junior loan permits recourse to the borrower (as junior loans often do)
and the senior loan does not, a borrower may be more likely to repay sums due
on the junior loan than those on the senior loan. Second, acts of the senior
lender that prejudice the junior lender or impair the junior lender's
security may create a superior equity in favor of the junior lender. For
example, if the borrower and the senior lender agree to an increase in the
principal amount of or the interest rate payable on the senior loan, the
senior lender may lose its priority to the extent an existing junior lender
is harmed or the borrower is additionally burdened. Third, if the borrower
defaults on the senior loan and/or any junior loan or loans, the existence of
junior loans and actions taken by junior lenders can impair the security
available to the senior lender and can interfere with or delay the taking of
action by the senior lender. Moreover, the bankruptcy of a junior lender may
operate to stay foreclosure or similar proceeds by the senior lender.

                   MATERIAL FEDERAL INCOME TAX CONSEQUENCES

GENERAL

   The following is a general discussion of anticipated material federal
income tax consequences of the purchase, ownership and disposition of the
securities offered by this prospectus. This discussion has been prepared with
the advice of Thacher Proffitt & Wood, Orrick, Herrington & Sutcliffe LLP and
Stroock & Stroock & Lavan, counsel to the depositor. This discussion is
directed solely to securityholders that hold the securities as capital assets
within the meaning of Section 1221 of the Internal Revenue Code and does not
purport to discuss all federal income tax consequences that may be applicable
to particular categories of investors, some of which may be subject to
special rules, including banks, insurance companies, foreign investors,
tax-exempt organizations, dealers in securities or currencies, mutual funds,
real estate investment trusts, natural persons, cash method taxpayers, S
corporations, estates and trusts, investors that hold the securities as part
of a hedge, straddle or, an integrated or conversion transaction, or holders
whose "functional currency" is not the United States dollar. Also, it does
not address alternative minimum tax consequences or the indirect effects on
the holders of equity interests in a securityholder. Further, 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, FASIT 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:

   o     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

   o     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 in this prospectus. In
addition to the federal income tax consequences described in this prospectus,
potential investors should consider the state and local tax consequences, if
any, of the purchase, ownership and disposition of the securities. See "State
and Other Tax Consequences" in this prospectus. Securityholders 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
securities offered by this prospectus.

   This prospectus discusses two types of securities, (1) notes or
certificates issued by an issuer for which a REMIC or FASIT election is in
effect, and (2) notes issued by an issuer for which no REMIC or FASIT
election is in effect. See "REMICs and FASITs" and "Notes" in this
prospectus.

   The following discussion is based in part upon the rules governing
original issue discount that are described in Sections 1271-1273 and 1275 of
the Code and in the Treasury regulations issued thereunder, which are
referred to in this prospectus as the OID regulations, in part upon the REMIC
provisions and the Treasury regulations issued thereunder, or the REMIC
regulations, and in part upon the FASIT

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provisions and the proposed Treasury regulations appearing in the Federal
Register on February 7, 2000, or the proposed FASIT regulations. With the
exception of rules relating to anti-abuse and governing transition entities,
the proposed FASIT regulations will not be binding until those regulations
are filed as final regulations with the Federal Register. The proposed FASIT
regulations provide that the effective date for rules relating to anti-abuse
and governing transition entities is February 4, 2000. The OID regulations,
which are effective with respect to debt instruments issued on or after April
4, 1994, do not adequately address various issues relevant to, and in some
instances provide that they are not applicable to, securities like the
securities.

REMICS AND FASITS

   Unless otherwise specified in the accompanying prospectus supplement, as
to each series of certificates, the master servicer will cause an election to
be made to have the related trust treated as a REMIC under Sections 860A
through 860G of the Internal Revenue Code, or as a FASIT under Sections 860H
through 860L of the Internal Revenue Code. Unless otherwise specified in the
accompanying prospectus supplement, no election to have the related trust
treated as a REMIC or FASIT will be made for each series of notes. If a REMIC
or FASIT election or elections will be made for the related trust, the
accompanying prospectus supplement for each series of securities will
identify all "regular interests" and "residual interests" in the REMIC, and
all "regular interests" and "high-yield regular interests" in the FASIT. If
interests in a FASIT ownership interest are offered for sale, the
accompanying prospectus supplement will describe the federal income tax
consequences of the purchase, holding and disposition of those interests. If
a REMIC or FASIT election will not be made for a trust and a series of
certificates, the federal income tax consequences of the purchase, ownership
and disposition of the certificates will be described in the accompanying
prospectus supplement. If a REMIC or FASIT election will not be made for a
trust and a series of notes, the federal income tax consequences of the
purchase, ownership and disposition of the notes will be as described in
"Notes," unless specified otherwise in the accompanying prospectus
supplement. For purposes of this tax discussion, references to a
"securityholder" or a "holder" are to the beneficial owner of a certificate
or note.

 Classification of REMICs and FASITs

   Upon the issuance of each series of REMIC or FASIT securities, either
Thacher Proffitt & Wood, Orrick, Herrington & Sutcliffe LLP or Stroock &
Stroock & Lavan, counsel to the depositor, will deliver its opinion to the
effect that, assuming compliance with all provisions of the related pooling
and servicing agreement, the related trust, or each applicable portion
thereof, will qualify as a REMIC or FASIT, as the case may be, and the
securities offered with respect thereto will be considered to evidence
ownership of "regular interests" or "residual interests" in the related
REMIC, or "regular interests" or "ownership interests" in the related FASIT.

   The Proposed FASIT Regulations contain an "anti-abuse" rule that, among
other things, enables the IRS to disregard a FASIT election, treat one or
more of the assets of a FASIT as held by a person other than the holder of
the ownership interest in the FASIT, treat a FASIT regular interest as other
than a debt instrument or treat a regular interest held by any person as
having the tax characteristics of one or more of the assets held by the
FASIT, if a principal purpose of forming or using the FASIT was to achieve
results inconsistent with the intent of the FASIT provisions and the Proposed
FASIT Regulations based on all the facts and circumstances. Among the
requirements that the Proposed FASIT Regulations state for remaining within
the intent of the FASIT provisions is that no FASIT provision be used to
obtain a federal tax result that could not be obtained without the use of
that provision unless the provision clearly contemplates that result. The
only general intent that the Proposed FASIT Regulations attribute to the
FASIT provisions is to promote the spreading of credit risk on debt
instruments by facilitating their securitization. Although any FASIT whose
securities are offered pursuant to this prospectus will be structured to
reduce the likelihood that the IRS would recharacterize the tax treatment of
the offered securities, the anti-abuse provisions of the Proposed FASIT
Regulations are sufficiently broad and vague that the avoidance of
recharacterization cannot be assured. Investors should be cautious in
purchasing any of the securities for which a FASIT election has been made and
should consult with their tax advisors in

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determining the federal, state, local and other tax consequences to them for
the purchase, holding and disposition of those securities.

   If an entity electing to be treated as a REMIC or FASIT fails to comply
with one or more of the ongoing requirements of the Internal Revenue Code for
this status during any taxable year, the Internal Revenue Code provides that
the entity will not be treated as a REMIC or FASIT for that year and
thereafter. In that event, the entity may be taxable as a separate
corporation under Treasury regulations, and the related REMIC or FASIT
securities may not be accorded the status or given the tax treatment
described below. Although the Internal Revenue Code authorizes the Treasury
Department to issue regulations providing relief in the event of an
inadvertent termination of REMIC or FASIT status, no regulations have been
issued. Any relief, moreover, may be accompanied by sanctions, such as the
imposition of a corporate tax on all or a portion of the trust's income for
the period in which the requirements for that status are not satisfied. The
proposed FASIT regulations provide that, upon the termination of a FASIT,
FASIT regular interest holders are treated as exchanging their FASIT regular
interests for new interests in the trust. The new interests are characterized
under general tax principles, and the deemed exchange of the FASIT regular
interests for new interests in the trust may require the FASIT regular
interest holders to recognize gain, but not loss. The pooling and servicing
agreement with respect to each REMIC or FASIT will include provisions
designed to maintain the trust's status as a REMIC or FASIT under the
applicable provisions of the Internal Revenue Code. It is not anticipated
that the status of any trust as a REMIC or FASIT will be terminated prior to
termination of the trust.

   In general, a swap or yield supplement agreement may not be an asset of a
REMIC. If a trust of a particular series contains a swap or yield supplement
agreement, the accompanying prospectus supplement will disclose the tax
treatment of such an arrangement. In contrast, a swap or yield supplement
agreement may be an asset of a FASIT, but only if it is reasonably required
to hedge or guarantee against the FASIT's risks associated with being the
obligor on the interests that the FASIT has issued.

 Characterization of Investments in REMIC and FASIT Securities

   In general, REMIC regular and residual securities, and FASIT regular
securities, will be "real estate assets" within the meaning of Section
856(c)(4)(A) of the Internal Revenue Code and assets described in Section
7701(a)(19)(C) of the Internal Revenue Code in the same proportion that the
assets of the REMIC or FASIT underlying the securities would be so treated.
Moreover, if 95% or more of the assets of the REMIC or FASIT qualify for any
of the foregoing treatments at all times during a calendar year, those
securities will qualify for the corresponding status in their entirety for
that calendar year. Interest, including original issue discount, on the REMIC
or FASIT regular securities and income allocated to the class of REMIC
residual securities will be interest described in Section 856(c)(3)(B) of the
Internal Revenue Code to the extent that those securities are treated as
"real estate assets" within the meaning of Section 856(c)(4)(A) of the
Internal Revenue Code. In addition, REMIC regular securities will be
"qualified mortgages" within the meaning of Section 860G(a)(3) of the
Internal Revenue Code, as will FASIT regular securities if 95% or more of the
value of the FASIT is at all times attributable to qualified mortgages, if
transferred to another REMIC on its startup day in exchange for regular or
residual interests in that REMIC, and REMIC or FASIT regular securities will
be "permitted assets"within the meaning of Section 860L(c) of the Internal
Revenue Code. The determination as to the percentage of the REMIC's or
FASIT's assets that constitute assets described in the foregoing sections of
the Internal Revenue 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 or FASIT during that calendar quarter. The master servicer will
report those determinations to securityholders in the manner and at the times
required by applicable Treasury regulations.

   The assets of the REMIC or FASIT will include, in addition to loans,
payments on loans held pending distribution on the REMIC or FASIT securities
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 loans, or whether the assets, to the extent not
invested in assets described in the foregoing sections, otherwise would
receive the same treatment as the loans for purposes of all of the foregoing
sections. In addition, in some instances

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loans may not be treated entirely as assets described in the foregoing
sections. The REMIC regulations do provide, however, that payments on loans
held pending distribution are considered part of the loans for purposes of
Section 856(c)(4)(A) of the Internal Revenue Code. Furthermore, foreclosure
property will qualify as "real estate assets" under Section 856(c)(4)(A) of
the Internal Revenue Code.

 Tiered REMIC and FASIT Structures

   For some series of REMIC or FASIT securities, two or more separate
elections may be made to treat designated portions of the related trust as
REMICs or FASITs, or tiered REMICs or FASITs, for federal income tax
purposes. Upon the issuance of this type of series of REMIC or FASIT
securities, Thacher Proffitt & Wood, Orrick, Herrington & Sutcliffe LLP, or
Stroock & Stroock & Lavan, counsel to the depositor, will deliver their
opinion to the effect that, assuming compliance with all provisions of the
related pooling and servicing agreement, the tiered REMICs or FASITs will
each qualify as a REMIC or FASIT, as the case may be, and the REMIC or FASIT
securities issued by the tiered REMICs or FASITs, respectively, will be
considered to evidence ownership of "regular interests" or "residual
interests" in the related REMIC, or "regular interests" or "ownership
interests" in the related FASIT.

   Solely for purposes of determining whether the REMIC or FASIT securities
will be "real estate assets" within the meaning of Section 856(c)(4)(A) of
the Internal Revenue Code, and "loans secured by an interest in real
property" under Section 7701(a)(19)(C) of the Internal Revenue Code, and
whether the income on the securities is interest described in Section
856(c)(3)(B) of the Internal Revenue Code, the tiered REMICs or FASITs will
be treated as, respectively, one REMIC or FASIT.

 Taxation of Owners of REMIC and FASIT Regular Securities

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

 Original Issue Discount

   Some regular securities may be issued with "original issue discount"
within the meaning of Section 1273(a) of the Internal Revenue Code. Any
holders of regular securities issued with original issue discount typically
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 that income. In addition, Section 1272 (a)(6) of the
Internal Revenue Code provides special rules applicable to regular securities
and various other debt instruments issued with original issue discount.
Regulations have not been issued under that section.

   The Internal Revenue Code requires that a prepayment assumption be used
with respect to loans held by a REMIC or FASIT in computing the accrual of
original issue discount on regular securities issued by that REMIC or FASIT,
and that adjustments be made in the amount and rate of accrual of the
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 accompanying the Tax
Reform Act of 1986, indicates that the regulations will provide that the
prepayment assumption used with respect to a regular security must be the
same as that used in pricing the initial offering of the regular security.
The prepayment assumption used by the master servicer in reporting original
issue discount for each series of regular securities will be consistent with
this standard and will be disclosed in the accompanying prospectus
supplement. However, neither the depositor nor the master servicer will make
any representation that the loans will in fact prepay at a rate conforming to
the prepayment assumption or at any other rate.

   The original issue discount, if any, on a regular security will be the
excess of its stated redemption price at maturity over its issue price. The
issue price of a particular class of regular securities will be the

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first cash price at which a substantial amount of regular securities of that
class is sold, excluding sales to bond houses, brokers and underwriters. If
less than a substantial amount of a particular class of regular securities is
sold for cash on or prior to the date of their initial issuance, the issue
price for the class will be treated as the fair market value of that class on
the closing date. Under the OID regulations, the stated redemption price of a
regular security is equal to the total of all payments to be made on that
security 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 a regular security.

   In the case of regular securities bearing adjustable interest rates, the
determination of the total amount of original issue discount and the timing
of the inclusion of the original issue discount will vary according to the
characteristics of the regular securities. In general terms, original issue
discount is accrued by treating the interest rate of the securities as fixed
and making adjustments to reflect actual interest rate adjustments.

   Some classes of the regular securities may provide for the first interest
payment with respect to their securities 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" for
original issue discount is each monthly period that 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 regular security and accounted for as original issue
discount. Because interest on regular securities 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 regular securities.

   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 regular security will
reflect the accrued interest. In these cases, information returns to the
securityholders and the Internal Revenue Service, or 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 purchase price of the regular security, and not as a separate
asset the purchase price of which is recovered entirely out of interest
received on the next distribution date, and that portion of the interest paid
on the first distribution date in excess of interest accrued for a number of
days corresponding to the number of days from the closing date to the first
distribution date should be included in the stated redemption price of the
regular security. However, the OID regulations state that all or some portion
of the accrued interest may be treated as a separate asset the cost of which
is recovered entirely out of interest paid on the first distribution date. It
is unclear how an election to do so would be made under the OID regulations
and whether that election could be made unilaterally by a securityholder.

   Notwithstanding the general definition of original issue discount,
original issue discount on a regular security will be considered to be de
minimis if it is less than 0.25% of the stated redemption price of the
regular security multiplied by its weighted average maturity. For this
purpose, the weighted average maturity of the regular security is computed as
the sum of the amounts determined, as to each payment included in the stated
redemption price of the regular security, by multiplying:

   o     the number of complete years, rounding down for partial years, from
         the issue date until the payment is expected to be made, presumably
         taking into account the prepayment assumption; by

   o     a fraction, the numerator of which is the amount of the payment, and
         the denominator of which is the stated redemption price at maturity
         of the regular security.

   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

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the total amount of the de minimis original issue discount and a fraction,
the numerator of which is the amount of the principal payment and the
denominator of which is the outstanding stated principal amount of the
regular security. The OID regulations also would permit a securityholder to
elect to accrue de minimis original issue discount into income currently
based on a constant yield method. See "Taxation of Owners of REMIC and FASIT
Regular Securities--Market Discount" for a description of that election under
the OID regulations.

   If original issue discount on a regular security is in excess of a de
minimis amount, the holder of the security must include in ordinary gross
income the sum of the "daily portions" of original issue discount for each
day during its taxable year on which it held the regular security, including
the purchase date but excluding the disposition date. In the case of an
original holder of a regular security, the daily portions of original issue
discount will be determined as follows.

   As to each "accrual period," that is, unless otherwise stated in the
accompanying prospectus supplement, each period that 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 accrued
period, begins on the closing date, a calculation will be made of the portion
of the original issue discount that accrued during that accrual period. The
portion of original issue discount that accrues in any accrual period will
equal the excess, if any, of:

   o     the sum of:

         o    the present value, as of the end of the accrual period, of all of
              the distributions remaining to be made on the regular security,
              if any, in future periods; and

         o    the distributions made on the regular security during the accrual
              period of amounts included in the stated redemption price; over

         o    the adjusted issue price of the regular security at the beginning
              of the accrual period.

   The present value of the remaining distributions referred to in the
preceding sentence will be calculated assuming that distributions on the
regular security will be received in future periods based on the loans being
prepaid at a rate equal to the prepayment assumption and using a discount
rate equal to the original yield to maturity of the security. For these
purposes, the original yield to maturity of the security will be calculated
based on its issue price and assuming that distributions on the security will
be made in all accrual periods based on the loans being prepaid at a rate
equal to the prepayment assumption. The adjusted issue price of a regular
security at the beginning of any accrual period will equal the issue price of
the security, increased by the aggregate amount of original issue discount
that accrued with respect to that security in prior accrual periods, and
reduced by the amount of any distributions made on that regular security 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 that
day.

   A subsequent purchaser of a regular security that purchases the security
at a price, excluding any portion of that price 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 that security. However, each daily
portion will be reduced, if the cost is in excess of its "adjusted issue
price," in proportion to the ratio excess bears to the aggregate original
issue discount remaining to be accrued on the regular security. The adjusted
issue price of a regular security on any given day equals the sum of the
adjusted issue price, or, in the case of the first accrual period, the issue
price, of the security at the beginning of the accrual period which includes
that day, and the daily portions of original issue discount for all days
during the accrual period prior to that day.

 Market Discount

   A securityholder that purchases a regular security at a market discount,
that is, in the case of a regular security issued without original issue
discount, at a purchase price less than its remaining stated principal
amount, or in the case of a regular security issued with original issue
discount, at a purchase price less than

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its adjusted issue price will recognize income upon receipt of each
distribution representing stated redemption price. In particular, under
Section 1276 of the Internal Revenue Code the securityholder will be required
to allocate the portion of each distribution representing stated redemption
price first to accrued market discount not previously included in income, and
to recognize ordinary income to that extent.

   A securityholder 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, the election will apply to all market discount bonds
acquired by securityholder on or after the first day of the first taxable
year to which the election applies. In addition, the OID regulations permit a
securityholder 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 the election were made with respect to a
regular security with market discount, the securityholder would be deemed to
have made an election to include market discount in income currently with
respect to all other debt instruments having market discount that the
securityholder acquires during the taxable year of the election or
thereafter, and possibly previously acquired instruments. Similarly, a
securityholder that made this election for a security that is acquired at a
premium would be deemed to have made an election to amortize bond premium
with respect to all debt instruments having amortizable bond premium that the
securityholder owns or acquires. See "Taxation of Owners of REMIC and FASIT
Regular Securities--Premium" in this prospectus. Each of these elections to
accrue interest, discount and premium with respect to a security on a
constant yield method or as interest would be irrevocable.

   However, market discount with respect to a regular security will be
considered to be de minimis for purposes of Section 1276 of the Code if the
market discount is less than 0.25% of the remaining stated redemption price
of the regular security multiplied by the number of complete years to
maturity remaining after the date of its purchase. In interpreting a similar
rule with respect to original issue discount on obligations payable in
installments, the OID regulations refer to the weighted average maturity of
obligations, and it is likely that the same rule will be applied with respect
to market discount, presumably taking into account the prepayment assumption.
If market discount is treated as de minimis under this rule, it appears that
the actual discount would be treated in a manner similar to original issue
discount of a de minimis amount. See "Taxation of Owners of REMIC and FASIT
Regular Securities--Original Issue Discount" in this prospectus. This
treatment would result in discount being included in income at a slower rate
than discount would be required to be included in income using the method
described above.

   Internal Revenue Code Section 1276(b)(3) 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, a number of rules described in the Committee Report
apply. The Committee Report indicates that in each accrual period market
discount on regular securities should accrue, at the securityholder's option:

   o     on the basis of a constant yield method;

   o     in the case of a regular security 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 regular security as of the beginning of the accrual
         period; or

   o     in the case of a regular security 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 regular security 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 the preceding paragraph have
not been issued, it is not possible to predict what effect those regulations
might have on the tax treatment of a regular security purchased at a discount
in the secondary market.

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   To the extent that regular securities provide for monthly or other
periodic distributions throughout their term, the effect of these rules may
be to require market discount to be includible in income at a rate that is
not significantly slower than the rate at which the discount would accrue if
it were original issue discount. Moreover, in any event a holder of a regular
security generally will be required to treat a portion of any gain on the
sale or exchange of that security 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.

   Further, under Section 1277 of the Code a holder of a regular security 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 regular security purchased with market discount. For these purposes,
the de minimis rule referred to above applies. Any deferred interest expense
would not exceed the market discount that accrues during that taxable year
and is, in general, allowed as a deduction not later than the year in which
the market discount is includible in income. If the holder elects to include
market discount in income currently as it accrues on all market discount
instruments acquired by that holder in that taxable year or thereafter, the
interest deferral rule described above will not apply.

 Premium

   A regular security purchased at a cost, excluding any portion of that cost
attributable to accrued qualified stated interest, greater than its remaining
stated redemption price will be considered to be purchased at a premium. The
holder of a regular security may elect under Section 171 of the Code to
amortize that premium under the constant yield method over the life of the
security. If this election is made, it 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 regular security, rather than as a separate interest
deduction. The OID regulations also permit securityholders to elect to
include all interest, discount and premium in income based on a constant
yield method, further treating the securityholder as having made the election
to amortize premium generally. See "Taxation of Owners of REMIC and FASIT
Regular Securities--Market Discount" in this prospectus. 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 regular securities without regard to whether those securities
have original issue discount, will also apply in amortizing bond premium
under Section 171 of the Internal Revenue Code.

 Realized Losses

   Under Internal Revenue Code Section 166 both corporate holders of the
regular securities and noncorporate holders of the regular securities that
acquire those securities 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 securities become wholly or partially worthless as the
result of one or more realized losses on the loans. However, it appears that
a noncorporate holder that does not acquire a regular security in connection
with a trade or business will not be entitled to deduct a loss under Section
166 of the Internal Revenue Code until the holder's security 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 regular security will be required to accrue interest and
original issue discount with respect to that security, without giving effect
to any reductions in distributions attributable to defaults or delinquencies
on the loans or the underlying securities until it can be established that
any reduction ultimately will not be recoverable. As a result, the amount of
taxable income reported in any period by the holder of a regular security
could exceed the amount of economic income actually realized by the holder in
that period. Although the holder of a regular security 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 the loss or reduction in income.

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 Special Rules for FASIT High-Yield Regular Securities

   General. A high-yield interest in a FASIT is a subcategory of a FASIT
regular security. A FASIT high-yield regular security is a FASIT regular
security that either (i) has an issue price that exceeds 125% of its stated
principal amount, (ii) has a yield to maturity equal to or greater than a
specified amount (generally 500 basis points above the appropriate applicable
federal rate), or (iii) is an interest-only obligation whose interest
payments consist of a non-varying specified portion of the interest payments
on permitted assets. A holder of a FASIT high-yield regular security is
subject to treatment, described above, applicable to FASIT regular
securities, generally.

   Limitations on Utilization of Losses. The holder of a FASIT high-yield
regular security may not offset its income derived thereon by any unrelated
losses. Thus, the taxable income of the holder will be at least equal to the
taxable income derived from that security (which includes gain or loss from
the sale of that security), from any security representing a FASIT ownership
interest, and from any excess inclusions income derived from any security
representing a REMIC residual interest. Thus, income from those securities
generally cannot be offset by current net operating losses or net operating
loss carryovers. Similarly, the alternative minimum taxable income of the
holder of a high-yield regular security cannot be less than the holder's
taxable income determined solely for those securities. For purposes of these
provisions, all members of an affiliated group filing a consolidated return
are treated as one taxpayer. Accordingly, the consolidated taxable income of
the group cannot be less than the group's "tainted" income (thereby
preventing losses of one member from offsetting the tainted income of another
member). However, to avoid doubly penalizing income, net operating loss
carryovers are determined without regard to that income for both regular tax
and alternative minimum tax purposes.

   Transfer Restrictions. Transfers of FASIT high-yield regular securities to
certain "disqualified holders" will (absent the satisfaction of certain
conditions) be disregarded for federal income tax purposes. In that event,
the most recent eligible holder (generally the transferring holder) will
continue to be taxed as if it were the holder of the security (although the
disqualified holder (and not the most recent eligible holder) would be
taxable on any gain recognized by that holder for that security). Although
not free from doubt, the tax ownership of a FASIT high-yield regular security
may (absent the satisfaction of certain conditions) revert to a prior holder
even if the transferee becomes a disqualified holder after the relevant
transfer. Each applicable pooling and servicing agreement, trust agreement or
indenture requires, as a prerequisite to any transfer of a FASIT high-yield
regular security, the delivery to the trustee of an affidavit of the
transferee to the effect that it is not a disqualified holder and contains
certain other provisions designed to preclude the automatic reversion of the
tax ownership of that security. For these purposes, a "disqualified holder"
is any person other than a (i) FASIT or (ii) domestic C corporation (other
than a corporation that is exempt from (or not subject to) federal income
tax); provided, however, that all (a) regulated investment companies subject
to the provisions of Part I of subchapter M of the Internal Revenue Code, (b)
real estate investment trusts subject to the provisions of Part II of
subchapter M of the Internal Revenue Code, (c) REMICs, and (d) cooperatives
described in Section 1381(a) of the Internal Revenue Code are also
"disqualified holders."

 Pass-through Entities Holding FASIT Regular Securities

   If a pass-through entity issues a high-yielding debt or equity interest
that is supported by any FASIT regular security, that entity will be subject
to an excise tax unless no principal purpose of that resecuritization was the
avoidance of the rules relating to FASIT high-yield regular securities
(pertaining to eligible holders of those securities). See "Taxation of Owners
of REMIC and FASIT Regular Securities--Special Rules for FASIT High-Yield
Regular Securities--Transfer Restrictions". The tax will apply if the
original yield to maturity of the debt or equity interest in the pass-through
entity exceeds the greater of (i) the sum of (a) the applicable federal rate
in effect for the calendar month in which the debt or equity interest is
issued) and (b) five percentage points or (ii) the yield to maturity to that
entity on the FASIT regular security (determined as of the date that the
entity acquired that interest). The Internal Revenue Code provides that
Treasury regulations will be issued to provide the manner in which to
determine the yield to maturity of any equity interest. No such regulations
have yet been issued. If such tax did apply, the tax would equal the product
of (i) the highest corporate tax rate and (ii) the income of the holder of
the debt or equity interest that is properly attributable to the FASIT
regular security supporting that interest.

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 Taxation of Owners of REMIC Residual Securities

   General. As residual interests, the REMIC residual securities will be
subject to tax rules that differ significantly from those that would apply if
the REMIC residual securities were treated for federal income tax purposes as
direct ownership interests in the loans or as debt instruments issued by the
REMIC.

   A holder of a REMIC residual security typically will be required to report
its daily portion of the taxable income or, subject to the limitations noted
in this discussion, the net loss of the REMIC for each day during a calendar
quarter that the holder owned the REMIC residual security. 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
accompanying prospectus supplement. The daily amounts will then be allocated
among the REMIC residual securityholders in proportion to their respective
ownership interests on that day. Any amount included in the gross income or
allowed as a loss of any REMIC residual securityholder 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
securityholders without regard to the timing or amount of cash distributions
by the REMIC. Ordinary income derived from REMIC residual securities will be
"portfolio income" for purposes of the taxation of taxpayers subject to
limitations under Section 469 of the Internal Revenue Code on the
deductibility of "passive losses."

   A holder of a REMIC residual security that purchased the security from a
prior holder of that security 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 the REMIC residual
security. These daily portions will equal the amounts of taxable income or
net loss determined as described above. The Committee Report indicates that
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 securityholder that purchased the REMIC residual security from
a prior holder of the security at a price greater than, or less than, the
adjusted basis, the REMIC residual security would have had in the hands of an
original holder of the security. The REMIC regulations, however, do not
provide for any modifications.

   Any payments received by a holder of a REMIC residual security in
connection with the acquisition of that REMIC residual security will be taken
into account in determining the income of the holder for federal income tax
purposes. Although it appears likely that the payment would be includible in
income immediately upon its receipt, the IRS might assert that the 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 these payments, holders of REMIC residual securities should
consult their tax advisors concerning the treatment of these payments for
income tax purposes.

   The amount of income REMIC residual securityholders will be required to
report, or the tax liability associated with that income, may exceed the
amount of cash distributions received from the REMIC for the corresponding
period. Consequently, REMIC residual securityholders should have other
sources of funds sufficient to pay any federal income taxes due as a result
of their ownership of REMIC residual securities 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 securityholders may
exceed the cash distributions received by the REMIC residual securityholders
for the corresponding period may significantly adversely affect the REMIC
residual securityholders' after-tax rate of return.

   Taxable Income of the REMIC. The taxable income of the REMIC will equal
the income from the loans and other assets of the REMIC plus any cancellation
of indebtedness income due to the allocation of realized losses to REMIC
regular securities, 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 securities, and any other
class of REMIC securities constituting "regular interests" in the REMIC not
offered by this prospectus, amortization of any premium on the loans, bad
debt deductions with respect to the loans and, except as described below, for
servicing, administrative and other expenses.

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   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 intends to treat the fair market value of the loans as being equal
to the aggregate issue prices of the REMIC regular securities and REMIC
residual securities. The aggregate basis will be allocated among the loans
collectively and the other assets of the REMIC in proportion to their
respective fair market values. The issue price of any REMIC securities
offered by this prospectus will be determined in the manner described above
under "--Taxation of Owners of REMIC and FASIT Regular Securities -- Original
Issue Discount" in this prospectus. Accordingly, if one or more classes of
REMIC securities are retained initially rather than sold, the master servicer
may be required to estimate the fair market value of those interests in order
to determine the basis of the REMIC in the loans 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 loans that it holds will be equivalent to the method
of accruing original issue discount income for REMIC regular securityholders,
that is, under the constant yield method taking into account the prepayment
assumption. However, a REMIC that acquires loans at a market discount must
include the discount in income currently, as it accrues, on a constant
interest basis. See "--Taxation of Owners of REMIC and FASIT Regular
Securities" above, which describes a method of accruing discount income that
is analogous to that required to be used by a REMIC as to loans with market
discount that it holds.

   A loan will be deemed to have been acquired with discount, or premium, to
the extent that the REMIC's basis in the loan, determined as described in the
preceding paragraph, is less than, or greater than, its stated redemption
price. Any discount will be includible in the income of the REMIC as it
accrues, in advance of receipt of the cash attributable to that income, under
a method similar to the method described above for accruing original issue
discount on the REMIC regular securities. It is anticipated that each REMIC
will elect under Section 171 of the Internal Revenue Code to amortize any
premium on the loans. Premium on any loan to which the election applies may
be amortized under a constant yield method, presumably taking into account a
prepayment assumption.

   A REMIC will be allowed deductions for interest, including original issue
discount, on the REMIC regular securities, including any other class of REMIC
securities constituting "regular interests" in the REMIC not offered by this
prospectus, equal to the deductions that would be allowed if the REMIC
regular securities, including any other class of REMIC securities
constituting "regular interests" in the REMIC not offered by this prospectus,
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 and FASIT Regular Securities--Original Issue Discount," except that the
de minimis rule and the adjustments for subsequent holders of REMIC regular
securities, including any other class of securities constituting "regular
interests" in the REMIC not offered by this prospectus, described in that
section will not apply.

   If a class of REMIC regular securities is issued at an Issue Premium, the
REMIC will have an additional item of income in 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 and FASIT Regular Securities--Original
Issue Discount" in this prospectus.

   As a general rule, the taxable income of the REMIC is required to 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" in this prospectus. Further, the limitation on
miscellaneous itemized deductions imposed on individuals by Section 67 of the
Internal Revenue Code, which allows those 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 of these expenses will be allocated as a
separate item to

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the holders of REMIC residual securities, subject to the limitation of
Section 67 of the Internal Revenue Code and the rules relating to the
alternative minimum tax. See "--Possible Pass-Through of Miscellaneous
Itemized Deductions" in this prospectus. If the deductions allowed to the
REMIC exceed its gross income for a calendar quarter, the excess will be the
net loss for the REMIC for that calendar quarter.

   Basis Rules, Net Losses and Distributions. The adjusted basis of a REMIC
residual security will be equal to the amount paid for that REMIC residual
security, increased by amounts included in the income of the REMIC residual
securityholder and decreased, but not below zero, by distributions made, and
by net losses allocated, to the REMIC residual securityholder.

   A REMIC residual securityholder is not allowed to take into account any
net loss for any calendar quarter to the extent the net loss exceeds the
REMIC residual securityholder's adjusted basis in its REMIC residual security
as of the close of that calendar quarter, determined without regard to the
net loss. Any loss that is not currently deductible by reason of this
limitation may be carried forward indefinitely to future calendar quarters
and, subject to the same limitation, may be used only to offset income from
the REMIC residual security. The ability of REMIC residual securityholders to
deduct net losses may be subject to additional limitations under the Internal
Revenue Code, as to which REMIC residual securityholders should consult their
tax advisors.

   Any distribution on a REMIC residual security will be treated as a
non-taxable return of capital to the extent it does not exceed the holder's
adjusted basis in the REMIC residual security. To the extent a distribution
on a REMIC residual security exceeds the adjusted basis, it will be treated
as gain from the sale of the REMIC residual security. Holders of REMIC
residual securities may be entitled to distributions early in the term of the
related REMIC under circumstances in which their bases in the REMIC residual
securities will not be sufficiently large that distributions will be treated
as nontaxable returns of capital. Their bases in the REMIC residual
securities will initially equal the amount paid for the REMIC residual
securities and will be increased by their allocable shares of taxable income
of the trust. However, their basis increases may not occur until the end of
the calendar quarter, or perhaps the end of the calendar year, with respect
to which the REMIC taxable income is allocated to the REMIC residual
securityholders. Gain will be recognized to the REMIC residual securityholder
on a distribution to the extent that, at the time the distribution is made,
the amount of the distribution exceeds the securityholder's initial basis in
the residual security together with any net increases in that basis. The gain
so recognized will be treated as gain from the sale of the REMIC residual
security.

   The effect of these rules is that a Residual securityholder may not
amortize its basis in a REMIC residual security, 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 security. See
"--Sales of REMIC Securities" in this prospectus. For a discussion of
possible modifications of these rules that may require adjustments to income
of a holder of a REMIC residual security other than an original holder in
order to reflect any difference between the cost of the REMIC residual
security to the holder and the adjusted basis the REMIC residual security
would have had in the hands of the original holder, see "--Taxation of Owners
of REMIC Residual Securities--General" in this prospectus.

   Excess Inclusions. Any "excess inclusions" with respect to a REMIC
residual security will be subject to federal income tax in all events.

   In general, the "excess inclusions" with respect to a REMIC residual
security for any calendar quarter will be the excess, if any, of:

   o     the sum of the daily portions of REMIC taxable income allocable to
         the REMIC residual security; over

   o     the sum of the "daily accruals" for each day during that quarter
         that the REMIC residual security was held by the REMIC residual
         securityholder.

   The daily accruals of a REMIC residual securityholder 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

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residual security 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 security as of the beginning of any
calendar quarter will be equal to the issue price of the REMIC residual
security, increased by the sum of the daily accruals for all prior quarters
and decreased, but not below zero, by any distributions made with respect to
the REMIC residual security before the beginning of that quarter. The issue
price of a REMIC residual security is the initial offering price to the
public, excluding bond houses, brokers and underwriters, at which a
substantial amount of the REMIC residual securities were sold. If less than a
substantial amount of REMIC residual securities is sold for cash on or prior
to the closing date, the issue price for those REMIC residual securities will
be treated as the fair market value of those REMIC residual securities on the
Closing Date. The "long-term Federal rate" is an average of current yields on
Treasury securities with a remaining term of greater than nine years,
computed and published monthly by the IRS. Although it has not done so, the
Treasury has authority to issue regulations that would treat the entire
amount of income accruing on a REMIC residual security as an excess inclusion
if the REMIC residual securities are considered not to have "significant
value."

   For REMIC residual securityholders, an excess inclusion:

   o     will not be permitted to be offset by deductions, losses or loss
         carryovers from other activities;

   o     will be treated as "unrelated business taxable income" to an
         otherwise tax-exempt organization; and

   o     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
         securityholders that are foreign investors. See, however, "--Foreign
         Investors in REMIC Securities" in this prospectus.

   Furthermore, for purposes of the alternative minimum tax:

   o     excess inclusions will not be permitted to be offset by the
         alternative tax net operating loss deduction; and

   o     alternative minimum taxable income may not be less than the
         taxpayer's excess inclusions; provided, however, that for purposes
         of this clause, alternative minimum taxable income is determined
         without regard to the special rule that taxable income cannot be
         less than excess inclusions. The latter rule has the effect of
         preventing nonrefundable tax credits from reducing the taxpayer's
         income tax to an amount lower than the alternative minimum tax on
         excess inclusions.

   In the case of any REMIC residual securities held by a real estate
investment trust, the aggregate excess inclusions with respect to the REMIC
residual securities, reduced, but not below zero, by the real estate
investment trust taxable income, within the meaning of Section 857(b)(2) of
the Internal Revenue Code, excluding any net capital gain, will be allocated
among the shareholders of the trust in proportion to the dividends received
by the shareholders from the trust, and any amount so allocated will be
treated as an excess inclusion with respect to a REMIC residual security as
if held directly by the shareholder. Treasury regulations yet to be issued
could apply a similar rule to regulated investment companies, common trust
funds and a number of cooperatives; the REMIC Regulations currently do not
address this subject.

   Noneconomic REMIC Residual Securities. Under the REMIC regulations,
transfers of "noneconomic" REMIC residual securities will be disregarded for
all federal income tax purposes if "a significant purpose of the transfer was
to enable the transferor to impede the assessment or collection of tax." If
the transfer is disregarded, the purported transferor will continue to remain
liable for any taxes due with respect to the income on the "noneconomic"
REMIC residual security. The REMIC regulations provide that a REMIC residual
security 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:

   o     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

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         expected to accrue with respect to the REMIC residual security,
         which rate is computed and published monthly by the IRS, on the
         REMIC residual security equals at least the present value of the
         expected tax on the anticipated excess inclusions; and

   o     the transferor reasonably expects that the transferee will receive
         distributions with respect to the REMIC residual security 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 securities that may
constitute noneconomic residual interests will be subject to restrictions
under the terms of the related pooling and servicing agreement that are
intended to reduce the possibility of any transfer being disregarded. The
restrictions will require each party to a transfer to provide an affidavit
that no purpose of the transfer is to impede the assessment or collection of
tax, including representations as to the financial condition of the
prospective transferee, as to which the transferor also is required to make a
reasonable investigation to determine the transferee's historic payment of
its debts and ability to continue to pay its debts as they come due in the
future. Prior to purchasing a REMIC residual security, prospective purchasers
should consider the possibility that a purported transfer of the REMIC
residual security by this type of 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 that purchaser.

   The IRS has issued proposed changes to the REMIC regulations that would
add to the conditions necessary to assure that a transfer of a noneconomic
residual interest would be respected. The proposed additional condition would
require that the amount received by the transferee be no less on a present
value basis than the present value of the net tax detriment attributable to
holding a residual interest reduced by the present value of the projected
payments to be received on the residual interest. The change is proposed to
be effective for transfers of residual interests occurring after February 4,
2000.

   The accompanying prospectus supplement will disclose whether offered REMIC
residual securities may be considered "noneconomic" residual interests under
the REMIC regulations. Any disclosure that a REMIC residual security will not
be considered "noneconomic" will be based upon a number of assumptions, and
the depositor will make no representation that a REMIC residual security will
not be considered "noneconomic" for purposes of the above-described rules.
See "--Foreign Investors in REMIC Securities--REMIC Residual Securities" in
this prospectus for additional restrictions applicable to transfers of REMIC
residual securities to foreign persons.

   Mark-to-Market Rules. On December 24, 1996, the IRS released the
Mark-to-Market Regulations. The 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
REMIC residual security acquired after January 4, 1995 is not treated as a
security and thus may not be marked to market. Prospective purchasers of a
REMIC residual security should consult their tax advisors regarding the
possible application of the mark-to-market requirement to REMIC residual
securities.

   Possible Pass-Through of Miscellaneous Itemized Deductions. Fees and
expenses of a REMIC typically will be allocated to the holders of the related
REMIC residual securities. 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 those fees and expenses should be
allocated to the holders of the related REMIC regular securities. Unless
otherwise stated in the accompanying prospectus supplement, fees and expenses
will be allocated to holders of the related REMIC residual securities in
their entirety and not to the holders of the related REMIC regular
securities.

   With respect to REMIC residual securities or REMIC regular securities the
holders of which receive an allocation of fees and expenses in accordance
with the preceding discussion, if any holder thereof is an individual, estate
or trust, or a "pass-through entity" beneficially owned by one or more
individuals, estates or trusts:

   o     an amount equal to the individual's, estate's or trust's share of
         fees and expenses will be added to the gross income of that holder;
         and

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   o     the individual's, estate's or trust's share of fees and expenses
         will be treated as a miscellaneous itemized deduction allowable
         subject to the limitation of Section 67 of the Internal Revenue
         Code, which permits those 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 Internal Revenue 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:

   o     3% of the excess of the individual's adjusted gross income over that
         amount; or

   o     80% of the amount of itemized deductions otherwise allowable for the
         taxable year.

   The amount of additional taxable income reportable by REMIC
securityholders that are subject to the limitations of either Section 67 or
Section 68 of the Internal Revenue Code may be substantial. Furthermore, in
determining the alternative minimum taxable income of this type of holder of
a REMIC security 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 the holder's allocable portion of servicing
fees and other miscellaneous itemized deductions of the REMIC, even though an
amount equal to the amount of fees and other deductions will be included in
the holder's gross income. Accordingly, the REMIC securities may not be
appropriate investments for individuals, estates, or trusts, or pass-through
entities beneficially owned by one or more individuals, estates or trusts.
Any prospective investors should consult with their tax advisors prior to
making an investment in these securities.

 Sales of REMIC and FASIT Securities

   If a REMIC or FASIT security is sold, the selling securityholder will
recognize gain or loss equal to the difference between the amount realized on
the sale and its adjusted basis in the REMIC or FASIT security. The adjusted
basis of a regular security typically will equal the cost of that regular
security to that securityholder, increased by income reported by the
securityholder with respect to that regular security, including original
issue discount and market discount income, and reduced, but not below zero,
by distributions on the regular security received by the securityholder and
by any amortized premium. The adjusted basis of a REMIC residual security
will be determined as described under "--Taxation of Owners of REMIC Residual
Securities--Basis Rules, Net Losses and Distributions" in this prospectus.
Except as described below, any gain or loss in most cases will be capital
gain or loss.

   Gain from the sale of a REMIC regular security (but not a FASIT regular
security) that might otherwise be capital gain will be treated as ordinary
income to the extent the gain does not exceed the excess, if any, of:

   o     the amount that would have been includible in the seller's income
         with respect to the REMIC regular security had income accrued
         thereon at a rate equal to 110% of the "applicable Federal rate",
         which is typically a rate based on an average of current yields on
         Treasury securities having a maturity comparable to that of the
         security, which rate is computed and published monthly by the IRS,
         determined as of the date of purchase of the REMIC regular security;
         over

   o     the amount of ordinary income actually includible in the seller's
         income prior to the sale.

   In addition, gain recognized on the sale of a regular security by a seller
who purchased the regular security 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 security was held. See
"--Taxation of Owners of REMIC and FASIT Regular Securities--Market Discount"
in this prospectus.

   REMIC securities and FASIT securities will be "evidences of indebtedness"
within the meaning of Section 582(c)(1) of the Internal Revenue Code, so that
gain or loss recognized from the sale of a regular security by a bank or
thrift institution to which that section applies will be ordinary income or
loss.

   A portion of any gain from the sale of a regular security that might
otherwise be capital gain may be treated as ordinary income to the extent
that the security is held as part of a "conversion transaction" within the
meaning of Section 1258 of the Internal Revenue Code. A conversion
transaction generally is

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one in which the taxpayer has taken two or more positions in securities or
similar property that reduce or eliminate market risk, if substantially all
of the taxpayer's return is attributable to the time value of the taxpayer's
net investment in the transaction. The amount of gain so realized in a
conversion transaction that is recharacterized as ordinary income in most
cases 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 any 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.

   If the seller of a REMIC residual security reacquires the security, any
other residual interest in a REMIC or any similar interest in a "taxable
mortgage pool", as defined in Section 7701(i) of the Internal Revenue Code,
within six months of the date of the sale, the sale will be subject to the
"wash sale" rules of Section 1091 of the Internal Revenue Code. In that
event, any loss realized by the REMIC residual securityholder on the sale
will not be deductible, but instead will be added to the REMIC residual
securityholder's adjusted basis in the newly-acquired asset.

 Prohibited Transactions and Other Possible Taxes

   The Code imposes a tax on REMICs equal to 100% of the net income derived
from "prohibited transactions". In general, subject to specified exceptions a
prohibited transaction means the disposition of a loan, the receipt of income
from a source other than a loan or other permitted investments, the receipt
of compensation for services, or gain from the disposition of an asset
purchased with the payments on the loans for temporary investment pending
distribution on the REMIC securities. 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, some types of 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.
Each pooling and servicing agreement will include provisions designed to
prevent the acceptance of any contributions that would be subject to the 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 accompanying
prospectus supplement, it is not anticipated that any REMIC will recognize
"net income from foreclosure property" subject to federal income tax.

   Unless otherwise stated in the accompanying 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 or trustee in either case out of its
own funds, provided that the master servicer or the trustee, as the case may
be, has sufficient assets to do so, and provided further that the tax arises
out of a breach of the master servicer's or the trustee's obligations, as the
case may be, under the related pooling and servicing agreement and relating
to compliance with applicable laws and regulations. Any tax not borne by the
master servicer or the trustee will be payable out of the related trust
resulting in a reduction in amounts payable to holders of the related REMIC
securities.

   In the case of a FASIT, the holder of the ownership interest and not the
FASIT itself will be subject to any prohibited transaction taxes.

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 Tax and Restrictions on Transfers of REMIC Residual Securities to Certain
Organizations

   If a REMIC residual security is transferred to a "disqualified
organization", a tax would be imposed in an amount, determined under the
REMIC regulations, equal to the product of:

   o     the present value, discounted using the "applicable Federal rate"
         for obligations whose term ends on the close of the last quarter in
         which excess inclusions are expected to accrue with respect to the
         security, which rate is computed and published monthly by the IRS,
         of the total anticipated excess inclusions with respect to the REMIC
         residual security for periods after the transfer; and

   o     the highest marginal federal income tax rate applicable to
         corporations.

   The anticipated excess inclusions must be determined as of the date that
the REMIC residual security is transferred and must be based on events that
have occurred up to the time of transfer, the prepayment assumption and any
required or permitted clean up calls or required liquidation provided for in
the REMIC's organizational documents. This tax generally would be imposed on
the transferor of the REMIC residual security, except that where the transfer
is through an agent for a disqualified organization, the tax would instead be
imposed on that agent. However, a transferor of a REMIC residual security
would in no event be liable for the tax with respect to a transfer if the
transferee furnishes to the transferor an affidavit that the transferee is
not a disqualified organization and, as of the time of the transfer, the
transferor does not have actual knowledge that the affidavit is false.
Moreover, an entity will not qualify as a REMIC unless there are reasonable
arrangements designed to ensure that:

   o     residual interests in the entity are not held by disqualified
         organizations; and

   o     information necessary for the application of the tax described in
         this prospectus will be made available.

   Restrictions on the transfer of REMIC residual securities and a number of
other provisions that are intended to meet this requirement will be included
in the pooling and servicing agreement, and will be discussed more fully in
any prospectus supplement relating to the offering of any REMIC residual
security.

   In addition, if a "pass-through entity" includes in income excess
inclusions with respect to a REMIC residual security, and a disqualified
organization is the record holder of an interest in that entity, then a tax
will be imposed on it equal to the product of:

   o     the amount of excess inclusions on the REMIC residual security that
         are allocable to the interest in the pass-through entity held by the
         disqualified organization; and

   o     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 that pass-through entity
furnishes to that pass-through entity the holder's social security number and
a statement under penalties of perjury that the social security number is
that of the record holder, or a statement under penalties of perjury that the
record holder is not a disqualified organization.

   For these purposes, a "disqualified organization" means

   o     the United States, any State or political subdivision thereof, any
         foreign government, any international organization, or any agency or
         instrumentality of the foregoing, but would not include
         instrumentalities described in Section 168(h)(2)(D) of the Code or
         the Federal Home Loan Mortgage Corporation;

   o     any organization, other than a cooperative described in Section 521
         of the Internal Revenue Code, that is exempt from federal income
         tax, unless it is subject to the tax imposed by Section 511 of the
         Internal Revenue Code; or

   o     any organization described in Section 1381 (a)(2)(C) of the Internal
         Revenue Code.

   For these purposes, a "pass-through entity" means any regulated investment
company, real estate investment trust, trust, partnership or other entities
described in Section 860E (e)(6) of the Internal Revenue Code. In addition, a
person holding an interest in a pass-through entity as a nominee for another
person will, with respect to that interest, be treated as a pass-through
entity.

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 Termination

   A REMIC will terminate immediately after the distribution date following
receipt by the REMIC of the final payment from of the loans or upon a sale of
the REMIC's assets following the adoption by the REMIC of a plan of complete
liquidation. The last distribution on a REMIC regular security will be
treated as a payment in retirement of a debt instrument. In the case of a
REMIC residual security, if the last distribution on the REMIC residual
security is less than the REMIC residual securityholder's adjusted basis in
the security, the REMIC residual securityholder should be treated as
realizing a loss equal to the amount of the difference. The loss may be
subject to the "wash sale" rules of Section 1091 of the Internal Revenue
Code. See "--Sales of REMIC Securities" in this prospectus. The character of
this loss as ordinary or capital is uncertain.

   The inadvertent termination of a REMIC or FASIT may have other
consequences. See "REMICs and FASITs--Classification of REMICs and FASITs" in
this prospectus.

 Reporting and Other Administrative Matters

   Solely for purposes of the administrative provisions of the Internal
Revenue Code, the REMIC will be treated as a partnership and REMIC residual
securityholders will be treated as partners. Unless otherwise stated in the
accompanying prospectus supplement, the master servicer will file REMIC
federal income tax returns on behalf of the related REMIC, will be designated
as and will act as the "tax matters person" with respect to the REMIC in all
respects, and will hold at least a nominal amount of REMIC residual
securities.

   As the tax matters person, the master servicer will have the authority to
act on behalf of the REMIC and the REMIC residual securityholders in
connection with the administrative and judicial review of items of income,
deduction, gain or loss of the REMIC, as well as the REMIC's classification.
REMIC residual securityholders will be required to report the 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, as tax matters person, and the IRS concerning the REMIC item.

   Adjustments made to the REMIC tax return may require a REMIC residual
securityholder to make corresponding adjustments on its return, and an audit
of the REMIC's tax return, or the adjustments resulting from an audit, could
result in an audit of a REMIC residual securityholder's return. No REMIC will
be registered as a tax shelter under Section 6111 of the Internal Revenue
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 security 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 that person and other information.

   Reporting of interest income, including any original issue discount, with
respect to REMIC regular securities is required annually, and may be required
more frequently under Treasury regulations. These information reports are
required to be sent to individual holders of REMIC regular interests and the
IRS; holders of REMIC regular securities that are corporations, trusts,
securities dealers and 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 security issued with original issue
discount to disclose on its face information including the amount of original
issue discount and the issue date, and requiring this information to be
reported to the IRS. Reporting with respect to the REMIC residual securities,
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, typically on a quarterly basis.

   As applicable, the REMIC regular security information reports will include
a statement of the adjusted issue price of the REMIC regular security 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

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requires information relating to the holder's purchase price that the master
servicer will not have, the regulations only require that information
pertaining to the appropriate proportionate method of accruing market
discount be provided. See "Taxation of Owners of REMIC and FASIT Regular
Securities--Market Discount" in this prospectus.

   The responsibility for complying with the foregoing reporting rules will
be borne by the master servicer. Securityholders may request any information
with respect to the returns described in Section 1.6049-7(e)(2) of the
Treasury regulations. Any request should be directed to the master servicer
at Residential Funding Corporation, 8400 Normandale Lake Boulevard, Suite
600, Minneapolis, Minnesota 55437.

   A FASIT is treated as a branch of the holder of the ownership interest in
the FASIT. Thus, all assets, liabilities, and items of income, gain,
deduction, loss, and credit of a FASIT are treated as assets, liabilities,
and such items of the holder of the ownership interest in the FASIT. Because
the holder of the ownership interest in a FASIT includes the FASIT's tax
items in determining its taxable income and credits, the proposed FASIT
regulations make the holder of the ownership interest in the FASIT (rather
than the FASIT) responsible for reporting those items on its federal income
tax return.

 Backup Withholding With Respect to REMIC and FASIT Securities

   Payments of interest and principal, as well as payments of proceeds from
the sale of REMIC or FASIT securities, may be subject to the "backup
withholding tax" under Section 3406 of the Internal Revenue Code at a rate of
31% if recipients of payments fail to furnish to the payor information,
including their taxpayer identification numbers, or otherwise fail to
establish an exemption from the tax. Any amounts deducted and withheld from a
distribution to a recipient would be allowed as a credit against the
recipient's federal income tax. Furthermore, penalties may be imposed by the
IRS on a recipient of payments that is required to supply information but
that does not do so in the proper manner.

 Foreign Investors in REMIC and FASIT Securities

   A REMIC or FASIT regular securityholder (other than a holder of a FASIT
high-yield regular security) 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 regular
security will not be subject to United States federal income or withholding
tax on a distribution on a regular security, provided that the holder
complies to the extent necessary with identification requirements, including
delivery of a statement, signed by the securityholder under penalties of
perjury, certifying that the securityholder is not a United States person and
providing the name and address of the securityholder. For these purposes,
"United States person" means a citizen or resident of the United States, a
corporation, partnership, including an entity treated as a corporation or
partnership for federal income tax purposes, created or organized in, or
under the laws of, the United States or any state thereof or the District of
Columbia except, in the case of a partnership, to the extent provided in
regulations, or an estate whose income is subject to United States federal
income tax regardless of its source, or a trust if a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more United States persons have the authority to control all
substantial decisions of the trust. To the extent prescribed in regulations
by the Secretary of the Treasury, a trust which was in existence on August
20, 1996, other than a trust treated as owned by the grantor under subpart E
of part I of subchapter J of chapter 1 of the Internal Revenue Code, and
which was treated as a United States person on August 20, 1996 may elect to
continue to be treated as a United States person notwithstanding the previous
sentence. It is possible that the IRS may assert that the foregoing tax
exemption should not apply with respect to a REMIC regular security held by a
REMIC residual securityholder that owns directly or indirectly a 10% or
greater interest in the REMIC residual securities or a FASIT regular security
held by the owner of a 10% or greater interest in the holder of the FASIT
ownership interest. Further, the Proposed FASIT Regulations treat all
interest received by a foreign holder of a FASIT regular interest as
ineligible for the foregoing exemption from withholding tax if the FASIT
receives or accrues interest from a United States resident in which the
foreign holder has a 10% or more ownership interest or as to which the
foreign holder is a controlled foreign corporation to which the United States
resident is related. If the holder does not qualify for exemption,
distributions of interest, including distributions of accrued original issue
discount, to the holder may be subject to a tax rate of 30%, subject to
reduction under any applicable tax treaty.

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   In addition, the foregoing rules will not apply to exempt a United States
shareholder of a controlled foreign corporation from taxation on the United
States shareholder's allocable portion of the interest income received by the
controlled foreign corporation.

   Further, it appears that a regular security would not be included in the
estate of a non-resident alien individual and would not be subject to United
States estate taxes. However, securityholders who are non-resident alien
individuals should consult their tax advisors concerning this question.

   Unless otherwise stated in the accompanying prospectus supplement,
transfers of REMIC residual securities to investors that are not United
States persons will be prohibited under the related pooling and servicing
agreement.

 New Withholding Regulations

   The Treasury Department has issued new regulations which make
modifications to the withholding, backup withholding and information
reporting rules described above. The new withholding regulations attempt to
unify certification requirements and modify reliance standards. The new
withholding regulations will generally be effective for payments made after
December 31, 2000, subject to transition rules. Prospective investors are
urged to consult their tax advisors regarding the new withholding
regulations.

NOTES

   Upon the issuance of the notes, Thacher Proffitt & Wood, Orrick,
Herrington & Sutcliffe LLP or Stroock & Stroock & Lavan, as tax counsel to
the depositor, will deliver its opinion generally to the effect that, for
federal income tax purposes, assuming compliance with all provisions of the
indenture, trust agreement and related documents, (a) the notes will be
treated as indebtedness and (b) the issuer, as created under the terms and
conditions of the trust agreement, will not be characterized as an
association, or publicly traded partnership within the meaning of Internal
Revenue Code section 7704, taxable as a corporation or as a taxable mortgage
pool within the meaning of Internal Revenue Code section 7701(i).

 Status as Real Property Loans

   Notes held by a domestic building and loan association will not constitute
"loans . . . secured by an interest in real property" within the meaning of
Internal Revenue Code section 7701(a)(19)(C)(v); and notes held by a real
estate investment trust will not constitute "real estate assets" within the
meaning of Internal Revenue Code section 856(c)(4)(A) and interest on notes
will not be considered "interest on obligations secured by mortgages on real
property" within the meaning of Internal Revenue Code section 856(c)(3)(B).

 Taxation of Noteholders

   Notes generally will be subject to the same rules of taxation as REMIC and
FASIT regular securities, as described above, except that (i) income
reportable on the notes is not required to be reported under the accrual
method unless the holder otherwise used the accrual method and (ii) the
special rule treating a portion of the gain on sale or exchange of a REMIC
regular security as ordinary income is inapplicable to the notes. See "REMICs
and FASITs--Taxation of Owners of REMIC and FASIT Securities" and "REMICs and
FASITs--Sales of REMIC and FASIT Securities". Except as otherwise stated in
the accompanying prospectus supplement, the notes will not be issued with
original issue discount since the principal amount of the notes will not
exceed their issue price by more than a de minimis amount. See "REMICs and
FASITs--Taxation of Owners of REMIC and FASIT Securities--Original Issue
Discount". Also, interest paid on a note to noteholder that is not a United
States person will normally qualify for the exception from United States
withholding tax described in "REMICs and FASITs--Foreign Investors in REMIC
and FASIT Securities" except, in addition to the exceptions noted in that
section, where the recipient is a holder, directly or by attribution, of 10%
or more of the capital or profits interest in the issuer.

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                       STATE AND OTHER TAX CONSEQUENCES

   In addition to the federal income tax consequences described in "Material
Federal Income Tax Consequences," potential investors should consider the
state and local tax consequences of the acquisition, ownership, and
disposition of the securities offered hereunder. State tax law may differ
substantially from the corresponding federal tax law, and the discussion
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
securities offered hereunder.

                             ERISA CONSIDERATIONS

   Sections 404 and 406 of the Employee Retirement Income Security Act of
1974, as amended, or ERISA, impose fiduciary and prohibited transaction
restrictions on employee pension and welfare benefit plans subject to ERISA
and on various other retirement plans and arrangements, including bank
collective investment funds and insurance company general and separate
accounts in which those employee benefit plans and arrangements are invested.
Section 4975 of the Internal Revenue Code imposes essentially the same
prohibited transaction restrictions on certain tax-favored plans, including
tax-qualified retirement plans described in Section 401(a) of the Internal
Revenue Code and individual retirement accounts described in Section 408 of
the Internal Revenue Code.

   Some employee benefit plans, including governmental plans, as defined in
Section 3(32) of ERISA, and, if no election has been made under Section
410(d) of the Internal Revenue Code, church plans, as defined in Section
3(33) of ERISA, are not subject to the ERISA requirements discussed in this
prospectus. Accordingly, assets of these plans may be invested in securities
without regard to the ERISA considerations described below, subject to the
provisions of applicable federal and state law. Any plan that is qualified
and exempt from taxation under Sections 401(a) and 501(a) of the Internal
Revenue Code, however, is subject to the prohibited transaction rules in
Section 503(b) of the Internal Revenue Code.

   Section 404 of ERISA imposes 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. In addition, Section 406 of ERISA and Section 4975 of the Internal
Revenue Code prohibit a broad range of transactions involving assets of
employee benefit plans and arrangements and tax-favored plans, which are
collectively referred to in this prospectus as "ERISA plans," and persons,
called "parties in interest" under ERISA or "disqualified persons" under the
Internal Revenue Code, which are collectively referred to in this prospectus
as "parties in interest," who have specified relationships to the ERISA
plans, unless a statutory, regulatory or administrative exemption is
available. Some parties in interest that participate in a prohibited
transaction may be subject to a penalty, or an excise tax, imposed under
Section 502(i) of ERISA or Section 4975 of the Internal Revenue Code, unless
a statutory, regulatory or administrative exemption is available with respect
to any transaction of this sort.

PLAN ASSET REGULATIONS

   An investment of the assets of an ERISA plan in securities may cause the
underlying loans, private securities or any other assets included in a trust
or other entity to be deemed ERISA plan assets of the ERISA plan. The U.S.
Department of Labor, or DOL, has promulgated regulations at 29 C.F.R. Section
2510.3-101 concerning whether or not an ERISA plan's assets would be deemed
to include an interest in the underlying assets of an entity, including a
trust, for purposes of applying the general fiduciary responsibility
provisions of ERISA and the prohibited transaction provisions of ERISA and
the Internal Revenue Code, when an ERISA plan acquires an "equity interest,"
such as a certificate, in that entity. Exceptions contained in the DOL
regulations provide that an ERISA plan's assets will not include an undivided
interest in each asset of an entity in which it makes an equity investment
if:

   o  the entity is an operating company;

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<PAGE>
   o  the equity investment made by the ERISA plan is either a
      "publicly-offered security" that is "widely held," both as defined in
      the DOL regulations, or a security issued by an investment company
      registered under the Investment Company Act of 1940, as amended; or

   o  "benefit plan investors" do not own 25% or more in value of any class
      of equity securities issued by the entity. For this purpose, "benefit
      plan investors" include ERISA plans, as well as any "employee benefit
      plan," as defined in Section 3(3) of ERISA, which is not subject to
      Title I of ERISA, such as governmental plans, as defined in Section
      3(32) of ERISA, and church plans, as defined in Section 3(33) of ERISA,
      which have not made an election under Section 410(d) of the Internal
      Revenue Code, foreign plans and any entity whose underlying assets
      include ERISA plan assets by reason of an ERISA plan's investment in
      the entity.

The DOL regulations provide that the term "equity interest" means any
interest in an entity other than an instrument which is treated as
indebtedness under applicable local law and which has no "substantial equity
features."

   Under the DOL regulations, depending on the facts and circumstances, ERISA
plan assets may be deemed to include an interest in the assets of an entity,
such as a trust, rather than merely the ERISA plan's interest in the
instrument evidencing the equity interest, such as a certificate. Therefore,
unless the accompanying prospectus supplement indicates otherwise, ERISA
plans should not acquire or hold certificates, or notes which may be deemed
in the respective prospectus supplement to have "substantial equity
features," in reliance upon the availability of any exception under the DOL
regulations stated in the preceding paragraph. For purposes of this section
"ERISA Considerations," the terms "ERISA plan assets" and "assets of an ERISA
plan" have the meanings assigned by the DOL regulations to, respectively,
"plan assets" and "assets of a plan," and include an undivided interest in
the underlying assets of entities in which an ERISA plan invests.

   Under the DOL regulations, the prohibited transaction provisions of
Section 406 of ERISA and Section 4975 of the Internal Revenue Code may apply
to the assets of a trust and cause the depositor, the master servicer, any
subservicer, the trustee, the obligor under any credit enhancement mechanism
or affiliates of those entities to be considered or become parties in
interest with respect to an investing ERISA plan or an ERISA plan holding an
interest in that entity. If so, the acquisition or holding of securities by
or on behalf of the investing ERISA plan could also give rise to a prohibited
transaction under ERISA and Section 4975 of the Internal Revenue Code, unless
some statutory, regulatory or administrative exemption is available.
Securities acquired by an ERISA plan would be assets of that ERISA plan.
Under the DOL regulations, a trust, including the loans, private securities
or any other assets held in the trust, may also be deemed to be assets of
each ERISA plan that acquires securities. Special caution should be exercised
before ERISA plan assets are used to acquire a security in those
circumstances, especially if, with respect to the assets, the depositor, the
master servicer, any subservicer, the trustee, the obligor under any credit
enhancement mechanism or an affiliate thereof either:

   o  has investment discretion with respect to the investment of ERISA plan
      assets; or

   o  has authority or responsibility to give, or regularly gives, investment
      advice with respect to ERISA plan assets for a fee under an agreement
      or understanding that this advice will serve as a primary basis for
      investment decisions with respect to the ERISA plan assets.

   Any person who has discretionary authority or control with respect to the
management or disposition of ERISA plan assets and any person who provides
investment advice with respect to the ERISA plan assets for a fee is a
fiduciary of the investing ERISA plan. If the loans, the private securities
or any other assets in a trust were to constitute ERISA plan assets, then any
party exercising management or discretionary control with respect to those
ERISA plan assets may be deemed to be an ERISA plan "fiduciary," and thus
subject to the general fiduciary responsibility provisions of ERISA and the
prohibited transaction provisions of ERISA and Section 4975 of the Internal
Revenue Code with respect to any investing ERISA plan. In addition, if the
loans, private securities or any other assets in a trust were to constitute
ERISA plan assets, then the acquisition or holding of securities by or on
behalf of an ERISA plan or with ERISA plan assets, as well as the operation
of the trust, may constitute or involve a prohibited transaction under ERISA
and Section 4975 of the Internal Revenue Code.

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CONSIDERATIONS FOR ERISA PLANS REGARDING THE PURCHASE OF CERTIFICATES

 Prohibited Transaction Exemptions

   The DOL issued an individual exemption, Prohibited Transaction Exemption
94-29 (59 Fed. Reg. 14675, March 29, 1994), as amended by PTE 97-34, 62 Fed.
Reg. 39021 (July 21, 1997), to Residential Funding Corporation and a number
of its affiliates, which exempts from the application of some of the
prohibited transaction provisions of Section 406 of ERISA, and the excise
taxes imposed on the prohibited transactions under Section 4975(a) and (b) of
the Internal Revenue Code, various transactions, among others, relating to
the servicing and operation of mortgage pools and the purchase, sale and
holding of pass-through certificates issued by that trust as to which:

   o  the depositor or any of its affiliates is the sponsor, and any entity
      which has received from the DOL an individual prohibited transaction
      exemption which is similar to the Exemption is the sole underwriter,
      manager or co-manager of the underwriting syndicate or a seller or
      placement agent; or

   o  the depositor or an affiliate is the underwriter, provided that the
      conditions described in the Exemption are satisfied.

   For purposes of this section, the term "underwriter" shall include:

   o  the depositor and a number of its affiliates;

   o  any person directly or indirectly, through one or more intermediaries,
      controlling, controlled by or under common control with the depositor
      and a number of its affiliates;

   o  any member of the underwriting syndicate or selling group of which a
      person described in the first two clauses above is a manager or
      co-manager with respect to a class of certificates; or

   o  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:

   o  the acquisition of certificates by an ERISA plan or with ERISA plan
      assets must be on terms that are at least as favorable to the ERISA
      plan as they would be in an arm's-length transaction with an unrelated
      party;

   o  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;

   o  the certificates at the time of acquisition by an ERISA plan or with
      ERISA plan assets must be rated in one of the three highest generic
      rating categories by Standard & Poor's, a division of The McGraw-Hill
      Companies, Inc., Moody's Investors Service, Inc., Duff & Phelps Credit
      Rating Co. or Fitch IBCA, Inc., which are collectively referred to as
      the "exemption rating agencies";

   o  the trustee cannot be an affiliate of any other member of the
      "restricted group" which consists of the trustee, any underwriter, the
      depositor, the master servicer, any subservicer and any borrower with
      respect to assets of a trust constituting more than 5% of the aggregate
      unamortized principal balance of the assets in the related trust as of
      the date of initial issuance of the certificates;

   o  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
      depositor under the assignment of the assets to the related trust must
      represent not more than the fair market value of those obligations, and
      the sum of all payments made to and retained by the master servicer and
      any subservicer must represent not more than reasonable compensation
      for that person's services under the related pooling and servicing
      agreement and reimbursement of that person's reasonable expenses in
      connection therewith; and

   o  the investing ERISA plan or ERISA 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.

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<PAGE>
   In addition, except as otherwise specified in the accompanying prospectus
supplement, the exemptive relief afforded by the Exemption may not apply to
any certificates where the related trust contains revolving credit loans,
unsecured loans, certain purchase obligations or a swap.

   The Exemption also requires that each trust meet the following
requirements:

   o  the trust must consist solely of assets of the type that have been
      included in other investment pools;

   o  certificates evidencing interests in those other investment pools must
      have been rated in one of the three highest categories of one of the
      exemption rating agencies for at least one year prior to the
      acquisition of certificates by or on behalf of an ERISA plan or with
      ERISA plan assets; and

   o  certificates in the other investment pools must have been purchased by
      investors other than ERISA plans for at least one year prior to any
      acquisition of certificates by or on behalf of an ERISA plan or with
      ERISA plan assets.

   A fiduciary or other investor of ERISA plan assets contemplating
purchasing a certificate must make its own determination that the general
conditions described above will be satisfied with respect to that
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(a) of ERISA, as well as the excise taxes imposed by Sections 4975(a) and
(b) of the Internal Revenue Code by reason of Sections 4975(c)(1)(A) through
(D) of the Internal Revenue 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 an ERISA plan or with
ERISA 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 an excluded ERISA plan or with ERISA plan assets of an
excluded ERISA plan by any person who has discretionary authority or renders
investment advice with respect to ERISA plan assets of the excluded ERISA
plan. For purposes of the certificates, an "excluded ERISA plan" is an ERISA
plan sponsored by any member of the restricted group.

   If 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, as well as the excise taxes imposed by Section 4975(a)
and (b) of the Internal Revenue Code by reason of Section 4975(c)(1)(E) of
the Internal Revenue Code, in connection with:

   o  the direct or indirect sale, exchange or transfer of certificates in
      the initial issuance of certificates between the depositor or an
      underwriter and an ERISA plan when the person who has discretionary
      authority or renders investment advice with respect to the investment
      of the relevant ERISA plan assets in the certificates is:

   o  a borrower with respect to 5% or less of the fair market value of the
      assets of a trust; or

   o  an affiliate of that borrower; provided that, with respect to the
      acquisition of certificates in connection with the initial issuance of
      the certificates, a number of quantitative restrictions described in
      the Exemption are met;

   o  the direct or indirect acquisition or disposition in the secondary
      market of certificates by an ERISA plan or with ERISA plan assets; and

   o  the holding of certificates by an ERISA plan or with ERISA plan assets.

   Additionally, if 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(a) of ERISA, as well as the taxes imposed by Sections
4975(a) and (b) of the Internal Revenue Code by reason of Section 4975(c) of
the Internal Revenue Code, for transactions in connection with the servicing,
management and operation of the mortgage pools. Unless otherwise described in
the accompanying prospectus supplement, the depositor expects that the
specific conditions of the Exemption required for this purpose will be
satisfied

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<PAGE>
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
Internal Revenue Code by reason of Section 4975(c) of the Internal Revenue
Code, for transactions in connection with the servicing, management and
operation of the mortgage 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, as well as the taxes imposed by
Section 4975(a) and (b) of the Internal Revenue Code by reason of Sections
4975(c)(1)(A) through (D) of the Internal Revenue Code, if those restrictions
are deemed to otherwise apply merely because a person is deemed to be a party
in interest with respect to an investing ERISA plan, or the investing entity
holding ERISA plan assets, by virtue of providing services to the ERISA plan
or by virtue of having specified relationships to such a person, solely as a
result of the ERISA plan's ownership of certificates.

   Before purchasing a certificate, a fiduciary or other investor of ERISA
plan assets should itself confirm that the certificates constitute
"certificates" for purposes of the Exemption and that the specific and
general conditions described in the Exemption and the other requirements
described 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 ERISA plan asset investor should consider
its general fiduciary obligations under ERISA in determining whether to
purchase any certificates with ERISA plan assets.

   Any fiduciary or other ERISA plan asset investor that proposes to purchase
certificates on behalf of an ERISA plan or with ERISA plan assets should
consult with its counsel with respect to the potential applicability of ERISA
and the Internal Revenue Code to that investment and the availability of the
Exemption or any other DOL 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 loans, the fiduciary or other ERISA plan
asset investor should consider the availability of the Exemption or of
Prohibited Transaction Class Exemption, or PTCE, 83-1 for various
transactions involving mortgage pool investment trusts. However, PTCE 83-1
does not provide exemptive relief with respect to certificates evidencing
interests in trust funds which include Cooperative Loans or some types of
mortgage certificates. In addition, the fiduciary or other ERISA plan asset
investor should consider the availability of other class exemptions granted
by the DOL, which provide relief from a number of the prohibited transaction
provisions of ERISA and the related excise tax provisions of Section 4975 of
the Internal Revenue Code, including Sections I and III of PTCE 95-60,
regarding transactions by insurance company general accounts. The
accompanying prospectus supplement may contain additional information
regarding the application of the Exemption, PTCE 83-1, PTCE 95-60 or other
DOL class 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 ERISA plan's or other ERISA 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 this form of an investment.

 Insurance Company General Accounts

   In addition to any exemptive relief that may be available under PTCE 95-60
for the purchase and holding of the certificates by an insurance company
general account, Section 401(c) of ERISA provides exemptive relief from the
provisions of Part 4 of Title I of ERISA and Section 4975 of the Internal
Revenue Code, including the prohibited transaction restrictions imposed by
ERISA and the related excise taxes imposed by Section 4975 of the Internal
Revenue Code, for certain transactions involving an insurance company general
account. Pursuant to Section 401(c) of ERISA, the DOL published final
regulations on January 5, 2000. These final regulations, the 401(c)
regulations, are generally applicable on July 5, 2001. The 401(c) regulations
provide guidance for the purpose of determining, in cases where insurance
policies or annuity contracts supported by an insurer's general account are
issued to or for the benefit of an ERISA plan on or before December 31, 1998,
which general account assets constitute ERISA plan assets. Section 401(c) of
ERISA generally provides that, until the date which is 18 months

                                       119
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after the 401(c) regulations become final, no person shall be subject to
liability under Part 4 of Title I of ERISA or Section 4975 of the Internal
Revenue Code on the basis of a claim that the assets of an insurance company
general account constitute ERISA plan assets:

   o  except as otherwise provided by the Secretary of Labor in the 401(c)
      regulations to prevent avoidance of the regulations; or

   o  unless an action is brought by the Secretary of Labor for various
      breaches of fiduciary duty which would also constitute a violation of
      federal or state criminal law.

   Any assets of an insurance company general account which support insurance
policies or annuity contracts issued to an ERISA plan after December 31, 1998
or issued to ERISA plans on or before December 31, 1998 for which the
insurance company does not comply with the 401(c) regulations may be treated
as ERISA plan assets. In addition, because Section 401(c) does not relate to
insurance company separate accounts, separate account assets are still
treated as ERISA plan assets of any ERISA plan invested in the separate
account. Insurance companies contemplating the investment of general account
assets in the certificates should consult with their legal counsel with
respect to the applicability of Sections I and III of PTCE 95-60 and Section
401(c) of ERISA, including the general account's ability to continue to hold
the certificates after July 5, 2001.

 Representation from Investing ERISA Plans

   It is not clear whether certificates backed by revolving credit loans with
respect to which a number of Trust Balances of revolving credit loans are
included in the related trust would constitute "certificates" for purposes of
the Exemption. In promulgating the Exemption, the DOL did not have under
consideration interests in mortgage pools of the exact nature described in
this paragraph and accordingly, unless otherwise provided in the accompanying
prospectus supplement, certificates representing interests as described in
this paragraph should not be purchased by or on behalf of an ERISA plan or
with ERISA plan assets based solely upon the Exemption. In addition, the
exemptive relief afforded by the Exemption will not apply to the purchase,
sale or holding of any class of subordinate certificates, and may not apply
to any certificates where the related trust contains a funding account during
the period in which additional loans are permitted to be transferred to the
trust unless the funding account meets the requirements stated in the
Exemption.

   To the extent certificates are backed by revolving credit loans or are
subordinate certificates or the related trust contains a funding account that
does not meet the requirements of the Exemption, except as otherwise
specified in the respective prospectus supplement, transfers of the
certificates to an ERISA plan, to a trustee or other person acting on behalf
of any ERISA plan, or to any other person using the ERISA plan assets to
effect the acquisition will not be registered by the trustee unless the
transferee provides the depositor, the trustee and the master servicer with
an opinion of counsel satisfactory to the depositor, the trustee and the
master servicer, which opinion will not be at the expense of the depositor,
the trustee or the master servicer, that the purchase of the certificates by
or on behalf of the ERISA plan:

   o  is permissible under applicable law;

   o  will not constitute or result in any non-exempt prohibited transaction
      under ERISA or Section 4975 of the Internal Revenue Code; and

   o  will not subject the depositor, the trustee or the master servicer to
      any obligation in addition to those undertaken in the pooling and
      servicing agreement.

   In lieu of an opinion of counsel, the transferee may provide a
certification of facts substantially to the effect that the purchase of
subordinate certificates by or on behalf of the ERISA plan:

   o  is permissible under applicable law;

   o  will not constitute or result in a non-exempt prohibited transaction
      under ERISA or Section 4975 of the Internal Revenue Code;

   o  will not subject the depositor, the trustee or the master servicer to
      any obligation in addition to those undertaken in the pooling and
      servicing agreement; and

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   o  the following conditions are met:

      o  the source of funds used to purchase that certificates is an
         "insurance company general account," as that term is defined in PTCE
         95-60; and

      o  the conditions described in Section I and Section III of PTCE 95-60
         have been satisfied as of the date of the acquisition of the
         certificates.

CONSIDERATIONS FOR ERISA PLANS REGARDING THE PURCHASE OF NOTES

 Prohibited Transaction Exemptions

   An ERISA plan fiduciary or other ERISA plan assets investor considering an
investment in notes should consider the availability of some class exemptions
granted by the DOL, which provide relief from some of the prohibited
transaction provisions of ERISA and the related excise tax provisions of the
Internal Revenue Code, including PTCE 95-60; PTCE 84-14, regarding
transactions effected by a "qualified professional asset manager"; PTCE 90-1,
regarding transactions by insurance company pooled separate accounts; PTCE
91-38, regarding investments by bank collective investment funds; and PTCE
96-23, regarding transactions effected by an "in-house asset manager." The
respective prospectus supplement may contain additional information regarding
the application of PTCE 95-60 or other DOL exemptions for the notes offered
by this prospectus.

 Insurance Company General Accounts

   In addition to any exemptive relief that may be available under PTCE 95-60
for the purchase and holding of the notes by an insurance company general
account, Section 401(c) of ERISA provides exemptive relief from the
provisions of Part 4 of Title I of ERISA and Section 4975 of the Internal
Revenue Code, including the prohibited transaction restrictions imposed by
ERISA and the related excise taxes imposed by Section 4975 of the Internal
Revenue Code, for certain transactions involving an insurance company general
account. Pursuant to Section 401(c) of ERISA, the DOL published final
regulations on January 5, 2000. These final regulations, the 401(c)
regulations, are generally applicable on July 5, 2001. The 401(c) regulations
provide guidance for the purpose of determining, in cases where insurance
policies or annuity contracts supported by an insurer's general account are
issued to or for the benefit of an ERISA plan on or before December 31, 1998,
which general account assets constitute ERISA plan assets. Section 401(c) of
ERISA generally provides that, until the date which is 18 months after the
401(c) regulations become final, no person shall be subject to liability
under Part 4 of Title I of ERISA or Section 4975 of the Internal Revenue Code
on the basis of a claim that the assets of an insurance company general
account constitute plan assets:

   o  except as otherwise provided by the Secretary of Labor in the 401(c)
      regulations to prevent avoidance of the regulations; or

   o  unless an action is brought by the Secretary of Labor for various
      breaches of fiduciary duty which would also constitute a violation of
      federal or state criminal law.

   Any assets of an insurance company general account which support insurance
policies or annuity contracts issued to a plan after December 31, 1998 or
issued to ERISA plans on or before December 31, 1998 for which the insurance
company does not comply with the 401(c) regulations may be treated as ERISA
plan assets. In addition, because Section 401(c) does not relate to insurance
company separate accounts, separate account assets are still treated as ERISA
plan assets of any ERISA plan invested in the separate account. Insurance
companies contemplating the investment of general account assets in the notes
should consult with their legal counsel with respect to the applicability of
PTCE 95-60 and Section 401(c) of ERISA, including the general account's
ability to continue to hold the notes after July 5, 2001.

 Representation from ERISA Plans Investing in Notes with "Substantial Equity
Features"

   If the accompanying prospectus supplement provides that any of the notes
being issued have "substantial equity features" within the meaning of the DOL
regulations, transfers of the notes to an ERISA plan, to a trustee or other
person acting on behalf of any ERISA plan, or to any other person

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using the assets of any ERISA plan to effect the acquisition will not be
registered by the indenture trustee unless the transferee provides the
depositor, the indenture trustee and the master servicer with an opinion of
counsel satisfactory to the depositor, the indenture trustee and the master
servicer, which opinion will not be at the expense of the depositor, the
indenture trustee or the master servicer, that the purchase of the notes by
or on behalf of the ERISA plan is permissible under applicable law, will not
constitute or give rise to a prohibited transaction, and will not subject the
depositor, the indenture trustee or the master servicer to any obligation in
addition to those undertaken in the trust agreement. In lieu of the opinion
of counsel, the transferee may provide a certification of facts substantially
to the effect that (x) the purchase of notes by or on behalf of the ERISA
plan or any other benefit plan investor is permissible under applicable law,
will not constitute or result in any non-exempt prohibited transaction under
ERISA or Section 4975 of the Internal Revenue Code and will not subject the
depositor, the indenture trustee or the master servicer to any obligation in
addition to those undertaken in the trust agreement, and (y) the following
statements are correct:

   o  the transferee is an insurance company;

   o  the source of funds used to purchase the notes is an "insurance company
      general account," as the term is defined in PTCE 95-60; and

   o  the conditions described in Section I of PTCE 95-60 have been satisfied
      as of the date of the acquisition of the notes.

TAX EXEMPT INVESTORS

   An ERISA plan that is a Tax-Exempt Investor nonetheless will be subject to
federal income taxation to the extent that its income is "unrelated business
taxable income," or UBTI, within the meaning of Section 512 of the Internal
Revenue 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 "Material Federal Income
Tax Consequences--REMICs and FASITs-- Taxation of Owners of REMIC Residual
Securities--Excess Inclusions" in this prospectus. In addition, income as to
certificates and other equity interests of a trust that has issued notes
would be "debt-financed income" and therefore would be UBTI.

CONSULTATION WITH COUNSEL

   There can be no assurance that the Exemption will apply with respect to
any particular ERISA plan that acquires certificates, even if all the
conditions specified in the Exemption were satisfied, or that any other DOL
exemption will apply with respect to any particular ERISA plan that acquires
securities, even if all the conditions specified in a DOL exemption were
satisfied. Prospective ERISA plan investors should consult with their legal
counsel concerning the impact of ERISA and the Internal Revenue Code and the
potential consequences to their specific circumstances prior to making an
investment in the securities.

   Before purchasing a certificate, a fiduciary of an ERISA plan should
itself confirm that all the specific and general conditions described in the
Exemption or in one of the DOL exemptions would be satisfied, and, in the
case of a certificate purchased under the Exemption, that the certificate
constitutes a "certificate" for purposes of the Exemption. Before purchasing
a note in reliance on any DOL exemption or Section 401(c) of ERISA, a
fiduciary of an ERISA plan or other ERISA plan asset investor should itself
confirm that all of the specific and general conditions described in the
exemption or Section 401(c) of ERISA would be satisfied.

   In addition to making its own determination as to the availability of the
exemptive relief provided in the Exemption or in any other DOL exemption, the
ERISA plan fiduciary should consider its general fiduciary obligations under
ERISA in determining whether to purchase a security on behalf of an ERISA
plan.

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                           LEGAL INVESTMENT MATTERS

   Each class of securities offered by this prospectus and by the
accompanying prospectus supplements will be rated at the date of issuance in
one of the four highest rating categories by at least one rating agency. As
specified in the accompanying prospectus supplement, each class of securities
will evidence an interest in trust assets primarily secured by second or more
junior liens, and therefore will not constitute "mortgage related securities"
for purposes of the Secondary Mortgage Market Enhancement Act of 1984, as
amended, or SMMEA. Accordingly, investors whose investment authority is
subject to legal restrictions should consult their legal advisors to
determine whether and to what extent the securities constitute legal
investments for them.

   All depository institutions considering an investment in the securities
should review the Federal Financial Institutions Examination Council's
Supervisory Policy Statement on the Selection of Securities Dealers and
Unsuitable Investment Practices, to the extent adopted by their respective
regulators, setting forth, in relevant part, a number of investment practices
deemed to be unsuitable for an institution's investment portfolio, as well as
guidelines for investing in various types of mortgage related securities.

   The foregoing does not take into consideration the applicability of
statutes, rules, regulations, orders, guidelines or agreements generally
governing investments made by a particular investor, including, but not
limited to, "prudent investor" provisions, percentage-of-assets limits and
provisions which may restrict or prohibit investment in securities which are
not "interest bearing" or "income paying."

   There may be other restrictions on the ability of some investors either to
purchase some classes of securities or to purchase any class of securities
representing more than a specified percentage of the investors' assets. The
depositor will make no representations as to the proper characterization of
any class of securities for legal investment or other purposes, or as to the
ability of particular investors to purchase any class of securities under
applicable legal investment restrictions. These uncertainties may adversely
affect the liquidity of any class of securities. 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 legal advisors in determining whether
and to what extent the securities of any class constitute legal investments
or are subject to investment, capital or other restrictions.

                               USE OF PROCEEDS

   Substantially all of the net proceeds to be received from the sale of
securities will be applied by the depositor to finance the purchase of, or to
repay short-term loans incurred to finance the purchase of, the trust assets
underlying the securities or will be used by the depositor for general
corporate purposes. The depositor expects that it will make additional sales
of securities similar to the securities from time to time, but the timing and
amount of any additional offerings will be dependent upon a number of
factors, including the volume of loans purchased by the depositor, prevailing
note rates, availability of funds and general market conditions.

                             METHODS OF DISTRIBUTION

   The securities offered by this prospectus and by the accompanying
prospectus supplements will be offered in series through one or more of the
methods described in the following paragraph. The prospectus supplement
prepared for each series will describe the method of offering being utilized
for that series and will state the net proceeds to the depositor from that
sale.

   The depositor intends that securities will be offered through the
following methods from time to time and that offerings may be made
concurrently through more than one of these methods or that an offering of a
particular series of securities may be made through a combination of two or
more of the following methods:

   o  by negotiated firm commitment or best efforts underwriting and public
      re-offering by underwriters;

   o  by placements by the depositor with institutional investors through
      dealers; and

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<PAGE>
   o  by direct placements by the depositor with institutional investors.

   In addition, if specified in the accompanying prospectus supplement, a
series of securities may be offered in whole or in part to the seller of the
related trust assets and other assets, if applicable, that would comprise the
pool securing the securities.

   If underwriters are used in a sale of any securities, other than in
connection with an underwriting on a best efforts basis, the securities will
be acquired by the underwriters for their own account and may be resold from
time to time in one or more transactions, including negotiated transactions,
at fixed public offering prices or at varying prices to be determined at the
time of sale or at the time of commitment therefor. These underwriters may be
broker-dealers affiliated with the depositor whose identities and
relationships to the depositor will be as described in the accompanying
prospectus supplement. The managing underwriter or underwriters for the offer
and sale of a particular series of securities will be described on the cover
of the prospectus supplement relating to that series and the members of the
underwriting syndicate, if any, will be named in the accompanying prospectus
supplement.

   In connection with the sale of the securities, underwriters may receive
compensation from the depositor or from purchasers of the securities in the
form of discounts, concessions or commissions. Underwriters and dealers
participating in the distribution of the securities may be deemed to be
underwriters in connection with the securities, and any discounts or
commissions received by them from the depositor and any profit on the resale
of securities by them may be deemed to be underwriting discounts and
commissions under the Securities Act.

   It is anticipated that the underwriting agreement pertaining to the sale
of any series of securities will provide that the obligations of the
underwriters will be subject to conditions precedent, that the underwriters
will be obligated to purchase all of the securities if any are purchased,
other than in connection with an underwriting on a best efforts basis, and
that, in limited circumstances, the depositor will indemnify the several
underwriters and the underwriters will indemnify the depositor against a
number of civil liabilities, including liabilities under the Securities Act,
or will contribute to payments required to be made for these liabilities.

   The prospectus supplement for any series offered by placements through
dealers will contain information regarding the nature of the offering and any
agreements to be entered into between the depositor and purchasers of
securities of that series.

   The depositor anticipates that the securities offered hereby will be sold
primarily to institutional investors or sophisticated non-institutional
investors. Purchasers of securities, including dealers, may, depending on the
facts and circumstances of the purchases, be deemed to be "underwriters"
within the meaning of the Securities Act, in connection with reoffers and
sales by them of securities. Holders of securities should consult with their
legal advisors in this regard prior to any reoffer or sale.

                                LEGAL MATTERS

   Specific legal matters, including a number of federal income tax matters,
will be passed upon for the depositor by Thacher Proffitt & Wood, New York,
New York, by Orrick, Herrington & Sutcliffe LLP, New York, New York or by
Stroock & Stroock & Lavan, as specified in the prospectus supplement.

                            FINANCIAL INFORMATION

   The depositor has determined that its financial statements are not
material to the offering made by this prospectus. The securities do not
represent an interest in or an obligation of the depositor. The depositor's
only obligations as to a series of securities will be to repurchase trust
assets upon any breach of the limited representations and warranties made by
the depositor, or as otherwise provided in the applicable prospectus
supplement.

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                            ADDITIONAL INFORMATION

   The depositor has filed the registration statement with the Commission.
The depositor is also subject to some of the information requirements of the
Securities Exchange Act of 1934, as amended, or the Exchange Act, and,
accordingly, will file reports thereunder with the Commission. The
registration statement and its exhibits, and reports and other information
filed by the depositor under 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 some of its Regional Offices
located as follows: Chicago Regional Office, Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and Northeast
Regional Office, 7 World Trade Center, Suite 1300, New York, New York 10048
and electronically through the Securities and Exchange Commission's
Electronic Data Gathering, Analysis and Retrieval System at the Commission's
Web Site (http://www.sec.gov).

   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 that 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 depositor 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 in those documents.

                          REPORTS TO SECURITYHOLDERS

   Monthly reports which contain information concerning the trust for a
series of securities will be sent by or on behalf of the master servicer or
the trustee to each holder of record of the securities of the related series.
See "Description of the Securities--Reports to Securityholders" in this
prospectus. Reports forwarded to holders will contain financial information
that has not been examined or reported upon by an independent certified
public accountant. The depositor will file with the Commission the periodic
reports relating to the trust for a series of securities as are required
under the Exchange Act.

              INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

   The SEC allows the depositor to "incorporate by reference" the information
filed with the SEC by the depositor, under Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act, that relates to the trust fund for the securities. This
means that the depositor can disclose important information to any investor
by referring the investor to these documents. The information incorporated by
reference is an important part of this prospectus, and information filed by
the depositor with the SEC that relates to the trust fund for the securities
will automatically update and supersede this information.

   The depositor will provide or cause to be provided without charge to each
person to whom this prospectus and accompanying prospectus supplement is
delivered in connection with the offering of one or more classes of the
series of securities, upon written or oral request of that person, a copy of
any or all reports incorporated in this prospectus by reference, in each case
to the extent the reports relate to one or more of the classes of the series
of securities, other than the exhibits to those documents, unless the
exhibits are specifically incorporated by reference in the documents.
Requests should be directed in writing to Residential Funding Mortgage
Securities II, Inc., 8400 Normandale Lake Boulevard, Suite 600, Minneapolis,
Minnesota 55437, or by telephone at (612) 832-7000.

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<PAGE>
                                   GLOSSARY

   1998 POLICY STATEMENT--The revised supervisory statement listing the
guidelines for investments in "high risk private securities", and adopted by
the Federal Reserve Board, the Office of the Comptroller of the Currency, the
FDIC, the National Credit Union Administration and the OTS with an effective
date of May 26, 1998.

   ADMINISTRATOR--In addition to or in lieu of the master servicer for a
series of securities, the related prospectus supplement may identify an
administrator for the trust. The administrator may be an affiliate of the
depositor or the master servicer.

   ADVANCE--As to any closed-end loan and any distribution date, an amount
equal to the scheduled payment of interest and, if specified in the
accompanying prospectus supplement, principal, other than any Balloon Amount
in the case of a Balloon Loan, which was delinquent as of the close of
business on the business day preceding the related determination date.

   AGENCY SECURITY--Any security issued by Freddie Mac, Fannie Mae or Ginnie
Mae. Such Agency Securities may represent whole or partial interests in pools
of (1) loans or (2) Agency Securities. Unless otherwise set forth in the
accompanying 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 loans
specified in the accompanying prospectus supplement.

   BALLOON AMOUNT--The full outstanding principal balance on a Balloon Loan
due and payable on the maturity date.

   BALLOON LOANS--Fixed rate loans having original or modified terms to
maturity of 5, 7 or 15 years in most cases as described in the accompanying
prospectus supplement, with level monthly payments of principal and interest
based on a 30 year amortization schedule. The amount of the monthly payment
will remain constant until the maturity date, when the Balloon Amount will be
due and payable.

   BANKRUPTCY AMOUNT--The amount of Bankruptcy Losses that may be borne
solely by the credit enhancement of the related series.

   BANKRUPTCY LOSSES--A Realized Loss attributable to actions which may be
taken by a bankruptcy court in connection with a loan, including a reduction
by a bankruptcy court of the principal balance of or the mortgage rate on a
loan or an extension of its maturity.

   CALL CLASS--A class of securities under which the holder will have the
right, at its sole discretion, to terminate the related trust, resulting in
early retirement of the securities of the series.

   CALL PRICE--In the case of a call with respect to a Call Class, a price
equal to 100% of the principal balance of the related securities as of the
day of that purchase plus accrued interest at the applicable pass-through
rate.

   CALL SECURITY--Any security evidencing an interest in a Call Class.

   COOPERATIVE--As to a Cooperative Loan, the corporation that owns the
related apartment building.

   COOPERATIVE LOANS--Cooperative apartment loans evidenced by Cooperative
Securities secured by security interests in shares issued by Cooperatives and
in the related proprietary leases or occupancy agreements granting exclusive
rights to occupy specific dwelling units in the related buildings.

   COOPERATIVE NOTES--A promissory note relating to a Cooperative Loan.

   Credit Scores--A measurement of the relative degree of risk a borrower
represents to a lender obtained from credit reports utilizing, among other
things, payment history, delinquencies on accounts, levels of outstanding
indebtedness, length of credit history, types of credit, and bankruptcy
experience.

   CUSTODIAL ACCOUNT--The custodial account or accounts created and
maintained by the master servicer in the name of a depository institution, as
custodian for the holders of the securities, for the holders of other
interests in loans serviced or sold by the master servicer and for the master
servicer, into which the amounts shall be deposited directly. That account or
accounts shall be an Eligible Account.

                                       126
<PAGE>
   DEBT SERVICE REDUCTION--Modifications of the terms of a loan resulting
from a bankruptcy proceeding, including a reduction in the amount of the
monthly payment on the related loan, but not any permanent forgiveness of
principal. Together with Deficient Valuations, Debt Service Reductions are
referred to in this prospectus as Bankruptcy Losses.

   DEFAULTED MORTGAGE LOSSES--A Realized Loss attributable to the borrower's
failure to make any payment of principal or interest as required under the
mortgage note, but not including Special Hazard Losses, Extraordinary Losses
or other losses resulting from damage to a mortgaged property, Bankruptcy
Losses or Fraud Losses.

   DEFICIENT VALUATION--In connection with the personal bankruptcy of a
borrower, the difference between the then outstanding principal balance of
the first and junior loans secured by the mortgaged property and a lower
value as established by the bankruptcy court.

   DESIGNATED SELLER TRANSACTION--A transaction in which the loans are
provided directly to the depositor by an unaffiliated seller described in the
accompanying prospectus supplement.

   DIRECT PUERTO RICO MORTGAGE--As to any Puerto Rico loan, a mortgage to
secure a specific obligation for the benefit of a specified person.

   DISTRIBUTION AMOUNT--As to a class of securities for any distribution
date, the portion, if any, of the amount to be distributed to that class for
that distribution date of principal, plus, if the class is entitled to
payments of interest on that distribution date, interest accrued during the
related interest accrual period at the applicable security rate on the
principal balance or notional amount of that class specified in the
applicable prospectus supplement, less certain interest shortfalls if
specified in the accompanying prospectus supplement, which will include:

   o  any deferred interest added to the principal balance of the loans
      and/or the outstanding balance of one or more classes of securities on
      the related due date;

   o  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
      securityholders which are not covered by advances or the applicable
      credit enhancement; and

   o  prepayment interest shortfalls in collections of interest on closed-end
      loans resulting from Principal Prepayments made by the borrower during
      the month preceding the month in which the distribution date occurs and
      are not covered by Advances, in each case in an amount that is
      allocated to that class on the basis set forth in the prospectus
      supplement.

   DRAW--Money drawn by the borrower in most cases with either checks or
credit cards, subject to applicable law, on a revolving credit loan under the
related credit line agreement at any time during the Draw Period.

   DRAW PERIOD--The period specified in the related credit line agreement
when a borrower on a revolving credit loan may make a Draw.

   ELIGIBLE ACCOUNT--An account acceptable to the applicable rating agency.

   ENDORSABLE PUERTO RICO MORTGAGE--As to any Puerto Rico loan, a mortgage to
secure an instrument transferable by endorsement.

   ENVIRONMENTAL LIEN--A lien imposed by federal or state statute, for any
cleanup costs incurred by a state on the property that is the subject of the
cleanup costs.

   EXCESS SPREAD--A portion of interest due on the loans or securities
transferred as part of the assets of the related trust.

   EXCLUDED BALANCE--That portion of the principal balance of any revolving
credit loan not included in the Trust Balance at any time, which may include
balances attributable to Draws after the cut-off date and may include a
portion of the principal balance outstanding as of the cut-off date.

   EXCLUDED SPREAD--A portion of interest due on the loans or securities,
excluded from the assets transferred to the related trust.

                                       127
<PAGE>
   EXTRAORDINARY LOSSES--Realized Losses occasioned by war, civil
insurrection, various governmental actions, nuclear reaction and other
similar risks.

   FRAUD LOSS AMOUNT--The amount of Fraud Losses that may be borne solely by
the credit enhancement of the related series.

   FRAUD LOSSES--A Realized Loss incurred on defaulted loans as to which
there was fraud in the origination of the loans.

   GROSS MARGIN--For a revolving credit loan, a fixed or variable percentage
described in the related mortgage note, which when added to the related
index, provides the loan rate for the revolving credit loan.

   HIGH COST LOANS--Loans that are subject to the 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,
which were originated on or after October 1, 1995, are not loans made to
finance the purchase of the mortgaged property and have interest rates or
origination costs in excess of prescribed levels.

   INSURANCE PROCEEDS--Proceeds of any special hazard insurance policy,
bankruptcy policy, mortgage pool insurance policy, primary insurance policy
and any title, hazard or other insurance policy or guaranty covering any loan
in the pool together with any payments under any letter of credit.

   ISSUE PREMIUM--As to a class of REMIC regular securities, the issue price
in excess of the stated redemption price of that class.

   LIQUIDATED LOAN--A defaulted loan or contract for which the related
mortgaged property has been sold by the related trust and all recoverable
Liquidation Proceeds and Insurance Proceeds have been received.

   LIQUIDATION PROCEEDS--Amounts collected by the subservicer in connection
with the liquidation of a loan, by foreclosure or otherwise.

   NET LOAN RATE--As to a loan, the mortgage rate net of servicing fees,
other administrative fees and any Excess Spread or Excluded Spread.

   NONRECOVERABLE ADVANCE--Any Advance previously made which the master
servicer has determined to not be ultimately recoverable from Liquidation
Proceeds, Insurance Proceeds or otherwise.

   PARTIES IN INTEREST--As to an ERISA plan, persons who have specified
relationships to the ERISA plan, either "parties in interest" within the
meaning of ERISA or "disqualified persons" within the meaning of the Internal
Revenue Code.

   PAYMENT ACCOUNT--An account established and maintained by the master
servicer in the name of the related trustee for the benefit of the holders of
each series of securities, for the disbursement of payments on the loans
evidenced by each series of securities.

   PERMITTED INVESTMENTS--United States government securities and other
investments that at the time of acquisition are rated in one of the
categories specified in the related agreement.

   PRINCIPAL PREPAYMENTS--Any principal payments received for a loan, in
advance of the scheduled due date and not accompanied by a payment of
interest for any period following the date of payment.

   QUALIFIED INSURER--As to a mortgage pool insurance policy, special hazard
insurance policy, bankruptcy policy, certificate insurance policy or surety
bond, an insurer qualified under applicable law to transact the insurance
business or coverage as applicable.

   REALIZED LOSS--As to any defaulted loan that is finally liquidated, the
amount of loss realized, if any, as described in the related pooling and
servicing agreement, will equal the portion of the Stated Principal Balance
remaining after application of all amounts recovered, net of amounts
reimbursable to the master servicer for related Advances and expenses,
towards interest and principal owing on the loan. As to a loan the principal
balance of which has been reduced in connection with bankruptcy proceedings,
the amount of the reduction will be treated as a Realized Loss.

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<PAGE>
   REO CONTRACT--A manufactured housing contract or home improvement contract
where title to the related mortgaged property has been obtained by the
trustee or its nominee on behalf of securityholders of the related series.

   REO LOAN--A loan where title to the related mortgaged property has been
obtained by the trustee or its nominee on behalf of securityholders of the
related series.

   SERVICING ADVANCES--Amounts advanced on any loan to cover taxes, insurance
premiums or similar expenses, any amounts advanced on any loan to acquire,
preserve, restore or protect the related mortgaged property, or any amount
advanced in respect of a senior lien on the related mortgaged property.

   SPECIAL HAZARD AMOUNT--The amount of Special Hazard Losses that may be
allocated to the credit enhancement of the related series.

   SPECIAL HAZARD LOSSES--A Realized Loss incurred, to the extent that the
loss was attributable to:

   o  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

   o  any shortfall in insurance proceeds for partial damage due to the
      application of the co-insurance clauses contained in hazard insurance
      policies.

The amount of the Special Hazard Loss is limited to he lesser of the cost of
repair or replacement of the mortgaged property; any loss above that amount
would be a Defaulted Mortgage Loss or other applicable type of loss. Special
Hazard Losses does not include losses occasioned by war, civil insurrection,
some governmental actions, errors in design, faulty workmanship or materials
except under some circumstances, nuclear reaction, chemical contamination or
waste by the borrower.

   SPECIAL SERVICER--A special servicer named pursuant to the servicing
agreement for a series of securities, which will be responsible for the
servicing of delinquent loans.

   STATED PRINCIPAL BALANCE--As to any loan as of any date of determination,
its principal balance 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 securityholders on or before the date of determination, and as
further reduced to the extent that any Realized Loss has been allocated to
any securities on or before that date.

   SUBORDINATE AMOUNT--A specified portion of subordinated distributions with
respect to the loans, allocated to the holders of the subordinate securities
as set forth in the accompanying prospectus supplement.

   SUBSERVICING ACCOUNT--An account established and maintained by a
subservicer which meets the requirements described in the Guide and is
otherwise acceptable to the master servicer.

   TAX-EXEMPT INVESTOR--Tax-qualified retirement plans described in Section
401(a) of the Internal Revenue Code and on individual retirement accounts
described in Section 408 of the Internal Revenue Code.

   TAX-FAVORED PLANS--An ERISA plan that is exempt from federal income
taxation under Section 501 of the Internal Revenue Code.

   TRUST BALANCE--As described in the accompanying prospectus supplement, a
specified portion of the total principal balance of each revolving credit
loan outstanding at any time, which will consist of the principal balance
thereof as of the cut-off date minus the portion of all payments and losses
thereafter that are allocated to the Trust Balance and minus the portion of
the principal balance that has been transferred to another trust fund prior
to the cut-off date, and will not include any portion of the principal
balance attributable to Draws made after the cut-off date.

<PAGE>                                     129



<PAGE>

               RESIDENTIAL FUNDING MORTGAGE SECURITIES II, INC.


                                  $138,370,000


                       HOME EQUITY LOAN-BACKED TERM NOTES,

                                SERIES 2000-HS1

                            PROSPECTUS SUPPLEMENT


                   RESIDENTIAL FUNDING SECURITIES CORPORATION
                                  UNDERWRITERS

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE
IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION.

WE ARE NOT OFFERING THE NOTES OFFERED HEREBY IN ANY STATE WHERE THE OFFER IS NOT
PERMITTED.

WE REPRESENT THE ACCURACY OF THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT AND
THE ACCOMPANYING PROSPECTUS ONLY AS OF THE DATES ON THEIR RESPECTIVE COVERS.

Dealers will be required to deliver a prospectus supplement and prospectus when
acting as underwriters of the notes offered hereby and with respect to their
unsold allotments or subscriptions. In addition, all dealers selling the notes,
whether or not participating in this offering, may be required to deliver a
prospectus supplement and prospectus until December 20, 2000.



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