BEAR STEARNS ASSET BACKED SECURITIES INC
424B5, 1999-09-27
ASSET-BACKED SECURITIES
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<PAGE>

                                                Filed Pursuant to Rule 424(b)(5)
                                            Registration Statement No. 333-83541

PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED AUGUST 5, 1999)

                                  $175,000,000

                            GMACM LOAN TRUST 1999-HLTV1
                                     Issuer

                             GMAC MORTGAGE CORPORATION
                              Seller and Servicer

                     BEAR STEARNS ASSET BACKED SECURITIES, INC.
                                   Depositor

                     LOAN-BACKED TERM NOTES, SERIES 1999-HLTV1

<TABLE>
<S>                                  <C>
                                     THE TRUST
                                     o consists of a pool of closed-end, second lien, fixed-rate home equity loans
                                       with high combined loan-to-value ratios;
                                     o includes funds on deposit in an account to be used to acquire home equity
                                       loans subsequent to the date of issuance of the notes; and
                                     o will also include a yield supplement agreement under which the yield
                                       supplement counterparty will make certain payments to the trust.
                                     OFFERED NOTES
                                     o Two classes of notes, both of which are offered by this prospectus
                                       supplement and the accompanying prospectus:
</TABLE>

<TABLE>
<CAPTION>
                                               INITIAL NOTE
                                      CLASS      BALANCE       DESIGNATIONS    NOTE RATE
                                      ------   ------------    ------------    ----------
<S>                                   <C>      <C>             <C>             <C>
                                       A-1     $125,000,000     Senior          Variable
                                       A-2     $ 50,000,000     Senior           7.73%
</TABLE>

<TABLE>
<S>                                  <C>
                                     An expanded summary of the initial note balances, note rates and ratings of
                                     the notes is set forth on page S-5.
                                     CREDIT ENHANCEMENT
                                     Credit enhancement for the notes consists of:
                                     o excess interest, overcollateralization and a reserve account; and
                                     o a financial guaranty insurance policy issued by Ambac Assurance
                                       Corporation.

                                                            Ambac
</TABLE>

       NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE OFFERED NOTES OR DETERMINED THAT
THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IS ACCURATE OR COMPLETE. IT IS
ILLEGAL FOR ANYONE TO TELL YOU OTHERWISE.
                         ------------------------------
    The underwriters will offer the notes to the public at varying prices to be
determined at the time of sale. The underwriters' commission will be the
difference between the price the underwriters pay
to the depositor for the notes and the amount the underwriters receive from the
sale of the notes to the public. Delivery of the notes is expected to be made in
book entry form on or about September 23, 1999. The notes will be offered in the
United States and Europe.

BEAR, STEARNS & CO. INC.                                PAINEWEBBER INCORPORATED

          THE DATE OF THIS PROSPECTUS SUPPLEMENT IS SEPTEMBER 15, 1999


YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE S-10 IN THIS
PROSPECTUS SUPPLEMENT AND ON PAGE 18 OF THE ATTACHED PROSPECTUS.

The notes will be obligations of the trust only. The notes and the assets of the
trust will not be obligations of GMAC Mortgage Corporation, Bear Stearns Asset
Backed Securities, Inc., Norwest Bank Minnesota, National Association, or any of
their respective affiliates.

This prospectus supplement may be used to offer and sell the notes offered
hereby only if accompanied by the prospectus.

<PAGE>

 Important notice about information presented in this prospectus supplement and
                          the accompanying prospectus

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

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

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

If the description of your 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 245 Park Avenue, New York,
New York 10167, and its phone number is (212) 272-2000.

                                     S-2
<PAGE>

                               Table of Contents

<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----

                             Prospectus Supplement

<S>                                                                                                           <C>
Summary......................................................................................................  S-4
Risk Factors..................................................................................................S-10
Introduction..................................................................................................S-14
Description of the Home Equity Loans..........................................................................S-14
The Seller and Servicer.......................................................................................S-26
The Issuer....................................................................................................S-27
The Owner Trustee.............................................................................................S-27
The Indenture Trustee.........................................................................................S-28
The Credit Enhancer...........................................................................................S-29
The Yield Supplement Agreement................................................................................S-30
Description of the Securities.................................................................................S-31
Description of the Policy.....................................................................................S-39
Yield and Prepayment Considerations...........................................................................S-40
Description of the Home Equity Loan Purchase Agreement........................................................S-46
Description of the Servicing Agreement........................................................................S-49
Description of the Trust Agreement and Indenture..............................................................S-50
The Agreements................................................................................................S-54
Use of Proceeds...............................................................................................S-54
Certain Federal Income Tax Considerations.....................................................................S-54
ERISA Considerations..........................................................................................S-54
Legal Investment..............................................................................................S-55
Underwriting..................................................................................................S-55
Experts.......................................................................................................S-56
Legal Matters.................................................................................................S-56
Ratings.......................................................................................................S-56
Annex I........................................................................................................A-1

                                  Prospectus

Risk Factors.....................................................................................................3
Description of the Securities....................................................................................8
The Trust Funds.................................................................................................13
Enhancement.....................................................................................................22
Servicing of Loans..............................................................................................25
The Agreements..................................................................................................32
Certain Legal Aspects of the Loans..............................................................................42
The Depositor...................................................................................................53
Use of Proceeds.................................................................................................53
Certain Federal Income Tax Considerations.......................................................................53
State Tax Considerations........................................................................................76
FASIT Securities................................................................................................76
ERISA Considerations............................................................................................79
Legal Matters...................................................................................................85
Financial Information...........................................................................................85
Available Information...........................................................................................85
Incorporation of Certain Information by Reference...............................................................85
Rating..........................................................................................................86
Legal Investment................................................................................................87
Plan of Distribution............................................................................................87
Index of Defined Terms..........................................................................................88
</TABLE>

                                     S-3
<PAGE>

                                    SUMMARY

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

<TABLE>
<S>                                                  <C>
Title of the offered securities..................    Loan-Backed Term Notes, Series 1999-HLTV1.

Issuer or trust..................................    GMACM Loan Trust 1999-HLTV1.

Depositor........................................    Bear Stearns Asset Backed Securities, Inc.

Servicer and seller..............................    GMAC Mortgage Corporation.

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

Indenture trustee................................    Norwest Bank Minnesota, National Association.

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

Home equity loans................................    Initially, 2,244 closed-end, fixed rate home equity loans
                                                     with an aggregate principal balance of approximately
                                                     $125,371,700 as of the cut-off date. The loans are secured
                                                     by liens that are junior in priority to a senior lien on the
                                                     related mortgaged properties consisting primarily of one- to
                                                     four-family residential properties. Along with the initial
                                                     home equity loans, the issuer will also purchase fixed rate
                                                     home equity loans from the seller prior to December 23, 1999.

Cut-off date.....................................    The close of business on September 1, 1999 or, in the case
                                                     of any home equity loan originated after that date and sold
                                                     to the trust, the applicable date as of which such home
                                                     equity loan is sold to the trust.

Closing date.....................................    On or about September 23, 1999.

Payment dates....................................    Beginning in October 1999 on the 18th day of each month or,
                                                     if the 18th day is not a business day, on the next business
                                                     day.

Form of notes....................................    Book-entry form, same day funds through DTC.
</TABLE>

                                     S-4
<PAGE>

<TABLE>
<S>                                                  <C>
Minimum denominations............................    $25,000 and integral multiples of $1,000 in excess of that
                                                     amount.
</TABLE>


<TABLE>
<CAPTION>

- ------------------------------------------------------------------------------------------------------------------
                                                      Notes
- ------------------------------------------------------------------------------------------------------------------
                      Note           Initial           Initial Rating        Final Maturity
     Class            Rate         Note Balance       (Moody's/S&P)(1)          Date(2)           Designations
- ---------------- --------------- ----------------- ---------------------- --------------------- ------------------
<S>              <C>             <C>               <C>                    <C>                   <C>
      A-1         Variable(3)      $125,000,000           Aaa/AAA          November 18, 2025         Senior/
                                                                                                  Variable Rate
      A-2           7.73%(4)       $ 50,000,000           Aaa/AAA          November 18, 2025         Senior/
                                                                                                   Fixed Rate
- ---------------- --------------- ----------------- ---------------------- --------------------- ------------------
Total Notes                        $175,000,000
- -------------------------------- ----------------- ---------------------- --------------------- ------------------
</TABLE>

(1)      See "Ratings" in this prospectus supplement.
(2)      Due to losses and prepayments on the home equity loans, the actual
         final payment date may be substantially earlier than such date.
(3)      On any payment date, equal to the least of (i) LIBOR plus a margin of
         0.39% per annum and (ii) 13.00% per annum. The margin on the Class
         A-1 Notes will increase to 0.78% after the Step-up Date. The "Step-up
         Date" is the first payment date on which the aggregate outstanding
         principal balance of the home equity loans is less than 10% of the
         sum of (x) the aggregate principal balance of the home equity loans
         as of the cut-off date and (y) the amount on deposit in the
         pre-funding account on the closing date.
(4)      The note rate on the Class A-2 Notes will increase to 8.23% per annum
         after the Step-up Date.

                                     S-5

<PAGE>

The Trust

The depositor will establish the GMACM Loan Trust 1999-HLTV1, a Delaware
business trust. The trust will be established pursuant to a trust agreement,
dated as of September 23, 1999, between the depositor and the owner trustee.
The trust will issue the notes pursuant to an indenture dated as of September
1, 1999, between the issuer and the indenture trustee. The assets of the trust
will consist of the home equity loans and certain related assets.
Substantially all of the home equity loans will be secured by liens on
mortgaged properties in which the borrowers have little or negative equity
therein (i.e., the related combined loan-to-value ratios approach or exceed
100%) at the time of origination of the loans.

In addition to the home equity loans conveyed to the trust on the closing
date, the property of the trust will include cash on deposit in certain
accounts, including the pre-funding account, the reserve account, and other
collections on the home equity loans. The trust will also include a financial
guarantee insurance policy provided by Ambac Assurance Corporation, which will
guarantee certain payments on the notes, and a yield supplement agreement
under which the yield supplement counterparty will make certain payments to
the trust if LIBOR for future payments dates is higher than a LIBOR rate
specified in the yield supplement agreement.

Payments of interest and principal on the notes will be made only from
payments received in connection with the home equity loans, the financial
guarantee insurance policy and the yield supplement agreement to the extent
described herein.

The Home Equity Loan Pool

The statistical information presented in this prospectus supplement reflects
the pool of initial home equity loans as of the cut-off date. The pool will
consist of closed-end, fixed rate, home equity loans expected to have an
aggregate unpaid principal balance as of the cut-off date of approximately
$125,371,700.

Approximately 99.84% of the initial home equity loans are secured by liens
that are junior (i.e., second or subsequent) in priority to a senior lien on
the related mortgaged properties consisting primarily of one- to four-family
residential properties. In addition, the initial home equity loans have the
following characteristics as of the cut-off date:

- ------------------------------------ --------------
Range of principal balances          $14,358 to
                                     $150,000
Average principal balance            $55,870
Range of loan rates                  8.25% to
                                     18.99%
Weighted average loan rate           13.50%
Range of original terms to
  maturity months                    120 to 300
Weighted average original term       272 months
  to maturity
Range of remaining terms to          106 to 300
  maturity                           months
Weighted average remaining  term     264 months
  to maturity
Range of combined loan-to-value      7.81% to
  ratios                             125.00%
Weighted average combined            114.73%
  loan-to-value ratio
- ------------------------------------ --------------

See "Description of the Home Equity Loans" in this prospectus supplement.

The Certificates
The trust will also issue Loan-Backed Certificates, Series 1999-HLTV1, which
will not be offered by this prospectus supplement. The certificates will be
issued pursuant to the trust agreement and will represent the beneficial
ownership interests in the trust.

Pre-Funding Account
On the closing date, an amount equal to the excess of the aggregate initial
principal

                                     S-6
<PAGE>

balance of the notes over the aggregate principal balance of the initial home
equity loans will be deposited from the proceeds of the sale of the notes into
a pre-funding account. The seller will be obligated to sell home equity loans
to the trust after the closing date and the trust will be obligated, subject
to the consent of the credit enhancer, to purchase such subsequent home equity
loans from funds on deposit in the pre-funding account during the pre-funding
period. The pre-funding period will begin on the closing date and will end on
the earliest of (i) the date on which the amount on deposit in the pre-funding
account is less than $100,000, (ii) December 23, 1999, and (iii) the
occurrence, if any, of a servicer default under the servicing agreement. The
subsequent home equity loans, as well as the initial home equity loans, will
conform to certain specified characteristics. Amounts on deposit in the
pre-funding account will be invested in permitted investments specified in the
indenture. Any amount remaining in the pre-funding account at the end of the
pre-funding period described above will be used to prepay the notes.

Capitalized Interest Account
On the closing date, the seller, if required by the credit enhancer, will make
a cash deposit from the proceeds of the sale of the notes into a capitalized
interest account held by the indenture trustee, unless a letter of credit
evidencing the availability of such amount is delivered to the owner trustee
on the closing date. Any letter of credit must be in form and substance, and
issued by a provider, acceptable to the credit enhancer. Amounts on deposit in
the capitalized interest account will be withdrawn, or drawings under such
letter of credit will be made, on each payment date during the pre-funding
period to fund portions of the interest payments on the notes to the extent
set forth in the indenture and the servicing agreement.

Payments on the Notes

Payments of principal and interest on the home equity loans and other
unscheduled collections will be collected each month. After retaining its
servicing fee and amounts that reimburse the servicer for reimbursable
expenses, the servicer will forward all collections on the home equity loans
to the indenture trustee.

The aggregate amount of such monthly collections is described under the
heading "Description of the Servicing Agreement - Principal and Interest
Collections" in this prospectus supplement.

On each payment date, principal and interest collections will be allocated,
together with any insured payment from the credit enhancer, any payment under
the yield supplement agreement and any withdrawal from the reserve account, as
follows:


- -------------------------------------------------
                     Step 1
To pay accrued and unpaid interest due on the
notes;
- -------------------------------------------------
                        |
- -------------------------------------------------
                     Step 2
To pay principal on the notes, pro rata, in an
amount equal to the principal collection
distribution amount for such payment date;
- -------------------------------------------------
                        |
- -------------------------------------------------
                     Step 3
To pay principal on the notes, pro rata, in an
amount equal to the liquidation loss amounts for
such payment date, together with any such
liquidation loss amounts remaining undistributed
from any preceding payment date;
- -------------------------------------------------
                        |
- -------------------------------------------------
                     Step 4
To pay the credit enhancer the accrued and unpaid
premium for the policy, and the amount, if any,
of the monthly fee for the limited reimbursement
agreement;
- -------------------------------------------------
                        |

                                     S-7
<PAGE>

- -------------------------------------------------
                     Step 5
To reimburse the credit enhancer for any prior
draws on the policy, with interest;
- -------------------------------------------------
                        |
- -------------------------------------------------
                     Step 6
To the extent of remaining available funds, to
pay as additional principal on the notes, pro rata,
any amount necessary to increase the amount of
overcollateralization to the required
overcollateralization level;
- -------------------------------------------------
                        |
- -------------------------------------------------
                     Step 7
To pay the credit enhancer any other amounts
owed to it pursuant to the insurance agreement,
with interest;
- -------------------------------------------------
                        |
- -------------------------------------------------
                     Step 8
To deposit funds into the reserve account from
the payments, if any, on the yield supplement
agreement up to the required level;
- -------------------------------------------------
                        |
- -------------------------------------------------
                     Step 9
To pay the indenture trustee any unpaid
expenses and other reimbursable amounts owed to
the indenture trustee; and
- -------------------------------------------------
                        |
- -------------------------------------------------
                    Step 10
To pay any remaining amount to the holder of
the certificates.
- -------------------------------------------------

Credit Enhancement

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

Excess Interest. Because the mortgagors are expected to pay more interest on
the home equity loans than is necessary to pay the interest on the notes each
month (including any interest rate cap payments), there may be excess
interest. Some of this excess interest may be used to protect the notes
against some losses by making an additional payment of principal up to the
amount of the losses.

Overcollateralization. Excess interest that is not needed to cover losses will
be used to make additional principal payments on the notes, until the
aggregate principal balance of the home equity loans exceeds the aggregate
principal amount of the notes by a specified amount. This excess will
represent overcollateralization, which may absorb some losses on the home
equity loans, if they are not covered by excess interest. If the level of
overcollateralization falls below what is required, the excess interest
described above will be paid to the notes as principal, until the required
level of overcollateralization is reached.

Policy. On the closing date, the credit enhancer will issue the financial
guarantee insurance policy in favor of the indenture trustee for the benefit
of the noteholders. The policy will unconditionally and irrevocably guarantee
interest on the notes at the note rate, will cover all losses allocated to the
notes not covered by excess interest or overcollateralization and will
guarantee amounts due on the notes on the payment date in November 2025. Some
payments that are covered by the policy may be paid directly to the indenture
trustee from a limited reimbursement agreement in favor of the credit
enhancer, instead of by a draw under the policy. The policy is not cancelable
for any reason.

See "Description of the Policy" herein and "Enhancement" in the prospectus.

Reserve Account. On each payment date, to the extent of funds
on deposit in the reserve account, an amount will be withdrawn from the
reserve account and deposited into the note payment account to protect the
notes against some losses, interest shortfalls or both. To the extent the
amount on deposit in the reserve account

                                     S-8
<PAGE>

exceeds the required level, the excess will be withdrawn and released to the
holder of the certificates.

Yield Supplement Agreement

The yield supplement agreement is an agreement between the yield supplement
counterparty and the trustee for the benefit of the holders of the Class A-1
Notes. Under the yield supplement agreement, on or before each payment date
the yield supplement counterparty is required to pay to the trust an amount
equal to any increase in LIBOR above a LIBOR rate specified in the yield
supplement agreement multiplied by the product of the principal balance of the
Class A-1 Notes and the number of days in the related Interest Accrual Period
divided by 360.

See "The Yield Supplement Agreement" in this prospectus supplement for
additional information about the yield supplement counterparty.

Optional Redemption

On any payment date on which the principal balance of the home equity loans is
less than 10% of the sum of (x) the aggregate principal balance of the home
equity loans as of the cut-off date and (y) the amount on deposit in the
pre-funding account on the closing date, the servicer will have the option to
repurchase all but not less than all of the home equity loans. No such
optional repurchase will be permitted without the prior written consent of the
credit enhancer if it would result in a draw on the policy.

An exercise of the optional redemption will cause the notes to be paid in full
with accrued interest sooner than the notes otherwise would have been paid.

See "Description of the Securities , Maturity and Optional Redemption" in this
prospectus supplement and "The Agreements , Termination" in the prospectus.

Ratings

When issued, the notes will receive the ratings shown on page S-5 of this
prospectus supplement. A security rating is not a recommendation to buy, sell
or hold a security and is subject to change or withdrawal at any time by the
assigning rating agency. The ratings also do not address the rate of principal
prepayments on the home equity loans. The rate of prepayments, if different
than originally anticipated, could adversely affect the yield realized by
holders of the notes.

See "Ratings" in this prospectus supplement.

Legal Investment

The 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 notes constitute
legal investments for you.

See "Legal Investment" in this prospectus supplement for important information
concerning possible restrictions on ownership of the notes by regulated
institutions.

ERISA Considerations

Subject to important considerations, the depositor expects that the notes may
be purchased by persons investing assets of employee benefit plans or
individual retirement accounts. Plans should consult with their legal advisors
before investing in the notes.

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

Tax Status

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

See "Certain Federal Income Tax Considerations" in this prospectus supplement
and in the accompanying prospectus.

                                     S-9
<PAGE>

                                Risk Factors

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

         The 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 notes:

Special Yield and Prepayment Considerations

The yield to maturity on your notes will vary depending on the rate of
prepayments.

         The yield to maturity of your notes will depend on a variety of
         factors, including:

         o        the rate and timing of principal payments on the home equity
                  loans, including prepayments, defaults and liquidations, and
                  repurchases due to breaches of representations or warranties;
         o        the note rate on your note; and
         o        the purchase price you paid for your note.

         The rates of prepayment and default are two of the most important and
         least 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 a 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 anticipated.

The rate of prepayments on the home equity loans will vary depending on future
market conditions, and other factors.

         Since mortgagors can generally prepay their home equity loans at any
         time, the rate and timing of principal payments on the notes are highly
         uncertain. Generally, when market interest rates increase, mortgagors
         are less likely to prepay their home equity loans. This could result in
         a slower return of principal to you at a time when you might have been
         able to reinvest those funds at a higher rate of interest than the note
         rate. On the other hand, when market interest rates decrease, borrowers
         are generally more likely to prepay their home equity loans. This could
         result in a faster return of principal to you at a time when you might
         not be able to reinvest those funds at an interest rate as high as the
         note rate.

         Refinancing programs, which may involve soliciting all or some of the
         mortgagors to refinance their home equity loans, may increase the rate
         of prepayments on the home equity loans.

         69.62% of the home equity loans provide for payment of a prepayment
         charge during a specified period. Prepayment charges may reduce the
         rate of prepayment on the home equity loans until the end of the
         prepayment charge period. See "Description of the Home Equity Loans" in
         this prospectus supplement.

                                     S-10
<PAGE>

Risks Associated With The Home Equity Loans

The return on your notes may be reduced by losses on the home equity loans,
which are more likely because they are junior liens.

         Approximately 99.84% of the initial home equity loans are secured by
         liens that are junior (i.e., second or subsequent) in priority to a
         senior lien on the related mortgaged properties. Proceeds from
         liquidation of the mortgaged properties will be available to satisfy
         the home equity loans only if the claims of any senior mortgages have
         been satisfied in full. When it is uneconomical to foreclose on a
         mortgaged property or engage in other loss mitigation procedures, the
         servicer may write off the entire outstanding balance of the home
         equity loan as a bad debt. These are risks particularly applicable to
         home equity loans secured by second liens that have high combined
         loan-to-value ratios or have small balances relative to the total
         indebtedness of the borrower because it is more likely that the
         servicer would determine foreclosure to be uneconomical than for first
         lien home equity loans with low loan-to-value ratios. As of the cut-off
         date, the weighted average combined loan-to-value ratio of the home
         equity loans is 114.73%, and approximately 90.61% of the home equity
         loans will have combined loan-to-value ratios in excess of 100%.

There may be variations in the subsequent home equity loans from the initial
home equity loans.

         Each subsequent home equity loan will satisfy the eligibility criteria
         referred to in this prospectus supplement at the time the seller
         transfers it to the issuer. However, the seller may originate or
         acquire subsequent home equity loans using credit criteria different
         from those it applied to the initial home equity loans. These
         subsequent home equity loans may therefore be of a different credit
         quality than the initial home equity loans. Thus, after the transfer of
         subsequent home equity loans to the issuer, the aggregate
         characteristics of the home equity loans then part of the trust estate
         may vary from those of the initial home equity loans. See "Description
         of the Home Equity Loans--Conveyance of Subsequent Home Equity Loans"
         and "-The Pre-Funding Account".

The return on your notes may be reduced in an economic downturn.

         Home equity loans similar to those included in the home equity loan
         pool have been originated only for a limited period of time. During
         this 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 mortgagors to repay their loans. No prediction can be made as to the
         effect of an economic downturn on the rate of delinquencies and losses
         on the home equity loans.

Origination disclosure practices for the home equity loans could create
liabilities that may affect your notes.

         Approximately 52.37% of the home equity loans included in the home
         equity loan pool are subject to special rules, disclosure requirements
         and other regulatory provisions because they are high cost loans.
         Purchasers or assignees of these high cost loans, including the trust,
         could be exposed to all claims and defenses that the mortgagors could
         assert against the originators of the home equity loans. Remedies
         available to a mortgagor include monetary penalties, as well as
         rescission rights if the appropriate disclosures were not given as
         required. See "Certain Legal Aspects of the Loans" in the prospectus.

                                      S-11
<PAGE>

The underwriting standards for the home equity loans are more sensitive to risks
relating to borrower credit-worthiness and less sensitive to risks relating to
collateral value compared to first lien loans.

         The underwriting standards under which were underwritten the home
         equity loans are analogous to credit lending, rather than mortgage
         lending, since underwriting decisions were based primarily on the
         borrower's credit history and capacity to repay rather than on the
         appraised value of the collateral. The underwriting standards allow
         loans to be approved with combined loan-to-value ratios of up to 125%.
         See "Description of the Home Equity Loans -- Underwriting Standards" in
         this prospectus supplement. Because of the relatively high combined
         loan-to-value ratios of the home equity loans and the fact that the
         home equity loans are secured by junior liens, losses on the home
         equity loans will likely be higher than on first lien home equity
         loans.

The return on your notes may be particularly sensitive to changes in real estate
markets in specific regions.

         The concentration of the related mortgaged properties in one or more
         geographic regions may increase the risk of loss on the notes.
         Approximately 37.06% of the cut-off date principal balance of the home
         equity 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 home equity
         loans, the home equity loans related to properties in that region may
         experience increased rates of delinquency, which may result in losses
         on the home equity 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.

Debt incurred by the borrowers in addition to the home equity loans could
increase your risk.

         With respect to home equity loans which were used for debt
         consolidation, there can be no assurance that the borrower will not
         incur further debt in addition to the home equity loan. This additional
         debt could impair the ability of borrowers to repay their debts, which
         in turn could result in higher rates of delinquency and loss on the
         home equity loans.

Servicing Practices

Loss mitigation practices or the release of a lien may increase your risk.

         The servicer may use a wide variety of practices to limit losses on
         defaulted home equity loans, including writing off part of the debt,
         reducing future payments, and deferring the collection of past due
         payments. The servicing agreement also permits the servicer to release
         the lien on a limited number of mortgaged properties. See "Description
         of the Servicing Agreement" in this prospectus supplement.

The seller has only limited historical delinquency, loss and prepayment
information.

         The seller originated and purchased high combined loan-to-value ratio
         loans through its ditech.com division. The assets of DiTech Funding
         Corporation were acquired by the seller in March 1999. Those assets are
         utilized by the seller in its ditech.com division. DiTech Funding
         Corporation began its program of originations, purchases and sales of
         high combined loan-to-value ratio loans in September 1996. Accordingly,
         the seller has only limited historical delinquency and loan loss
         information, and no delinquency and loan loss experience for such loans
         has been

                                      S-12
<PAGE>

         included in this prospectus supplement. See "The Seller and
         Servicer-Delinquency Experience" in this prospectus supplement.

Year 2000 Systems Risk

         As is the case with most companies using computers in their operations,
         the servicer is faced with the task of completing its compliance goals
         in connection with the year 2000 issue. The year 2000 issue is the
         result of computer programs being written using two digits, rather than
         four digits, to define the applicable year. Any of the servicer's
         computer programs that have time-sensitive software may recognize a
         date using "00" as the year 1900 rather than the year 2000. Any such
         occurrence could result in major computer system failure or
         miscalculations. The servicer is presently engaged in various
         procedures with the goal of attaining year 2000 compliance for its
         computer systems and software. However, in the event that the servicer,
         or any of its suppliers, customers, brokers or agents do not
         successfully and timely achieve year 2000 compliance, the performance
         of obligations of the servicer under the servicing agreement could be
         materially adversely affected.

Limited Obligations

Payments on the home equity loans, together with the policy, the yield
supplement agreement and funds in the pre-funding account and the capitalized
interest account, are the sole source of payments on your notes.

         Credit enhancement for the notes includes excess interest,
         overcollateralization, the yield supplement agreement and the financial
         guarantee insurance policy. None of the seller, the depositor, the
         servicer, the indenture trustee, the owner trustee or any of their
         affiliates will have any obligation to replace this credit enhancement,
         or to take any other action to maintain any rating of the notes. If any
         losses are incurred on the home equity loans that are not covered by
         this credit enhancement, the holders of the notes will bear the risk of
         these losses. In addition, in the event that the cost of entering into
         a new yield supplement agreement is in excess of the termination value
         received by the trust upon the termination of the yield supplement
         agreement, none of the seller, the servicer, the depositor, the
         indenture trustee, the owner trustee nor any other person will be
         obligated to pay the amount of the shortfall.

Liquidity Risks

You may have to hold your notes to maturity if their marketability is limited.

         A secondary market for your notes may not develop. Even if a secondary
         market does develop, it may not continue, or it 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. Illiquidity can have an adverse effect on the market
         value of your notes.

                                      S-13
<PAGE>

                                 Introduction

         The trust will be formed under a trust agreement, to be dated as of
the closing date, between the depositor and the owner trustee. The issuer will
issue $175,000,000 aggregate principal amount of Loan-Backed Term Notes,
Series 1999-HLTV1. These notes will be issued under an indenture, to be dated
as of September 1, 1999, between the issuer and the indenture trustee. Under
the trust agreement, the issuer will issue one class of Loan-Backed
Certificates, Series 1999-HLTV1. The notes and the certificates are
collectively referred to in this prospectus supplement as the securities. Only
the notes are offered by this prospectus supplement. On the closing date, the
depositor will transfer to the issuer a pool of home equity loans secured by
one-to four-family residential properties.

         You can find definitions for capitalized terms used in this
prospectus supplement under the caption "Glossary of Terms" on page S-34 in
this prospectus supplement or under the caption "Index of Terms" beginning on
page 88 in the prospectus.

                     Description of the Home Equity Loans

General

         The statistical information presented in this prospectus supplement
relates to the pool of home equity loans, referred to as the initial home
equity loans, as of the close of business on the cut-off date. Unless
otherwise indicated, all percentages set forth in this prospectus supplement
are approximate percentages and are based upon the outstanding principal
balances of the initial home equity loans as of the cut-off date. Home equity
loans sold to the issuer after the closing date are referred to as the
subsequent home equity loans and will be selected using generally the same
criteria as that used to select the initial home equity loans, and generally
the same representations and warranties will be made with respect thereto. See
"Description of the Home Equity Loans--Conveyance of Subsequent Home Equity
Loans" and "-The Pre-Funding Account" herein.

Initial Home Equity Loans

         The pool of initial home equity loans will be conveyed to the trust
on the closing date. On or prior to December 23, 1999, the issuer may purchase
subsequent home equity loans having an unpaid principal balance up to the
initial amount deposited into the pre-funding account. All of the home equity
loans will be closed-end, fixed-rate loans which are not insured or guaranteed
by any governmental agency and the related proceeds of which were used to:

         o        finance property improvements,

         o        finance the acquisition of personal property such as home
                  appliances or furnishings,

         o        finance debt consolidation,

         o        finance the partial refinancing of residential properties,

         o        provide cash to the borrower for unspecified purposes, or

         o        a combination of the foregoing.

         The home equity loans will be secured by mortgages, deeds of trust
and security deeds on residences (i.e., one- to four-family residences,
condominium units and townhouses, excluding investment properties) that are
primarily junior (i.e., second) in priority to a senior lien on the related
mortgaged properties.

         Although a small number of loans are acquired from correspondent
lenders, the seller currently originates a substantial number of the loans in
its portfolio directly with the related borrowers through its

                                      S-14
<PAGE>

extensive telemarketing and advertising solicitations. A substantial majority of
the home equity loans were originated directly with the related borrower by the
seller. All of the home equity loans will have been underwritten or reviewed to
determine whether such home equity loans comply with the underwriting standards
of the seller. For a description of the underwriting criteria applicable to the
home equity loans, see "Description of the Home Equity Loans-Underwriting
Standards" in this prospectus supplement.

         As of the cut-off date, approximately 90.61% of the home equity loans
will be secured by liens on mortgaged properties in which the borrowers have
no or negative equity therein (i.e., the related combined loan-to-value ratios
exceed 100%) at the time of origination of such home equity loans.

         All of the home equity loans will be sold by the seller to the
depositor, which will then transfer the home equity loans to the trust
pursuant to the home equity loan purchase agreement. The trust will be
entitled to all payments of principal and interest in respect of the home
equity loans received after the cut-off date (except for certain accrued
interest retained by the seller).

         As to any date, the pool balance will be equal to the aggregate of
the principal balances of all home equity loans owned by the trust as of that
date. The principal balance of a home equity loan, other than a liquidated
home equity loan, on any day is equal to its principal balance as of the
cut-off date, minus all collections credited against the principal balance of
the home equity loan in accordance with the related mortgage note prior to
that day. The principal balance of a liquidated home equity loan after final
recovery of substantially all of the related liquidation proceeds which the
servicer reasonably expects to receive will be zero.

Payments on the Home Equity Loans

         Interest on each home equity loan is payable monthly on the
outstanding principal balance thereof at a fixed rate per annum. The home
equity loans will be serviced under an "actuarial interest" method in which
interest is charged to the related borrowers, and payments are due from such
borrowers as of a scheduled day each month which is fixed at the time of
origination with payments received after a grace period following such
scheduled day subject to a late charge. Each regular scheduled payment made by
the borrower is, therefore, treated as containing a predetermined amount of
interest and principal. Scheduled monthly payments made by the borrowers on
the home equity loans either earlier or later than the scheduled due dates
thereof will not affect the amortization schedule or the relative application
of such payments to principal and interest. Interest accrued on each home
equity loan will be calculated on the basis of a 360-day year consisting of
twelve 30-day months.

Characteristics of the Initial Home Equity Loans

         The statistical information set forth below does not take into
account any of the subsequent home equity loans that may be sold to the trust
during the pre-funding period through the application of amounts on deposit in
the pre-funding account. Prior to the closing date, the seller may remove any
of the initial home equity loans or may substitute comparable loans for any of
the initial home equity loans. As a result, the statistical information
presented below regarding the characteristics of the initial home equity loans
expected to be included in the pool of initial home equity loans may vary in
certain respects from comparable information based on the actual composition
of the initial home equity loans transferred to the trust on the closing date.
In addition, after the cut-off date, the characteristics of the actual home
equity loans included in the trust may materially vary from the information
below due to a number of factors, including prepayments after the cut-off
date, the purchase of any subsequent home equity loans after the closing date
or the substitution or repurchase of home equity loans after the closing date.
See "--Conveyance of Subsequent Home Equity Loans" below.

                                      S-15
<PAGE>

Initial Home Equity Loan Statistics

         The initial home equity loans have the following characteristics as
of the cut-off date:

         o        The initial home equity loans consisted of 2,244 home equity
                  loans with an aggregate principal balance totaling
                  $125,371,699.57.

         o        The initial home equity loans bear interest at fixed rates
                  which range from 8.25% per annum to 18.99% per annum and have
                  a weighted average loan rate of approximately 13.50% per
                  annum.

         o        The principal balances of the initial home equity loans range
                  from $14,358.20 to $150,000 and average $55,869.74.

         o        The weighted average remaining term to stated maturity of the
                  initial home equity loans was approximately 264 months and the
                  weighted average number of months that have elapsed since
                  origination was 7.97 months.

         o        The weighted average combined loan-to-value ratio of the
                  initial home equity loans was approximately 114.73%, with the
                  highest combined loan-to-value ratio being 125.00%.

         o        Approximately 90.61% of the initial home equity loans had a
                  combined loan-to-value ratio in excess of 100%.

         o        All of the initial home equity loans are fully amortizing
                  loans having original stated maturities of not more than 30
                  years.

         o        No initial home equity loan is scheduled to mature later than
                  October 1, 2024.

         o        All of the initial home equity loans were home equity loans
                  secured by mortgaged properties located in 49 states and the
                  District of Columbia.

         o        All of the initial home equity loans were secured by mortgaged
                  properties represented by the related borrowers to be
                  owner-occupied.

         o        Approximately 0.16% of the initial home equity loans were
                  secured by first liens on the related mortgaged property and
                  approximately 99.84% of the initial home equity loans were
                  secured by second or subsequent liens on the related mortgaged
                  property.

         o        The documentation type for all of the initial home equity
                  loans was full documentation.

         o        None of the initial home equity loans were 31 days or more
                  past due.

Additional Home Equity Loan Characteristics

         Set forth below is a description of some additional characteristics
of the home equity loans, which are given as of the cut-off date unless
otherwise indicated. All percentages of the home equity loans are approximate
percentages unless otherwise indicated by the cut-off date balance. The sum of
the dollar amounts and percentages in the following tables may not equal the
totals due to rounding.

                                      S-16
<PAGE>

                                  PROPERTY TYPE

<TABLE>
<CAPTION>
                                                                    Aggregate                   Percentage of
                                                                      Unpaid                       Cut-off
                                              Number of             Principal                   Date Aggregate
Property Types                                  Loans                Balance                  Principal Balance
- --------------------------------------------  ---------     --------------------------    --------------------------
<S>                                           <C>                <C>                          <C>
Single Family Residence..................        2,122            $119,661,631.02                     95.45%
Condominium..............................          122               5,710,068.55                      4.55
                                                 -----            ---------------                   --------
                  Total..................        2,244            $125,371,699.57                    100.00%
                                                 =====            ===============                   ========

                               PRINCIPAL BALANCES

<CAPTION>
                                                                    Aggregate                   Percentage of
                                                                      Unpaid                       Cut-off
                                               Number of            Principal                   Date Aggregate
Principal Balance ($)                            Loans               Balance                  Principal Balance
- --------------------------------------------  ---------     --------------------------    --------------------------
<S>                                           <C>                <C>                          <C>
         0.01 to  25,000.00................       270             $  5,588,778.45                      4.46%
    25,000.01 to  50,000.00................       890               33,385,523.13                     26.63
    50,000.01 to  75,000.00................       550               34,455,807.32                     27.48
    75,000.01 to  100,000.00...............       363               30,875,767.58                     24.63
   100,000.01 to  125,000.00...............       124               14,337,971.46                     11.44
   125,000.01 to  150,000.00...............        47                6,727,851.63                      5.37
                                                -----             ---------------                    -------
                  Total....................     2,244             $125,371,699.57                    100.00%
                                                =====             ===============                    =======

<CAPTION>
                                ORIGINAL BALANCES

                                                                    Aggregate                   Percentage of
                                                                      Unpaid                       Cut-off
                                              Number of             Principal                   Date Aggregate
Original Balance  ($)                           Loans                Balance                  Principal Balance
- --------------------------------------------  ---------     --------------------------    --------------------------
<S>                                           <C>            <C>                             <C>
           0.01 to 25,000.00..............        264             $  5,440,047.60                      4.34%
      25,000.01 to 50,000.00..............        888               33,137,800.35                     26.43
      50,000.01 to 75,000.00..............        554               34,553,382.85                     27.56
      75,000.01 to 100,000.00.............        365               30,977,281.58                     24.71
     100,000.01 to 125,000.00.............        124               14,287,785.87                     11.40
     125,000.01 to 150,000.00.............         49                6,975,401.32                      5.56
                                                -----             ---------------                    -------
                   Total..................      2,244             $125,371,699.57                    100.00%
                                                =====             ===============                    =======
</TABLE>

                                      S-17
<PAGE>

                          COMBINED LOAN-TO-VALUE RATIOS

<TABLE>
<CAPTION>
                                                                       Aggregate                  Percentage of
                                                                        Unpaid                       Cut-off
Combined Loan-To-Value                         Number of               Principal                  Date Aggregate
Ratio (%)                                        Loans                  Balance                 Principal Balance
- ------------------------------------------    ----------        -------------------            -------------------
<S>                                           <C>               <C>                            <C>
      5.01 to 10.00...................              1            $        14,946.35                    0.01%
     10.01 to 15.00...................              1                     22,316.23                    0.02
     25.01 to 30.00...................              1                     41,751.07                    0.03
     40.01 to 45.00...................              2                     80,120.43                    0.06
     55.01 to 60.00...................              1                     21,913.80                    0.02
     60.01 to 65.00...................              2                     76,771.02                    0.06
     65.01 to 70.00...................              4                    142,036.48                    0.11
     70.01 to 75.00...................              5                    168,511.29                    0.13
     75.01 to 80.00...................             10                    384,339.20                    0.31
     80.01 to 85.00...................             12                    523,952.30                    0.42
     85.01 to 90.00...................             42                  2,065,832.02                    1.65
     90.01 to 95.00...................             62                  2,947,367.01                    2.35
     95.01 to 100.00..................            110                  5,281,456.38                    4.21
    100.01 to 105.00..................            162                  6,912,846.49                    5.51
    105.01 to 110.00..................            252                 12,177,180.72                    9.71
    110.01 to 115.00..................            367                 19,949,844.69                   15.91
    115.01 to 120.00..................            439                 25,989,549.74                   20.73
    120.01 to 125.00..................            771                 48,570,964.35                   38.74
                                                -----               ---------------                  -------
                    Total.............          2,244               $125,371,699.57                  100.00%
                                                =====               ===============                  =======
</TABLE>

        The minimum and maximum combined loan-to-value ratios of the initial
home equity loans as of the cut-off date are 7.81% and 125.00%, respectively,
and the weighted average is approximately 114.73%.

                           GEOGRAPHICAL DISTRIBUTIONS

<TABLE>
<CAPTION>
                                                                       Aggregate                  Percentage of
                                                                        Unpaid                      Cut-off
                                               Number of               Principal                  Date Aggregate
Location                                         Loans                  Balance                 Principal Balance
- ------------------------------------------    ----------        -------------------            -------------------
<S>                                           <C>               <C>                            <C>
California..........................              763              $ 46,467,074.52                    37.06%
Florida.............................              127                 7,455,742.04                     5.95
Arizona.............................              104                 5,826,978.48                     4.65
New York............................               99                 5,274,868.45                     4.21
Pennsylvania........................               87                 4,773,763.32                     3.81
Virginia............................               64                 3,187,847.17                     2.54
Indiana.............................               45                 2,961,693.88                     2.36
Georgia.............................               55                 2,831,149.99                     2.26
Illinois............................               52                 2,631,752.67                     2.10
Other...............................              848                43,960,829.05                    35.06
                                                -----              ---------------                   -------

                  Total.............            2,244              $125,371,699.57                   100.00%
                                                =====              ===============                   =======
</TABLE>

       The reference to "Other" in the preceding table includes states and the
District of Columbia that contain mortgaged properties for less than 2% of the
home equity loan pool.

                                      S-18
<PAGE>

                              JUNIOR RATIOS(1)(2)


<TABLE>
<CAPTION>
                                                                       Aggregate                  Percentage of
                                                                         Unpaid                      Cut-off
                                                                       Principal                  Date Aggregate
Junior Lien Ratio (%)                       Number of Loans             Balance                 Principal Balance
- ------------------------------------------    ----------        -------------------            -------------------
<S>                                           <C>               <C>                            <C>
          0 to 5.0000.................             10               $     542,122.17                   0.43%
     5.0001 to 10.0000................             17                     370,846.27                   0.30
    10.0001 to 15.0000................            108                   2,756,417.92                   2.20
    15.0001 to 20.0000................            235                   7,800,582.76                   6.22
    20.0001 to 25.0000................            358                  14,916,953.80                  11.90
    25.0001 to 30.0000................            346                  17,032,097.53                  13.59
    30.0001 to 35.0000................            296                  17,391,927.45                  13.87
    35.0001 to 40.0000................            278                  18,666,561.26                  14.89
    40.0001 to 45.0000................            210                  15,064,196.12                  12.02
    45.0001 to 50.0000................            160                  11,850,080.88                   9.45
    50.0001 to 55.0000................             91                   7,577,774.71                   6.04
    55.0001 to 60.0000................             65                   5,215,090.59                   4.16
    60.0001 to 65.0000................             33                   3,023,049.97                   2.41
    65.0001 to 70.0000................             20                   1,911,365.61                   1.52
    70.0001 to 75.0000................              9                     647,073.66                   0.52
    75.0001 to 80.0000................              3                     270,946.28                   0.22
    80.0001 to 85.0000................              3                     178,122.66                   0.14
    85.0001 to 90.0000................              1                      58,702.74                   0.05
    90.0001 to 95.0000................              1                      97,787.19                   0.08
                                                -----                ---------------                 -------
               Total..................          2,244                $125,371,699.57                 100.00%
                                                =====                ===============                 =======
</TABLE>

       The junior ratio of a home equity loan is the ratio (expressed as a
percentage) of the original principal balance of such home equity loan to the
sum of such original principal balance and the outstanding balance of any
senior mortgage computed as of the date such home equity loan is underwritten.

       The weighted average junior ratio of the initial home equity loans as
of the cut-off date is approximately 36.40%.

                                      S-19
<PAGE>

                                   LOAN RATES

<TABLE>
<CAPTION>
                                                                           Aggregate                 Percentage of
                                                                            Unpaid                      Cut-off
                                                Number of                Principal                  Date Aggregate
Loan Rates (%)                                    Loans                    Balance                 Principal Balance
- ------------------------------------------    ----------           -------------------            -------------------
<S>                                           <C>                  <C>                            <C>
    8.0001 to  8.5000 .................               4               $      157,646.28                   0.13%
    8.5001 to  9.0000 .................               3                      117,690.56                   0.09
    9.0001 to  9.5000 .................              13                      633,140.05                   0.51
    9.5001 to  10.0000 ................              37                    1,528,801.03                   1.22
   10.0001 to  10.5000 ................              18                      855,227.64                   0.68
   10.5001 to  11.0000 ................              72                    4,130,751.98                   3.29
   11.0001 to  11.5000 ................              64                    3,613,233.15                   2.88
   11.5001 to  12.0000 ................             121                    6,751,683.66                   5.39
   12.0001 to  12.5000 ................             214                   12,284,311.20                   9.80
   12.5001 to  13.0000 ................             306                   18,005,241.99                  14.36
   13.0001 to  13.5000 ................             299                   17,581,139.66                  14.02
   13.5001 to  14.0000 ................             399                   23,949,905.18                  19.10
   14.0001 to  14.5000 ................             145                    8,149,849.22                   6.50
   14.5001 to  15.0000 ................             250                   13,176,293.07                  10.51
   15.0001 to  15.5000 ................             138                    6,577,585.66                   5.25
   15.5001 to  16.0000 ................              52                    2,640,970.99                   2.11
   16.0001 to  16.5000 ................              90                    4,623,410.47                   3.69
   16.5001 to  17.0000 ................               3                      143,488.59                   0.11
   17.0001 to  17.5000 ................               7                      251,934.61                   0.20
   17.5001 to  18.0000 ................               8                      181,158.41                   0.14
   18.5001 or greater                                 1                       18,236.17                   0.01
                                                      -                 ---------------               --------
               Total...................           2,244                 $125,371,699.57                 100.00%
                                                  =====                 ===============                =======
</TABLE>

         The minimum and maximum loan rates of the initial home equity loans
as of the cut-off date are 8.250% and 18.990%, respectively, and the weighted
average is approximately 13.498%.

                     MONTHS REMAINING TO SCHEDULED MATURITY

<TABLE>
<CAPTION>
                                                                         Aggregate                 Percentage of
                                                                           Unpaid                     Cut-off
Range of Remaining Terms to Maturity           Number of                 Principal                 Date Aggregate
(months)                                         Loans                     Balance                Principal Balance
- ------------------------------------------    ----------            -------------------           -------------------
<S>                                           <C>                   <C>                           <C>
    61 to  120.........................             11                 $    426,432.81                    0.34%
   121 to  180.........................            534                   23,564,643.59                   18.80
   181 to  240.........................            147                    9,334,633.19                    7.45
   241 to  300.........................          1,552                   92,045,989.98                   73.42
                                                 -----                 ---------------                  ------
           Total.......................          2,244                 $125,371,699.57                  100.00%
                                                 =====                 ===============                  ======
</TABLE>

         The weighted average months remaining to scheduled maturity as of the
cut-off date is approximately 264 months.

                                      S-20
<PAGE>

                                  LIEN PRIORITY

<TABLE>
<CAPTION>
                                                                          Aggregate                 Percentage of
                                                                           Unpaid                     Cut-off
                                              Number of                   Principal                 Date Aggregate
Lien Status                                      Loans                     Balance                Principal Balance
- ------------------------------------------    ----------              -------------------         -------------------
<S>                                           <C>                     <C>                         <C>
First..................................              4                  $    202,569.20                 0.16%
Second.................................          2,240                   125,169,130.37                99.84
                                                 -----                  ---------------               -------
                  Total................          2,244                  $125,371,699.57               100.00%
                                                 =====                  ===============               =======
</TABLE>

                             DEBT-TO-INCOME RATIOS

<TABLE>
<CAPTION>
                                                                          Aggregate                  Percentage of
                                                                           Unpaid                      Cut-off
                                                Number of                 Principal                 Date Aggregate
Debt-to-Income Ratio (%)                          Loans                    Balance                 Principal Balance
- ------------------------------------------    ----------            -------------------           -------------------
<S>                                           <C>                   <C>                           <C>
10.0001     to  15.0000.................             3                  $    171,097.11                   0.14%
15.0001     to  20.0000.................            11                       491,933.54                   0.39
20.0001     to  25.0000.................            38                     1,711,984.87                   1.37
25.0001     to  30.0000.................           137                     6,194,118.98                   4.94
30.0001     to  35.0000.................           261                    12,906,540.98                  10.29
35.0001     to  40.0000.................           449                    24,361,325.10                  19.43
40.0001     to  45.0000.................           532                    28,535,382.67                  22.76
45.0001     to  50.0000.................           791                    49,793,710.94                  39.72
50.0001     to  55.0000.................            19                     1,077,070.28                   0.86
55.0001     to  60.0000.................             2                        90,400.00                   0.07
60.0001     to  65.0000.................             1                        38,135.10                   0.03
                                                     -                    -------------                --------
                Total...................         2,244                  $125,371,699.57                 100.00%
                                                 =====                  ===============                 ======
</TABLE>

                                      S-21
<PAGE>

Credit Scores

         Credit scores are obtained by many lenders in connection with home
equity loan applications to help assess a borrower's creditworthiness. 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. Credit scores range from approximately 200 to approximately 900,
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 does not correspond to the life of a mortgage loan. Furthermore, credit
scores were not developed specifically for use in connection with home equity
loans, but for consumer loans in general, and assess only the borrower's past
credit history. Therefore, a credit score does not take into consideration the
differences between home equity loans and consumer loans generally or the
specific characteristics of the related home equity loan for example, the
combined loan-to-value ratio, the collateral for the home equity loan, or the
debt to income ratio. 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 home equity loans.

         The following table provides information as to the credit scores of
the related borrowers as used in the origination of the home equity loans.


      CREDIT SCORES AS OF THE DATE OF ORIGINATION OF THE HOME EQUITY LOANS

<TABLE>
<CAPTION>
                                                                          Aggregate                 Percentage of
                                                                           Unpaid                     Cut-off
Range of Credit Scores as of the Date            Number of                Principal                 Date Aggregate
of Origination of the Loans                       Loans                    Balance                Principal Balance
- ------------------------------------------    ----------            -------------------           -------------------
<S>                                           <C>                   <C>                           <C>
540-559...............................               1               $        29,838.76                   0.02%
600-619...............................               1                        33,876.05                   0.03
640-659...............................              89                     3,306,161.36                   2.64
660-679...............................             792                    43,512,507.22                  34.71
680-699...............................             587                    35,043,276.12                  27.95
700-719...............................             346                    20,433,628.34                  16.30
720-739...............................             244                    13,662,860.09                  10.90
740-759...............................             121                     6,209,816.97                   4.95
760-779...............................              49                     2,431,502.62                   1.94
780-799...............................              12                       645,305.51                   0.51
800 or greater........................               2                        62,926.53                   0.05
                                                     -                  ---------------               --------
                  Total...............           2,244                  $125,371,699.57                 100.00%
                                                 =====                  ===============                 ======
</TABLE>

         The information set forth in the preceding sections is based upon
information provided by the seller and tabulated by the depositor. The
depositor makes no representation as to the accuracy or completeness of such
information.

                                      S-22
<PAGE>

Conveyance of Subsequent Home Equity Loans

         The purchase agreement permits the issuer to acquire subsequent home
equity loans from the seller. Accordingly, the statistical characteristics of
the home equity loans upon the acquisition of the subsequent home equity loans
may vary somewhat from the statistical characteristics of the initial home
equity loans as of the cut-off date as presented in this prospectus
supplement.

         Each subsequent home equity loan will have been underwritten
substantially in accordance with the criteria set forth herein under
"Description of the Home Equity Loans--Underwriting Standards." Subsequent
home equity loans will be transferred to the issuer pursuant to agreements
between the seller and the issuer referred to as subsequent transfer
agreements. In connection with the purchase of subsequent home equity loans on
such dates of transfer, referred to as subsequent transfer dates, the issuer
will be required to pay to the seller from amounts on deposit in the
pre-funding account a cash purchase price of 100% of the principal balance
thereof. In each instance in which subsequent home equity loans are
transferred to the trust pursuant to a subsequent transfer agreement, the
issuer will designate a cut-off date, referred to as a subsequent cut-off
date, with respect to the subsequent home equity loans acquired on such date.
The amount paid from the pre-funding account on each subsequent transfer date
will not include accrued interest on the subsequent home equity loans.
Following each subsequent transfer date, the aggregate principal balance of
the home equity loans will increase by an amount equal to the aggregate
principal balance of the subsequent home equity loans so acquired and the
amount in the pre-funding account will decrease accordingly.

         The obligation of the trust to purchase subsequent home equity loans
on a subsequent transfer date is subject to the consent of the credit enhancer
and to the following requirements, which are designed to ensure that,
following such purchase, the characteristics of the home equity loans in the
aggregate will not differ materially from the characteristics of the initial
home equity loans: (i) such home equity loan may not be more than 59 days
delinquent at the date of purchase; (ii) the remaining term to stated maturity
of such home equity loan may not extend beyond February 1, 2025; (iii) such
home equity loan must be secured by a mortgage in a first or second lien
position; (iv) such home equity loan must not have a mortgage interest rate
less than 8.25%; (v) such home equity loan must be otherwise acceptable to the
credit enhancer; (vi) following the purchase of such home equity loan by the
trust, the home equity loans (a) will have a weighted average mortgage
interest rate of at least 13.50%; (b) will have a weighted average combined
loan-to-value ratio of not more than 114.73%; and (c) will have a
concentration in any one state not in excess of 37.06% (based on the entire
pool of home equity loans); (vii) such home equity loan must have a combined
loan-to-value ratio not in excess of 125%; and (viii) such home equity loan
must comply with the representations and warranties in the servicing
agreement.

The Pre-Funding Account

         The indenture trustee will establish an account in its name
designated the "pre-funding account" and will deposit an amount therein,
referred to as the original pre-funded amount, on the closing date from the
net proceeds of the sale of the notes. The original pre-funded amount will be
approximately equal to the excess of the initial principal amount of the notes
over the pool balance of the initial home equity loans on the closing date.
Monies in the pre-funding account will be applied during a period referred to
as the pre-funding period to purchase subsequent home equity loans from the
seller. The pre-funding period will be the period from the closing date until
the earliest of (i) the date on which the amount on deposit in the pre-funding
account is less than $100,000; (ii) December 23, 1999; and (iii) the
occurrence, if any, of a servicer default under the servicing agreement.

                                     S-23
<PAGE>

         The pre-funding account will be part of the trust, but monies on
deposit therein will not be available to cover losses on or in respect of the
home equity loans. Any portion of the original pre-funded amount remaining on
deposit in the pre-funding account at the end of the pre-funding period will
be applied to prepay the notes, pro rata, based on the original note balance
of each class of notes. In the event the amount remaining on deposit in the
pre-funding account is substantial, holders of the notes will receive a
significant unanticipated payment of principal of their notes. Monies on
deposit in the pre-funding account may be invested in permitted investments as
provided in the indenture. There can be no assurance that a sufficient number
of subsequent home equity loans will be available for application of the
entire original pre-funded amount.

Capitalized Interest Account

         On the closing date, the seller, if required by the credit enhancer,
may make a cash deposit from the proceeds of the sale of the notes into a
capitalized interest account established and held by the indenture trustee.
Funds on deposit in the account will be applied to cover shortfalls in
interest on the notes that may arise due to the utilization of the pre-funding
account. In lieu of such deposit and if required by the credit enhancer, a
letter of credit in form and substance, and issued by a provider, acceptable
to the credit enhancer evidencing the availability of such amount may be
delivered to the indenture trustee on the closing date. On each payment date
during the pre-funding period, the indenture trustee will transfer from the
capitalized interest account (or make a drawing under such letter of credit
and transfer) to the note payment account an amount equal to the capitalized
interest requirement, if any, for such payment date. As to each payment date
during the pre-funding period, the capitalized interest requirement will be
the amount equal to the shortfall, if any, of (i) the sum of (a) interest
accrued at the applicable Note Rate or Rates on the amount on deposit in the
pre-funding account as of the preceding payment date (or as of the closing
date, in the case of the first payment date) and (b) the amount of fees paid
on such payment date to the credit enhancer, over (ii) the amount of
reinvestment earnings on funds on deposit in the pre-funding account.

         On the payment date following the end of the pre-funding period, the
indenture trustee will distribute to the seller any amounts remaining in the
capitalized interest account after taking into account withdrawals therefrom
on such payment date. The capitalized interest account will be closed
following such payment.

Underwriting Standards

         Substantially all of the initial home equity loans have been, and the
majority of the subsequent home equity loans will have been, underwritten by
the seller pursuant to its loan origination program referred to in this
prospectus supplement as the "ditech.com Freedom Loan program." All initial
home equity loans that were acquired by the seller were reviewed by the seller
to ensure material conformity with its underwriting guidelines. Generally, the
underwriting standards of the ditech.com Freedom Loan program place a greater
emphasis on the creditworthiness of the borrower than on the underlying
collateral in evaluating the likelihood that a borrower will be able to repay
a loan.

         The ditech.com Freedom Loan program is designed for homeowners who
may have little or no equity in their property, but who possess good to
excellent credit histories and provable income and use the proceeds for home
improvements, debt consolidation and/or other consumer purposes. Under the
ditech.com Freedom Loan program, the seller uses its own credit evaluation
criteria to classify the loans by risk class based in significant part on
credit score and debt-to-income ratio. The credit scores, which are obtained
from the credit reports of three major national credit reporting
organizations, are numerical representations of borrowers' estimated default
probabilities, and generally range from a low of 200 to a high of 900. The
ditech.com Freedom Loan program provides that the credit report reflecting the
median credit score is used by the seller in evaluating each applicant.
Generally, the applicant will have a credit score consistent with the
applicable program guidelines. The principal amount of the loan originated or
purchased by the seller generally does not exceed program guidelines. The
seller generally does not permit the ratio of total monthly debt obligations
to monthly gross income to exceed certain program guidelines. Other than on an
exception basis, the loans originated under the ditech.com Freedom Loan
program will not have a combined loan-to-value ratio in excess of 125%. In
general, the loan is secured by a

                                      S-24
<PAGE>

second lien on the related property. In most instances the property is improved
with an owner-occupied (based on the borrower's statement at origination) one-
to four-family residence.

         The seller offers loans under three primary programs. The first
program is the Cash program, under which the use of loan proceeds are not
restricted. The second program is the Home Improvement (H-125) program, under
which at least 80% of the loan proceeds must be devoted by the borrower to
home improvements. The third program is the Debt Consolidation (D-125)
program, under which at least 80% of the loan proceeds must be devoted to debt
consolidation. Below are brief summaries of each program's guidelines.

                              Cash Program Summary

<TABLE>
<CAPTION>
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
<S>                             <C>                          <C>                          <C>
Credit                          700+                         680-699                      660-679
Score
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Maximum                         $150,000                     $125,000                     $85,000
Loan
Amount:
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Maximum                         50%                          50%                          50%
Debt
Ratio:
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
</TABLE>


                    Home Improvement (H-125) Program Summary

                 ------------------------------------------ --------------
                 Credit Score                               640+
                 ------------------------------------------ --------------
                 ------------------------------------------ --------------
                 Minimum Loan Amount                        $50,000
                 ------------------------------------------ --------------
                 ------------------------------------------ --------------
                 Maximum Debt Ratio                         45%
                 ------------------------------------------ --------------


                   Debt Consolidation (D-125) Program Summary

                 --------------------------------------------- -----------
                 Credit Score                                  640+
                 --------------------------------------------- -----------
                 --------------------------------------------- -----------
                 Minimum Loan Amount                           $50,000
                 --------------------------------------------- -----------
                 --------------------------------------------- -----------
                 Maximum Debt Ratio                            45%
                 --------------------------------------------- -----------

         The following pretax disposable income requirements are applicable on
all programs whenever an applicant's debt ratio exceeds 40.0%.

      ----------------------------------- --------------------------------------
                 Loan Amount                     Minimum Residual Income
      ----------------------------------- --------------------------------------
      ----------------------------------- --------------------------------------
      $ 15,000 - $ 50,000                               $1500/mo
      ----------------------------------- --------------------------------------
      ----------------------------------- --------------------------------------
      $ 50,000 - $ 85,000                               $2000/mo
      ----------------------------------- --------------------------------------
      ----------------------------------- --------------------------------------
      $ 85,000 - $125,000                               $2500/mo
      ----------------------------------- --------------------------------------
      ----------------------------------- --------------------------------------
      $125,001 - $150,000                               $3000/mo
      ----------------------------------- --------------------------------------

         The maximum loan amount for self-employed borrowers is $50,000.

         A credit report reflecting the applicant's complete credit history is
required. The credit report typically contains information reflecting
delinquencies, repossessions, judgments, foreclosures, bankruptcies and
similar instances of adverse credit that can be discovered by a search of
public records. An applicant's recent credit report is used to evaluate the
borrower's payment record and must be current at the time of application.

                                      S-25
<PAGE>

         In addition to credit score and debt-to-income ratio parameters, the
seller also requires that each loan applicant be a generally acceptable credit
risk. Existing mortgage loans are required to be current at the time the
application is submitted. In addition, applicants may not have any mortgages
or rent payments more than 30 days beyond its respective due date during the
12 months preceding the application. For existing non-mortgage credit, minor
derogatory items are acceptable. In some cases, letters of explanation may be
required in explaining derogatory items. Any co-applicant that is being relied
upon for income qualification must have a credit score equal to or greater
than 620. The seller does not recognize income from co-applicants who possess
credit scores less than 620. On a case by case basis, the seller will allow
for deviation from these parameters if satisfactory letters of explanation are
obtained.

         With respect to valuation of prospective mortgaged properties, the
ditech.com Freedom Loan program allows for "stated value" (i.e., independent
verification of property values are not required) on loans of $35,000 and
less. For loans in excess of $35,000 and for which the subject loan is less
than or equal to 50% of the present balance of the senior lien, the value of
the mortgaged property is also based on the borrower's stated value. For loans
in excess of $35,000 for which the subject loans is greater than 50% of the
present balance of the senior lien, the seller requires a full appraisal, a
statistical appraisal based on the value of similar mortgaged properties in
the same geographic area or a drive-by appraisal. Generally, the seller bases
the loan decision on the creditworthiness of the borrower, rather than the
underlying collateral.

         Generally, the seller requires a title report by an approved title
company or legal firm on all property securing loans it originates or
purchases. Title reports indicate the lien position of any related senior
mortgage loans. The underwriting guidelines of the seller do not require
borrowers to obtain title insurance in connection with a home equity loan.

         Under the seller's origination policies, upon the sale of the related
property securing a borrower's loan, the borrower may qualify for a new loan
in an identical amount with respect to the borrower's new property upon the
satisfaction of all criteria applicable to such loan as if it were a new
origination. In the case of home equity loans included in the trust, the
servicer will enforce any related "due-on-sale" clauses and the new loan will
not be transferred to the trust.

                            The Seller and Servicer

General

         GMAC Mortgage Corporation is the seller and servicer for all of the
home equity loans. The seller is an indirect wholly-owned subsidiary of
General Motors Acceptance Corporation and is one of the nation's largest
mortgage bankers. The seller is engaged in the mortgage banking business,
including the origination, purchase, sale and servicing of residential loans.

         A substantial portion of the home equity loans were originated and
purchased by the seller through its ditech.com division. The seller acquired
the assets of DiTech Funding Corporation in March 1999 and utilizes those
assets in its ditech.com division.

         The notes do not represent an interest in or an obligation of the
seller or the servicer. The seller's only obligations with respect to the
notes will be pursuant to certain limited representations and warranties made
by the seller or as otherwise provided herein.

         The seller maintains its executive and principal offices at 100
Witmer Road, Horsham, Pennsylvania 19044. Its telephone number is (215)
682-1000.

                                      S-26
<PAGE>

         The servicer will be responsible for servicing the home equity loans
in accordance with the its program guide and the terms of the servicing
agreement. The custodian will be The Bank of Maryland.

         For information regarding foreclosure procedures, see "Description of
the Servicing Agreement--Collection and Liquidation Practices; Loss
Mitigation" in this prospectus supplement. Servicing and charge-off policies
and collection practices may change over time in accordance with the
servicer's business judgment, changes in the servicer's portfolio of real
estate secured revolving credit line loans that it services for its clients
and applicable laws and regulations, and other considerations.

Delinquency Experience

         The seller originated and purchased high combined loan-to-value ratio
loans through its ditech.com division. The assets of DiTech Funding
Corporation were acquired by the seller in March 1999. Those assets are
utilized by the seller in its ditech.com division. DiTech Funding Corporation
began its program of originations, purchases and sales of high combined
loan-to-value ratio loans in September 1996. Until recently, DiTech would
sell, on a whole loan, servicing released basis, high combined loan-to-value
ratio loans that it originated. Only a limited history of static pool
information is available with respect to DiTech's loans and no history of
static pool information was captured on any of the loans that DiTech sold on a
whole loan basis. As a result, there is no information on delinquency
experience and loan loss and liquidation experience for such loans on which to
provide meaningful disclosure. Accordingly, no delinquency and loan loss
experience has been included in this prospectus supplement. Prospective
investors should make their investment determination based on the home equity
loan underwriting criteria, the availability of the credit enhancement
described in this prospectus supplement, the characteristics of the home
equity loans and other information provided in this prospectus supplement.

                                   The Issuer

         The GMACM Loan Trust 1999-HLTV1 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 home equity 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 Rodney Square North, 1100
North 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 or any director,

                                     S-27
<PAGE>

officer or employee of the owner trustee 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 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 owner
trustee under the trust agreement.

         The commercial bank or trust company serving as owner trustee may
have normal banking relationships with the depositor, the seller and/or their
respective affiliates.

         The owner trustee may resign at any time, in which event the
indenture trustee will be obligated to appoint a successor owner trustee as
set forth in the trust agreement and the indenture. The indenture trustee may
also remove the owner trustee if the owner trustee ceases to be eligible to
continue as such under the trust agreement or if the owner trustee becomes
insolvent. Upon becoming aware of such circumstances, the indenture trustee
will be obligated to appoint a successor owner trustee after consultation with
the servicer. 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

         Norwest Bank Minnesota, National Association will be the indenture
trustee. The principal offices of the indenture trustee are located at Norwest
Center, Sixth and Marquette, Minneapolis, Minnesota 55479-0070, with
administrative offices located at 11000 Broken Land Parkway, Columbia,
Maryland 21044.

         The indenture trustee may have normal banking relationships with the
depositor, the seller and/or their respective affiliates.

         The indenture trustee may resign at any time, in which event the
owner trustee will be obligated to appoint a successor indenture trustee as
set forth in the Indenture. The owner trustee as set forth in the Indenture
may also remove the indenture trustee if the indenture trustee ceases to be
eligible to continue as such under the indenture or if the indenture trustee
becomes insolvent. Upon becoming aware of such circumstances, the owner
trustee will be obligated to appoint a successor indenture trustee after
consultation with the servicer. If so specified in the indenture, the
indenture trustee may also be removed at any time by the credit enhancer or by
the holders of a majority 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.

         The indenture trustee has undertaken a firmwide initiative to address
the year 2000 issue. The indenture trustee does not believe that the year 2000
issue will materially affect its ability to perform its functions with respect
to the issuer or have a material financial impact on the issuer. However,
there can be no assurance of this. Further, there can be no guarantee that the
systems of third parties, on which the indenture trustee's systems rely, will
be timely converted or that a failure to convert by such third parties or a
conversion that is incompatible with the indenture trustee's systems will not
have a material adverse effect on the issuer.

                                      S-28
<PAGE>

                               The Credit Enhancer

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

         Ambac Assurance Corporation 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. Ambac
Assurance Corporation primarily insures newly-issued municipal and structured
finance obligations. Ambac Assurance Corporation is a wholly-owned subsidiary
of Ambac Financial Group, Inc. (formerly, AMBAC, Inc.), a 100% publicly-held
company. Moody's Investors Services Inc., Standard & Poor's, a division of the
McGraw-Hill Companies, Inc., and Fitch IBCA, 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, 1998 and December 31, 1997 and for each of the
years in the three year period ended December 31, 1998, 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
Securities and Exchange Commission (the "Commission") on March 30, 1999;
Commission File No. 1-10777) and the unaudited consolidated financial
statements of the credit enhancer and its subsidiaries as of June 30, 1999 and
for the periods ending June 30, 1999 and June 30, 1998, included in the
Quarterly Report on Form 10-Q of Ambac Financial Group, Inc. for the period
ended June 30, 1999 (which was filed with the Commission on August 13, 1999)
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 its 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 to be
incorporated by reference into this prospectus supplement and to be a part
hereof from the respective dates of filing such financial statements.

         The following table sets forth the capitalization of the credit
enhancer as of December 31, 1996, December 31, 1997, December 31, 1998 and
June 30, 1999 respectively, in conformity with generally accepted accounting
principles.

                                     S-29
<PAGE>

                           Ambac Assurance Corporation
                        CONSOLIDATED CAPITALIZATION TABLE
                              (Dollars in Millions)

<TABLE>
<CAPTION>
                                                                                                             June 30,
                                                     December 31,       December 31,      December 31,          1999
                                                         1996               1997              1998          (Unaudited)
                                                     ------------       ------------      ------------      -----------
<S>                                                  <C>                <C>               <C>               <C>
Unearned premiums..............................           $  995           $1,184            $1,303          $1,349
Other liabilities..............................              259              562               548             413
                                                          ------           ------            ------          ------
                                                          $1,254           $1,746            $1,851          $1,762
                                                          ------           ------            ------          ------
Stockholder's equity(1)
   Common stock................................           $   82            $  82            $   82           $  82
   Additional paid-in capital..................              515              521               541             644
   Accumulated other comprehensive income......               66              118               138              39
   Retained earnings...........................              992            1,180             1,405           1,530
                                                          ------           ------            ------          ------
Total stockholder's equity.....................           $1,655           $1,901            $2,166          $2,295
                                                          ------           ------            ------          ------
Total liabilities and stockholder's equity.....           $2,909           $3,647            $4,017          $4,057
                                                          ======           ======            ======          ======
</TABLE>

(1)      Components of stockholder's equity have been restated for all periods
         presented to reflect "Accumulated other comprehensive income" in
         accordance with the Statement of Financial accounting Standards No.
         130 "Reporting Comprehensive Income" adopted by the credit enhancer
         effective January 1, 1998. As this new standard only requires
         additional information in the financial statements, it does not
         affect the credit enhancer's financial position or results of
         operations.

         For additional financial information concerning the credit enhancer,
see the audited and unaudited financial statements of the credit enhancer
i corporated by reference herein. Copies of the financial statements of the
credit enhancer incorporated by reference and copies of the credit enhancer's
annual statement for the year ended December 31, 1998 prepared in accordance
with statutory accounting standards are available, without charge, from the
credit enhancer. The address of the credit enhancer's administrative offices
and its telephone number are One State Street Plaza, 17th Floor, New York, New
York 10004 and (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 "Description of the Policy" and "The Credit
Enhancer" and in the financial statements incorporated herein by reference.


                        The Yield Supplement Agreement

General

         On the closing date the trustee will enter into the yield supplement
agreement with the yield supplement counterparty for the benefit of the
holders of the Class A-1 Notes. Under the yield supplement agreement, the
yield supplement counterparty will be paid its entire consideration on the
date of issuance of the notes.

         The yield supplement agreement, subject to its terms, will require
the yield supplement counterparty, in the event that LIBOR for a payment date
exceeds a LIBOR rate specified in the yield supplement agreement, to pay the
Yield Supplement Amount to the trustee for deposit into the note payment
account on or prior to such payment date.

                                      S-30
<PAGE>

         The coverage under the yield supplement agreement will become
effective on the date of issuance of the notes and will expire on the earlier
to occur of (i) the date on which the Class A-1 Notes are paid in full and
(ii) the eighth anniversary of the closing date.

         Upon the occurrence of an event of default or certain termination
events under the yield supplement agreement, including a downgrade of the
counterparty ratings assigned to the yield supplement counterparty which would
result in the withdrawal or downgrading of either rating assigned to the Class
A-1 Notes but for the existence of the policy, the trustee, with the consent
of the credit enhancer, will have the right to terminate the yield supplement
agreement, unless the yield supplement counterparty enters into a satisfactory
arrangement to secure the performance of its obligations. Upon such
termination, the yield supplement counterparty will be obligated to pay to the
trust the termination value of the yield supplement agreement, if any, and the
servicer on behalf of the trust, will be obligated, to the extent that the
termination value is sufficient therefor and only to the extent of any
termination payment received, (a) to cause a new yield supplement counterparty
to assume the obligations of the terminated yield supplement counterparty
under such yield supplement agreement or (b) to cause a new yield supplement
counterparty to enter into a new yield supplement agreement with the trust
having substantially similar terms as those set forth in the terminated yield
supplement agreement. In the event that the cost of entering into a new yield
supplement agreement or the cost of having the existing yield supplement
agreement assumed is in excess of the termination value received by the trust
upon termination of the yield supplement agreement, neither the seller, the
servicer, the depositor, the indenture trustee, the owner trustee nor any
other person will be obligated to pay the amount of the shortfall.

         In the event of any termination event under the yield supplement
agreement, no assurance can be given that an acceptable successor yield
supplement agreement could be entered into or that an acceptable successor
yield supplement counterparty could be found to assume the obligations under
the existing yield supplement agreement.

         The credit enhancer will be subrogated to the rights of the trust
under the yield supplement agreement to the extent that the credit enhancer
pays any amount as to which the yield supplement counterparty has failed to
pay a yield supplement amount.

Yield Supplement Counterparty

         Bear Stearns Financial Products Inc. will be the yield supplement
counterparty. BSFP is a bankruptcy remote derivatives product company based in
New York, New York that has been established as a wholly owned subsidiary of
The Bear Stearns Companies Inc. BSFP maintains a ratings classification of
"AAA" from Standard & Poor's and "Aaa" from Moody's. As of June 30, 1999, BSFP
had assets of approximately $441,700,000, liabilities of approximately
$277,300,000 and a stockholder's equity of approximately $164,000,000. BSFP
will provide upon request, without charge, to each person to whom this
Prospectus Supplement is delivered, a copy of (i) the ratings analysis from
each of Standard & Poor's and Moody's evidencing those respective ratings or
(ii) the most recent audited annual financial statements of BSFP. Request for
such information should be directed to Paul Raymond, DPC Manager of Bear
Stearns Financial Products Inc. at (212) 272-4009 or in writing at 245 Park
Avenue, Suite 1700, New York, New York 10167.

         BSFP is an affiliate of the depositor and Bear, Stearns & Co. Inc.,
one of the underwriters.

                          Description of the Securities

General

         The 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 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.

                                      S-31
<PAGE>

         The notes will be secured by the assets of the trust pledged by the
issuer to the indenture trustee under the indenture which will consist of:

         o        the home equity loans (including any subsequent mortgage
                  loans);

         o        all amounts on deposit in the note payment account, the
                  certificate distribution account, the pre-funding account, the
                  custodial account, the capitalized interest account and the
                  reserve account;

         o        the policy;

         o        the yield supplement agreement; and

         o        proceeds of the above.

Book-Entry Notes

         The notes will initially be issued as book-entry notes. Noteowners
may elect to hold their notes through the Depository Trust Company, or DTC, in
the United States, or Cedelbank or Euroclear, in Europe if they are
participants of their systems, or indirectly through organizations which are
participants in their systems. The book-entry notes will be issued in one or
more securities which equal the aggregate principal balance of the notes and
will initially be registered in the name of Cede & Co., the nominee of DTC.
Cedelbank and Euroclear will hold omnibus positions on behalf of their
participants through customers' securities accounts in Cedelbank's and
Euroclear's names on the books of their respective depositaries which in turn
will hold the positions in customers' securities accounts in the depositaries'
names on the books of DTC. Investors may hold the beneficial interests in the
book-entry notes in minimum denominations of $25,000 and in integral multiples
of $1,000 in excess of $25,000. Except as described below, no beneficial owner
of the notes will be entitled to receive a physical certificate, or definitive
note, representing the security. Unless and until definitive notes are issued,
it is anticipated that the only holder of the notes will be Cede & Co., as
nominee of DTC. Note owners will not be holders as that term is used in the
indenture.

         DTC has advised the depositor that management of DTC is aware that
some computer applications, systems and the like for processing data that are
dependent upon calendar dates, including dates before, on and after January 1,
2000, may encounter Y2K problems. DTC has informed its participants and other
members of the financial community, that it has developed and is implementing
a program so that its systems, as they relate to DTC services like the timely
payment of distributions, including principal and income payments, to
securityholders, book-entry deliveries and settlement of trades with DTC,
continue to function appropriately. This program includes a technical
assessment and a remediation plan, each of which is complete. Additionally,
DTC's plan includes a testing phase, which, DTC has advised its participants,
is expected to be completed within appropriate time frames.

         However, DTC's ability to perform properly its services is also
dependent upon other parties, including but not limited to issuers and their
agents, as well as DTC's participants and third party vendors from whom DTC
licenses software and hardware, and third party vendors on whom DTC relies for
information or the provision of services, including telecommunication and
electrical utility service providers, among others. DTC has informed its
participants that it is contacting and will continue to contact third party
vendors from whom DTC acquires services to:

         o        impress upon them the importance of those services being Y2K
                  compliant; and

         o        determine the extent of their efforts for Y2K remediation and,
                  as appropriate, testing of their services.

         In addition, DTC is in the process of developing contingency plans as
it deems appropriate.

                                      S-32
<PAGE>

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

         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 the
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 Cedelbank or
Euroclear, as appropriate.

         Note owners will receive all payments of principal and interest on
the notes from the indenture trustee through DTC and DTC participants. While
the 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 participants on whose behalf it acts in connection
with the notes and is required to receive and transmit payments of principal
and interest on the notes.

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

         Note owners will not receive or be entitled to receive definitive
notes representing their respective interests in the notes, except under the
limited circumstances described below. Unless and until definitive notes are
issued, note owners who are not participants may transfer ownership of notes
only through participants and indirect participants by instructing the
participants and indirect participants to transfer the notes, by book-entry
transfer, through DTC for the account of the purchasers of the notes, which
account is maintained with their respective participants. Under the DTC rules
and in accordance with DTC's normal procedures, transfers of ownership of
notes will be executed through DTC and the accounts of the respective
participants at DTC will be debited and credited. Similarly, the participants
and indirect participants will make debits or credits, as the case may be, on
their records on behalf of the selling and purchasing 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 notes
held through Cedelbank or Euroclear will be credited to the cash accounts of
Cedelbank participants or Euroclear participants in accordance with the
relevant system's rules and procedures, to the extent received by the relevant
depositary. The 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 the book-entry notes,
may be limited due 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 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 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 the actions are taken on behalf of
financial intermediaries whose holdings include the book-entry notes.
Cedelbank or the Euroclear operator, as the case may be, will take any other
action permitted to be taken by noteholders under the indenture on behalf of a
Cedelbank 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, with respect to some
notes which conflict with actions taken relating to other notes.

                                      S-33
<PAGE>

         Definitive 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, qualified 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
representing at least a majority of the aggregate note balance of the 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 to DTC, 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 this event and the availability through
DTC of definitive 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
notes, and subsequently, the indenture trustee will recognize the holders of
the definitive notes as holders under the indenture.

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

         None of the depositor, the 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 of the records relating to or
payments made on account of beneficial ownership interests in the notes held
by Cede, as nominee for DTC, or for maintaining, supervising or reviewing any
records relating to the beneficial ownership interests.

         For additional information regarding DTC, Cedelbank, Euroclear and
the notes, see Annex I to this prospectus supplement and "The Agreements --
Book-Entry Securities" in the prospectus.

Glossary of Terms

         The following terms are given the meanings shown below to help
describe the cash flows on the notes:

         Collection Period -- As to any payment date, the calendar month
preceding the month of that payment date.

         Interest Collections -- As to any payment date, an amount equal to
the sum of:

         o        the portion allocable to interest of all scheduled monthly
                  payments on the home equity loans received during the related
                  Collection Period, minus the servicing fees and the fees and
                  expenses of the trust,

         o        the portion of all Net Liquidation Proceeds allocated to
                  interest under the terms of the mortgage notes, reduced by the
                  administrative fees for that Collection Period, and

         o        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 home equity loans by the servicer.

         Interest Accrual Period -- As to the Class A-1 Notes and any payment
date other than the first payment date, the period commencing on the payment
date in the month immediately preceding the month in which such payment date
occurs and ending on the day preceding such payment date, and in the case of
the first payment date, the period commencing on September 10, 1999 and ending
on the day preceding the first payment date. As to the Class A-2 Notes and any
payment date, the calendar month preceding the month in which such payment
date occurs.

                                      S-34
<PAGE>

         LIBOR Business Day -- Any day other than:

         o        a Saturday or a Sunday, or

         o        a day on which banking institutions in the city of London,
                  England are required or authorized by law to be closed.

         Liquidated Home Equity Loan -- As to any payment date, any home
equity loan which the 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 which it expects to
recover in connection with the disposition of the related mortgaged property
have been recovered.

         Liquidation Loss Amount -- As to any payment date and Liquidated Home
Equity Loan, the unrecovered principal balance of the Liquidated Home Equity
Loan and any of its unpaid accrued interest at the end of the related
Collection Period in which the home equity loan became a Liquidated Home
Equity Loan, after giving effect to the Net Liquidation Proceeds allocable to
the principal balance.

         Liquidation Loss Distribution Amount -- As to any payment date, an
amount equal to the sum of (A) 100% of the Liquidation Loss Amounts on such
payment date, plus (B) any Liquidation Loss Amounts remaining undistributed
from any preceding payment date, together with interest from the date
initially distributable to the date paid. Any Liquidation Loss Amount shall
not be required to be paid as a Liquidation Loss Distribution Amount to the
extent that a Liquidation Loss Amount was paid on the notes by means of a draw
on the policy or was reflected in the reduction of the Overcollateralization
Amount.

         Net Liquidation Proceeds -- As to any Liquidated Home Equity Loan,
the proceeds, excluding amounts drawn on the policy, received in connection
with the liquidation of such home equity loan, whether through trustee's sale,
foreclosure sale or otherwise, reduced by related expenses (but not including
the portion, if any, of the amount that exceeds the principal balance of the
home equity loan at the end of the Collection Period immediately preceding the
Collection Period in which the home equity loan became a Liquidated Home
Equity Loan).

         Note Balance -- As to any date of determination, the principal
balance of the notes on the closing date less any amounts actually distributed
as principal thereon on all prior payment dates.

         Note Rate --As to each Interest Accrual Period, (i) for the Class A-1
Notes, the least of:

         o        LIBOR plus a margin of 0.39% per annum, and

         o        13.00% per annum; and

         o        (ii) for the Class A-2 Notes, 7.73% per annum.

Notwithstanding the foregoing, the margin on the Class A-1 Notes will increase
to 0.78% commencing on the first payment date after the Step-up Date, and the
Note Rate on the Class A-2 Notes will increase to 8.23% per annum commencing
on the first payment date after the Step-up Date.

         Overcollateralization Amount -- As to any payment date, the amount,
if any, by which the pool balance (after applying payments received in the
related Collection Period) exceeds the aggregate note balance of the notes on
the payment date (after taking into account the payment of the Principal
Collections and the Liquidation Loss Amounts for such payment date).

         Overcollateralization Increase Amount -- As to any payment date, the
amount necessary to bring the Overcollateralization Amount up to the Required
Overcollateralization Amount.

                                      S-35
<PAGE>

         Overcollateralization Release Amount -- As to any date of
determination, the excess, if any, of the Overcollateralization Amount over
the Required Overcollateralization Amount.

         Principal Collection Distribution Amount -- As to any payment date,
the total Principal Collections for that payment date less any
Overcollateralization Release Amount for such payment date.

         Principal Collections -- As to any payment date, an amount equal to
the sum of:

         o        the principal portion of all scheduled monthly payments on the
                  home equity loans received in the related Collection Period;
                  and

         o        all unscheduled collections, including full and partial
                  mortgagor prepayments on the home equity loans, insurance
                  proceeds, liquidation proceeds and proceeds from repurchases
                  of, and some amounts received in connection with any
                  substitutions for, the home equity loans, received or deemed
                  received during the related Collection Period, to the extent
                  the amounts are allocable to principal.

         Reference Bank Rate -- As to any Interest Accrual Period, as follows:
the arithmetic mean (rounded upwards, if necessary, to the nearest one
sixteenth of one percent) of the offered rates for United States dollar
deposits for one month which are offered by the Reference Banks as of 11:00
a.m., London, England time, on the second LIBOR Business Day prior to the
first day of such Interest Accrual Period to prime banks in the London
interbank market for a period of one month in amounts approximately equal to
the sum of the outstanding Note Balance of the Notes; provided, that at least
two such Reference Banks provide such rate. If fewer than two offered rates
appear, the Reference Bank 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 servicer and the credit enhancer, as of
11:00 a.m., New York 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 note balance of the notes. If no such quotations can be obtained,
the Reference Bank Rate will be the Reference Bank Rate applicable to the
preceding Interest Accrual Period.

         Required Overcollateralization Amount -- As to any payment date prior
to the Stepdown Date, an amount equal to 4.50% of the cut-off date pool
balance. On or after the Stepdown Date, the Required Overcollateralization
Amount will be equal to the lesser of (a) the Required Overcollateralization
Amount as of the cut-off date and (b) 9.00% of the current pool balance (after
applying payments received in the related Collection Period), but not lower
than $888,324.87, which is 0.50% of the cut-off date balance. However, any
scheduled reduction to the Required Overcollateralization Amount described in
the preceding sentence shall not be made as of any payment date unless certain
loss and delinquency tests set forth in the indenture are met. In addition,
the Required Overcollateralization Amount may be reduced with the prior
written consent of the credit enhancer and the rating agencies.

         Step-up Date -- The first payment date on which the aggregate
outstanding Principal Balance of the home equity loans is less than 10% of the
sum of (x) the pool balance as of the cut-off date and (y) the amount on
deposit in the pre-funding account on the closing date.

         Stepdown Date -- The later of:

         o        the payment date in October 2002; and

         o        the first payment date on which the pool balance (after
                  applying payments received in the related Collection Period)
                  has been reduced to less than 50% of the cut-off date pool
                  balance.

                                      S-36
<PAGE>

         Telerate Page 3750 -- The display page so designated on the Bridge
Information Systems Telerate Service (or such other page as may replace page
3750 on such 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 such page on such service, or if such service is no
longer offered, such other service for displaying LIBOR or comparable rates as
may be selected by the issuer after consultation with the indenture trustee
and the credit enhancer), the rate will be the Reference Bank Rate.

         Yield Supplement Amount -- As to any payment date, an amount equal to
(i) the product of (a) the amount by which LIBOR, as determined in the manner
described under "Description of the Securities-Determination of LIBOR" in this
prospectus supplement, exceeds the LIBOR rate specified in the yield
supplement agreement, (b) the Note Balance of the Class A-1 Notes as of such
payment date (before giving effect to distributions on such payment date) and
(c) the number of days in the related Interest Accrual Period, divided by (ii)
360.

Payments

         Payments on the notes will be made by the indenture trustee or the
paying agent beginning in October 1999 on the 18th day of each month or the
next succeeding business day if the 18th is not a business day. Each of these
dates is referred to as a payment date. Payments on the notes will be made to
the persons in whose names the notes are registered at the close of business
on the day prior to each payment date or, if the notes are no longer
book-entry notes, on the record date. See "Description of the Securities --
Payments of Interest" and " -- Payments of Principal" in the prospectus.
Payments will be made by wire transfer, check or money order mailed to the
address of the person which appears on the security register. In the case of
book-entry notes, payments will be made by wire transfer to DTC or its nominee
in amounts calculated on the determination date as described in this
prospectus supplement. However, the final payment relating to the notes (if
the notes are no longer book-entry notes) will be made only upon presentation
and surrender of the 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 State of Minnesota, New York, Pennsylvania, Maryland or
Delaware are required or authorized by law to be closed.

Interest Payments on the Notes

         Interest payments will accrue on each class of notes on each payment
date at the respective Note Rate, except that the margin on the Class A-1
Notes will increase to 0.78% commencing on the first payment date after the
Step-up Date, and the Note Rate on the Class A-2 Notes will increase to 8.23%
per annum commencing on the first payment date after the Step-up Date.

         Interest on the notes relating to any payment date will accrue for
the related Interest Accrual Period on the related note balance. Interest for
the Class A-1 Notes will be calculated on the basis of the actual number of
days in the related Interest Accrual Period and a 360-day year. Interest for
the Class A-2 Notes will be calculated on the basis of a 30-day month and a
360-day year. Interest payments on the notes will be funded from payments on
the home equity loans and, if necessary, from draws on the policy.

Determination of LIBOR

         Two business days before each payment date, LIBOR will be established
by the indenture trustee. As to any Interest Accrual Period, LIBOR will equal,
for any Interest Accrual Period other than the first Interest Accrual Period,
the rate for United States dollar deposits for one month that appears on the
Telerate Page 3750 as of 11:00 a.m., London, England time, on the second LIBOR
Business Day prior to the first day of such Interest Accrual Period. If such
rate does not appear on such page (or such other page as may replace such page
on such service, or if such service is no longer offered, such other service
for displaying LIBOR or comparable rates as may be reasonably selected by the
indenture trustee after consultation with the servicer and the credit
enhancer), the rate will be the

                                      S-37
<PAGE>

Reference Bank Rate. If no such quotations can be obtained and no Reference Bank
Rate is available, LIBOR will be LIBOR applicable to the preceding payment date.

         With respect to the first Interest Accrual Period, LIBOR will equal
5.38% per annum from September 10, 1999 up to but not including September 23,
1999. LIBOR will reset on September 21, 1999, and the Class A-1 Notes will
accrue interest as of September 23, 1999 based on such reset LIBOR rate until
the end of first Interest Accrual Period.

         The establishment of LIBOR as to each Interest Accrual Period by the
indenture trustee and the indenture trustee's calculation of the rate of
interest applicable to the notes for the related Interest Accrual Period will,
in the absence of manifest error, be final and binding.

Principal Payments on the Notes

         On each payment date, other than the payment date in November 2025
(the final payment date), principal payments will be due and payable on the
notes in an amount equal to the Principal Collection Distribution Amount,
together with any Liquidation Loss Distribution Amount and
Overcollateralization Increase Amount for such payment date, as and to the
extent described below. Principal will be payable on the Class A-1 Notes and
the Class A-2 Notes pro rata, based on the original note balance of each class
of notes. On the payment date in November 2025, principal will be due and
payable on the notes in an amount equal to the unpaid note balance. In no
event will principal payments on the notes on any payment date exceed the note
balance on that date.

Allocation of Payments on the Home Equity Loans

         The indenture trustee on behalf of the trust will establish a Note
Payment Account into which the servicer will deposit Principal Collections and
Interest Collections from the custodial account for each payment date on the
business day prior to that payment date. The Note Payment Account will be an
eligible account and amounts on deposit in the Note Payment Account will be
invested in permitted investments.

         On each payment date, Principal Collections and Interest Collections,
together with any insured payment from the credit enhancer, any payment under
the yield supplement agreement and any withdrawal from the reserve account,
will be allocated from the Note Payment Account in the following order of
priority:

         o        first, to pay accrued interest due on the note balance of the
                  notes;

         o        second, to pay as principal on the notes, pro rata, an amount
                  equal to the Principal Collection Distribution Amount for that
                  payment date;

         o        third, to pay as principal on the notes, pro rata, an amount
                  equal to the Liquidation Loss Distribution Amount for that
                  payment date;

         o        fourth, to pay the credit enhancer the premium for the policy
                  and any previously unpaid premiums for the policy, with
                  interest, and the amount, if any, of the monthly fee for the
                  limited reimbursement agreement;

         o        fifth, to reimburse the credit enhancer for prior draws made
                  on the policy, with interest;

         o        sixth, to pay as principal on the notes, pro rata, an amount
                  equal to the Overcollateralization Increase Amount for that
                  payment date;

         o        seventh, to pay the credit enhancer any other amounts owed to
                  it pursuant to the insurance agreement, with interest;

                                      S-38
<PAGE>

         o        eighth, to deposit funds into the reserve account from the
                  payments, if any, on the yield supplement agreement up to the
                  required level;

         o        ninth, to pay the indenture trustee any unpaid expenses and
                  other reimbursable amounts owed to the indenture trustee; and

         o        tenth, any remaining amounts to the holders of the
                  certificates.

Overcollateralization

         The cashflow mechanics of the trust are intended to create
overcollateralization by using a portion or all of the excess interest to make
principal payments on the notes in an amount equal to the
Overcollateralization Increase Amount. Such application of excess interest
will continue until the Overcollateralization Amount equals the Required
Overcollateralization Amount at which point such application will cease unless
necessary on a later payment date to increase the amount of
overcollateralization to the target level. In addition, the Required
Overcollateralization Amount may be permitted by the credit enhancer to step
down in the future in which case a portion of the excess interest will not be
paid to the holders of the notes but will instead be distributed to the
holders of the certificates. As a result of these mechanics, the weighted
average life of the notes will be different than it would have been in the
absence of such mechanics.

         To the extent that the protection provided by the application of
excess interest and the availability of overcollateralization are exhausted
and if payments are not made under the policy as required, noteholders may
incur a loss on their investments.

Reserve Account

         On each payment date, to the extent of funds on deposit in the
reserve account, an amount will be withdrawn from the reserve account and
deposited into the note payment account to protect the notes against some
losses, interest shortfalls or both. To the extent the amount on deposit in
the reserve account exceeds the required level, the excess will be withdrawn
and released to the holder of the certificates.

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 note payment account for the purpose of making
payments to the noteholders.

Maturity and Optional Redemption

         The notes will be payable in full on the payment date in November
2025, which is the final payment date, to the extent of the outstanding note
balance on that date, together with any accrued and unpaid interest.

         In addition, a principal payment may be made in full redemption of
the notes upon the exercise by the servicer of its option to purchase all but
not less than all of the home equity loans and related assets. This option may
be exercised beginning on the Step-up Date. In the event that all of the home
equity loans are purchased by the servicer, the purchase price will be equal
to the sum of the outstanding pool balance and any accrued and unpaid interest
at the weighted average of the loan rates through the day preceding the
payment date on which the purchase occurs, together with all amounts due and
owing to the credit enhancer. No such optional repurchase will be permitted
without the prior written consent of the credit enhancer if it would result in
a draw on the policy.

                                      S-39
<PAGE>

                            Description of the Policy

         The following summary of the terms of the policy does not purport to
be complete and is qualified in its entirety by reference to the policy. The
information in this section regarding the policy has been supplied by the
credit enhancer for inclusion herein. Only the notes will be entitled to the
benefit of the policy to be issued by the credit enhancer.

         On the closing date, the credit enhancer will issue the policy in
favor of the indenture trustee on behalf of the noteholders. The policy will
unconditionally and irrevocably guarantee specified payments on the notes. 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 credit enhancement provided by the application of excess
interest and the availability of overcollateralization.

         The credit enhancer's obligation under the policy will be discharged
to the extent that funds are received by the indenture trustee for
distribution to the noteholders, whether or not such funds are properly
distributed by the indenture trustee. For purposes of any draw under the
policy, amounts in the note payment account available for interest
distributions on any payment date will be deemed to include all amounts
available in the note payment account for that payment date, other than the
Principal Collection Distribution Amount and the Liquidation Loss Distribution
Amount, if any.

         An insured amount under the policy will mean:

         o        with respect to any payment date (other than the final
                  maturity date), an amount, if any, equal to the sum of (a) the
                  amount by which the aggregate amount of accrued interest on
                  the notes (excluding any Relief Act Shortfalls for such
                  payment date) at the respective Note Rates on such payment
                  date exceeds the amount on deposit in the note payment account
                  available for interest distributions on such payment date, and
                  (b) any Liquidation Loss Amount for such payment date, to the
                  extent not currently covered by a Liquidation Loss
                  Distribution Amount or a reduction in the
                  Overcollateralization Amount, and

         o        on the final maturity date, an amount, if any, equal to the
                  sum of (a) the amount by which the aggregate amount of accrued
                  interest on the notes (excluding any Relief Act Shortfalls for
                  such payment date) at the respective Note Rates on the final
                  payment date exceeds the amount on deposit in the note payment
                  account available for interest distributions on the final
                  payment date, and (b) the aggregate outstanding note balance
                  of the notes to the extent not otherwise paid on such date.

         Relief Act Shortfalls will not be covered by the policy. Relief Act
Shortfalls are interest shortfalls resulting from the application of the
Soldiers' and Sailors' Civil Relief Act of 1940, as amended. See "Certain
Legal Aspects of the Loans--Soldiers' and Sailors" Civil Relief Act of 1940"
in the Prospectus.

         Notwithstanding the foregoing, the amount of the draw under the
policy will be reduced by any amount paid directly to the trust under the
limited reimbursement agreement to be entered into by the credit enhancer.
Under the limited reimbursement agreement, some amounts otherwise payable
under the policy will be reimbursed to the credit enhancer, or if directed by
the credit enhancer, will be paid directly to the trust by a third party. The
trust is not a party to the limited reimbursement agreement and has no rights
with respect to it. In the event those amounts are not paid to the trust under
the limited reimbursement agreement, the credit enhancer will nevertheless
remain obligated to make all payments required to be made under the policy as
described in this section.

         The policy will be issued pursuant to, and shall be construed under,
the laws of the State of New York, without giving effect to the conflict of
laws principles thereof.

                                      S-40
<PAGE>

                      Yield and Prepayment Considerations

General

         The yield to maturity and the aggregate amount of distributions on
the notes will be affected by the rate and timing of principal payments on the
home equity loans and the amount and timing of mortgagor defaults resulting in
Liquidation Loss Amounts. The rate of default of home equity loans secured by
second liens may be greater than that of home equity loans secured by first
liens. In addition, yields may be adversely affected by a higher or lower than
anticipated rate of principal payments on the home equity loans. The rate of
principal payments on the home equity loans will in turn be affected by the
amortization schedules of the home equity loans, the rate and timing of
principal prepayments on the home equity loans by the mortgagors, liquidations
of defaulted home equity loans and repurchases of home equity loans due to
breaches of representations.

         The timing of changes in the rate of prepayments, liquidations and
repurchases of the home equity loans may, and the timing of Liquidation Loss
Amounts will, significantly affect the yield to an investor, even if the
average rate of principal payments experienced over time is consistent with an
investor's expectation. Since the rate and timing of principal payments on the
home equity loans will depend on future events and on a variety of factors, as
further described in this prospectus supplement, no assurance can be given as
to the rate or the timing of principal payments on the notes.

         Some of the home equity loans may be prepaid by the mortgagors at any
time. However, in most cases the home equity loans will be subject to a
prepayment charge. In addition, the home equity loans generally will contain
due-on-sale provisions permitting the mortgagee to accelerate the maturity of
such home equity loan upon sale or certain transfers by the borrower of the
underlying mortgaged property. The servicer will generally 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. The extent to which home equity loans 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 notes. See "Description of the Servicing
Agreement--Collection and Liquidation Practices; Loss Mitigation" in this
prospectus supplement for a description of certain provisions of the servicing
agreement that may affect the prepayment experience on the home equity loans
and may result in a prepayment experience on the home equity loans that
differs from that on other conventional home equity loans.

         The servicer may allow the refinancing of a home equity loan in the
trust by accepting prepayments thereon and permitting a new loan to the same
borrower secured by a mortgage on the same property, which may be originated
by the servicer or by an unrelated entity. In the event of such a refinancing,
the new loan would not be included in the trust and, therefore, such
refinancing would have the same effect as a prepayment in full of the related
home equity loan. The servicer may, from time to time, implement programs
designed to encourage refinancing. Such programs may include, without
limitation, modifications of existing loans, 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 or
the location of the mortgaged property. In addition, the servicer may
encourage refinancing of home equity loans, including defaulted home equity
loans, under which creditworthy borrowers assume the outstanding indebtedness
of such home equity loans which may be removed from the trust. As a result of
such programs, (i) the rate of principal prepayments of the home equity loans
may be higher than would otherwise be the case, and (ii) in some cases, the
average credit or collateral quality of the home equity loans remaining in the
trust may decline.

         Prepayments, liquidations and purchases of the home equity loans will
result in distributions to holders of the notes of principal amounts which
would otherwise be distributed over the remaining terms of the home equity
loans. Factors affecting prepayment, including defaults and liquidations, of
home equity loans include changes in mortgagors' housing needs, job transfers,
unemployment, mortgagors' net equity in the mortgaged properties, changes in
the value of the mortgaged properties, mortgage market interest rates,
solicitations and servicing

                                      S-41
<PAGE>

decisions. In addition, if prevailing mortgage rates fell significantly below
the loan rates on the home equity loans, the rate of prepayments, including
refinancings, would be expected to increase. Conversely, if prevailing mortgage
rates rose significantly above the loan rates on the home equity loans, the rate
of prepayments on the home equity loans would be expected to decrease.
Prepayment of the related first lien may also affect the rate of prepayments on
the home equity loans.

         The yield to investors on the notes will be sensitive to fluctuations
in the level of LIBOR and the Note Rate on the Class A-1 Notes will be capped
as described in "Description of the Securities -- Interest Payments on the
Notes" and " -- Determination of LIBOR" in this prospectus supplement.

         Amounts on deposit in the pre-funding account may be used during the
pre-funding period to acquire subsequent home equity loans. In the event that,
at the end of the pre-funding period, any amounts on deposit in the
pre-funding account have not been used to acquire subsequent home equity
loans, then the notes will be prepaid in part on the following payment date.

         The yield to maturity of the notes will depend, in part, on whether,
to what extent, and the timing with respect to which, any
Overcollateralization Increase Amount payments are used to accelerate payments
of principal on the notes or the Required Overcollateralization Amount is
reduced. See "Description of the Securities -Allocation of Payments on the
Home Equity Loans" in this prospectus supplement.

         The rate of defaults on the home equity loans will also affect the
rate and timing of principal payments on the home equity loans. In general,
defaults on home equity loans are expected to occur with greater frequency in
their early years. The rate of default of home equity loans secured by second
liens is likely to be greater than that of home equity loans secured by first
liens on comparable properties. The rate of default on home equity loans which
are refinance home equity loans, and on home equity loans with high combined
loan-to-value ratios, may be higher than for other types of home equity loans.
Furthermore, the rate and timing of prepayments, defaults and liquidations on
the home equity loans will be affected by the general economic condition of
the region of the country in which the related mortgaged properties are
located. The risk of delinquencies and loss is greater and prepayments are
less likely in regions where a weak or deteriorating economy exists, as may be
evidenced by, among other factors, increasing unemployment or falling property
values. See "Description of the Securities -- Weighted Average Lives of the
Securities" in the prospectus.

         Because the loan rates on the home equity loans and the note rate on
the Class A-2 Notes are fixed, these rates will not change in response to
changes in market interest rates. Only the note rate on the Class A-1 Notes is
variable and will change in response to changes in the LIBOR rate (up to the
maximum rate of 13% per annum). Accordingly, if market interest rates or
market yields for securities similar to the notes were to rise, the market
value of the Class A-2 Notes is more likely to decline than the market value
of the Class A-1 Notes.

         In addition, the yield to maturity on the notes will depend on, among
other things, the price paid by the holders of the notes. The extent to which
the yield to maturity of a note is sensitive to prepayments will depend, in
part, upon the degree to which it is purchased at a discount or premium. In
most cases, if notes are purchased at a premium and principal distributions on
the notes occur at a rate faster than assumed at the time of purchase, the
investor's actual yield to maturity will be lower than that anticipated at the
time of purchase. Conversely, if notes are purchased at a discount and
principal distributions on the notes occur at a rate slower than that assumed
at the time of purchase, the investor's actual yield to maturity will be lower
than that anticipated at the time of purchase. For additional considerations
relating to the yield on the notes, see "Risk Factors -- Yield may Vary;
Subordination" in the prospectus.

         Final Maturity Date: The final maturity date will be the payment date
in November 2025. Due to losses and prepayments on the home equity loans, the
actual final payment date may be substantially earlier than the date indicated
in the preceding sentence.

                                      S-42
<PAGE>

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

         The prepayment model used in this prospectus supplement, or
prepayment assumption, represents an assumed rate of prepayment each month
relative to the then outstanding principal balance of a pool of home equity
loans. A 100% prepayment assumption assumes a constant prepayment rate of 2%
per annum of the then outstanding principal balance of the home equity loans
in the first month of the life of the home equity loans and an additional
approximately 0.9286% (precisely 13/14%) per annum in each month thereafter
until the fifteenth month. Beginning in the fifteenth month and in each month
thereafter during the life of the home equity loans, a 100% prepayment
assumption assumes a constant prepayment rate of 15% per annum each month. As
used in the table below, a 50% prepayment assumption assumes prepayment rates
equal to 50% of the prepayment assumption. Correspondingly, a 150% prepayment
assumption assumes prepayment rates equal to 150% of the prepayment
assumption, and so forth. The prepayment assumption does not purport to be a
historical description of prepayment experience or a prediction of the
anticipated rate of prepayment of any pool of home equity loans, including the
home equity loans.

         The table below has been prepared on the basis of assumptions
described in this paragraph regarding the weighted average characteristics of
the home equity loans that are expected to be included in the trust, described
under "Description of the Home Equity Loans" in this prospectus supplement,
and the performance of the home equity loans. The tables assume, among other
things, that:

         o        the home equity loan pool consists of one group of home equity
                  loans with the following aggregate characteristics as of the
                  cut-off date: (i) an aggregate principal balance of
                  $177,664,974.62; (ii) a loan rate of between 8.25% and 18.99%;
                  (iii) weighted average loan rate of 13.50%; (iv) an original
                  amortization term of between 120 and 300 months; and (v) a
                  stated remaining term to maturity of between 106 and 300
                  months;

         o        the scheduled monthly payment for each home equity loan has
                  been based on its outstanding balance, interest rate and
                  remaining term to maturity, so that the home equity loan will
                  amortize in amounts sufficient for its repayment over its
                  remaining term to maturity;

         o        none of the seller, the servicer or the depositor will
                  repurchase any home equity loan, as described under "The
                  Agreements -- Repurchase and Substitution of Non-Conforming
                  Primary Assets" in the prospectus, and the servicer does not
                  exercise its option to purchase the home equity loans and, as
                  a result, cause a termination of the trust except as indicated
                  in the table;

         o        there are no delinquencies or Liquidation Loss Amounts on the
                  home equity loans, and principal payments on the home equity
                  loans will be timely received together with prepayments, if
                  any, on the last day of the month and at the respective
                  constant percentages of the prepayment assumption in the
                  tables;

         o        there is no prepayment interest shortfall or any other
                  interest shortfall in any month;

         o        the home equity loans pay on the basis on a 30-day month and a
                  360-day year;

         o        payments on the notes will be made on the 18th day of each
                  month, commencing in October 1999;

         o        payments on the home equity loans earn no reinvestment return;
                  there are no additional ongoing trust expenses payable out of
                  the trust; and

                                      S-43
<PAGE>

         o        the notes will be purchased on September 23, 1999.

         This list of assumptions is referred to as the structuring
assumptions.

         The actual characteristics and performance of the home equity loans
will differ from the assumptions used in constructing the table below, which
is hypothetical in nature and is provided only to give a general sense of how
the principal cash flows might behave under varying prepayment scenarios. For
example, it is very unlikely that the home equity loans will prepay at a
constant level of the prepayment assumption until maturity or that all of the
home equity loans will prepay at the same level of the prepayment assumption.
Moreover, the diverse remaining terms to maturity of the home equity loans
could produce slower or faster principal distributions than indicated in the
table at the various constant percentages of the prepayment assumption
specified, even if the weighted average remaining term to maturity of the home
equity loans is as assumed. Any difference between the assumptions and the
actual characteristics and performance of the home equity loans, or actual
prepayment or loss experience, will affect the percentage of initial note
balance outstanding over time and the weighted average life of the notes.

         Subject to the foregoing discussion and assumptions, the following
table indicates the weighted average life of the notes, and lists the
percentage of the initial note balance of the Class A-1 and Class A-2 Notes
that would be outstanding after each of the payment dates shown at various
percentages of the prepayment assumption.

                                      S-44
<PAGE>

         Percentage of Initial Class A-1 and Class A-2 Note Balance (1)

<TABLE>
<CAPTION>
        Payment Date                                                     Prepayment Assumption
- ---------------------------------------------     ---------------------------------------------------------------
                                                     0%        50%        75%       100%       125%      150%
                                                   ------    ------     ------    -------    -------   --------
<S>                                                <C>       <C>        <C>        <C>        <C>       <C>
Initial...................................          100        100        100        100        100       100

September 2000............................           96         90         88         85         82        79

September 2001............................           95         83         77         71         65        60

September 2002............................           94         75         67         59         52        45

September 2003............................           92         68         58         48         41        34

September 2004............................           91         61         50         40         33        26

September 2005............................           89         55         43         34         26        20

September 2006............................           86         49         37         28         21        15

September 2007............................           84         44         32         23         16        11

September 2008............................           81         40         28         19         13         9

September 2009............................           78         35         24         16         10         6

September 2010............................           74         31         20         13          8         5

September 2011............................           70         27         17         10          6         3

September 2012............................           65         24         14          8          5         2

September 2013............................           60         20         11          6          3         1

September 2014............................           55         17          9          5          2         1

September 2015............................           51         15          8          4          2         1

September 2016............................           47         13          6          3          1         *

September 2017............................           43         11          5          2          1         *

September 2018............................           38          9          4          1          *         0

September 2019............................           32          7          3          1          *         0

September 2020............................           27          5          2          1          0         0

September 2021............................           21          4          1          *          0         0

September 2022............................           13          2          *          0          0         0

September 2023............................            5          *          0          0          0         0

September 2024............................            0          0          0          0          0         0

Weighted Average Life to maturity (years)(2)      15.40       8.38       6.55       5.28       4.38      3.71
</TABLE>

- ----------------
(1)      All percentages are rounded to the nearest 1%.
(2)      Assumes the notes pay to maturity.
*        Denotes less than 0.5% but greater than 0.0%.

                                      S-45
<PAGE>

             Description of the Home Equity Loan Purchase Agreement

         The initial home equity loans to be deposited in the trust by the
depositor will be purchased by the depositor from the seller under the home
equity loan purchase agreement dated as of the cut-off date among the seller,
the depositor, the trust and the indenture trustee. The following summary
describes the primary terms of the home equity loan purchase agreement and is
qualified in its entirety by reference to the home equity loan purchase
agreement.

Purchase of Home Equity Loans

         Under the home equity loan purchase agreement, the seller will
transfer and assign without recourse to the depositor all of its right, title
and interest in and to the initial home equity loans and the mortgage notes,
mortgages and other related documents. Under an assignment by the depositor,
upon such transfer to it, the depositor will transfer and assign the initial
home equity loans to the trust, as well as the depositor's rights in the
purchase agreement. Subsequent home equity loans are intended to be purchased
by the trust from the seller on or before December 23, 1999 from funds on
deposit in the pre-funding account. The purchase agreement will provide that
the subsequent home equity loans will conform to the characteristics described
in "Description of the Home Equity Loans -- Conveyance of Subsequent Mortgage
Loans." The purchase prices for the initial home equity loans are specified
percentages of their face amounts as of the time of transfer and are payable
by the depositor as provided in the home equity loan purchase agreement. The
purchase price paid for any subsequent home equity loan by the indenture
trustee from amounts on deposit in the pre-funding account will be 100% of the
principal balance of the purchased subsequent home equity loan as of the date
of purchase.

         The home equity loan purchase agreement will require that, within the
time period specified in this prospectus supplement, the seller deliver to the
custodian, on behalf of the indenture trustee, the home equity loans sold by
the seller and the related documents described in the preceding paragraph for
the home equity loans. In lieu of delivery of original mortgages, the seller
may deliver true and correct copies of the mortgages which have been certified
as to authenticity by the appropriate county recording office where the
mortgage is recorded.

Representations and Warranties

         The seller will also represent and warrant with respect to the home
equity loans that, among other things:

         o        the information with respect to the home equity loans in the
                  schedule attached to the home equity loan purchase agreement
                  is true and correct in all material respects, and

         o        immediately prior to the sale of the initial home equity loans
                  to the depositor and the subsequent home equity loans to the
                  trust, the seller was the sole owner and holder of the home
                  equity loans free and clear of any and all liens and security
                  interests.

         The seller will also represent and warrant that, among other things,
as of the closing date:

         o        the home equity loan purchase agreement constitutes a legal,
                  valid and binding obligation of the seller, and

         o        the home equity loan purchase agreement constitutes a valid
                  transfer and assignment of all right, title and interest of
                  the seller in and to the initial home equity loans or the
                  subsequent home equity loans, as applicable, and the proceeds
                  of such home equity loans.

         The benefit of the representations and warranties made by the seller
will be assigned to the indenture trustee.

                                      S-46
<PAGE>

         Within 90 days of the closing date and one business day prior to the
related subsequent transfer date with respect to any subsequent home equity
loan, The Bank of Maryland, the custodian, will review or cause to be reviewed
such home equity loans and the related documents, and if any such home equity
loan or related document is found to be defective in any material respect,
which may materially and adversely affect the value of the related home equity
loan, or the interests of the indenture trustee, as pledgee of the home equity
loans, the securityholders or the credit enhancer in the home equity 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 home equity loan purchase agreement to repurchase the home equity loan
from the trust and to deposit the repurchase price into the custodial account.
In lieu of any 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 purchase or substitution will result in the
removal of the home equity loan required to be removed from the trust. The
removed home equity loan is referred to as a deleted loan. The obligation of
the seller to remove deleted loans sold by it from the trust is the sole
remedy regarding any defects in the home equity loans sold by the seller and
related documents for the home equity loans available against the seller.

         As to any home equity loan, the repurchase price referred to in the
preceding paragraph is equal to the principal balance of the home equity loan
at the time of any removal described in the preceding paragraph plus accrued
and unpaid interest 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 home equity loan substituted by the
seller for a deleted loan which must, on the date of the substitution:

         o        have an outstanding principal balance, or in the case of a
                  substitution of more than one home equity 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 no lower than and not more than 1% in excess
                  of the loan rate 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, at the time of substitution, 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 home
                  equity loans in the home equity loan purchase agreement,
                  deemed to be made as of the date of substitution; and

         o        satisfy 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 home equity loan as to
which there is a breach of a representation or warranty in the home equity
loan purchase agreement and the breach is not cured by the seller within the
time provided in the home equity loan purchase agreement.

                                      S-47
<PAGE>

                     Description of the Servicing Agreement

         The following summary describes terms of the servicing agreement,
dated as of the cut-off date among the trust, the indenture trustee and the
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. See "The Agreements" in the prospectus.

Principal and Interest Collections

         The servicer shall establish and maintain a custodial account in
which the servicer shall deposit or cause to be deposited any amounts
representing payments on and any collections received relating to the home
equity loans received on or after the cut-off date. The custodial account
shall be an eligible account. On each determination date, which is the 13th
day of each month, or if that day is not a business day, the following
business day, the servicer will notify the paying agent and the indenture
trustee prior to the close of business on the business day following the
determination date of the aggregate amounts required to be withdrawn from the
custodial account and deposited into the Note Payment Account.

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

         o        on the business day prior to each payment date, to the Note
                  Payment Account, an amount equal to Principal Collections and
                  Interest Collections for the preceding Collection Period; and

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

         All collections on the home equity loans will generally be allocated
in accordance with the mortgage notes between Principal Collections and
Interest Collections. As to unscheduled collections, the servicer may elect to
treat the amounts as included in Principal Collections and Interest
Collections for the payment date in the month of receipt, but is not obligated
to do so. As described in this prospectus supplement under "Description of the
Securities -- Principal Payments on the Notes," any amount for which the
election is so made shall be treated as having been received on the last day
of the related Collection Period for the purposes of calculating the amount of
principal and interest distributions to the notes.

Collection and Liquidation Practices; Loss Mitigation

         The servicer will make reasonable efforts to collect all payments
called for under the home equity loans and will, consistent with the servicing
agreement, follow such collection procedures which shall be normal and usual
in its general mortgage servicing activities with respect to mortgage loans
comparable to the home equity loans. The servicer is authorized to engage in a
wide variety of loss mitigation practices with respect to the home equity
loans, including waivers, modifications, payment forbearances, partial
forgiveness, entering into repayment schedule arrangements, and capitalization
of arrearages; provided in any case that the servicer determines that the
action is not materially adverse to the interests of the noteholders and is
generally consistent with the servicer's policies with respect to similar
loans; and provided further that some modifications, including reductions in
the loan rate, partial forgiveness or a maturity extension, may only be taken
if the home equity loan is in default or if default is reasonably foreseeable.
For home equity loans that come into and continue in default, the servicer may
take a variety of actions including foreclosure upon the mortgaged property,
writing off the balance of the home equity loan as bad debt, taking a deed in
lieu of foreclosure, accepting a short sale, permitting a short refinancing,
arranging

                                      S-48
<PAGE>

for a repayment plan, modifications as described above, or taking an unsecured
note. See "Servicing of Loans" in the prospectus.

Servicing and Other Compensation and Payment of Expenses

         The servicing fee for each home equity loan is payable out of the
interest payments on such home equity loan. The servicing fee is 0.50% per
annum. The servicing fee consists of (a) servicing compensation payable to the
servicer in respect of its servicing activities and (b) other related
compensation. The servicer is obligated to pay certain ongoing expenses
associated with its servicing activities and incurred by the servicer in
connection with its responsibilities under the servicing agreement.

Release of Lien; Refinancing of Senior Lien

         The servicing agreement permits the servicer to release the lien on
the mortgaged property securing a home equity loan under limited circumstances
if the home equity 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) 125% and (b) 105% times the combined
loan-to-value ratio previously in effect, if the 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 home equity loan to become unsecured, subject to limitations in
the servicing agreement. At the time of the release, some terms of the home
equity loan may be modified, including a loan rate increase or a maturity
extension, and the terms of the home equity loan may be further modified in
the event that the borrower subsequently delivers a mortgage on a substitute
mortgaged property.

         The servicer may permit the refinancing of any existing lien senior
to a home equity loan, provided that specified conditions in the servicing
agreement are met.

Non-Recordation of Assignments

         Subject to the consent of the credit enhancer, the seller will not be
required to record assignments of the mortgages to the indenture trustee in
the real property records of the states in which the related mortgaged
properties are located. The seller will retain record title to such mortgages
on behalf of the indenture trustee and the noteholders. Although the
recordation of the assignments of the mortgages in favor of the indenture
trustee is not necessary to effect a transfer of the home equity loans to the
indenture trustee, if the seller were to sell, assign, satisfy or discharge
any home equity loan prior to recording the related assignment in favor of the
indenture trustee, the other parties to such sale, assignment, satisfaction or
discharge may have rights superior to those of the indenture trustee. In some
states, in the absence of such recordation of the assignments of the
mortgages, the transfer to the indenture trustee of the home equity loans may
not be effective against certain creditors or purchasers from the seller or a
trustee in bankruptcy thereof. If such other parties, creditors or purchasers
have rights to the home equity loans that are superior to those of the
indenture trustee, noteholders could lose the right to future payments of
principal and interest to the extent that such rights are not otherwise
enforceable in favor of the indenture trustee under the applicable mortgage
documents.

Optional Repurchase of Defaulted Home Loans

         Under the servicing agreement, the servicer will have the option to
purchase from the trust any home equity loan which is 60 days or more
delinquent at a purchase price equal to its principal balance plus accrued
interest.

                                      S-49
<PAGE>

               Description of the Trust Agreement and Indenture

         The following summary describes the primary 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. See "The Agreements" in the
prospectus.

The Trust Fund

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

Reports to Holders

         The indenture trustee will make available to each noteholder, at its
address listed on the security register maintained with the indenture trustee,
to the extent such information is provided to the indenture trustee by the
servicer pursuant to the servicing agreement, a report setting forth amounts
relating to the notes for each payment date, among other things:

         o        the amount of principal payable on the payment date to the
                  holders of the notes;

         o        the amount of interest payable on the payment date to the
                  holders of the notes;

         o        the aggregate note balance of the notes after giving effect to
                  the payment of principal on the payment date;

         o        Principal Collections and Interest Collections for the related
                  Collection Period;

         o        the aggregate principal balance of the home equity loans as of
                  the end of the preceding Collection Period;

         o        the balance of the pre-funding account as of the end of the
                  preceding Collection Period;

         o        the balance of the capitalized interest account as of the end
                  of the preceding Collection Period;

         o        the aggregate principal balance of all subsequent home equity
                  loans transferred to the trust under a subsequent transfer
                  agreement during the related Collection Period and since the
                  closing date;

         o        the Overcollateralization Amount as of the end of the related
                  Collection Period; and

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

         In the case of information furnished under first and second listed
clause above relating to the notes, the amounts shall be expressed as a dollar
amount per $1,000 in face amount of notes.

         The indenture trustee will make the reports to noteholders (and, at
its option, any additional files containing the same information in an
alternative format) available each month to noteholders, and other parties to
the indenture via the indenture trustee's internet website and its
fax-on-demand service. The indenture trustee's fax-on-demand service may be
accessed by calling (301) 815-6610. The indenture trustee's internet website
shall initially be located at www.ctslink.com. Assistance in using the website
or the fax-on-demand service can be obtained by

                                      S-50
<PAGE>

calling the indenture trustee's customer service desk at (301) 815-6600. Parties
that are unable to use the above distribution options are entitled to have a
paper copy mailed to them via first class mail by calling the customer service
desk and indicating such. The indenture trustee shall have the right to change
the way the reports to noteholders are distributed in order to make such
distribution more convenient and/or more accessible and the indenture trustee
shall provide timely and adequate notification to all above parties regarding
any such changes.

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,

         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 the supplemental indenture comply
                  with the indenture and that all conditions precedent, as
                  provided in the indenture, relating to the 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 relating to 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 with respect to the notes under the
                  indenture except as may be expressly permitted by the
                  indenture, or

                                      S-51
<PAGE>

         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 of its interest or the proceeds of
                  its assets.

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

Events of Default

         An event of default under the indenture includes:

         o        a default for five (5) days or more in the payment of any
                  principal of or interest on the notes;

         o        the occurrence of a default in the observance or performance
                  in any material respect of any covenant or agreement of the
                  issuer made in the indenture, or any representation or
                  warranty of the issuer made in the indenture, proving to have
                  been incorrect in any material respect as of the time when the
                  same shall have been made that has a material adverse effect
                  on the noteholders or the credit enhancer, and such default
                  continues or not be cured for a period of 30 days after there
                  shall have been given to the issuer by the indenture trustee
                  or to the issuer and the indenture trustee by the holders of
                  at least 25% of the outstanding principal balance of the notes
                  or the credit enhancer, a written notice specifying such
                  default or incorrect representation or warranty and requiring
                  it to be remedied;

         o        the occurrence of the filing of a decree or order for relief
                  by a court having jurisdiction in the premises in respect of
                  the issuer or any substantial part of the trust in an
                  involuntary case under any applicable federal or state
                  bankruptcy, insolvency or other similar law now or hereafter
                  in effect, or the appointment of a receiver, liquidator,
                  assignee, custodian, trustee, sequestrator or similar official
                  of the issuer or for any substantial part of the trust, and
                  such decree or order shall remain unstayed and in effect for a
                  period of 60 consecutive days; or

         o        there occurs the commencement by the Issuer of a voluntary
                  case under any applicable federal or state bankruptcy,
                  insolvency or other similar law now or hereafter in effect, or
                  other similar acts related to bankruptcy or insolvency.

         If an event of default with respect to the notes at the time
outstanding occurs and is continuing, either the indenture trustee, the credit
enhancer or the holders of notes representing a majority of the aggregate note
balance, with the written consent of the credit enhancer, may declare all
notes to be due and payable immediately. Such declaration may, under certain
circumstances, be rescinded and annulled by the credit enhancer or the holders
of notes representing a majority of the aggregate note balance, with the
written consent of the credit enhancer.

         If, following an event of default with respect to the notes, the
notes have been declared to be due and payable, the indenture trustee, with
the consent of the credit enhancer, may in its discretion, notwithstanding
such acceleration, elect to maintain possession of the collateral securing the
notes and to continue to apply payments on such collateral as if there had
been no declaration of acceleration if such collateral continues to provide
sufficient funds for the payment of principal of and interest on the notes as
they would have become due if there had not been such a declaration.

         No noteholder generally will have any right under the indenture to
institute any proceeding with respect to the indenture unless

         o        such holder previously has given to the indenture trustee
                  written notice of default and the continuance thereof,

                                      S-52
<PAGE>

         o        (b) the holders of notes evidencing not less than 25% of the
                  aggregate percentage interests constituting the notes (i) have
                  made written request upon the indenture trustee to institute
                  such proceeding in their own name as indenture trustee
                  thereunder and (ii) have offered to the indenture trustee
                  reasonable indemnity,

         o        (c) the indenture trustee has neglected or refused to
                  institute any such proceeding for 60 days after receipt of
                  such request and indemnity and

         o        (d) no direction inconsistent with such written request has
                  been given to the indenture trustee during such 60 day period
                  by the holders of a majority of the outstanding principal
                  balances of the notes.

Modification of Indenture

         With the consent of the holders of a majority of the outstanding
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 by that modification and the credit
enhancer, however, 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, its
                  interest rate specified 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 some
                  provisions of the indenture regarding payment;

         o        reduce the percentage of the aggregate 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 a 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 the
                  calculation; or

         o        permit the creation of any lien ranking prior to or, except as
                  otherwise contemplated by the indenture, 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 in this prospectus supplement.

                                      S-53
<PAGE>

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 under the indenture or for errors in judgment. None
of the indenture trustee and any director, officer or employee of the
indenture trustee 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 indenture. Subject to limitations 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 a merger or consolidation shall be the successor of the
indenture trustee under the indenture.

                                 Use of Proceeds

         The proceeds from the sale of the notes will be used to (i) purchase
the initial home equity loans from the depositor and (ii) fund the pre-funding
account and, later, to purchase certain subsequent home equity loans as
described herein.

                    Certain Federal Income Tax Considerations

         In the opinion of Brown & Wood LLP, special tax counsel to the
depositor, for federal income tax purposes, the notes will be characterized as
indebtedness, and the issuer will not be characterized as an association (or a
publicly traded partnership) taxable as a corporation or as a taxable mortgage
pool within the meaning of Section 7701(i) of the Code.

         For federal income tax purposes, the notes will not be treated as
having been issued with "original issue discount" as defined in the
prospectus.

         Prospective investors in the notes should see "Certain Federal Income
Tax Consequences" and "State Tax Considerations" 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 notes.

                              ERISA Considerations

         The notes are eligible for purchase by pension, profit-sharing or
other employee benefit plans as well as individual retirement accounts and
certain types of Keogh plans. Any fiduciary or other investor of ERISA plan
assets that proposes to acquire or hold the notes on behalf of or with ERISA
plan assets of any ERISA plan should consult with its counsel with respect to
the potential applicability of the fiduciary responsibility provisions of
ERISA and the prohibited transaction provisions of ERISA and the Internal
Revenue Code to the proposed investment. See "ERISA Considerations" in the
prospectus.

         Each purchaser of a note, by its acceptance of the note, shall be
deemed to have represented that the acquisition of the note by the 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.

                                      S-54
<PAGE>

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

         o        has investment or administrative discretion with respect to
                  the ERISA plan's assets;

         o        has authority or responsibility to give, or regularly gives,
                  investment advice regarding the ERISA plan's assets, for a fee
                  and under an agreement or understanding that the advice will
                  serve as a primary basis for investment decisions regarding
                  the ERISA plan's assets and will be based on the particular
                  investment needs for the ERISA plan; or

         o        is an employer maintaining or contributing to the ERISA plan.

                                Legal Investment

         The notes will not constitute "mortgage related securities" for
purposes of the Secondary Mortgage Market Enhancement Act of 1984, as amended.
Accordingly, many institutions with legal authority to invest in
mortgage-related securities may not be legally authorized to invest in the
notes. No representation is made herein as to whether the 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 notes as legal investments for such
purchasers prior to investing in the notes. See "Legal Investment" in the
Prospectus.

                                 Underwriting

         Subject to the terms and conditions set forth in an underwriting
agreement dated September 15, 1999 between Bear, Stearns & Co. Inc., as
representative of the underwriters named below, and the depositor, the
underwriters have agreed to purchase, and the Depositor has agreed to sell,
severally but not jointly, the following principal amounts of notes set forth
opposite their names below.

<TABLE>
<CAPTION>
                                Underwriter                                          Principal Amount of Notes
                                -----------                                          -------------------------
<S>                                                                                  <C>
Bear, Stearns & Co. Inc...................................................                  $140,000,000

PaineWebber Incorporated..................................................                    35,000,000
                                                                                          --------------

            Total...........................................................                $175,000,000
                                                                                            ============
</TABLE>

         In the underwriting agreement, each of the underwriters has agreed,
subject to the terms and conditions set forth therein, to purchase all of its
respective allocation of the notes if any of the notes are purchased.

         The distribution of the notes by the underwriters may be effected
from time to time in one or more negotiated transactions or otherwise, at
varying prices to be determined at the time of sale. Proceeds to the depositor
from the sale of the notes, before deducting expenses payable by the
depositor, will be approximately 99.64885% of the aggregate note balance as of
the closing date.

         Until the distribution of the notes is completed, rules of the
Securities and Exchange Commission may limit the ability of the underwriters
and certain selling group members to bid for and purchase the notes. As an
exception to these rules, the underwriters are permitted to engage in certain
transactions that stabilize the price of the notes. Such transactions consist
of bids or purchases for the purpose of pegging, fixing or maintaining the
price of the notes.

                                      S-55
<PAGE>

         In general, purchases of a security for the purpose of stabilization
could cause the price of the security to be higher than it might be in the
absence of such purchases.

         Neither the depositor, the seller or any of their respective
affiliates nor any of the underwriters makes any representation or prediction
as to the direction or magnitude of any effect that the transactions described
above may have on the price of the notes. In addition, neither the depositor,
the seller or any of their respective affiliates nor any of the underwriters
makes any representation that the underwriters will engage in such
transactions or that such transactions, once commenced, will not be
discontinued without notice.

         The depositor has agreed to indemnify each underwriter against
certain liabilities, including liabilities under the Securities Act of 1933,
as amended, or contribute to payments the underwriters may be required to make
in respect thereof. The depositor is an affiliate of Bear, Stearns & Co. Inc.,
the representative of the underwriters.

         The underwriters intend to make a secondary market in the notes, but
have no obligation to do so. There can be no assurance that a secondary market
for the notes will develop, or if it does develop, that it will provide holders
of the notes with liquidity of investment at any particular time or for the life
of the notes. The notes will not be listed on any securities exchange.

         Upon receipt of a request by an investor who has received an
electronic prospectus supplement and prospectus from the underwriters or a
request by such investor's representative within the period during which there
is an obligation to deliver a prospectus supplement and prospectus, the
depositor or the underwriters will promptly deliver, or cause to be delivered,
without charge, a paper copy of the prospectus supplement and prospectus.

         Until 90 days from the date of this prospectus supplement, all
dealers effecting transactions in the notes, whether or not participating in
this distribution, may be required to deliver a prospectus supplement and
prospectus. This is in addition to the obligation of dealers to deliver a
prospectus supplement and prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.

                                     Experts

         The consolidated financial statements of Ambac Assurance Corporation
and subsidiaries, as of December 31, 1998 and 1997 and for each of the years
in the three-year period ended December 31, 1998 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

         Certain legal matters with respect to the servicer and the seller
will be passed upon for the servicer and the seller by the General Counsel to
GMAC Mortgage Corporation. Certain legal matters with respect to the notes
will be passed upon for the depositor and the underwriters by Brown & Wood
LLP, New York, New York.

                                    Ratings

         It is a condition to issuance that the notes be rated "Aaa" by
Moody's and "AAA" by Standard & Poor's. The depositor has not requested a
rating on the notes by any rating agency other than Moody's and Standard &
Poor's. However, there can be no assurance as to whether any other rating
agency will rate the notes, or, if it does, what rating would be assigned by
any other rating agency. A rating on the notes by another rating agency, if
assigned at all, may be lower than the ratings assigned to the notes by
Moody's and Standard & Poor's. A securities rating addresses the likelihood of
the receipt by holders of notes of distributions on the home equity loans. The
rating takes into consideration the structural and legal aspects associated
with the notes. The ratings on the notes do

                                      S-56
<PAGE>

not, however, constitute statements regarding the possibility that holders might
realize a lower than anticipated yield. 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-57
<PAGE>




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<PAGE>

                                                                         ANNEX I


            Global Clearance, Settlement and Tax Document Procedures

         Except in limited circumstances, the globally offered Bear Stearns
Asset Backed Securities, Inc., Loan-Backed Term Notes, Series 1999-HLTV1,
which are referred to as the global securities, will be available only in
book-entry form. Investors in the global securities may hold the global
securities through any of DTC, Cedelbank 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 Cedelbank and
Euroclear will be conducted in the ordinary way in accordance with the normal
rules and operating procedures of Cedelbank 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 Cedelbank or
Euroclear and DTC Participants holding notes will be effected on a
delivery-against-payment basis through the respective depositaries of
Cedelbank 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 the holders meet some 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, Cedelbank and
Euroclear will hold positions on behalf of their participants through their
relevant depositary which in turn will hold these 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 Cedelbank
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.

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 notes issues in same-day funds.

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

                                      A-1
<PAGE>

         Trading between DTC, seller and Cedelbank or Euroclear participants.
When global securities are to be transferred from the account of a DTC
participant to the account of a Cedelbank participant or a Euroclear
participant, the purchaser will send instructions to Cedelbank or Euroclear
through a Cedelbank participant or Euroclear participant at least one business
day prior to settlement. Cedelbank 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 that 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 Cedelbank 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, i.e., the trade fails, the Cedelbank or
Euroclear cash debt will be valued instead as of the actual settlement date.

         Cedelbank 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 Cedelbank or Euroclear. Under
this approach, they may take on credit exposure to Cedelbank or Euroclear
until the global securities are credited to their account one day later. As an
alternative, if Cedelbank or Euroclear has extended a line of credit to them,
Cedelbank 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, Cedelbank 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 reduce or
offset the amount of the overdraft charges, although the result will depend on
each Cedelbank 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 Cedelbank
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 Cedelbank or Euroclear Seller and DTC Purchaser. Due
to time zone differences in their favor, Cedelbank 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 Cedelbank or Euroclear through a Cedelbank participant or
Euroclear participant at least one business day prior to settlement. In these
cases Cedelbank 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 that 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. The payment will then be reflected in
the account of Cedelbank participant or Euroclear participant the following
day, and receipt of the cash proceeds in the Cedelbank 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
Cedelbank 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, i.e., the trade fails, receipt of the cash proceeds
in the Cedelbank participant's or Euroclear participant's account would
instead be valued as of the actual settlement date.

                                      A-2
<PAGE>

         Finally, day traders that use Cedelbank or Euroclear and that
purchase global securities from DTC participants for delivery to Cedelbank
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 Cedelbank or Euroclear for one day,
         until the purchase side of the trade is reflected in their Cedelbank
         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
         Cedelbank 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 Cedelbank participant or Euroclear participant.

Certain U.S. Federal Income Tax Documentation Requirements

         A beneficial owner of global securities holding securities through
Cedelbank 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 generally
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: Exemption for
                  Non-U.S. Persons (Form W-8).

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
(Certificate of Foreign Status). If the information shown on Form W-8 changes,
a new Form W-8 must be filed within 30 days of the change.

         Exemption for Non-U.S. persons with effectively connected income (Form
4224). 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, the Exemption from Withholding of Tax on
Income Effectively Connected with the Conduct of a Trade or Business in the
United States.

         Exemption or reduced rate for Non-U.S. persons resident in treaty
countries (Form 1001). 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, Holdership, Exemption or
Reduced Rate Certificate. If the treaty provides only for a reduced rate,
withholding tax will be imposed at that rate unless the filer alternatively
files Form W-8. Form 1001 may be filed by note holders or their agent.
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, the 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

                                      A-3
<PAGE>

W-8 and Form 1001 are effective for three calendar years and Form 4224 is
effective for one calendar year. The term 'U.S. person' means:

         o        a citizen or resident of the United States,

         o        a corporation or 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 of its states or the District of Columbia
                  (except, in the case of a partnership, to the extent provided
                  in regulations),

         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.

         Some trusts not described in the last clause above 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.

                                      A-4

<PAGE>

PROSPECTUS

                             Asset-Backed Securities
                              (Issuable in Series)
                   BEAR STEARNS ASSET BACKED SECURITIES, INC.
                                    Depositor

Consider carefully the risk factors beginning on page 3 of this prospectus.

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

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

The Securities

         Bear Stearns Asset Backed Securities, Inc., as depositor, will sell the
securities, which may be in the form of asset-backed certificates or
asset-backed notes. Each issue of securities will have its own series
designation and will evidence either:

         o        ownership interests in certain assets in a trust fund or

         o        debt obligations secured by certain assets in a trust fund.

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

The Trust Fund and Its Assets

         As specified in the related prospectus supplement, each trust fund will
consist primarily of assets from one of the following categories:

         o        closed-end and/or revolving home equity loans secured by
                  senior or subordinate liens on one- to four-family residential
                  or mixed-use properties;

         o        home improvement installment sales contracts and installment
                  loan agreements that are either unsecured or secured by senior
                  or subordinate liens on one- to four-family residential or
                  mixed-use properties or by purchase money security interests
                  in the related home improvements; and

         o        private asset backed securities.

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

Market for the Securities

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

Offers of the Securities

         Offers of the securities are made through Bear, Stearns & Co. Inc. and
the other underwriters listed in the related prospectus supplement.

         Neither the Securities and Exchange Commission nor any state securities
commission has approved these securities or determined that this prospectus is
accurate or complete. Any representation to the contrary is a criminal offense.

                            Bear, Stearns & Co. Inc.
                                 August 5, 1999


<PAGE>





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

              Information about each series of securities is contained in the
following documents:

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

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

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

         Each prospectus supplement generally will include the following
information with respect to the related series of securities:

         o        the principal amount, interest rate and authorized
                  denominations of each class of securities;

         o        information concerning the home equity loans, home improvement
                  contracts and/or private securities in the related trust fund;

         o        information concerning the seller or sellers of the home
                  equity loans, home improvement contracts and/or private
                  securities and information concerning any servicer;

         o        the terms of any credit enhancement with respect to particular
                  classes of the securities;

         o        information concerning other trust fund assets, including any
                  reserve fund;

         o        the final scheduled distribution date for each class of
                  securities;

         o        the method for calculating the amount of principal to be paid
                  to each class of securities, and the timing and order of
                  priority of principal payments;

         o        information about any REMIC or FASIT tax elections for some or
                  all of the trust fund assets; and

         o        particulars of the plan of distribution for the securities.

         If you require additional information, the mailing address of our
principal executive offices is Bear Stearns Asset Backed Asset Securities, Inc.,
245 Park Avenue, New York, New York 10167 and our telephone number is (212)
272-4095. For other means of acquiring additional information about us or a
series of securities, see "The Trust Funds -- Incorporation of Certain
Information by Reference" beginning on page 85 of this prospectus.



                                       2
<PAGE>


                                  RISK FACTORS

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


Limited Liquidity

         No market will exist for the securities of any series before they are
issued. In addition, we cannot give you any assurance that a resale market will
develop following the issuance and sale of any series of the securities. Even if
a resale market does develop, it might not provide you with liquidity of
investment or continue for the life of the securities.

Limited Assets for Making Payments

         The securities of each series will be payable solely from the assets of
the related trust fund, including any credit enhancement that may be applicable
to certain classes. In the case of securities that are in the form of notes, the
related indenture will require that noteholders proceed only against the assets
of the related trust fund. We cannot give you any assurance that the market
value of the assets in any trust fund will be equal to or greater than the total
principal amount of the related series of securities then outstanding, plus
accrued interest. Moreover, if the assets of a trust fund are ever sold, the
sale proceeds will be applied first to reimburse any related trustee, servicer
and credit enhancement provider for their unpaid fees and expenses before any
remaining amounts are distributed to securityholders.

         In addition, at the times specified in the related prospectus
supplement, certain assets of the trust fund and the related security accounts
may be released to the depositor, the servicer, the credit enhancement provider
or other persons, if

         o        all payments then due on the related securities have been
                  made, and

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

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

         You will have no recourse against the depositor or any other person if
any required distribution on the securities is not made or for any other
default. The only obligations of the depositor with respect to the related trust
fund or the securities would result from a breach of the representations and
warranties that the depositor may make concerning the trust assets. However,
because of the depositor's very limited assets, even if the depositor should be
required to repurchase a loan from a particular trust fund because of the breach
of a representation or warranty, its sole source of funds for the repurchase
would be:

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

         o        monies from any reserve fund established to pay for loan
                  repurchases.

Limited Protection Against Losses

         Credit enhancement is intended to reduce the effect of delinquent
payments or loan losses on those classes of securities that have the benefit of
the credit enhancement. Nevertheless, the amount of any credit enhancement is
subject to the limits described in the related prospectus supplement. Moreover,
the amount of credit enhancement may decline or be depleted under certain
circumstances before the related securities are paid in full. As a result,
securityholders may suffer losses.

Your Yields on the Securities May Vary

         The timing of principal payments on the securities of a series will be
affected by a number of factors, including the following:

         o        the extent of prepayments on the underlying loans in the trust
                  fund or, if the trust fund contains underlying


                                       3
<PAGE>
                  securities, on the loans backing the underlying securities;

         o        the method by which payments of principal are allocated among
                  the classes of securities of that series as specified in the
                  related prospectus supplement;

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

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

         o        repurchases of assets in the related trust fund as a result of
                  material breaches of representations and warranties made by
                  the depositor or a seller; and

         o        in the case of a trust fund that contains revolving credit
                  line loans, any provisions for non-amortization, early
                  amortization or scheduled amortization periods described in
                  the related prospectus supplement.

         All the above factors may affect the yield to maturity of the
securities.

         Interest payable on the securities on any given distribution date will
include all interest accrued during the related interest accrual period. Each
prospectus supplement will specify the interest accrual period for the
securities of the related series. If interest accrues during the calendar month
before the related distribution date, your effective yield will be less than it
would be if the interest accrual period ended the day before the distribution
date. As a result, your effective yield at par may be less than the indicated
coupon rate.

Some Loans Require Balloon Payments

         Certain of the underlying loans may not be fully amortizing over their
terms to maturity and may require a substantial principal payment (i.e., a
"balloon" payment) at their stated maturity. Loans of this type involve a
greater degree of risk than fully amortizing loans since the related borrower
generally must be able to refinance the loan or sell the related property prior
to the loan's maturity date. The borrower's ability to do so will depend on such
factors as the level of available mortgage rates at the time of sale or
refinancing, the relative strength of the local housing market, the borrower's
equity in the property, the borrower's general financial condition and tax laws.

Adjustable Rate Loans May Be Underwritten Differently

         A trust fund may include adjustable rate loans that were underwritten
on the assumption that the borrowers would be able to make higher monthly
payments in a relatively short period of time. In fact, however, the borrowers'
income may not be sufficient to meet their loan payments as payment amounts
increase, thus increasing the risk of default.

Property Values May Be Insufficient

         If the home equity loans in a trust fund are primarily in a junior lien
position, any proceeds from liquidations, insurance recoveries or condemnations
must be used first to satisfy the claims of the related senior lien loans (and
related foreclosure expenses) before being available to satisfy the junior lien
loans. In addition, a junior mortgage lender may only foreclose subject to the
related senior mortgage. As a result, the junior mortgage lender must either pay
the related senior mortgage lender in full, at or before the foreclosure sale,
or agree to make the regular payments on the senior mortgage. The trust will not
have a source of funds to satisfy any senior mortgages or to continue making
payments on them. As a result, the trust's ability, as a practical matter, to
foreclose on any junior mortgage loan will be quite limited. The following
factors, among others, could adversely affect property values in such a way that
the outstanding balance of the related loans, together with any senior financing
on the same properties, would equal or exceed those values:

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



                                       4
<PAGE>

         o        failure of borrowers to maintain their properties adequately;
                  and

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

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

Home Improvement Contracts and Other Loans May Not Have Sufficient Security

         A trust fund may include home improvement contracts that are not
secured by an interest in real estate or otherwise. It may also include home
equity loans with original loan-to-value ratios (or combined loan-to-value
ratios in the case of junior loans) greater than 100%. In these cases, the trust
fund could be treated as a general unsecured creditor for the unsecured portion
of these loans.

         If a loan of this type goes into default, the trust fund will have
recourse only against the borrower's assets generally for the unsecured portion
of the loan, along with the borrower's other general unsecured creditors. In a
bankruptcy proceeding, the unsecured portion of the loan may be discharged, even
if the value of the borrower's assets available to the trust fund would be
insufficient to pay the remaining amounts owing on the loan.

Home Improvement Contracts Will Not Be Stamped

         The depositor will ensure that a UCC-1 financing statement is filed
that identifies as collateral the home improvement contracts included in a trust
fund. However, unless the related prospectus supplement provides otherwise, the
home improvement contracts themselves will not be stamped or marked to reflect
their assignment to the trust fund. Thus, if as a result of negligence, fraud or
otherwise, a subsequent purchaser were able to take physical possession of the
contracts without notice of the assignment to the trust fund, the interests of
the related securityholders in those contracts could be defeated.

Pre-Funding May Adversely Affect Your Investment

         The related prospectus supplement may provide that the depositor or
seller will deposit a specified amount in a pre-funding account on the date the
securities are issued. In this case, the deposited funds may be used only to
acquire additional assets for the trust during a specified period after the
initial issuance of the securities. Any amounts remaining in the account at the
end of that period will be distributed as a prepayment of principal to the
holders of the related securities. As a result, the yield to maturity on your
investment may be adversely affected.

Bankruptcy Laws May Adversely Affect Trust Fund Assets

         The federal bankruptcy code and state debtor relief laws may adversely
affect the ability of the trust fund, as a secured lender, to realize upon its
security. For example, in a federal bankruptcy proceeding, a lender may not
foreclose on mortgaged property without the bankruptcy court's permission.
Similarly, the debtor may propose a rehabilitation plan, in the case of
mortgaged property that is not his principal residence, that would reduce the
amount of the lender's secured indebtedness to the value of the property as of
the commencement of the bankruptcy. As a result, the lender would be treated as
a general unsecured creditor for the reduced amount, the amount of the monthly
payments due on the loan could be reduced, and the interest rate and loan
payment schedule could be changed.

         Any such actions could result in delays in receiving payments on the
loans underlying the securities and result in the reduction of total payments.

Environmental Risks May Adversely Affect Trust Fund Assets

         Federal, state and local laws and regulations impose a wide range of
requirements on activities


                                       5
<PAGE>


that may affect the environment, health and safety. In certain circumstances,
these laws and regulations impose obligations on owners or operators of
residential properties such as those that secure the loans. Failure to comply
with these laws and regulations can result in fines and penalties that could be
assessed against the trust fund as owner of the related property.

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

Consumer Protection Laws May Adversely Affect Trust Fund Assets

         The loans and contracts in each trust fund also may be subject to
federal laws relating to loan origination and underwriting. These laws

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

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

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

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

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

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

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

Subordinate Securities Are Subject to Additional Risk

         If you invest in any class of subordinate securities, your rights as an
investor to receive payments otherwise due you will be subordinate to the rights
of the servicer and the holders of the related senior securities. As a result,
before investing in any subordinate securities, you must be prepared to bear the
risk that payments on your securities may be delayed and that you might not
recover all of your initial investment.

Financial Instruments May Not Perform As Expected

         As described under "Enhancement--Financial Instruments," a trust fund
may include


                                       6
<PAGE>

financial instruments to protect against certain risks or to provide certain
cash flow characteristics for particular classes of the securities of a series.
If you invest in such a class and the issuer of the financial instruments fails
to perform its obligations, the yield to maturity, market price and liquidity of
your securities could be materially adversely affected. In addition, if the
issuer of the related financial instruments experiences a credit rating
downgrade, the market price and liquidity of your securities could be reduced.
Finally, if the financial instruments are intended to provide an approximate or
partial hedge for certain risks or cashflow characteristics, the yield to
maturity, market price and liquidity of your securities could be adversely
affected to the extent that the financial instrument does not provide a perfect
hedge.

REMIC Residual Securities Are Subject to Additional Risk

         If you invest in any class of securities that represent the "residual
interest" in a real estate mortgage investment conduit (REMIC), you will be
required to report as ordinary income your pro rata share of the REMIC's taxable
income, whether or not you actually received any cash. Thus, as the holder of a
REMIC residual interest security, you could have taxable income and tax
liabilities in a year that are in excess of your ability to deduct servicing
fees and any other REMIC expenses. In addition, because of their special tax
treatment, your after-tax yield on a REMIC residual interest security may be
significantly less than that of a corporate bond with similar cash-flow
characteristics and pre-tax yield. Transfers of REMIC residual interest
securities are also restricted.

FASIT Ownership Securities Are Subject to Additional Risk

         If you are a fully taxable domestic corporation that invests in any
class of securities representing the "ownership interest" in a financial asset
securitization investment trust (FASIT), you will be required to report as
ordinary income your pro rata share of the FASIT's taxable income, whether or
not you actually received any cash. Thus, as the holder of a FASIT ownership
interest security, you could have taxable income and tax liabilities in a year
that are in excess of your ability to deduct servicing fees and any other FASIT
expenses. In addition, because of their special tax treatment, your after-tax
yield on a FASIT ownership interest security may be significantly less than that
of a corporate bond with similar cash-flow characteristics and pre-tax yield.
Transfers of FASIT ownership interest securities are also restricted.

Book Entry Registration

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

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

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

Security Ratings Are Not Recommendations

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



                                       7
<PAGE>

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

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

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

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



                          DESCRIPTION OF THE SECURITIES

General

         Bear Stearns Asset Backed Securities, Inc. (the "Depositor") will
establish a trust fund (each, a "Trust Fund") for each series (a "Series") of
its Asset-Backed Notes (the "Notes") and of its Asset-Backed Certificates (the
"Certificates").

         Each Series of Notes will be issued pursuant to an indenture (each, an
"Indenture") between the Trust Fund and the entity named in the related
Prospectus Supplement as trustee (the "Trustee") with respect to that Series. A
form of Indenture has been filed as an exhibit to the Registration Statement of
which this prospectus forms a part. If the Trust Fund includes Loans, the Trust
Fund and the related servicer (the "Servicer") will also enter into a Servicing
Agreement (each, a "Servicing Agreement") with respect to the Loans.

         The Certificates will also be issued in Series pursuant to separate
agreements (each, a "Pooling and Servicing Agreement" or a "Trust Agreement")
among the Depositor, the related Servicer (if the Trust Fund includes Loans) and
the related Trustee A form of Pooling and Servicing Agreement has been filed as
an exhibit to the Registration Statement of which this prospectus forms a part.
A Series may consist of both Notes and Certificates. We refer to both Notes and
Certificates in this prospectus as "Securities."

         The seller or sellers named in the related Prospectus Supplement
(collectively, the "Seller"), from which the Depositor will have purchased
certain of the assets included in the Trust Fund, may agree to reimburse the
Depositor for certain fees and expenses that the Depositor incurs in connection
with the offering of the related Securities.

         The following summaries describe certain provisions in the Pooling and
Servicing Agreement or Trust Agreement, in the case of a Series of Certificates,
and the Indenture and the Servicing Agreement, in the case of a Series of Notes
(collectively, the "Agreements") common to each Series of Securities. The
summaries do not purport to be complete and are subject to, and are qualified in
their entirety by reference to, the provisions of the Agreements and the
Prospectus Supplement relating to each Series of Securities. Where particular
provisions or terms used in the Agreements are referred to, the actual
provisions (including definitions of terms) are incorporated in this prospectus
by reference as part of such summaries.



                                       8
<PAGE>

         Each Series of Securities will consist of one or more classes (each, a
"Class"), one or more of which may be compound interest Securities, variable
interest Securities, planned balance (PAC) Securities, zero coupon Securities,
principal only Securities, interest only Securities or participating Securities.
A Series may also include one or more Classes of subordinated Securities. The
Securities of each Series will be issued only in fully registered form, without
coupons, in the authorized denominations for each Class specified in the related
Prospectus Supplement. Upon satisfaction of any conditions, applicable to a
particular Class as described in the related Prospectus Supplement, the transfer
of the Securities may be registered and the Securities may be exchanged at the
office of the Trustee without the payment of any service charge, other than any
tax or governmental charge payable in connection with the registration of
transfer or exchange. If specified in the related Prospectus Supplement, one or
more Classes of a Series may be available in book-entry form only.

         Unless otherwise provided in the related Prospectus Supplement,
payments of principal of and interest on a Series of Securities will be made on
the distribution dates specified in the Prospectus Supplement (each, a
"Distribution Date") by check mailed to holders of that Series, registered as
such at the close of business on the record date (specified in the Prospectus
Supplement) that is applicable to that Distribution Date at their addresses
appearing on the security register (each, a "Holder"). However, payments may be
made by wire transfer (at the expense of the Holder requesting payment by wire
transfer) in certain circumstances described in the Prospectus Supplement. In
addition final payments of principal in retirement of each Security will be made
only upon presentation and surrender of the Security at the office of the
related Trustee. Notice of the final payment on a Security will be mailed to the
Holder of that Security before the Distribution Date on which the final
principal payment is expected to be made.

         Payments of principal of and interest on the Securities will be made by
the Trustee, or a paying agent on behalf of the Trustee, as specified in the
related Prospectus Supplement. Unless otherwise provided in the related
Prospectus Supplement, the following amounts will be deposited directly into an
account (each, a "Collection Account") established for a particular Series with
the Trustee (or with the Servicer in the name of the Trustee):

         o        all payments with respect to the Primary Assets (as defined
                  below) for a Series, together with reinvestment income
                  thereon;

         o        amounts withdrawn from any cash, letters of credit, short-term
                  investments or other instruments acceptable to the rating
                  agencies identified in the Prospectus Supplement as rating
                  that Series (each, a "Rating Agency") deposited in one or more
                  reserve funds established in the name of the Trustee (each, a
                  "Reserve Fund'); and

         o        amounts available pursuant to any other credit enhancement.

         If provided in the related Prospectus Supplement, the deposits may be
net of certain amounts payable to the Servicer and any other person specified in
the Prospectus Supplement. Those amounts thereafter will be deposited into the
separate distribution account (each, a "Distribution Account") established for
that Series and will be available to make payments on the Securities of that
Series on the next Distribution Date. See "The Trust Funds--Collection and
Distribution Accounts" in this prospectus.

The Primary Assets and Their Valuation

         The "Primary Assets" of each Trust Fund may include one or more pools
of the following:

         o        closed-end and/or revolving home equity loans (the "Mortgage
                  Loans"), secured by senior or subordinate liens on one- to
                  four-family residential or mixed-use properties;


                                       9
<PAGE>

         o        home improvement installment sales contracts and installment
                  loan agreements (the "Home Improvement Contracts"), which are
                  either unsecured or secured generally by subordinate liens on
                  one- to four-family residential or mixed-use properties, or by
                  purchase money security interests in the related home
                  improvements (the "Home Improvements"); and

         o        securities (the "Private Securities") backed or secured by
                  Mortgage Loans, Contracts and/or Home Improvement Contracts
                  (the "Underlying Loans").

         The Mortgage Loans and the Home Improvement Contracts are collectively
referred to in this prospectus as the "Loans". The residential or mixed-use
properties that secure the Mortgage Loans are collectively referred to in this
prospectus as the "Mortgaged Properties".

         If specified in the related Prospectus Supplement for a Series of
Notes, each Primary Asset included in the related Trust Fund will be assigned an
initial "Asset Value." Unless otherwise specified in the related Prospectus
Supplement, at any time the Asset Value of the Primary Assets will be equal to

         o        the product of the Asset Value Percentage as set forth in the
                  Indenture and

         o        the lesser of

                  (a)      the stream of remaining regularly scheduled payments
                           on the Primary Assets, net, unless otherwise provided
                           in the related Prospectus Supplement, of certain
                           amounts payable as expenses, together with income
                           earned on each such scheduled payment received
                           through the day preceding the next Distribution Date
                           at the Assumed Reinvestment Rate, if any, discounted
                           to present value at the highest interest rate on the
                           Notes of that Series over periods equal to the
                           interval between payments on the Notes, and

                  (b)      the then-outstanding principal balance of the Primary
                           Assets.

         Unless otherwise specified in the related Prospectus Supplement, the
initial Asset Value of the Primary Assets will be at least equal to the
principal amount of the Notes of the related Series at the date of issuance.

         The "Assumed Reinvestment Rate," if any, for a Series will be the
highest rate permitted by the Rating Agencies or a rate insured by means of a
surety bond, guaranteed investment contract or reinvestment agreement or other
arrangement satisfactory to the Rating Agencies. If the Assumed Reinvestment
Rate is insured in this way, the related Prospectus Supplement will set forth
the terms of the arrangement.

Payments of Interest

         The Securities of each Class that by their terms are entitled to
receive interest will bear interest (calculated, unless otherwise specified in
the related Prospectus Supplement, on the basis of a 360-day year of twelve
30-day months) from the date and at the rate specified, or will be entitled to
receive interest payment amounts calculated in the method described, in the
related Prospectus Supplement. Interest on the interest-bearing Securities of a
Series will be payable on the Distribution Date specified in the related
Prospectus Supplement. The rate of interest on Securities of a Series may be
variable or may change with changes in the annual interest rates of the Loans
(or Underlying Loans) included in the related Trust Fund and/or as prepayments
occur with respect to the Loans (or Underlying Loans). Principal only Securities
may not be entitled to receive any interest distributions or may be entitled to
receive only nominal interest distributions. Any interest on zero coupon
Securities that is not paid on the related Distribution Date will accrue and be
added to principal on such Distribution Date.



                                       10
<PAGE>

         Interest payable on the Securities on a Distribution Date will include
all interest accrued during the period specified in the related Prospectus
Supplement. In the event interest accrues during the calendar month preceding a
Distribution Date, the effective yield to Holders will be reduced from the yield
that would otherwise be obtainable if interest payable on the Securities were to
accrue through the day immediately preceding that Distribution Date.

Payments of Principal

         On each Distribution Date for a Series, principal payments will be made
to the Holders of the related Securities on which principal is then payable, to
the extent set forth in the related Prospectus Supplement. The payments will be
made in a total amount determined as specified in the related Prospectus
Supplement and will be allocated among the respective Classes of the Series in
the manner, at the times and in the priority (which may, in certain cases,
include allocation by random lot) set forth in the related Prospectus
Supplement.

Final Scheduled Distribution Date

         The "Final Scheduled Distribution Date" with respect to each Class of a
Series of Notes is the date no later than which the total principal balance of
that Class will be fully paid, and with respect to each Class of a Series of
Certificates is the date on which the principal balance of that Class is
expected to be reduced to zero, in each case calculated on the basis of the
assumptions applicable to that Series described in the related Prospectus
Supplement. The Final Scheduled Distribution Date for each Class of a Series
will be specified in the related Prospectus Supplement. Since payments on the
Primary Assets will be used to make distributions that reduce the outstanding
principal amount of the Securities, it is likely that the actual final
Distribution Date of any Class will occur earlier, and may occur substantially
earlier, than its Final Scheduled Distribution Date. Furthermore, with respect
to a Series of Certificates, unless otherwise specified in the related
Prospectus Supplement, the actual final Distribution Date of any Certificate may
occur later than its Final Scheduled Distribution Date as a result of
delinquencies, defaults and liquidations of the Primary Assets in the Trust
Fund. No assurance can be given as to the actual prepayment experience with
respect to a Series. See "-Weighted Average Lives of the Securities" below.

Special Redemption

         If so specified in the Prospectus Supplement relating to a Series of
Securities having other than monthly Distribution Dates, one or more Classes of
Securities of that Series may be subject to special redemption, in whole or in
part, on the day specified in the related Prospectus Supplement (the "Special
Redemption Date") if, as a consequence of prepayments on the related Loans (or
Underlying Loans) or low yields then available for reinvestment, the entity
specified in the Prospectus Supplement determines, based on assumptions set
forth in the applicable Agreement, that the amount available for the payment of
interest that will have accrued on those Securities (the "Available Interest
Amount") through the designated interest accrual date specified in the related
Prospectus Supplement is less than the amount of interest that will have accrued
on those Securities to that date. In this event and as further described in the
Prospectus Supplement, the Trustee will redeem a principal amount of outstanding
Securities of that Series sufficient to cause the Available Interest Amount to
equal the amount of interest that will have accrued through the designated
interest accrual date for that Series of Securities outstanding immediately
after the redemption.

Optional Redemption, Purchase or Termination

         The Depositor or the Servicer or any other entity that may be
designated in the related Prospectus Supplement will have the option to redeem,
in whole or in part, one or more Classes of Notes or purchase


                                       11
<PAGE>

one or more Classes of Certificates of any Series on any Distribution Date under
the circumstances, if any, specified in the related Prospectus Supplement.
Alternatively, if the Prospectus Supplement for a Series of Certificates so
provides, the Depositor, the Servicer or another entity designated in the
related Prospectus Supplement will have the option to cause an early termination
of the Trust Fund by repurchasing all of the Primary Assets from the Trust Fund
on or after a date specified in the Prospectus Supplement, or on or after such
time as the total outstanding principal amount of the Certificates or Primary
Assets (as specified in the Prospectus Supplement) is equal to or less than the
amount or percentage specified in the Prospectus Supplement. Notice of such
redemption, purchase or termination must be given by the Depositor or the
Trustee prior to the related date. The redemption, purchase or repurchase price
will be set forth in the Prospectus Supplement. If specified in the Prospectus
Supplement, in the event that a REMIC election has been made, the Trustee shall
receive a satisfactory opinion of counsel that the optional redemption, purchase
or termination will be conducted so as to constitute a "qualified liquidation"
under Section 860F of the Internal Revenue Code of 1986, as amended (the
"Code").

         In addition, the Prospectus Supplement may provide other circumstances
under which Holders of Securities of a Series could be fully paid significantly
earlier than would otherwise be the case if payments or distributions were
solely based on the activity of the related Primary Assets.

Weighted Average Lives of the Securities

         Weighted average life refers to the average amount of time that will
elapse from the date of issue of a security until each dollar of principal of
the security will be repaid to the investor. Unless otherwise specified in the
related Prospectus Supplement, the weighted average life of the Securities of a
Class will be influenced by the rate at which the amount financed under the
Loans (or Underlying Loans relating to the Private Securities, as applicable)
included in the Trust Fund for a Series is paid, whether in the form of
scheduled amortization or prepayments.

         Prepayments on loans and other receivables can be measured relative to
a prepayment standard or model. The Prospectus Supplement for a Series of
Securities will describe the prepayment standard or model, if any, that is used
and may contain tables setting forth the projected weighted average life of each
Class of Securities of the Series and the percentage of the original principal
amount of each Class of Securities of the Series that would be outstanding on
specified Distribution Dates based on the assumptions stated in such Prospectus
Supplement, including assumptions that prepayments on the Loans (or Underlying
Loans relating to the Private Securities, as applicable) included in the related
Trust Fund are made at rates corresponding to various percentages of the
prepayment standard or model specified in the Prospectus Supplement.

         There is, however, no assurance that prepayment of the Loans (or
Underlying Loans relating to the Private Securities, as applicable) included in
the related Trust Fund will conform to any level of any prepayment standard or
model specified in the related Prospectus Supplement. The rate of principal
prepayments on pools of loans may be influenced by a variety of factors,
including job-related factors such as transfers, layoffs or promotions and
personal factors such as divorce, disability or prolonged illness. Economic
conditions, either generally or within a particular geographic area or industry,
also may affect the rate of principal prepayments. Demographic and social
factors may influence the rate of principal prepayments in that some borrowers
have greater financial flexibility to move or refinance than do others. The
deductibility of mortgage interest payments, servicing decisions and other
factors also can affect the rate of principal prepayments. As a result, there
can be no assurance as to the rate or timing of principal prepayments of the
Loans (or Underlying Loans) either from time to time or over the lives of the
Loans (or Underlying Loans).



                                       12
<PAGE>

         The rate of prepayments of conventional housing loans and other
receivables has fluctuated significantly in recent years. In general, however,
if prevailing interest rates fall significantly below the interest rates on the
Loans (or Underlying Loans) for a Series, those loans are likely to prepay at
rates higher than if prevailing interest rates remain at or above the interest
rates borne by those loans. In this regard, it should be noted that the Loans
(or Underlying Loans) for a Series may have different interest rates. In
addition, the weighted average life of a Class of the Securities may be affected
by the varying maturities of the Loans (or Underlying Loans). If any Loans (or
Underlying Loans) for a Series have actual terms to stated maturity that are
less than those that were assumed in calculating the Final Scheduled
Distribution Date of the related Securities, one or more Classes of the Series
may be fully paid prior to their respective Final Scheduled Distribution Date,
even in the absence of prepayments and a reinvestment return higher than the
Assumed Reinvestment Rate.

                                 THE TRUST FUNDS

General

         The Notes of each Series will be secured by the pledge of the assets of
the related Trust Fund, and the Certificates of each Series will represent
interests in the assets of the related Trust Fund. The Trust Fund of each Series
will include assets purchased by the Depositor from the Seller composed of:

                  o        the Primary Assets;

                  o        amounts available from the reinvestment of payments
                           on the Primary Assets at the Assumed Reinvestment
                           Rate, if any, specified in the related Prospectus
                           Supplement;

                  o        any credit enhancement ("Enhancement") in the form of
                           an irrevocable letter of credit, surety bond,
                           insurance policy or other form of credit support;

                  o        any Mortgaged Property or Home Improvement that
                           secured a Loan but which is acquired by foreclosure
                           or deed in lieu of foreclosure or repossession "REO
                           Property"); and

                  o        the amount, if any, initially deposited into the
                           Collection Account or Distribution Account(s) for a
                           Series as specified in the related Prospectus
                           Supplement.

         The Securities will be non-recourse obligations of the related Trust
Fund. The assets of the Trust Fund specified in the related Prospectus
Supplement for a Series of Securities, unless the Prospectus Supplement
indicates otherwise, will serve as collateral only for that Series of
Securities. Holders of a Series of Notes may only proceed against the collateral
securing that Series of Notes in the case of a default with respect to that
Series of Notes and may not proceed against any assets of the Depositor or the
related Trust Fund not pledged to secure those Notes.

         The Primary Assets for a Series will be sold by the Seller to the
Depositor or purchased by the Depositor in the open market or in privately
negotiated transactions (which may include transactions with affiliates) and
will be transferred by the Depositor to the Trust Fund. Loans relating to a
Series will be serviced by the Servicer (which may be the Seller) that is
specified in the related Prospectus Supplement. The Servicer will service the
Loans pursuant to a Pooling and Servicing Agreement, with respect to a Series of
Certificates or a Servicing Agreement between the Trust Fund and Servicer, with
respect to a Series of Notes.

         If the Prospectus Supplement so provides, a Trust Fund relating to a
Series of Securities may be a business trust formed under the laws of the state
specified in the Prospectus Supplement pursuant to a trust agreement (each, a
"Trust Agreement") between the Depositor and the Trustee.


                                       13
<PAGE>

         Each Trust Fund, prior to the initial offering of the related Series of
Securities, will have no assets or liabilities. No Trust Fund is expected to
engage in any activities other than:

         o        to acquire, manage and hold the related Primary Assets and
                  other assets contemplated in this prospectus and in the
                  related Prospectus Supplement, and the proceeds thereof;

         o        to issue the Securities;

         o        to make payments and distributions on the Securities; and

         o        to perform certain related activities.

         No Trust Fund is expected to have any source of capital other than its
assets and any related Enhancement.

         Primary Assets included in the Trust Fund for a Series may consist of
any combination of Loans and Private Securities, as and to the extent the
related Prospectus Supplement specifies.

The Loans

         Mortgage Loans. The Primary Assets for a Series may consist, in whole
or in part, of closed-end home equity loans (the "Closed-End Loans") and/or
revolving home equity loans or certain balances forming a part of the revolving
loans (the "Revolving Credit Line Loans" and, together with the Closed-End
Loans, the "Mortgage Loans") secured by mortgages, primarily on one- to
four-family residential or mixed-use properties, that may be subordinated to
other mortgages on the same Mortgaged Property. The Mortgage Loans may have
fixed interest rates or adjustable interest rates and may provide for other
payment characteristics as described below and in the related Prospectus
Supplement.

         The full principal amount of a Closed-End Loan is advanced at
origination of the loan and generally is repayable in equal (or substantially
equal) installments of an amount sufficient to fully amortize such loan at its
stated maturity. Unless otherwise described in the related Prospectus
Supplement, the original terms to stated maturity of Closed-End Loans will not
exceed 360 months. Principal amounts on a Revolving Credit Line Loan may be
drawn down (up to a maximum amount as set forth in the related Prospectus
Supplement) or repaid under each Revolving Credit Line Loan from time to time,
but may be subject to a minimum periodic payment. Except to the extent provided
in the related Prospectus Supplement, the Trust Fund will not include any
amounts borrowed under a Revolving Credit Line Loan after the date designated in
the Prospectus Supplement as the cut-off date (the "Cut-off Date"). As more
fully described in the related Prospectus Supplement, interest on each Revolving
Credit Line Loan, excluding introductory rates offered from time to time during
promotional periods, is computed and payable monthly on the average daily
Principal Balance of that Loan. Under certain circumstances, under either a
Revolving Credit Line Loan or a Closed-End Loan, a borrower may choose an
interest-only payment option under which only the amount of interest that
accrues on the loan during the billing cycle must be paid. An interest-only
payment option may be available for a specified period before the borrower must
begin paying at least the minimum monthly payment of a specified percentage of
the average outstanding balance of the loan.

         The rate of prepayment on the Mortgage Loans cannot be predicted. Home
equity loans have been originated in significant volume only during the past few
years and the Depositor is not aware of any publicly available studies or
statistics on the rate of prepayment of such loans. Generally, home equity loans
are not viewed by borrowers as permanent financing. Accordingly, the Mortgage
Loans may experience a higher rate of prepayment than traditional first mortgage
loans. On the other hand, because home equity loans such as the Revolving Credit
Line Loans generally are not fully amortizing, the absence of voluntary borrower
prepayments could cause rates of principal payments to be lower than, or



                                       14
<PAGE>

similar to, those of traditional fully-amortizing first mortgage loans. The
prepayment experience of the related Trust Fund may be affected by a wide
variety of factors, including general economic conditions, prevailing interest
rate levels, the availability of alternative financing and homeowner mobility
and the frequency and amount of any future draws on any Revolving Credit Line
Loans. Other factors that might be expected to affect the prepayment rate of a
pool of home equity mortgage loans or home improvement contracts include the
amounts of, and interest rates on, the underlying first mortgage loans, and the
use of first mortgage loans as long-term financing for home purchase and
subordinate mortgage loans as shorter-term financing for a variety of purposes,
including home improvement, education expenses and purchases of consumer
durables such as automobiles. Accordingly, the Mortgage Loans may experience a
higher rate of prepayment than traditional fixed-rate first mortgage loans. In
addition, any future limitations on the right of borrowers to deduct interest
payments on home equity loans for federal income tax purposes may further
increase the rate of prepayments of the Mortgage Loans. Moreover, the
enforcement of a "due-on-sale" provision (as described below) will have the same
effect as a prepayment of the related Mortgage Loan. See "Certain Legal Aspects
of the Loans--Due-on-Sale Clauses in Mortgage Loans."

         Collections on Revolving Credit Line Loans may vary for a number of
reasons, including those listed below.

         o        A borrower may make a payment during a month in an amount that
                  is as little as the minimum monthly payment for that month or,
                  during the interest-only period for certain Revolving Credit
                  Line Loans (and, in more limited circumstances, Closed-End
                  Loans with respect to which an interest-only payment option
                  has been selected), the interest, fees and charges for that
                  month.

         o        A borrower may make a payment that is as much as the entire
                  Principal Balance plus accrued interest and related fees and
                  charges during a month.

         o        A borrower may fail to make the required periodic payment.

         o        Collections on the Mortgage Loans may vary due to seasonal
                  purchasing and the payment habits of borrowers.

         The Mortgage Loans will be secured by "Single Family Properties" (i.e.,
one- to four-family residential housing, including condominium units and
cooperative dwelling units) and mixed-use properties. Mixed-use properties will
consist of structures of no more than three stories that include one- to
four-residential dwelling units and space used for retail, professional or other
commercial uses. Such uses, which will not involve more than 50% of the space in
the structure, may include doctor, dentist or law offices, real estate agencies,
boutiques, newsstands, convenience stores or other similar types of uses
intended to cater to individual customers as specified in the related Prospectus
Supplement. The properties may be located in suburban or metropolitan districts.
Any such non-residential use will be in compliance with local zoning laws and
regulations. The Single Family Properties may consist of detached individual
dwellings, individual condominiums, townhouses, duplexes, row houses, individual
units in planned unit developments and other attached dwelling units. Each
Single Family Property will be located on land owned in fee simple by the
borrower or on land leased by the borrower for a term at least ten years (unless
otherwise provided in the related Prospectus Supplement) greater than the term
of the related Loan. Attached dwellings may include owner-occupied structures
where each borrower owns the land upon which the unit is built, with the
remaining adjacent land owned in common or dwelling units subject to a
proprietary lease or occupancy agreement in a cooperatively owned apartment
building.

         Unless otherwise specified in the related Prospectus Supplement,
Mortgages on cooperative dwelling units consist of a lien on the shares issued
by the cooperative dwelling corporation and the proprietary lease or occupancy
agreement relating to the cooperative dwelling.



                                       15
<PAGE>

         The aggregate Principal Balance of Loans secured by Single Family
Properties that are owner-occupied will be disclosed in the related Prospectus
Supplement. Unless otherwise specified in the Prospectus Supplement, the sole
basis for a representation that a given percentage of the Loans are secured by
Single Family Property that is owner-occupied will be either

         o        a representation by the borrower at origination of the
                  Mortgage Loan either that the underlying Mortgaged Property
                  will be used by the borrower for a period of at least six
                  months every year or that the borrower intends to use the
                  Mortgaged Property as a primary residence, or

         o        a finding that the address of the underlying Mortgaged
                  Property is the borrower's mailing address as reflected in the
                  Servicer's records.

         To the extent specified in the related Prospectus Supplement, Single
Family Properties may include non-owner occupied investment properties and
vacation and second homes.

         Home Improvement Contracts. The Primary Assets for a Series may
consist, in whole or in part, of home improvement installment sales contracts
and installment loan agreements (the "Home Improvement Contracts") originated by
a home improvement contractor in the ordinary course of business. As specified
in the related Prospectus Supplement, the Home Improvement Contracts will either
be unsecured or secured by senior or junior Mortgages primarily on Single Family
Properties, or by purchase money security interests in the related Home
Improvements. Unless otherwise specified in the applicable Prospectus
Supplement, the Home Improvement Contracts will be fully amortizing and may have
fixed interest rates or adjustable interest rates and may provide for other
payment characteristics as described below and in the related Prospectus
Supplement.

         Unless otherwise specified in the related Prospectus Supplement, the
home improvements (the "Home Improvements") securing the Home Improvement
Contracts 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. As used in this prospectus, the term "Property"
includes the Mortgaged Properties and the Home Improvements.

         Additional Information. The selection criteria that will apply with
respect to the Loans, including, but not limited to, the combined loan-to-value
ratios or loan-to-value ratios, as applicable, original terms to maturity and
delinquency information, will be specified in the related Prospectus Supplement.

         The Loans for a Series may include Loans that do not amortize their
entire Principal Balance by their stated maturity in accordance with their terms
and require a balloon payment of the remaining Principal Balance at maturity, as
specified in the related Prospectus Supplement. As further described in the
related Prospectus Supplement, the Loans for a Series may include Loans that do
not have a specified stated maturity.

         The Loans will be conventional contracts or contracts insured by the
Federal Housing Administration (the "FHA") or partially guaranteed by the
Veterans Administration (the "VA"). Loans designated in the related Prospectus
Supplement as insured by the FHA will be insured by the FHA under various FHA
programs as authorized under the United States Housing Act of 1937, as amended..
These programs generally limit the principal amount and interest rates of the
mortgage loans insured. Loans insured by the FHA generally require a minimum
down payment of approximately 5% of the original principal amount of the loan.
No FHA-insured Loans relating to a Series may have an interest rate or original
principal amount exceeding the applicable FHA limits at the time or origination
of such loan.


                                       16
<PAGE>

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

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

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

         Loans designated in the related Prospectus Supplement as guaranteed by
the VA will be partially guaranteed by the VA under the Serviceman's
Readjustment Act of 1944, as amended. The Serviceman's Readjustment Act of 1944,
as amended, permits a veteran (or in certain instances, the spouse of a veteran)
to obtain a mortgage loan guaranty by the VA covering mortgage financing of the
purchase of a one- to four-family dwelling unit at interest rates permitted by
the VA. The program has no mortgage loan limits, requires no down payment from
the purchaser and permits the guarantee of mortgage loans of up to 30 years'
duration.

         The maximum guaranty that may be issued by the VA under a VA-
guaranteed mortgage loan depends upon the original principal amount of the
mortgage loan, as further described in 38 United States Code Section 1803(a), as
amended. The liability on the guaranty is reduced or increased pro rata with any
reduction or increase in the amount of indebtedness, but in no event will the
amount payable on the


                                       17
<PAGE>

guaranty exceed the amount of the original guaranty. The VA may, at its option
and without regard to its guaranty, make full payment to a mortgage holder of
unsatisfied indebtedness on a mortgage upon its assignment to the VA.

         With respect to a defaulted VA-guaranteed Loan, the Servicer is, absent
exceptional circumstances, authorized to announce its intention to foreclose
only when the default has continued for three months. Generally, a claim for the
guaranteed amount is submitted to the VA after liquidation of the Mortgaged
Property.

         The amount payable under a VA guaranty will be the percentage of the
VA- insured loan originally guaranteed by the VA applied to the indebtedness
outstanding as of the applicable date of computation specified in the VA
regulations. Payments under the guaranty will be equal to the unpaid principal
amount of the loan, interest accrued on the unpaid balance of the loan to the
appropriate date of computation and limited expenses of the mortgagee, but in
each case only to the extent that such amounts have not been recovered through
liquidation of the mortgaged property. The amount payable under the guaranty may
in no event exceed the amount of the original guaranty.

         The related Prospectus Supplement for each Series will provide
information with respect to the Loans that are Primary Assets as of the Cut-off
Date, including, among other things, and to the extent relevant:

         o        the aggregate unpaid Principal Balance of the Loans;

         o        the range and weighted average interest rates on the Loans,
                  and, in the case of adjustable rate Loans, the range and
                  weighted average of the current interest rates and the
                  lifetime interest rate caps, if any;

         o        the range and average Principal Balance of the Loans;

         o        the weighted average original and remaining terms to stated
                  maturity of the Loans and the range of original and remaining
                  terms to stated maturity, if applicable;

         o        the range and weighted average of combined loan-to-value
                  ratios or loan-to-value ratios for the Loans, as applicable;

         o        the percentage (by Principal Balance as of the Cut-off Date)
                  of Loans that accrue interest at adjustable or fixed interest
                  rates;

         o        any special hazard insurance policy or bankruptcy bond or
                  other enhancement relating to the Loans;

         o        the percentage (by Principal Balance as of the Cut-off Date)
                  of Loans that are secured by Mortgaged Properties or Home
                  Improvements or that are unsecured;

         o        the geographic distribution of any Mortgaged Properties
                  securing the Loans;

         o        for Loans that are secured by Single Family Properties, the
                  percentage (by Principal Balance as of the Cut-off Date)
                  secured by shares relating to cooperative dwelling units,
                  condominium units, investment property and vacation or second
                  homes;

         o        the lien priority of the Loans;

         o        the delinquency status and year of origination of the Loans;

         o        whether such Loans are Closed-End Loans and/or Revolving
                  Credit Line Loans; and


                                       18
<PAGE>


         o        in the case of Revolving Credit Line Loans, the general
                  payments and credit line terms of those Loans and other
                  pertinent features.

         The related Prospectus Supplement will also specify any other
limitations on the types or characteristics of Loans for a Series.

         If information of the nature described above respecting the Loans is
not known to the Depositor at the time the Securities are initially offered,
more general or approximate information of the nature described above will be
provided in the Prospectus Supplement and additional information will be set
forth in a Current Report on Form 8-K to be available to investors on the date
of issuance of the related Series and to be filed with the Commission within 15
days after the initial issuance of the Securities.

Private Securities

         General. Primary Assets for a Series may consist, in whole or in part,
of Private Securities that include:

         o        pass-through certificates representing beneficial interests in
                  loans of the type that would otherwise be eligible to be Loans
                  (the "Underlying Loans") or

         o        collateralized obligations secured by Underlying Loans.

The pass-through certificates or collateralized obligations will have
previously been

         o        offered and distributed to the public pursuant to an effective
                  registration statement, or

         o        purchased in a transaction not involving any public offering
                  from a person that is not an affiliate of the issuer of the
                  Private Securities at the time of sale (nor its affiliate at
                  any time during the three preceding months) and a period of
                  two years has elapsed since the date the Private Securities
                  were acquired from the issuer or from its affiliate, whichever
                  is later.

         Although individual Underlying Loans may be insured or guaranteed by
the United States or an agency or instrumentality thereof, they need not be, and
the Private Securities themselves will not be insured or guaranteed.

         Private Securities will have been issued pursuant to a pooling and
servicing agreement, a trust agreement or similar agreement (each, a "PS
Agreement"). The seller/servicer of the Underlying Loans will have entered into
the PS Agreement with the trustee under such PS Agreement (the "PS Trustee").
The PS Trustee or its agent, or a custodian, will possess the Underlying Loans.
Underlying Loans will be serviced by a servicer (the "PS Servicer") directly or
by one or more sub-servicers who may be subject to the supervision of the PS
Servicer.

         The sponsor of the Private Securities (the "PS Sponsor") will be

         o        a financial institution or other entity engaged generally in
                  the business of lending;

         o        a public agency or instrumentality of a state, local or
                  federal government; or

         o        a limited purpose corporation organized for the purpose of,
                  among other things, establishing trusts and acquiring and
                  selling loans to such trusts, and selling beneficial interests
                  in such trusts.

         If so specified in the Prospectus Supplement, the PS Sponsor may be an
affiliate of the Depositor. The obligations of the PS Sponsor generally will be
limited to certain representations and warranties that


                                       19
<PAGE>

it makes with respect to the assets conveyed by it to the related trust. Unless
otherwise specified in the related Prospectus Supplement, the PS Sponsor will
not have guaranteed any of the assets conveyed to the related trust or any of
the Private Securities issued under the PS Agreement.

         Distributions of principal and interest will be made on the Private
Securities on the dates specified in the related Prospectus Supplement. The
Private Securities may be entitled to receive nominal or no principal
distributions or nominal or no interest distributions. Principal and interest
distributions will be made on the Private Securities by the PS Trustee or the PS
Servicer. The PS Sponsor or the PS Servicer may have the right to repurchase the
Underlying Loans after a certain date or under other circumstances specified in
the related Prospectus Supplement.

         The Underlying Loans may be fixed rate, level payment, fully amortizing
loans or adjustable rate loans or loans having balloon or other irregular
payment features. The Underlying Loans will be secured by mortgages on Mortgaged
Properties.

         Credit Support Relating to Private Securities. Credit support in the
form of reserve funds, subordination of other private securities issued under
the PS Agreement, guarantees, cash collateral accounts, security policies or
other types of credit support may be provided with respect to the Underlying
Loans or with respect to the Private Securities themselves. The type,
characteristics and amount of credit support will be a function of certain
characteristics of the Underlying Loans and other factors and will have been
established for the Private Securities on the basis of requirements of the
nationally recognized statistical rating organization that rated the Private
Securities.

         Additional Information. The Prospectus Supplement for a Series for
which the Primary Assets include Private Securities will specify, to the extent
relevant and to the extent such information is reasonably available to the
Depositor and the Depositor reasonably believes such information to be reliable:

         o        the total approximate principal amount and type of the Private
                  Securities to be included in the Trust Fund for that Series;

         o        certain characteristics of the Underlying Loans, including

                  (a)      the payment features of the Underlying Loans (i.e.,
                           whether they are Closed-End Loans and/or Revolving
                           Credit Line Loans, whether they are fixed rate or
                           adjustable rate and whether they provide for fixed
                           level payments or other payment features);

                  (b)      the approximate aggregate Principal Balance, if
                           known, of the Underlying Loans insured or guaranteed
                           by a governmental entity;

                  (c)      the servicing fee or range of servicing fees for the
                           Underlying Loans;

                  (d)      the minimum and maximum stated maturities of the
                           Underlying Loans at origination;

                  (e)      the lien priority of the Underlying Loans; and

                  (f)      the delinquency status and year of origination of
                           such Underlying Loans;

         o        the maximum original term to stated maturity of the Private
                  Securities;

         o        the weighted average term to stated maturity of the Private
                  Securities;


                                       20
<PAGE>

         o        the pass-through or certificate rate or range of rates for the
                  Private Securities;

         o        the PS Sponsor, the PS Servicer (if other than the PS Sponsor)
                  and the PS Trustee for the Private Securities;

         o        certain characteristics of any credit support such as reserve
                  funds, security policies or guarantees relating to the
                  Underlying Loans or to the Private Securities themselves;

         o        the terms on which Underlying Loans may, or are required to,
                  be purchased prior to their stated maturity or the stated
                  maturity of the Private Securities; and

         o        the terms on which Underlying Loans may be substituted for
                  those originally underlying the Private Securities.

         The above disclosure may be on an approximate basis and will be as of
the date specified in the related Prospectus Supplement. If information of the
nature described above for the Private Securities is not known to the Depositor
at the time the Securities are initially offered, more general or approximate
information of a similar nature will be provided in the Prospectus Supplement
and the additional information, if available, will be set forth in a Current
Report on Form 8-K to be available to investors on the date of issuance of the
related Series and to be filed with the SEC within 15 days of the initial
issuance of such Securities.

Collection and Distribution Accounts

         A separate Collection Account will be established by the Trustee, or
the Servicer in the name of the Trustee, for each Series of Securities for
receipt of any cash specified in the related Prospectus Supplement to be
initially deposited therein by the Depositor, all amounts received on or with
respect to the Primary Assets and, unless otherwise specified in the related
Prospectus Supplement, income earned thereon. Certain amounts on deposit in such
Collection Account and certain amounts available pursuant to any Enhancement, as
provided in the related Prospectus Supplement, will be deposited into the
applicable Distribution Account, which will also be established by the
applicable Trustee for each such Series of Securities, for distribution to the
related Holders. Unless otherwise specified in the related Prospectus
Supplement, the applicable Trustee will invest the funds in the Collection
Account and the Distribution Account(s) in Eligible Investments maturing, with
certain exceptions, not later, in the case of funds in the Collection Account,
than the day preceding the date such funds are due to be deposited into the
Distribution Account(s) or otherwise distributed and, in the case of funds in
the Distribution Account(s), than the day preceding the next Distribution Date
for the related Series of Securities.

         "Eligible Investments" include, among other investments, obligations of
the United States and certain agencies thereof, federal funds, certificates of
deposit, commercial paper, demand and time deposits and banker's acceptances,
certain repurchase agreements of United States government securities and certain
guaranteed investment contracts, in each case acceptable to the Rating Agencies.

         Notwithstanding any of the foregoing, amounts may be deposited and
withdrawn pursuant to any deposit agreement or minimum principal payment
agreement that may be specified in the related Prospectus Supplement.

         If specified in the related Prospectus Supplement, a Trust Fund will
include one or more segregated trust accounts (each, a "Pre-Funding Account")
established and maintained with the Trustee for the related Series. If so
specified, on the Closing Date for the Series, a portion of the proceeds of the
sale of the related Securities (such amount, the "Pre-Funded Amount") will be
deposited into the Pre-Funding Account and may be used to purchase additional
Primary Assets during the period of time specified in the related Prospectus
Supplement (the "Pre-Funding Period"). In no case will the


                                       21
<PAGE>

Pre-Funded Amount exceed 50% of the total principal amount of the related
Securities, and in no case will the Pre-Funding Period exceed one year. The
Primary Assets to be purchased generally will be selected on the basis of the
same criteria as those used to select the initial Primary Assets, and the same
representations and warranties will be made with respect to them. If any
Pre-Funded Amount remains on deposit in the Pre-Funding Account at the end of
the Pre-Funding Period, such amount will be applied in the manner specified in
the related Prospectus Supplement to prepay the Notes and/or the Certificates of
the applicable Series.

         If a Pre-Funding Account is established, one or more segregated trust
accounts (each, a "Capitalized Interest Account") may be established and
maintained with the Trustee for the related Series. On the Closing Date for the
Series, a portion of the proceeds of the sale of the Securities of the Series
will be deposited into the Capitalized Interest Account and used to fund the
excess, if any, of

         o        the sum of

                  (i)      the amount of interest accrued on the Securities of
                           the Series and

                  (ii)     if specified in the related Prospectus Supplement,
                           certain fees or expenses during the Pre-Funding
                           Period,

                                      over
                                      ----

         o        the amount of interest available from the Primary Assets in
                  the Trust Fund.

         Any amounts on deposit in the Capitalized Interest Account at the end
of the Pre-Funding Period that are not necessary for such purposes will be
distributed to the person specified in the related Prospectus Supplement.

                                   ENHANCEMENT

         If so provided in the Prospectus Supplement relating to a Series of
Securities, simultaneously with the Depositor's assignment of the Primary Assets
to the Trustee, the Depositor will obtain a security policy, issue subordinated
securities or obtain any other form of enhancement or combination thereof
(collectively, "Enhancement") in favor of the Trustee on behalf of the Holders
of the related Series or designated Classes of the Series from an institution or
by other means acceptable to the Rating Agencies. The Enhancement will support
the payment of principal of and interest on the Securities, and may be applied
for certain other purposes to the extent and under the conditions set forth in
the Prospectus Supplement. Enhancement for a Series may include one or more of
the forms described below, or such other form as may be specified in the related
Prospectus Supplement. If so specified in the related Prospectus Supplement, any
Enhancement may be structured so as to protect against losses relating to more
than one Trust Fund, in the manner described in that Prospectus Supplement.

Subordinated Securities

         If specified in the related Prospectus Supplement, Enhancement for a
Series may consist of one or more Classes of subordinated Securities. The rights
of the Holders of subordinated Securities to receive distributions on any
Distribution Date will be subordinate in right and priority to the rights of
Holders of senior Securities of the same Series, but only to the extent
described in the related Prospectus Supplement.



                                       22
<PAGE>

Insurance

         If specified in the related Prospectus Supplement, Enhancement for a
Series may consist of pool insurance policies, special hazard insurance
policies, bankruptcy bonds and other types of insurance relating to the Primary
Assets, as described below and in the related Prospectus Supplement.

         Pool Insurance Policy. If so specified in the related Prospectus
Supplement, the Depositor will obtain a pool insurance policy (the "Pool
Insurance Policy") for the Loans in the related Trust Fund. The Pool Insurance
Policy will cover any loss (subject to the limitations described in a related
Prospectus Supplement) by reason of default, but will not cover the portion of
the Principal Balance of any Loan that is required to be covered by any primary
mortgage insurance policy. The amount and terms of any such coverage will be set
forth in the related Prospectus Supplement.

         Special Hazard Insurance Policy. Although the terms of such policies
vary to some degree, a special hazard insurance policy typically provides that,
where there has been damage to Property securing a defaulted or foreclosed Loan
(title to which has been acquired by the insured) and to the extent such damage
is not covered by the standard hazard insurance policy (or any flood insurance
policy, if applicable) required to be maintained with respect to the Property,
or in connection with partial loss resulting from the application of the
coinsurance clause in a standard hazard insurance policy, the special hazard
insurer will pay the lesser of

         (i)      the cost of repair or replacement of the Property, or

         (ii)     upon transfer of the Property to the special hazard insurer,
                  the unpaid Principal Balance of the Loan at the time of
                  acquisition of the Property by foreclosure or deed in lieu of
                  foreclosure, plus accrued interest to the date of claim
                  settlement and certain expenses incurred by the Servicer with
                  respect to the Property.

         If the unpaid Principal Balance plus accrued interest and certain
expenses is paid by the special hazard insurer, the amount of further coverage
under the special hazard insurance policy will be reduced by that amount less
any net proceeds from the sale of the Property. Any amount paid as the cost of
repair of the Property will reduce coverage by that amount. Special hazard
insurance policies typically do not cover losses occasioned by war, civil
insurrection, certain governmental actions, errors in design, faulty workmanship
or materials (except under certain circumstances), nuclear reaction, flood (if
the mortgaged property is in a federally designated flood area), chemical
contamination and certain other risks.

         Restoration of the Property with the proceeds described under clause
(i) in the second previous paragraph is expected to satisfy the condition under
any Pool Insurance Policy that the Property be restored before a claim under the
Pool Insurance Policy may be validly presented with respect to the defaulted
Loan secured by the Property. The payment described under clause (ii) in the
second previous paragraph will render unnecessary presentation of a claim in
respect of the Loan under any Pool Insurance Policy. Therefore, so long as a
Pool Insurance Policy remains in effect, the payment by the special hazard
insurer of the cost of repair or of the unpaid Principal Balance of the related
Loan plus accrued interest and certain expenses will not affect the total amount
in respect of insurance proceeds paid to Holders of the Securities, but will
affect the relative amounts of coverage remaining under the special hazard
insurance policy and Pool Insurance Policy.

         Bankruptcy Bond. In the event of a bankruptcy of a borrower, the
bankruptcy court may establish the value of the Property securing the related
Loan at an amount less than the then-outstanding Principal Balance of the Loan.
The amount of the secured debt could be reduced to that value, and the holder of
the Loan thus would become an unsecured creditor to the extent the Principal
Balance of the Loan exceeds


                                       23
<PAGE>

the value assigned to the Property by the bankruptcy court. In addition, certain
other modifications of the terms of a Loan can result from a bankruptcy
proceeding. See "Certain Legal Aspects of the Loans" in this prospectus. If the
related Prospectus Supplement so provides, the Depositor or other entity
specified in the Prospectus Supplement will obtain a bankruptcy bond or similar
insurance contract covering losses resulting from proceedings with respect to
borrowers under the Federal Bankruptcy Code. The bankruptcy bond will cover
certain losses resulting from a reduction by a bankruptcy court of scheduled
payments of principal of and interest on a Loan or a reduction by the court of
the principal amount of a Loan and will cover certain unpaid interest on the
amount of any principal reduction from the date of the filing of a bankruptcy
petition.

         The bankruptcy bond will provide coverage in the aggregate amount
specified in the Prospectus Supplement for all Loans in the Trust Fund for the
related Series. Such amount will be reduced by payments made under the
bankruptcy bond in respect of the Loans, unless otherwise specified in the
related Prospectus Supplement, and will not be restored.

Reserve Funds

         If the Prospectus Supplement relating to a Series of Securities so
specifies, the Depositor will deposit into one or more funds to be established
with the Trustee as part of the Trust Fund for that Series or for the benefit of
any provider of Enhancement with respect to that Series (each, a "Reserve Fund")
cash, a letter or letters of credit, cash collateral accounts, Eligible
Investments, or other instruments meeting the criteria of the Rating Agencies in
the amount specified in such Prospectus Supplement. In the alternative or in
addition to such an initial deposit, a Reserve Fund for a Series may be funded
over time through application of all or a portion of the excess cash flow from
the Primary Assets for the Series, to the extent described in the related
Prospectus Supplement. If applicable, the initial amount of the Reserve Fund and
the Reserve Fund maintenance requirements for a Series of Securities will be
described in the related Prospectus Supplement.

         Amounts withdrawn from any Reserve Fund will be applied by the
applicable Trustee to make payments on the Securities of the related Series, to
pay expenses, to reimburse any provider of Enhancement for the Series or for any
other purpose, in the manner and to the extent specified in the related
Prospectus Supplement.

         Amounts deposited into a Reserve Fund will be invested by the
applicable Trustee in Eligible Investments maturing no later than the day
specified in the related Prospectus Supplement.

Minimum Principal Payment Agreement

         If provided in the Prospectus Supplement relating to a Series of
Securities, the Depositor will enter into a minimum principal payment agreement
with an entity meeting the criteria of the Rating Agencies pursuant to which the
entity will provide certain payments on the Securities of the Series in the
event that aggregate scheduled principal payments and/or prepayments on the
Primary Assets for the Series are not sufficient to make certain payments on the
Securities of the Series, as provided in the Prospectus Supplement.

Deposit Agreement

         If specified in a Prospectus Supplement, the Depositor and the
applicable Trustee for such Series of Securities will enter into a deposit
agreement with the entity specified in such Prospectus Supplement on or before
the sale of the related Series of Securities. The purpose of a deposit agreement
would be to accumulate available cash for investment so that such cash, together
with income thereon, can be applied


                                       24
<PAGE>

to future distributions on one or more Classes of Securities. The Prospectus
Supplement for a Series of Securities pursuant to which a deposit agreement is
used will contain a description of the terms of such deposit agreement.

Financial Instruments

         If provided in the related Prospectus Supplement, the Trust Fund may
include one or more financial instruments that are intended to meet the
following goals:

         o        to convert the payments on some or all of the Loans and
                  Private Securities from fixed to floating payments, or from
                  floating to fixed, or from floating based on a particular
                  index to floating based on another index;

         o        to provide payments if any index rises above or falls below
                  specified levels; or

         o        to provide protection against interest rate changes, certain
                  types of losses or other payment shortfalls to one or more
                  Classes of the related Series.

         If a Trust Fund includes financial instruments of this type, the
instruments may be structured to be exempt from the registration requirements of
the Securities Act of 1933, as amended.

         The related Prospectus Supplement will include, or incorporate by
reference, material financial and other information about the provider of the
financial instruments.

                               SERVICING OF LOANS

General

         Customary servicing functions with respect to Loans comprising the
Primary Assets in a Trust Fund will be provided by the Servicer directly,
pursuant to the related Servicing Agreement or Pooling and Servicing Agreement,
as the case may be, with respect to a Series of Securities.

Collection Procedures; Escrow Accounts

         The Servicer will make reasonable efforts to collect all payments
required to be made under the Loans and will, consistent with the terms of the
related Agreement for a Series and any applicable Enhancement, follow such
collection procedures as it follows with respect to comparable loans held in its
own portfolio. Consistent with the above, the Servicer may, in its discretion,
(i) waive any assumption fee, late payment charge, or other charge in connection
with a Loan and (ii) to the extent provided in the related Agreement, arrange
with a borrower a schedule for the liquidation of delinquencies by extending the
Due Dates for Scheduled Payments on a Loan.

         If the related Prospectus Supplement so provides, the Servicer, to the
extent permitted by law, will establish and maintain escrow or impound accounts
(each, an "Escrow Account") with respect to Loans in which payments by borrowers
to pay taxes, assessments, mortgage and hazard insurance policy premiums, and
other comparable items will be deposited. In the case of Loans that do not
require such payments under the related loan documents, the Servicer will not be
required to establish any Escrow Account for those Loans. The Servicer will make
withdrawals from the Escrow Accounts to effect timely payment of taxes,
assessments and mortgage and hazard insurance, to refund to borrowers amounts
determined to be overages, to pay interest to borrowers on balances in the
Escrow Account to the extent required by law, to repair or otherwise protect the
related Property and to clear and terminate such Escrow


                                       25
<PAGE>

Account. The Servicer will be responsible for the administration of the Escrow
Accounts and generally will make advances to such accounts when a deficiency
exists therein.

Deposits to and Withdrawals from the Collection Account

         Unless the related Prospectus Supplement specifies otherwise, the
Trustee or the Servicer will establish a separate account (the "Collection
Account") in the name of the Trustee. Unless the related Prospectus Supplement
provides otherwise, the Collection Account will be an account maintained

         o        at a depository institution, the long-term unsecured debt
                  obligations of which at the time of any deposit are rated by
                  each Rating Agency that rates the related the Securities of
                  that Series at levels satisfactory to each Rating Agency; or

         o        in an account or accounts the deposits in which are insured to
                  the maximum extent available by the Federal Deposit Insurance
                  Corporation or that are secured in a manner meeting
                  requirements established by each Rating Agency.

         Unless otherwise specified in the related Prospectus Supplement, the
funds held in the Collection Account may be invested in Eligible Investments. If
so specified in the related Prospectus Supplement, the Servicer will be entitled
to receive as additional compensation any interest or other income earned on
funds in the Collection Account.

         Unless otherwise specified in the related Prospectus Supplement, the
Servicer, the Depositor, the Trustee or the Seller, as appropriate, will deposit
into the Collection Account for each Series, on the business day following the
Closing Date, all scheduled payments of principal and interest on the Primary
Assets ("Scheduled Payments") due after the related Cut-off Date but received by
the Servicer on or before the Closing Date, and thereafter, within two business
days after the date of receipt thereof, the following payments and collections
received or made by it (other than, unless otherwise provided in the related
Prospectus Supplement, in respect of principal of and interest on the related
Primary Assets due on or before the Cut-off Date):

         (i)      All payments in respect of principal, including prepayments,
                  on the Primary Assets;

         (ii)     All payments in respect of interest on the Primary Assets
                  after deducting therefrom, at the discretion of the Servicer
                  (but only to the extent of the amount permitted to be
                  withdrawn or withheld from the Collection Account in
                  accordance with the related Agreement), the fee payable to the
                  Servicer (the "Servicing Fee") in respect of such Primary
                  Assets;

         (iii)    All amounts received by the Servicer in connection with the
                  liquidation of Primary Assets or the related Property, whether
                  through foreclosure sale, repossession or otherwise, including
                  payments in connection with the Primary Assets received from
                  the borrower, other than amounts required to be paid or
                  refunded to the borrower pursuant to the terms of the
                  applicable loan documents or otherwise pursuant to law, net of
                  related liquidation expenses (such net amount, the
                  "Liquidation Proceeds"), exclusive of, in the discretion of
                  the Servicer (but only to the extent of the amount permitted
                  to be withdrawn from the Collection Account in accordance with
                  the related Agreement), the Servicing Fee, if any, in respect
                  of the related Primary Asset;

         (iv)     All proceeds under any title insurance, hazard insurance
                  policy or other insurance policy covering any such Primary
                  Asset, other than proceeds to be applied to the restoration or
                  repair of the related Property or released to the borrower in
                  accordance with the related Agreement;


                                       26
<PAGE>

         (v)      All amounts required to be deposited therein from any Reserve
                  Fund for the Series pursuant to the related Agreement;

         (vi)     All advances of cash made by the Servicer in respect of
                  delinquent Scheduled Payments on a Loan and for any other
                  purpose as required pursuant to the related Agreement
                  ("Advances"); and

         (vii)    All repurchase prices of any Primary Assets repurchased by the
                  Depositor, the Servicer or the Seller pursuant to the related
                  Agreement.

         Unless otherwise specified in the related Prospectus Supplement, the
Servicer is permitted, from time to time, to make withdrawals from the
Collection Account for each Series for the following purposes:

         (i)      to reimburse itself for Advances made by it in connection with
                  that Series pursuant to the related Agreement; provided, that
                  the Servicer's right to reimburse itself is limited to amounts
                  received on or in respect of particular Loans (including, for
                  this purpose, Liquidation Proceeds and proceeds of insurance
                  policies covering the related Loans and Mortgaged Properties
                  ("Insurance Proceeds")) that represent late recoveries of
                  Scheduled Payments with respect to which the Advance was made;

         (ii)     to the extent provided in the related Agreement, to reimburse
                  itself for any Advances that it made in connection with the
                  Series which the Servicer determines in good faith to be
                  nonrecoverable from amounts representing late recoveries of
                  Scheduled Payments respecting which the Advance was made or
                  from Liquidation Proceeds or Insurance Proceeds;

         (iii)    to reimburse itself from Liquidation Proceeds for liquidation
                  expenses and for amounts expended by it in good faith in
                  connection with the restoration of damaged Property and, in
                  the event deposited into the Collection Account and not
                  previously withheld, and to the extent that Liquidation
                  Proceeds after such reimbursement exceed the Principal Balance
                  of the related Loan, together with accrued and unpaid interest
                  thereon to the Due Date for the Loan next succeeding the date
                  of its receipt of the Liquidation Proceeds, to pay to itself
                  out of the excess the amount of any unpaid Servicing Fee and
                  any assumption fees, late payment charges, or other charges on
                  the related Loan;

         (iv)     in the event it has elected not to pay itself the Servicing
                  Fee out of the interest component of any Scheduled Payment,
                  late payment or other recovery with respect to a particular
                  Loan prior to the deposit of the Scheduled Payment, late
                  payment or recovery into the Collection Account, to pay to
                  itself the Servicing Fee, as adjusted pursuant to the related
                  Agreement, from any such Scheduled Payment, late payment or
                  other recovery, to the extent permitted by the related
                  Agreement;

         (v)      to reimburse itself for expenses incurred by and recoverable
                  by or reimbursable to it pursuant to the related Agreement;

         (vi)     to pay to the applicable person with respect to each Primary
                  Asset or related REO Property that has been repurchased or
                  removed from the Trust Fund by the Depositor, the Servicer or
                  the Seller pursuant to the related Agreement, all amounts
                  received thereon and not distributed as of the date on which
                  the related repurchase price was determined;


                                       27
<PAGE>

         (vii)    to make payments to the Trustee of the Series for deposit into
                  the related Distribution Account, if any, or for remittance to
                  the Holders of the Series in the amounts and in the manner
                  provided for in the related Agreement; and

         (viii)   to clear and terminate the Collection Account pursuant to the
                  related Agreement.

         In addition, if the Servicer deposits into the Collection Account for a
Series any amount not required to be deposited therein, the Servicer may, at any
time, withdraw the amount from the Collection Account.

Advances and Limitations on Advances

         The related Prospectus Supplement will describe the circumstances, if
any, under which the Servicer will make Advances with respect to delinquent
payments on Loans. If specified in the related Prospectus Supplement, the
Servicer will be obligated to make Advances. Its obligation to make Advances may
be limited in amount, or may not be activated until a certain portion of a
specified Reserve Fund is depleted. Advances are intended to provide liquidity
and, except to the extent specified in the related Prospectus Supplement, not to
guarantee or insure against losses. Accordingly, any funds advanced are
recoverable by the Servicer out of amounts received on particular Loans that
represent late recoveries of Scheduled Payments, Insurance Proceeds or
Liquidation Proceeds respecting which any Advance was made. If an Advance is
made and subsequently determined to be nonrecoverable from late collections,
Insurance Proceeds or Liquidation Proceeds from the related Loan, the Servicer
may be entitled to reimbursement from other funds in the Collection Account or
Distribution Account(s), as the case may be, or from a specified Reserve Fund,
as applicable, to the extent specified in the related Prospectus Supplement.

Maintenance of Insurance Policies and Other Servicing Procedures

         Standard Hazard Insurance; Flood Insurance. Except as otherwise
specified in the related Prospectus Supplement, the Servicer will be required to
maintain (or to cause the borrower under each Loan to maintain) a standard
hazard insurance policy providing the standard form of fire insurance coverage
with extended coverage for certain other hazards as is customary in the state in
which the related Property is located. The standard hazard insurance policies
will provide for coverage at least equal to the applicable state standard form
of fire insurance policy with extended coverage for property of the type
securing the related Loans. In general, the standard form of fire and extended
coverage policy will cover physical damage to or destruction of, the related
Property caused by fire, lightning, explosion, smoke, windstorm, hail, riot,
strike and civil commotion, subject to the conditions and exclusions
particularized in each policy. Because the standard hazard insurance policies
relating to the Loans will be underwritten by different hazard insurers and will
cover Properties located in various states, the policies will not contain
identical terms and conditions. The basic terms, however, generally will be
determined by state law and generally will be similar. Most such policies
typically will not cover any physical damage resulting from war, revolution,
governmental actions, floods and other water-related causes, earth movement
(including earthquakes, landslides and mudflows), nuclear reaction, wet or dry
rot, vermin, rodents, insects or domestic animals, theft and, in certain cases,
vandalism. The foregoing list is merely indicative of certain kinds of uninsured
risks and is not intended to be all inclusive. Uninsured risks not covered by a
special hazard insurance policy or other form of Enhancement will adversely
affect distributions to Holders. When a Property securing a Loan is located in a
flood area identified by HUD pursuant to the Flood Disaster Protection Act of
1973, as amended, the Servicer will be required to cause flood insurance to be
maintained with respect to the Property, to the extent available.


                                       28
<PAGE>

         The standard hazard insurance policies covering Properties typically
will contain a "coinsurance" clause, which in effect will require that the
insured at all times carry hazard insurance of a specified percentage (generally
80% to 90%) of the full replacement value of the Property, including any
improvements on the Property, in order to recover the full amount of any partial
loss. If the insured's coverage falls below this specified percentage, the
coinsurance clause will provide that the hazard insurer's liability in the event
of partial loss will not exceed the greater of (i) the actual cash value (i.e.,
replacement cost less physical depreciation) of the Property, including the
improvements, if any, damaged or destroyed or (ii) such proportion of the loss,
without deduction for depreciation, as the amount of insurance carried bears to
the specified percentage of the full replacement cost of the Property and
improvements. Since the amount of hazard insurance to be maintained on the
improvements securing the Loans declines as their Principal Balances decrease,
and since the value of the Properties will fluctuate over time, the effect of
this requirement in the event of partial loss may be that hazard Insurance
Proceeds will be insufficient to restore fully the damage to the affected
Property.

         Unless otherwise specified in the related Prospectus Supplement,
coverage will be in an amount at least equal to the greater of (i) the amount
necessary to avoid the enforcement of any co-insurance clause contained in the
policy or (ii) the outstanding Principal Balance of the related Loan. Unless
otherwise specified in the related Prospectus Supplement, the Servicer will also
maintain on REO Property a standard hazard insurance policy in an amount that is
at least equal to the maximum insurable value of the REO Property. No earthquake
or other additional insurance will be required of any borrower or will be
maintained on REO Property other than pursuant to such applicable laws and
regulations as shall at any time be in force and shall require the additional
insurance.

         Any amounts collected by the Servicer under any those insurance
policies (other than amounts to be applied to the restoration or repair of the
Property, released to the borrower in accordance with normal servicing
procedures or used to reimburse the Servicer for amounts to which it is entitled
to reimbursement) will be deposited into the Collection Account. In the event
that the Servicer obtains and maintains a blanket policy insuring against hazard
losses on all of the Loans, written by an insurer then acceptable to each Rating
Agency that assigns a rating to the related Series, it will conclusively be
deemed to have satisfied its obligations to cause to be maintained a standard
hazard insurance policy for each Loan or related REO Property. This blanket
policy may contain a deductible clause, in which case the Servicer will be
required, in the event that there has been a loss that would have been covered
by the policy absent the deductible clause, to deposit into the Collection
Account the amount not otherwise payable under the blanket policy because of the
application of the deductible clause.

Realization upon Defaulted Loans

         The Servicer will use its reasonable best efforts to foreclose upon,
repossess or otherwise comparably convert the ownership of the Properties
securing the related Loans that come into and continue in default and as to
which no satisfactory arrangements can be made for collection of delinquent
payments. In this connection, the Servicer will follow such practices and
procedures as it deems necessary or advisable and as are normal and usual in its
servicing activities with respect to comparable loans that it services. However,
the Servicer will not be required to expend its own funds in connection with any
foreclosure or towards the restoration of the Property unless it determines that
(i) such restoration or foreclosure will increase the Liquidation Proceeds of
the related Loan available to the Holders after reimbursement to itself for its
expenses and (ii) its expenses will be recoverable either through Liquidation
Proceeds or Insurance Proceeds. Notwithstanding anything to the contrary herein,
in the case of a Trust Fund for which a REMIC election has been made, the
Servicer will be required to liquidate any REO Property by the end of the third
calendar year after the Trust Fund acquires beneficial ownership of the REO
Property. While the holder of an REO Property can often maximize its recovery


                                       29
<PAGE>

by providing financing to a new purchaser, the Trust Fund, if applicable, will
have no ability to do so and neither the Servicer nor the Depositor will be
required to do so.

         The Servicer may arrange with the borrower on a defaulted Loan a change
in the terms of such Loan to the extent provided in the related Prospectus
Supplement. This type of modification may only be entered into if it meets the
underwriting policies and procedures employed by the Servicer in servicing
receivables for its own account and meets the other conditions set forth in the
related Prospectus Supplement.

Enforcement of Due-On-Sale Clauses

         Unless otherwise specified in the related Prospectus Supplement for a
Series, when any Property is about to be conveyed by the obligor, the Servicer
will, to the extent it has knowledge of the prospective conveyance and prior to
the time of the consummation of the conveyance, exercise its rights to
accelerate the maturity of the related Loan under any applicable "due-on-sale"
clause, unless it reasonably believes that the clause is not enforceable under
applicable law or if the enforcement of the clause would result in loss of
coverage under any primary mortgage insurance policy. In that event, the
Servicer is authorized to accept from or enter into an assumption agreement with
the person to whom the Property has been or is about to be conveyed. Under the
assumption, the transferee of the Property becomes liable under the Loan and the
original borrower is released from liability and the transferee is substituted
as the borrower and becomes liable under the Loan. Any fee collected in
connection with an assumption will be retained by the Servicer as additional
servicing compensation. The terms of a Loan may not be changed in connection
with an assumption.

Servicing Compensation and Payment of Expenses

         Except as otherwise provided in the related Prospectus Supplement, the
Servicer will be entitled to a periodic Servicing Fee in an amount to be
determined as specified in the related Prospectus Supplement. The Servicing Fee
may be fixed or variable, as specified in the related Prospectus Supplement. In
addition, unless otherwise specified in the related Prospectus Supplement, the
Servicer will be entitled to additional servicing compensation in the form of
assumption fees, late payment charges and similar items, or excess proceeds
following disposition of Property in connection with defaulted Loans.

         Unless otherwise specified in the related Prospectus Supplement, the
Servicer will pay certain expenses incurred in connection with the servicing of
the Loans, including, without limitation, the payment of the fees and expenses
of each applicable Trustee and independent accountants, payment of Security
Policy and insurance policy premiums, if applicable, and the cost of credit
support, if any, and payment of expenses incurred in preparation of reports to
Holders.

         When a borrower makes a principal prepayment in full between due dates
on the related Loan, the borrower generally will be required to pay interest on
the amount prepaid only to the date of prepayment. If and to the extent provided
in the related Prospectus Supplement, in order that one or more Classes of the
Securities of a Series will not be adversely affected by any resulting shortfall
in interest, the amount of the Servicing Fee may be reduced to the extent
necessary to include in the Servicer's remittance to the applicable Trustee for
deposit into the related Distribution Account an amount equal to one month's
interest on the related Loan (less the Servicing Fee). If the total amount of
such shortfalls in a month exceeds the Servicing Fee for such month, a shortfall
to Holders may occur.

         Unless otherwise specified in the related Prospectus Supplement, the
Servicer will be entitled to reimbursement for certain expenses that it incurs
in connection with the liquidation of defaulted Loans.


                                       30
<PAGE>

The related Holders will suffer no loss by reason of the Servicer's expenses to
the extent the expenses are covered under related insurance policies or from
excess Liquidation Proceeds. If claims are either not made or paid under the
applicable insurance policies or if coverage thereunder has been exhausted, the
related Holders will suffer a loss to the extent that Liquidation Proceeds,
after reimbursement of the Servicer's expenses, are less than the Principal
Balance of and unpaid interest on the related Loan that would be distributable
to Holders. In addition, the Servicer will be entitled to reimbursement of its
expenses in connection with the restoration of REO Property This right of
reimbursement is prior to the rights of the Holders to receive any related
Insurance Proceeds, Liquidation Proceeds or amounts derived from other
Enhancement. The Servicer generally is also entitled to reimbursement from the
Collection Account for Advances.

         Unless otherwise specified in the related Prospectus Supplement, the
rights of the Servicer to receive funds from the Collection Account for a
Series, whether as the Servicing Fee or other compensation, or for the
reimbursement of Advances, expenses or otherwise, are not subordinate to the
rights of Holders of Securities of the Series.

Evidence as to Compliance

         If so specified in the related Prospectus Supplement, the applicable
Agreement will provide that, each year, a firm of independent public accountants
will furnish a statement to the Trustee to the effect that the firm has examined
certain documents and records relating to the servicing of the Loans by the
Servicer and that, on the basis of the examination, the firm is of the opinion
that the servicing has been conducted in compliance with the Agreement, except
for (i) such exceptions as the firm believes to be immaterial and (ii) any other
exceptions set forth in the statement.

         If so specified in the related Prospectus Supplement, the applicable
Agreement will also provide for delivery to the Trustee of an annual statement
signed by an officer of the Servicer to the effect that the Servicer has
fulfilled its obligations under the Agreement throughout the preceding calendar
year.

Certain Matters Regarding the Servicer

         The Servicer for each Series will be identified in the related
Prospectus Supplement. The Servicer may be an affiliate of the Depositor and may
have other business relationships with the Depositor and its affiliates.

         If an Event of Default (defined below) occurs under either a Servicing
Agreement or a Pooling and Servicing Agreement, the Servicer may be replaced by
the Trustee or a successor Servicer. Unless otherwise specified in the related
Prospectus Supplement, the Events of Default and the rights of a Trustee upon a
default under the Agreement for the related Series will be substantially similar
to those described under "The Agreements--Events of Default; Rights upon Event
of Default--Pooling and Servicing Agreement; Servicing Agreement" in this
prospectus.

         Unless otherwise specified in the Prospectus Supplement, the Servicer
does not have the right to assign its rights and delegate its duties and
obligations under the related Agreement unless the successor Servicer accepting
such assignment or delegation

         o        services similar loans in the ordinary course of its business;

         o        is reasonably satisfactory to the Trustee;

         o        has a net worth of not less than the amount specified in the
                  Prospectus Supplement;


                                       31
<PAGE>

         o        would not cause any Rating Agency's rating of the related
                  Securities in effect immediately prior to the assignment, sale
                  or transfer to be qualified, downgraded or withdrawn as a
                  result of the assignment, sale or transfer; and

         o        executes and delivers to the Trustee an agreement, in form and
                  substance reasonably satisfactory to the Trustee, that
                  contains an assumption by the successor Servicer of the due
                  and punctual performance and observance of each covenant and
                  condition required to be performed or observed by the Servicer
                  under the Agreement from and after the date of the agreement.

         No assignment will become effective until the Trustee or a successor
Servicer has assumed the servicer's obligations and duties under the related
Agreement. To the extent that the Servicer transfers its obligations to a
wholly-owned subsidiary or affiliate, the subsidiary or affiliate need not
satisfy the criteria set forth above; however, in such instance, the assigning
Servicer will remain liable for the servicing obligations under the Agreement.
Any entity into which the Servicer is merged or consolidated or any successor
corporation resulting from any merger, conversion or consolidation will succeed
to the Servicer's obligations under the Agreement provided that the successor or
surviving entity meets the requirements for a successor Servicer set forth
above.

         Except to the extent otherwise provided therein, each Agreement will
provide that neither the Servicer nor any director, officer, employee or agent
of the Servicer will be under any liability to the related Trust Fund, the
Depositor or the Holders for any action taken or for failing to take any action
in good faith pursuant to the related Agreement, or for errors in judgment.
However, neither the Servicer nor any such person will be protected against any
breach of warranty or representations made under the Agreement, or the failure
to perform its obligations in compliance with any standard of care set forth in
the Agreement, or liability that would otherwise be imposed by reason of willful
misfeasance, bad faith or negligence in the performance of their duties or by
reason of reckless disregard of their obligations and duties under the
Agreement. Each Agreement will further provide that the Servicer and any
director, officer, employee or agent of the Servicer is entitled to
indemnification from the related Trust Fund and will be held harmless against
any loss, liability or expense incurred in connection with any legal action
relating to the Agreement or the Securities, other than any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence in
the performance of duties under the Agreement or by reason of reckless disregard
of those obligations and duties. In addition, the Agreement will provide that
the Servicer is not under any obligation to appear in, prosecute or defend any
legal action that is not incidental to its servicing responsibilities under the
Agreement that, in its opinion, may involve it in any expense or liability. The
Servicer may, in its discretion, undertake any such action that it may deem
necessary or desirable with respect to the Agreement and the rights and duties
of the parties thereto and the interests of the Holders thereunder. In that
event, the legal expenses and costs of the action and any resulting liability
may be expenses, costs, and liabilities of the Trust Fund and the Servicer may
be entitled to be reimbursed therefor out of the Collection Account.

                                 THE AGREEMENTS

         The following summaries describe certain provisions of the Agreements.
The summaries do not purport to be complete and are subject to, and qualified in
their entirety by reference to, the provisions of the Agreements. Where
particular provisions or terms used in the Agreements are referred to, the
provisions or terms are as specified in the related Agreements.


                                       32
<PAGE>

Assignment of Primary Assets

         General. At the time of issuance of the Securities of a Series, the
Depositor will transfer, convey and assign to the related Trust Fund all right,
title and interest of the Depositor in the Primary Assets and other property to
be transferred to the Trust Fund. Such assignment will include all principal and
interest due on or with respect to the Primary Assets after the Cut-off Date
(except for any retained interests). The Trustee will, concurrently with the
assignment, execute and deliver the Securities.

         Assignment of Mortgage Loans. Unless otherwise specified in the related
Prospectus Supplement, the Depositor will deliver or cause to be delivered to
the Trustee (or, if specified in the Prospectus Supplement, a custodian on
behalf of the Trustee (the "Custodian")), as to each Mortgage Loan, the related
note endorsed without recourse to the order of the Trustee or in blank, the
original mortgage, deed of trust or other security instrument (each, a
"Mortgage") with evidence of recording indicated thereon (except for any
Mortgage not returned from the public recording office, in which case a copy of
such Mortgage will be delivered, together with a certificate that the original
of such Mortgage was delivered to such recording office), and an assignment of
the Mortgage in recordable form. The Trustee, or, if so specified in the related
Prospectus Supplement, the Custodian, will hold those documents in trust for the
benefit of the Holders.

         If so specified in the related Prospectus Supplement, at the time of
issuance of the Securities, the Depositor will cause assignments to the Trustee
of the Mortgages relating to the Loans to be recorded in the appropriate public
office for real property records, except in states where, in the opinion of
counsel acceptable to the Trustee, recording is not required to protect the
Trustee's interest in the related Loans. If specified in the Prospectus
Supplement, the Depositor will cause the assignments to be recorded within the
time after issuance of the Securities as is specified in the related Prospectus
Supplement. In this event, the Prospectus Supplement will specify whether the
Agreement requires the Depositor to repurchase from the Trustee any Loan the
related Mortgage of which is not recorded within that time, at the price
described below with respect to repurchases by reason of defective
documentation. Unless otherwise provided in the Prospectus Supplement, the
enforcement of the repurchase obligation would constitute the sole remedy
available to the Holders or the Trustee for the failure of a Mortgage to be
recorded.

         Assignment of Home Improvement Contracts. Unless otherwise specified in
the related Prospectus Supplement, the Depositor will deliver or cause to be
delivered to the Trustee (or the Custodian), as to each Home Improvement
Contract, the original Home Improvement Contract and copies of related documents
and instruments and, other than in the case of unsecured Home Improvement
Contracts, the security interest in the related Home Improvements. In order to
give notice of the right, title and interest of Holders to the Home Improvement
Contracts, the Depositor will cause a UCC-1 financing statement to be executed
by the Depositor or the Seller identifying the Trustee as the secured party and
identifying all Home Improvement Contracts as collateral. Unless otherwise
specified in the related Prospectus Supplement, the Home Improvement Contracts
will not be stamped or otherwise marked to reflect their assignment to the
Trust. Therefore, if, through negligence, fraud or otherwise, a subsequent
purchaser were able to take physical possession of the Home Improvement
Contracts without notice of such assignment, the interest of Holders in the Home
Improvement Contracts could be defeated. See "Certain Legal Aspects of the
Loans--The Home Improvement Contracts" in this prospectus.

         Loan Schedule. Each Loan will be identified in a schedule appearing as
an exhibit to the related and will specify with respect to each Loan:

         o        the original principal amount,


                                       33
<PAGE>

         o        its unpaid Principal Balance as of the Cut-off Date,

         o        the current interest rate,

         o        the current Scheduled Payment of principal and interest,

         o        the maturity date, if any, of the related note, and

         o        if the Loan is an adjustable rate Loan, the lifetime rate cap,
                  if any, and the current index.

         Assignment of Private Securities. The Depositor will cause Private
Securities to be registered in the name of the PS Trustee (or its nominee or
correspondent). The PS Trustee (or its nominee or correspondent) will have
possession of any certificated Private Securities. Unless otherwise specified in
the related Prospectus Supplement, the PS Trustee will not be in possession of
or be assignee of record of any underlying assets for a Private Security. See
"The Trust Funds--Private Securities" in this prospectus. Each Private Security
will be identified in a schedule appearing as an exhibit to the related
Agreement, which will specify the original principal amount, Principal Balance
as of the Cut-off Date, annual pass-through rate or interest rate and maturity
date for each Private Security conveyed to the Trust Fund. In the Agreement, the
Depositor will represent and warrant to the PS Trustee regarding the Private
Securities that:

         o        the information contained in the Private Securities schedule
                  is true and correct in all material respects;

         o        immediately prior to the conveyance of the Private Securities,
                  the Depositor had good title, and was their sole owner
                  (subject to any retained interest);

         o        there has been no other sale by the Private Securities; and

         o        there is no existing lien, charge, security interest or other
                  encumbrance (other than any retained interest) on the Private
                  Securities.

         Repurchase and Substitution of Non-Conforming Primary Assets. Unless
otherwise provided in the related Prospectus Supplement, if any document in the
file relating to the Primary Assets delivered by the Depositor to the Trustee
(or Custodian) is found by the Trustee, within 90 days of the execution of the
related Agreement (or promptly after the Trustee's receipt of any document
permitted to be delivered after the Closing Date), to be defective in any
material respect and the Depositor or Seller does not cure such defect within 90
days, (or within any other period specified in the related Prospectus
Supplement), the Depositor or Seller will, not later than 90 days (or within
such any period specified in the related Prospectus Supplement), after the
Trustee's notice to the Depositor or the Seller, as the case may be, of the
defect, repurchase the related Primary Asset or any property acquired in respect
thereof from the Trustee. Unless otherwise specified in the related Prospectus
Supplement, the repurchase shall be effected at a price equal to the:

         (a)      the lesser of

                  (i)      the Principal Balance of the Primary Asset, and

                  (ii)     the Trust Fund's federal income tax basis in the
                           Primary Asset;

                                      plus
                                      ----

         (b)      accrued and unpaid interest to the date of the next Scheduled
                  Payment on the Primary Asset at the rate set forth in the
                  related Agreement;


                                       34
<PAGE>

provided, however, the purchase price shall not be limited in (i) above to the
Trust Fund's federal income tax basis, if the repurchase at a price equal to the
Principal Balance of the repurchased Primary Asset will not result in any
prohibited transaction tax under Section 860F(a) of the Code.

         If provided in the related Prospectus Supplement, the Depositor or
Seller, as the case may be, may, rather than repurchase the Primary Asset as
described above, remove the non-conforming Primary Asset from the Trust Fund
(the "Deleted Primary Asset") and substitute in its place one or more other
Primary Assets (each, a "Qualifying Substitute Primary Asset"); provided,
however, that (i) with respect to a Trust Fund for which no REMIC election is
made, the substitution must be effected within 120 days of the date of initial
issuance of the Securities and (ii) with respect to a Trust Fund for which a
REMIC election is made, after a specified time period, the Trustee must have
received a satisfactory opinion of counsel that such substitution will not cause
the Trust Fund to lose its status as a REMIC or otherwise subject the Trust Fund
to a prohibited transaction tax.

         Unless otherwise specified in the related Prospectus Supplement, any
Qualifying Substitute Primary Asset will, on the date of substitution,

         o        have a Principal Balance, after deduction of all Scheduled
                  Payments due in the month of substitution, not in excess of
                  the Principal Balance of the Deleted Primary Asset (the amount
                  of any shortfall to be deposited to the Collection Account in
                  the month of substitution for distribution to Holders),

         o        have an interest rate not less than (and not more than 2%
                  greater than) the interest rate of the Deleted Primary Asset,

         o        have a remaining term-to-stated maturity not greater than (and
                  not more than two years less than) that of the Deleted Primary
                  Asset; and

         o        comply with all of the representations and warranties set
                  forth in the applicable Agreement as of the date of
                  substitution.

         Unless otherwise provided in the related Prospectus Supplement, the
above-described cure, repurchase or substitution obligations constitute the sole
remedies available to the Holders or the Trustee for a material defect in a
document for a Primary Asset.

         The Depositor or another entity will make representations and
warranties with respect to Primary Assets for a Series. If the Depositor or the
other entity cannot cure a breach of any such representations and warranties in
all material respects within the time period specified in the related Prospectus
Supplement after notification by the Trustee of such breach, and if the breach
is of a nature that materially and adversely affects the value of such Primary
Asset, the Depositor or the other entity will be obligated to repurchase the
affected Primary Asset or, if provided in the Prospectus Supplement, provide a
Qualifying Substitute Primary Asset, subject to the same conditions and
limitations on purchases and substitutions as described above.

         The Depositor's only source of funds to effect any cure, repurchase or
substitution will be through the enforcement of the corresponding obligations,
if any, of the responsible originator or Seller of the non-conforming Primary
Assets. See "Risk Factors--Limited Assets for Making Payments" in this
prospectus.

         No Holder of Securities of a Series, solely by virtue of the Holder's
status as a Holder, will have any right under the applicable Agreement to
institute any proceeding with respect to Agreement, unless Holder previously has
given to the Trustee for the Series written notice of default and unless the
Holders of Securities evidencing not less than 51% of the aggregate voting
rights of the Securities of the Series


                                       35
<PAGE>

have made written request upon the Trustee to institute the proceeding in its
own name as Trustee thereunder and have offered to the Trustee reasonable
indemnity, and the Trustee for 60 days has neglected or refused to institute any
such proceeding.

Reports to Holders

         The applicable Trustee or other entity specified in the related
Prospectus Supplement will prepare and forward to each Holder on each
Distribution Date, or as soon thereafter as is practicable, a statement setting
forth, to the extent applicable to any Series, among other things:

         (i)      the amount of principal distributed to Holders of the related
                  Securities and the outstanding principal balance of the
                  Securities following the distribution;

         (ii)     the amount of interest distributed to Holders of the related
                  Securities and the current interest on the Securities;

         (iii)    the amount of

                  (a)      any overdue accrued interest included in such
                           distribution,

                  (b)      any remaining overdue accrued interest with respect
                           to the Securities, or

                  (c)      any current shortfall in amounts to be distributed as
                           accrued interest to Holders of such Securities;

         (iv)     the amount of

                  (a)      any overdue payments of scheduled principal included
                           in the distribution,

                  (b)      any remaining overdue principal amounts with respect
                           to the Securities,

                  (c)      any current shortfall in receipt of scheduled
                           principal payments on the related Primary Assets or

                  (d)      any realized losses or Liquidation Proceeds to be
                           allocated as reductions in the outstanding principal
                           balances of the Securities;

         (v)      the amount received under any related Enhancement, and the
                  remaining amount available under the Enhancement;

         (vi)     the amount of any delinquencies with respect to payments on
                  the related Primary Assets;

         (vii)    the book value of any REO Property acquired by the related
                  Trust Fund; and

         (viii)   such other information as specified in the related Agreement.

         In addition, within a reasonable period of time after the end of each
calendar year, the applicable Trustee, unless otherwise specified in the related
Prospectus Supplement, will furnish to each Holder of record at any time during
the calendar year:

         o        the total of the amounts reported pursuant to clauses (i),
                  (ii) and (iv)(d) above for the calendar year, and


                                       36
<PAGE>

         o        the information specified in the related Agreement to enable
                  Holders to prepare their tax returns including, without
                  limitation, the amount of any original issue discount accrued
                  on the Securities.

         Information in the Distribution Date Statements and annual statements
provided to the Holders will not have been examined and reported upon by an
independent public accountant. However, the Servicer will provide to the Trustee
a report by independent public accountants with respect to its servicing of the
Loans. See "Servicing of Loans--Evidence as to Compliance" in this prospectus.

         If so specified in the Prospectus Supplement, the related Series of
Securities (or one or more Classes of the Series) will be issued in book-entry
form. In that event, owners of beneficial interests in those Securities will not
be considered Holders and will not receive such reports directly from the
Trustee. The Trustee will forward such reports only to the entity or its nominee
that is the registered holder of the global certificate that evidences such
book-entry securities. Beneficial owners will receive reports from the
participants and indirect participants of the applicable book-entry system in
accordance with the policies and procedures of such entities.

Events of Default; Rights upon Event of Default

         Pooling and Servicing Agreement; Servicing Agreement. Unless otherwise
specified in the related Prospectus Supplement, "Events of Default" under the
Pooling and Servicing Agreement for each Series of Certificates relating to
Loans include

         o        any failure by the Servicer to deposit amounts in the
                  Collection Account and Distribution Account(s) to enable the
                  Trustee to distribute to Holders of Securities of the Series
                  any required payment, provided that this failure continues
                  unremedied for the number of days specified in the related
                  Prospectus Supplement after the giving of written notice to
                  the Servicer by the Trustee, or to the Servicer and the
                  Trustee by Holders having not less than 25% of the total
                  voting rights of the Series;

         o        any failure by the Servicer duly to observe or perform in any
                  material respect any other of its covenants or agreements in
                  the Agreement provided that this failure continues unremedied
                  for the number of days specified in the related Prospectus
                  Supplement after the giving of written to the Servicer by the
                  Trustee, or to the Servicer and the Trustee by the Holders
                  having not less than 25% of the total voting rights of the of
                  the Series; and

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

         So long as an Event of Default remains unremedied under the applicable
Agreement for a Series of Securities relating to the servicing of Loans, unless
otherwise specified in the related Prospectus Supplement, the Trustee or Holders
of Securities of the Series having not less than 51% of the total voting rights
of the Series may terminate all of the rights and obligations of the Servicer as
servicer under the applicable Agreement (other than its right to recovery of
other expenses and amounts advanced pursuant to the terms of the Agreement,
which rights the Servicer will retain under all circumstances), whereupon the
Trustee will succeed to all the responsibilities, duties and liabilities of the
Servicer under the Agreement and will be entitled to reasonable servicing
compensation not to exceed the applicable servicing fee, together with other
servicing compensation in the form of assumption fees, late payment charges or
otherwise as provided in the Agreement.

         In the event that the Trustee is unwilling or unable so to act, it may
select (or petition a court of competent jurisdiction to appoint) a finance
institution, bank or loan servicing institution with a net worth


                                       37
<PAGE>

specified in the related Prospectus Supplement to act as successor Servicer
under the provisions of the Agreement. The successor Servicer would be entitled
to reasonable servicing compensation in an amount not to exceed the Servicing
Fee as set forth in the related Prospectus Supplement, together with other
servicing compensation in the form of assumption fees, late payment charges or
otherwise, as provided in the Agreement.

         During the continuance of any Event of Default of a Servicer under an
Agreement for a Series of Securities, the Trustee will have the right to take
action to enforce its rights and remedies and to protect and enforce the rights
and remedies of the Holders of Securities of the Series, and, unless otherwise
specified in the related Prospectus Supplement, Holders of Securities having not
less than 51% of the total voting rights of the Series may direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred upon the Trustee. However,
the Trustee will not be under any obligation to pursue any such remedy or to
exercise any of such trusts or powers unless the Holders have offered the
Trustee reasonable security or indemnity against the cost, expenses and
liabilities that may be incurred by the Trustee as a result. The Trustee may
decline to follow any such direction if it determines that the action or
proceeding so directed may not lawfully be taken or would involve it in personal
liability or be unjustly prejudicial to the non-assenting Holders.

         Indenture. Unless otherwise specified in the related Prospectus
Supplement, "Events of Default" under the Indenture for each Series of Notes
include:

         o        a default for thirty (30) days or more in the payment of any
                  principal of or interest on any Note of the Series;

         o        failure to perform any other covenant of the Depositor or the
                  Trust Fund in the Indenture, provided that the failure
                  continues for a period of sixty (60) days after notice is
                  given in accordance with the procedures described in the
                  related Prospectus Supplement;

         o        any representation or warranty made by the Depositor or the
                  Trust Fund in the Indenture or in any certificate or other
                  writing delivered pursuant to it or in connection with it with
                  respect to or affecting such Series having been incorrect in a
                  material respect as of the time made, provided that the breach
                  is not cured within sixty (60) days after notice is given in
                  accordance with the procedures described in the related
                  Prospectus Supplement;

         o        certain events of bankruptcy, insolvency, receivership or
                  liquidation of the Depositor or the Trust Fund; and

         o        any other Event of Default specified with respect to Notes of
                  that Series.

         If an Event of Default with respect to the then-outstanding Notes of
any Series occurs and is continuing, either the Indenture Trustee or the Holders
of a majority of the total amount of those Notes may declare the principal
amount of all the Notes of the Series (or, if the Notes of that Series are Zero
Coupon Securities, such portion of the principal amount as may be specified in
the related Prospectus Supplement) to be due and payable immediately. Under
certain circumstances of this type the declaration may be rescinded and annulled
by the Holders of a majority of the total amount of those Notes.

         If, following an Event of Default with respect to any Series of Notes,
the related Notes have been declared to be due and payable, the Indenture
Trustee may, in its discretion, and notwithstanding such acceleration, elect to
maintain possession of the collateral securing the Notes and to continue to
apply distributions on the collateral as if there had been no declaration of
acceleration, provided that the collateral continues to provide sufficient funds
for the payment of principal of and interest on the Notes 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


                                       38
<PAGE>

(other than a default in the payment of any principal of or interest on any Note
of the Series for thirty (30) days or more), unless:

         (a)      the Holders of 100% of the total amount of the
                  then-outstanding Notes of the Series consent to such sale;

         (b)      the proceeds of the sale or liquidation are sufficient to pay
                  in full the principal of and accrued interest due and unpaid
                  on the outstanding Notes of the Series at the date of sale; or

         (c)      the Indenture Trustee determines that the collateral would not
                  be sufficient on an ongoing basis to make all payments on the
                  Notes as such payments would have become due if the Notes had
                  not been declared due and payable, and the Indenture Trustee
                  obtains the consent of the Holders of 66<T075>% of the total
                  amount of the then-outstanding Notes of the Series.

         In the event that the Indenture Trustee liquidates the collateral in
connection with an Event of Default involving a default for thirty (30) days or
more in the payment of principal of or interest on the Notes of a Series, the
Indenture provides that the Indenture Trustee will have a prior lien on the
proceeds of any liquidation for its unpaid fees and expenses. As a result, upon
the occurrence of an Event of Default of this type, the amount available for
distribution to the Noteholders may 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 Noteholders
after the occurrence of such an Event of Default.

         Unless otherwise specified in the related Prospectus Supplement, in the
event that the principal of the Notes of a Series is declared due and payable as
described above, Holders of the 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 remains unamortized.

         Subject to the provisions of the Indenture relating to the duties of
the Indenture Trustee, in case an Event of Default shall occur and be continuing
with respect to a Series of Notes, the Indenture Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request or direction of any of the Holders of Notes of the Series, unless the
Holders offer security or indemnity satisfactory to the Indenture Trustee
against the costs, expenses and liabilities it might incur in complying with
their request or direction. Subject to the provisions for indemnification and
certain limitations contained in the Indenture, the Holders of a majority of
amount of the then-outstanding Notes of the Series shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Indenture Trustee or exercising any trust or power conferred on
the Indenture Trustee with respect to those Notes, and the Holders of a majority
of the amount of the amount of the then- outstanding Notes of the Series may, in
certain cases, waive any default with respect to the Notes, except a default in
the payment of principal or interest or a default in respect of a covenant or
provision of the Indenture that cannot be modified without the waiver or consent
of all the Holders of the outstanding Notes of affected thereby.

The Trustees

         The identity of the commercial bank, savings and loan association or
trust company named as the Trustee or Indenture Trustee, as the case may be, for
each Series of Securities will be set forth in the related Prospectus
Supplement. Entities serving as Trustee may have normal banking relationships
with the Depositor or the Servicer. In addition, for the purpose of meeting the
legal requirements of certain local jurisdictions, each Trustee will have the
power to appoint co-trustees or separate trustees. In the event of an
appointment, all rights, powers, duties and obligations conferred or imposed
upon the Trustee


                                       39
<PAGE>

by the related Agreement will be conferred or imposed upon that Trustee and each
separate trustee or co-trustee jointly, or, in any jurisdiction in which the
Trustee shall be incompetent or unqualified to perform certain acts, singly upon
the separate trustee or co-trustee who will exercise and perform such rights,
powers, duties and obligations solely at the direction of the Trustee. The
Trustee may also appoint agents to perform any of its responsibilities, which
agents will have any or all of the rights, powers, duties and obligations of the
Trustee conferred on them by their appointment; provided, however, that the
Trustee will continue to be responsible for its duties and obligations under the
Agreement.

Duties of Trustees

         No Trustee will make any representations as to the validity or
sufficiency of the related Agreement, the Securities or of any Primary Asset or
related documents. If no Event of Default (as defined in the related Agreement)
has occurred, the applicable Trustee will be required to perform only those
duties specifically required of it under the Agreement. Upon receipt of the
various certificates, statements, reports or other instruments required to be
furnished to it, the Trustee will be required to examine them to determine
whether they are in the form required by the related Agreement. However, the
Trustee will not be responsible for the accuracy or content of any such
documents furnished to it by the Holders or the Servicer under the Agreement.

         Each Trustee may be held liable for its own negligent action or failure
to act, or for its own misconduct; provided, however, that no Trustee will be
personally liable with respect to any action taken, suffered or omitted to be
taken by it in good faith in accordance with the direction of the related
Holders in an Event of Default. No Trustee will be required to expend or risk
its own funds or otherwise incur any financial liability in the performance of
any of its duties under the related Agreement, or in the exercise of any of its
rights or powers, if it has reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.

Resignation of Trustees

         Each Trustee may, upon written notice to the Depositor, resign at any
time, in which event the Depositor will be obligated to use its best efforts to
appoint a successor Trustee. If no successor Trustee has been appointed and has
accepted such appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for appointment of a successor Trustee. Each Trustee may also be
removed at any time (i) if that Trustee ceases to be eligible to continue as
such under the related Agreement, (ii) if that Trustee becomes insolvent or
(iii) by the Holders of Securities having more than over 50% of the total voting
rights of the Securities in the Trust Fund upon written notice to the Trustee
and to the Depositor. Any resignation or removal of a Trustee and appointment of
a successor Trustee will not become effective until the successor Trustee
accepts its appointment.

Amendment of Agreement

         Unless otherwise specified in the Prospectus Supplement, the Agreement
for each Series of Securities may be amended by the Depositor, the Servicer
(with respect to a Series relating to Loans), and the Trustee, without notice to
or consent of the Holders

         (i)      to cure any ambiguity,

         (ii)     to correct any defective provisions or to correct or
                  supplement any provision therein,

         (iii)    to add to the duties of the Depositor, the applicable Trustee
                  or the Servicer,


                                       40
<PAGE>

         (iv)     to add any other provisions with respect to matters or
                  questions arising under such Agreement or related Enhancement,

         (v)      to add or amend any provisions of such Agreement as required
                  by a Rating Agency in order to maintain or improve the rating
                  of the Securities (it being understood that none of the
                  Depositor, the Seller, the Servicer or any Trustee is
                  obligated to maintain or improve such rating), or

         (vi)     to comply with any requirements imposed by the Code;

provided, however, that any such amendment (other than pursuant to clause (vi)
above) will not adversely affect in any material respect the interests of any
Holders of the Series, as evidenced by an opinion of counsel delivered to the
Trustee. Unless otherwise specified in the Prospectus Supplement, any such
amendment shall be deemed not to adversely affect in any material respect the
interests of any Holder if the Trustee receives written confirmation from each
applicable Rating Agency rating that the amendment will not cause the Rating
Agency to reduce its then-current rating.

         Unless otherwise specified in the Prospectus Supplement, each Agreement
for each Series may also be amended by the applicable Trustee, the Servicer, if
applicable, and the Depositor with the consent of the Holders possessing not
less than 66 2/3% of the total outstanding principal amount of the Securities
of the Series (or, if only certain Classes are affected by the amendment,
66 2/3% of the total outstanding principal amount of each affected Class), for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Agreement, or modifying in any manner the rights of
Holders of the Series. In no event, however, shall any such amendment

         (a)      reduce the amount or delay the timing of payments on any
                  Security without the consent of the Holder of the Security; or

         (b)      reduce the aforesaid percentage of the total outstanding
                  principal amount of Securities of each Class, the Holders of
                  which are required to consent to any such amendment, without
                  the consent of the Holders of 100% of the total outstanding
                  principal amount of each affected Class.

Voting Rights

         The related Prospectus Supplement will set forth the method of
determining allocation of voting rights with respect to a Series.

List of Holders

         Upon written request of three or more Holders of record of a Series for
purposes of communicating with other Holders with respect to their rights under
the Agreement, (which request is accompanied by a copy of the communication such
Holders propose to transmit), the Trustee will afford them access during
business hours to the most recent list of Holders of that Series held by the
Trustee.

              No Agreement will provide for the holding of any annual or other
meeting of Holders.

Book-Entry Securities

         If specified in the related Prospectus Supplement for a Series of
Securities, the Securities (or one or more Classes of the Securities) may be
issued in book-entry form. In that event, beneficial owners of those Securities
will not be considered "Holders" under the Agreements and may exercise the
rights of Holders only indirectly through the participants in the applicable
book-entry system.


                                       41
<PAGE>

REMIC Administrator

         For any Series with respect to which a REMIC election is made,
preparation of certain reports and certain other administrative duties with
respect to the Trust Fund may be performed by a REMIC administrator, who may be
an affiliate of the Depositor.

Termination

         Pooling and Servicing Agreement; Trust Agreement. The obligations
created by the Pooling and Servicing Agreement or Trust Agreement for a Series
will terminate upon the distribution to Holders of all amounts distributable to
them pursuant to the Agreement under the circumstances described in the related
Prospectus Supplement. See "Description of the Securities--Optional Redemption,
Purchase or Termination" in this prospectus.

         Indenture. The Indenture will be discharged with respect to a Series of
Notes (except with respect to certain continuing rights specified in the
Indenture) upon the delivery to the Indenture Trustee for cancellation of all
the Notes of that Series or, with certain limitations, upon deposit with the
Indenture Trustee of funds sufficient for the payment in full of all of the
Notes of the Series.

         In addition to such discharge with certain limitations, , if so
specified with respect to the Notes of any Series, the Indenture will provide
that the related Trust Fund will be discharged from any and all obligations in
respect of the Notes of that Series (except for certain obligations relating to
temporary Notes and exchange of Notes, registration of the transfer or exchange
of those Notes, replacing stolen, lost or mutilated Notes, to, maintaining
paying agencies and holding monies for payment in trust) upon the deposit with
the Indenture Trustee, in trust, of money and/or direct obligations of or
obligations guaranteed by the United States of America that, through the payment
of interest and principal in accordance with their terms, will provide money in
an amount sufficient to pay the principal of and each installment of interest on
those Notes on the Final Scheduled Distribution Date for the Notes and any
installment of interest on the Notes in accordance with the terms of the
Indenture and the Notes. In the event of any such defeasance and discharge of
Notes of a Series, Holders of Notes of that Series would be able to look only to
such money and/or direct obligations for payment of principal of and interest
on, if any, their Notes until maturity.

                       CERTAIN LEGAL ASPECTS OF THE LOANS

         The following discussion contains summaries of certain legal aspects of
mortgage loans, home improvement installment sales contracts and home
improvement installment loan agreements that are general in nature. Because
certain legal aspects are governed by applicable state law (which laws may
differ substantially), the summaries do not purport to be complete or reflect
the laws of any particular state, or encompass the laws of all states in which
the properties securing the Loans are situated.

Mortgages

         The Loans for a Series will, and certain Home Improvement Contracts for
a Series may, be secured by either mortgages or deeds of trust or deeds to
secure debt (such Mortgage Loans and Home Improvement Contracts are hereinafter
referred to in this section as "mortgage loans"), depending upon the prevailing
practice in the state in which the property subject to a mortgage loan is
located. The filing of a mortgage, deed of trust or deed to secure debt creates
a lien or title interest upon the real property covered by that instrument and
represents the security for the repayment of an obligation that is customarily
evidenced by a promissory note. It is not prior to the lien for real estate
taxes and assessments or other charges imposed under governmental police powers
and may also be subject to other


                                       42
<PAGE>

liens pursuant to the laws of the jurisdiction in which the mortgaged property
is located. Priority with respect to the instruments depends on their terms, the
knowledge of the parties to the mortgage and generally on the order of recording
with the applicable state, county or municipal office. There are two parties to
a mortgage: the mortgagor, who is the borrower/property owner or the land
trustee (as described below), and the mortgagee, who is the lender. Under the
mortgage instrument, the mortgagor delivers to the mortgagee a note or bond and
the mortgage. In the case of a land trust, there are three parties because title
to the property is held by a land trustee under a land trust agreement of which
the borrower/property owner is the beneficiary; at origination of a mortgage
loan, the borrower executes a separate undertaking to make payments on the
mortgage note. A deed of trust transaction normally has three parties: the
trustor, who is the borrower/property owner; the beneficiary, who is the lender;
and the trustee, a third-party grantee. Under a deed of trust, the trustor
grants the property, irrevocably until the debt is paid, in trust, generally
with a power of sale, to the trustee to secure payment of the obligation. The
mortgagee's authority under a mortgage and the trustee's authority under a deed
of trust are governed by the law of the state in which the real property is
located, the express provisions of the mortgage or deed of trust, and, in some
cases, in deed of trust transactions, the directions of the beneficiary.

Foreclosure on Mortgages

         Foreclosure of a mortgage is generally accomplished by judicial action.
Generally, the action is initiated by the service of legal pleadings upon all
parties having an interest of record in the real property. Delays in completion
of the foreclosure occasionally may result from difficulties in locating
necessary parties defendant. When the mortgagee's right to foreclosure is
contested, the legal proceedings necessary to resolve the issue can be
time-consuming and expensive. After the completion of a judicial foreclosure
proceeding, the court may issue a judgment of foreclosure and appoint a receiver
or other officer to conduct the sale of the property. In some states, mortgages
may also be foreclosed by advertisement, pursuant to a power of sale provided in
the mortgage. Foreclosure of a mortgage by advertisement is essentially similar
to foreclosure of a deed of trust by nonjudicial power of sale.

         Foreclosure of a deed of trust is generally accomplished by a
nonjudicial trustee's sale under a specific provision in the deed of trust that
authorizes the trustee to sell the property upon any default by the borrower
under the terms of the note or deed of trust. In certain states, foreclosure
also may be accomplished by judicial action in the manner provided for
foreclosure of mortgages. In some states, the trustee must record a notice of
default and send a copy to the borrower-trustor and to any person who has
recorded a request for a copy of a notice of default and notice of sale. In
addition, the trustee in some states must provide notice to any other individual
having an interest in the real property, including any junior lienholders. If
the deed of trust is not reinstated within any applicable cure period, a notice
of sale must be posted in a public place and, in most states, published for a
specified period of time in one or more newspapers. In addition, some state laws
require that a copy of the notice of sale be posted on the property and sent to
all parties having an interest of record in the property. The trustor, borrower,
or any 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. Generally,
state law controls the amount of foreclosure expenses and costs, including
attorney's fees, which may be recovered by a lender. If the deed of trust is not
reinstated, a notice of sale must be posted in a public place and, in most
states, published for a specified period of time in one or more newspapers. In
addition, some state laws require that a copy of the notice of sale be posted on
the property, recorded and sent to all parties having an interest in the real
property.

         An action to foreclose a mortgage is an action to recover the mortgage
debt by enforcing the mortgagee's rights under the mortgage. It is regulated by
statutes and rules and subject throughout to the court's equitable powers.
Generally, a mortgagor is bound by the terms of the related mortgage note and
the mortgage as made and cannot be relieved from his default if the mortgagee
has exercised its rights in a


                                       43
<PAGE>

commercially reasonable manner. However, since a foreclosure action historically
was equitable in nature, the court may exercise equitable powers to relieve a
mortgagor of a default and deny the mortgagee foreclosure on proof that either
the mortgagor's default was neither willful nor in bad faith or the mortgagee's
action established a waiver, fraud, bad faith, or oppressive or unconscionable
conduct such as to warrant a court of equity to refuse affirmative relief to the
mortgagee. Under certain circumstances a court of equity may relieve the
mortgagor from an entirely technical default where such default was not willful.

         A foreclosure action is subject to most of the delays and expenses of
other lawsuits if defenses or counterclaims are interposed, sometimes requiring
up to several years to complete. Moreover, a non-collusive, regularly conducted
foreclosure sale may be challenged as a fraudulent conveyance, regardless of the
parties' intent, if a court determines that the sale was for less than fair
consideration and the sale occurred while the mortgagor was insolvent and within
one year (or within the state statute of limitations if the trustee in
bankruptcy elects to proceed under state fraudulent conveyance law) of the
filing of bankruptcy. Similarly, a suit against the debtor on the related
mortgage note may take several years and, generally, is a remedy alternative to
foreclosure, the mortgagee being precluded from pursuing both at the same time.

         In the case of foreclosure under either a mortgage or a deed of trust,
the sale by the referee or other designated officer or by the trustee is a
public sale. However, because of the difficulty potential third party purchasers
at the sale have in determining the exact status of title and because the
physical condition of the property may have deteriorated during the foreclosure
proceedings, it is uncommon for a third party to purchase the property at a
foreclosure sale. Rather, it is common for the lender to purchase the property
from the trustee or referee for an amount that may be equal to the unpaid
principal amount of the mortgage note secured by the mortgage or deed of trust
plus accrued and unpaid interest and the expenses of foreclosure, in which event
the mortgagor's debt will be extinguished or the lender may purchase for a
lesser amount in order to preserve its right against a borrower to seek a
deficiency judgment in states where such a judgment is available. Thereafter,
subject to the right of the borrower in some states to remain in possession
during the redemption period, the lender will assume the burdens of ownership,
including obtaining hazard insurance, paying taxes and making such repairs at
its own expense as are necessary to render the property suitable for sale. The
lender will commonly obtain the services of a real estate broker and pay the
broker's commission in connection with the sale of the property. Depending upon
market conditions, the ultimate proceeds of the sale of the property may not
equal the lender's investment in the property. Any loss may be reduced by the
receipt of any mortgage guaranty Insurance Proceeds.

Environmental Risks

         Federal, state and local laws and regulations impose a wide range of
requirements on activities that may affect the environment, health and safety.
These include laws and regulations governing air pollutant emissions, hazardous
and toxic substances, impacts to wetlands, leaks from underground storage tanks
and the management, removal and disposal of lead- and asbestos-containing
materials. In certain circumstances, these laws and regulations impose
obligations on the owners or operators of residential properties such as those
subject to the Loans. The failure to comply with such laws and regulations may
result in fines and penalties.

         Moreover, under various federal, state and local laws and regulations,
an owner or operator of real estate may be liable for the costs of addressing
hazardous substances on, in or beneath such property and related costs. Such
liability may be imposed without regard to whether the owner or operator knew
of, or was responsible for, the presence of such substances, and could exceed
the value of the property and the aggregate assets of the owner or operator. In
addition, persons who transport or dispose of


                                       44
<PAGE>

hazardous substances, or arrange for the transportation, disposal or treatment
of hazardous substances, at off-site locations may also be held liable if there
are releases or threatened releases of hazardous substances at such off-site
locations.

         In addition, under the laws of some states and under the Federal
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"),
contamination of property may give rise to a lien on the property to assure the
payment of the costs of clean-up. In several states, such a lien has priority
over the lien of an existing mortgage against such property. Under CERCLA, such
a lien is subordinate to pre-existing, perfected security interests.

         Under the laws of some states, and under CERCLA, there is a possibility
that a lender may be held liable as an "owner or operator" for costs of
addressing releases or threatened releases of hazardous substances at a
property, regardless of whether or not the environmental damage or threat was
caused by a current or prior owner or operator. CERCLA and some state laws
provide an exemption from the definition of "owner or operator" for a secured
creditor who, without "participating in the management" of a facility, holds
indicia of ownership primarily to protect its security interest in the facility.
The Solid Waste Disposal Act (the "SWDA") provides similar protection to secured
creditors in connection with liability for releases of petroleum from certain
underground storage tanks. However, if a lender "participates in the management"
of the facility in question or is found not to have held its interest primarily
to protect a security interest, the lender may forfeit its secured creditor
exemption status.

         A regulation promulgated by the U.S. Environmental Protection Agency
(the "EPA") in April 1992 attempted to clarify the activities in which lenders
could engage both prior to and subsequent to foreclosure of a security interest
without forfeiting the secured creditor exemption under CERCLA. The rule was
struck down in 1994 by the United States Court of Appeals for the District of
Columbia Circuit in Kelley ex rel State of Michigan v. Environmental Protection
Agency, 15 F.3d 1100 (D.C Cir. 1994), reh'g denied, 25 F.3d 1088, cert. denied
sub nom. Am. Bankers Ass'n v. Kelley, 115 S.Ct. 900 (1995). Another EPA
regulation promulgated in 1995 clarifies the activities in which lenders may
engage without forfeiting the secured creditor exemption under the underground
storage tank provisions of the SWDA. That regulation has not been struck down.

         On September 30, 1996, Congress enacted the Asset Conservation, Limited
Liability and Deposit Insurance Protection Act (ACA) which amended both CERCLA
and the SWDA to provide additional clarification regarding the scope of the
lender liability exemptions under the two statutes. Among other things, the ACA
specifies the circumstances under which a lender will be protected by the CERCLA
and SWDA exemptions, both while the borrower is still in possession of the
secured property and following foreclosure on the secured property.

         Generally, the ACA states that a lender who holds indicia of ownership
primarily to protect a security interest in a facility will be considered to
participate in management only if, while the borrower is still in possession of
the facility encumbered by the security interest, the lender (i) exercises
decision-making control over environmental compliance related to the facility
such that the lender has undertaken responsibility for hazardous substance
handling or disposal practices related to the facility or (ii) exercises control
at a level comparable to that of a manager of the facility such that the lender
has assumed or manifested responsibility for (a) overall management of the
facility encompassing daily decision-making with respect to environmental
compliance or (b) overall or substantially all of the operational functions (as
distinguished from financial or administrative functions) of the facility other
than the function of environmental compliance. The ACA also specifies certain
activities that are not considered to be "participation in management,"
including monitoring or enforcing the terms of the extension of credit or
security interest, inspecting the facility, and requiring a lawful means of
addressing the release or threatened release of a hazardous substance.


                                       45
<PAGE>

         The ACA also specifies that a lender who did not participate in
management of a facility prior to foreclosure will not be considered an "owner
or operator," even if the lender forecloses on the facility and after
foreclosure sells or liquidates the facility, maintains business activities,
winds up operations, undertakes an appropriate response action, or takes any
other measure to preserve, protect, or prepare the facility prior to sale or
disposition, if the lender seeks to sell or otherwise divest the facility at the
earliest practicable, commercially reasonable time, on commercially reasonable
terms, taking into account market conditions and legal and regulatory
requirements.

         The ACA specifically addresses the potential liability of lenders who
hold mortgages or similar conventional security interests in real property, such
as the Trust Fund does in connection with the Mortgage Loans and the Home
Improvement Contracts.

         If a lender is or becomes liable under CERCLA, it may be authorized to
bring a statutory action for contribution against any other "responsible
parties," including a previous owner or operator. However, such persons or
entities may be bankrupt or otherwise judgment proof, and the costs associated
with environmental cleanup and related actions may be substantial. Moreover,
some state laws imposing liability for addressing hazardous substances do not
contain exemptions from liability for lenders. Whether the costs of addressing a
release or threatened release at a property pledged as collateral for one of the
Loans would be imposed on the Trust Fund, and thus occasion a loss to the
Holders, therefore depends on the specific factual and legal circumstances at
issue.

Rights of Redemption

         In some states, after sale pursuant to a deed of trust or foreclosure
of a mortgage, the trustor or mortgagor and foreclosed junior lienors are given
a statutory period in which to redeem the property from the foreclosure sale.
The right of redemption should be distinguished from the equity of redemption,
which is a non-statutory right that must be exercised prior to the foreclosure
sale. In some states, redemption may occur only upon payment of the entire
principal balance of the loan, accrued interest and expenses of foreclosure. In
other states, redemption may be authorized if the former borrower pays only a
portion of the sums due. The effect of a statutory right of redemption is to
diminish the ability of the lender to sell the foreclosed property. The exercise
of a right of redemption would defeat the title of any purchaser at a
foreclosure sale, or of any purchaser from the lender subsequent to foreclosure
or sale under a deed of trust. Consequently, the practical effect of a right of
redemption is to force the lender to retain the property and pay the expenses of
ownership until the redemption period has run. In some states, there is no right
to redeem property after a trustee's sale under a deed of trust.

Junior Mortgages; Rights of Senior Mortgages

         The Mortgage Loans comprising or underlying the Primary Assets included
in the Trust Fund for a Series will be secured by mortgages or deeds of trust,
which may be second or more junior mortgages to other mortgages held by other
lenders or institutional investors. The rights of the Trust Fund (and therefore
of the Holders), as mortgagee under a junior mortgage, are subordinate to those
of the mortgagee under the senior mortgage, including the prior rights of the
senior mortgagee to receive hazard insurance and condemnation proceeds and to
cause the property securing the mortgage loan to be sold upon default of the
mortgagor, thereby extinguishing the junior mortgagee's lien unless the junior
mortgagee asserts its subordinate interest in the property in foreclosure
litigation and, possibly, satisfies the defaulted senior mortgage. A junior
mortgagee may satisfy a defaulted senior loan in full and, in some states, may
cure the default and bring the senior loan current, in either event 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.


                                       46
<PAGE>

         The standard form of the mortgage used by most institutional lenders
confers on the mortgagee the right both to receive all proceeds collected under
any hazard insurance policy and all awards made in connection with condemnation
proceedings, and to apply such proceeds and awards to any indebtedness secured
by the mortgage, in such order as the mortgagee may determine. Thus, in the
event improvements on the property are damaged or destroyed by fire or other
casualty, or in the event the property is taken by condemnation, the mortgagee
or beneficiary under underlying senior mortgages will have the prior right to
collect any insurance proceeds payable under a hazard insurance policy and any
award of damages in connection with the condemnation and to apply the same to
the indebtedness secured by the senior mortgages. Proceeds in excess of the
amount of senior mortgage indebtedness, in most cases, may be applied to the
indebtedness of a junior mortgage.

         Another provision sometimes found in the form of the mortgage or deed
of trust used by institutional lenders obligates the mortgagor to pay before
delinquency all taxes and assessments on the property and, when due, all
encumbrances, charges and liens on the property that appear prior to the
mortgage or deed of trust, to provide and maintain fire insurance on the
property, to maintain and repair the property and not to commit or permit any
waste thereof, and to appear in and defend any action or proceeding purporting
to affect the property or the rights of the mortgagee under the mortgage. Upon a
failure of the mortgagor to perform any of these obligations, the mortgagee is
given the right under certain mortgages to perform the obligation itself, at its
election, with the mortgagor agreeing to reimburse the mortgagee for any sums
expended by the mortgagee on behalf of the mortgagor. All sums so expended by
the mortgagee become part of the indebtedness secured by the mortgage.

Anti-Deficiency Legislation and Other Limitations on Lenders

         Certain states have imposed statutory prohibitions that limit the
remedies of a beneficiary under a deed of trust or a mortgagee under a mortgage.
In some states, statutes limit the right of the beneficiary or mortgagee to
obtain a deficiency judgment against the borrower following foreclosure or sale
under a deed of trust. A deficiency judgment is a personal judgment against the
former borrower equal in most cases to the difference between the net amount
realized upon the public sale of the real property and the amount due to the
lender. Other statutes require the beneficiary or mortgagee to exhaust the
security afforded under a deed of trust or mortgage by foreclosure in an attempt
to satisfy the full debt before bringing a personal action against the borrower.
In certain other states, the lender has the option of bringing a personal action
against the borrower on the debt without first exhausting such security.
However, in some of these states, the lender, following judgment on the personal
action, may be deemed to have elected a remedy and may be precluded from
exercising remedies with respect to the security. Consequently, the practical
effect of the election requirement, when applicable, is that lenders will
usually proceed first against the security rather than bringing a personal
action against the borrower. Finally, other statutory provisions limit any
deficiency judgment against the former borrower following a foreclosure sale to
the excess of the outstanding debt over the fair market value of the property at
the time of the public sale. The purpose of these statutes is generally to
prevent a beneficiary or a mortgagee from obtaining a large deficiency judgment
against the former borrower as a result of low or no bids at the foreclosure
sale.

         In addition to laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including the federal bankruptcy laws, the
Federal Soldiers' and Sailors' Relief Act of 1940 and state laws affording
relief to debtors, may interfere with or affect the ability of the secured
lender to realize upon collateral and/or enforce a deficiency judgment. For
example, with respect to federal bankruptcy law, the filing of a petition acts
as a stay against the enforcement of remedies for collection of a debt.
Moreover, a court with federal bankruptcy jurisdiction may permit a debtor
through a rehabilitation plan under chapter 13 of the federal bankruptcy code to
cure a monetary default with respect to a loan on his residence by paying
arrearages within a reasonable time period and reinstating the


                                       47
<PAGE>

original loan payment schedule even though the lender accelerated the loan and
the lender has taken all steps to realize upon its security (provided no sale of
the property has yet occurred) prior to the filing of the debtor's chapter 13
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 obligor to pay arrearages over a
number of years.

         Courts with federal bankruptcy jurisdiction have also indicated that
the terms of a mortgage loan may be modified if the borrower has filed a
petition under chapter 13. These courts have suggested that such modifications
may include reducing the amount of each monthly payment, changing the rate of
interest, altering the repayment schedule and reducing the lender's security
interest to the value of the residence, thus leaving the lender a general
unsecured creditor for the difference between the value of the residence and the
outstanding balance of the loan. Federal bankruptcy law and limited case law
indicate that the foregoing modifications could not be applied to the terms of a
loan secured by property that is the principal residence of the debtor. In all
cases, the secured creditor is entitled to the value of its security plus
post-petition interest, attorney's fees and costs to the extent the value of the
security exceeds the debt.

         In a chapter 11 case under the federal bankruptcy code, the lender is
precluded from foreclosing without authorization from the bankruptcy court. The
lender's lien may be transferred to other collateral and/or be limited in amount
to the value of the lender's interest in the collateral as of the date of the
bankruptcy. The loan term may be extended, the interest rate may be adjusted to
market rates and the priority of the loan may be subordinated to bankruptcy
court-approved financing. The bankruptcy court can, in effect, invalidate
due-on-sale clauses through confirmed Chapter 11 plans of reorganization.

         The bankruptcy code provides priority to certain tax liens over the
lender's security. This may delay or interfere with the enforcement of rights in
respect of a defaulted mortgage loan. In addition, substantive requirements are
imposed upon lenders in connection with the origination and the servicing of
mortgage loans by numerous federal and some state consumer protection laws. The
laws include the federal Truth in Lending Act, Real Estate Settlement Procedures
Act, Equal Credit Opportunity Act, Fair Credit Billing Act, Fair Credit
Reporting Act and related statutes and regulations. These federal laws 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.

Due-on-Sale Clauses in Mortgage Loans

         Due-on-sale clauses permit the lender to accelerate the maturity of the
loan if the borrower sells or transfers, whether voluntarily or involuntarily,
all or part of the real property securing the loan without the lender's prior
written consent. The enforceability of these clauses has been the subject of
legislation or litigation in many states, and in some cases, typically involving
single family residential mortgage transactions, their enforceability has been
limited or denied. In any event, the Garn-St. Germain Depository Institutions
Act of 1982 (the "Garn-St. Germain Act") 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, subject
to certain exceptions. As a result, due-on-sale clauses have become generally
enforceable except in those states whose legislatures exercised their authority
to regulate the enforceability of such clauses with respect to mortgage loans
that were (i) originated or assumed during the "window period" under the
Garn-St. Germain Act, which ended in all cases not later than October 15, 1982,
and (ii) originated by lenders other than national banks, federal savings
institutions and federal credit unions. FHLMC has taken the position in its
published mortgage servicing standards that, out of a total of eleven "window
period states," five states (Arizona, Michigan, Minnesota, New Mexico and Utah)
have enacted statutes extending, on various terms and for varying periods, the
prohibition on enforcement of due-on-sale clauses with respect to certain
categories of window period


                                       48
<PAGE>

loans. Also, 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.

         In addition, under federal bankruptcy law, due-on-sale clauses may not
be enforceable in bankruptcy proceedings and may, under certain circumstances,
be eliminated in any modified mortgage resulting from such bankruptcy
proceeding.

Enforceability of Prepayment and Late Payment Fees

         Forms of notes, mortgages and deeds of trust used by lenders may
contain provisions obligating the borrower to pay a late charge if payments are
not timely made, and in some circumstances may provide for prepayment fees or
penalties if the obligation is paid prior to maturity. In certain states, there
are or may be specific limitations, upon the late charges a lender may collect
from a borrower for delinquent payments. Certain states also limit the amounts
that a lender may collect from a borrower as an additional charge if the loan is
prepaid. Late charges and prepayment fees are typically retained by servicers as
additional servicing compensation.

Equitable Limitations on Remedies

         In connection with lenders' attempts to realize upon their security,
courts have invoked general equitable principles. The equitable principles are
generally designed to relieve the borrower from the legal effect of his 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 of the borrower's default and the
likelihood that the borrower will be able to reinstate the loan. In some cases,
courts have substituted their judgment for the lender's judgment and have
required 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 a lender to realize upon his
security if the default under the security agreement is not monetary, such as
the borrower's failure to adequately maintain the property or the borrower's
execution of secondary financing 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 security agreements receive notices in addition to the
statutorily-prescribed minimums. For the most part, these cases have upheld the
notice provisions as being reasonable or have found that, in cases involving the
sale by a trustee under a deed of trust or by a mortgagee under a mortgage
having a power of sale, there is insufficient state action to afford
constitutional protections to the borrower.

         Most conventional single-family mortgage loans may be prepaid in full
or in part without penalty. The regulations of the Office of Thrift Supervision
(the "OTS") prohibit the imposition of a prepayment penalty or equivalent fee
for or in connection with the acceleration of a loan by exercise of a
due-on-sale clause. A mortgagee to whom a prepayment in full has been tendered
may be compelled to give either a release of the mortgage or an instrument
assigning the existing mortgage. The absence of a restraint on prepayment,
particularly with respect to mortgage loans having higher mortgage rates, may
increase the likelihood of refinancing or other early retirements of such
mortgage loans.

Applicability of Usury Laws

         Title V of the Depository Institutions Deregulation and Monetary
Control Act of 1980, enacted in March 1980 ("Title V"), provides that state
usury limitations shall not apply to certain types of residential first mortgage
loans originated by certain lenders after March 31, 1980. Similar federal
statutes were in effect with respect to mortgage loans made during the first
three months of 1980. The OTS, as successor


                                       49
<PAGE>

to the Federal Home Loan Bank Board, is authorized to issue rules and
regulations and to publish interpretations governing implementation of Title V.

         Title V authorizes any state to reimpose interest rate limits by
adopting, before April 1, 1983, a state law, or by certifying that the voters of
such state have voted in favor of any provision, constitutional or otherwise,
which expressly rejects an application of the federal law. Fifteen states
adopted such a law prior to the April 1, 1983 deadline. In addition, even where
Title V is not so rejected, any state is authorized by the law to adopt a
provision limiting discount points or other charges on mortgage loans covered by
Title V.

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, generally
are "chattel paper" or constitute "purchase money security interests," each as
defined in the Uniform Commercial Code (the "UCC") in effect in the applicable
jurisdiction. Pursuant to the UCC, the sale of chattel paper is treated in a
manner similar to perfection of a security interest in chattel paper. Under the
related Agreement, the Depositor will transfer physical possession of the Home
Improvement Contracts to the Trustee or 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 otherwise
specified in the related Prospectus Supplement, the Home Improvement 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 Home
Improvement Contracts without notice of such assignment, the Trustee's interest
in the contracts could be defeated.

         Security Interests in Home Improvements

         The Home Improvement Contracts that are secured by the Home
Improvements financed thereby grant to the originator of such contracts a
purchase money security interest in such Home Improvements to secure all or part
of the purchase price of such 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. Purchase money security interests of
this type are assignable. In general, 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 such 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 general, under the UCC, a security interest does not exist under the UCC in
ordinary building material incorporated into an improvement on land. Home
Improvement Contracts that finance lumber, bricks, other types of ordinary
building material or other goods that are deemed to lose such characterization,
upon incorporation of such 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 Home
Improvement Contract by voluntary surrender, by "self-help" repossession that is
"peaceful" (i.e., without breach of the peace) or, in the absence of


                                       50
<PAGE>

voluntary surrender and the ability to repossess without breach of the peace, by
judicial process. The holder of a Home Improvement Contract must give the debtor
a number of days' notice, which varies from 10 to 30 days depending on the
state, prior to commencement of any repossession. The UCC and consumer
protection laws in most states place restrictions on repossession sales,
including requiring prior notice to the debtor and commercial reasonableness in
effecting such a sale. The law in most states also requires that the debtor be
given notice of any sale prior to resale of the unit 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 judgement 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 judgements, and in many cases
the defaulting borrower would have no assets with which to pay a judgement.

         Certain other statutory provisions, including federal and state
bankruptcy and insolvency laws and general equitable principles, may limit or
delay the ability of a lender to repossess and resell collateral or enforce a
deficiency judgement.

         Consumer Protection Laws

         The so-called "Holder-in-Due-Course" rule of the Federal Trade
Commission is intended to defeat the ability of the transferor of a consumer
credit contract that is the seller of goods that gave rise to the transaction
(and certain related lenders and assignees) to transfer the contract free of
notice of claims by the debtor thereunder. The effect of this rule is to subject
the assignee of the contract to all claims and defenses 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 such obligor. Numerous other federal and state consumer
protection laws impose requirements applicable to the origination and lending
pursuant to the contracts, including the Truth in Lending Act, the Federal Trade
Commission Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the
Equal Credit Opportunity Act, the Fair Debt Collection Practices Act and the
Uniform Consumer Credit Code. In the case of some of these laws, the failure to
comply with their provisions may affect the enforceability of the related
contract.

         Applicability of Usury Laws

         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
certain kinds of consumer goods. The Home Improvement Contracts would be covered
if they satisfy certain 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 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.

Installment Sales Contracts

         The Loans may also consist of installment sales contracts. Under an
installment sales contract (each, an "Installment Sales Contract") the seller
(hereinafter referred to


                                       51
<PAGE>

in this section as the "lender") retains legal title to the property and enters
into an agreement with the purchaser (hereinafter referred to in this section as
the "borrower") for the payment of the purchase price, plus interest, over the
term of such contract. Only after full performance by the borrower of the
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 Sales Contract, the borrower is generally responsible
for maintaining the property in good condition and for paying real estate taxes,
assessments and hazard insurance policy premiums associated with the property.

         The method of enforcing the rights of the lender under an Installment
Sales Contract varies on a state-by-state basis depending upon the extent to
which state courts are willing, or able pursuant to state statute, to enforce
the contract strictly according to the terms. The terms of Installment Sales
Contracts generally provide that upon a default by the borrower, the borrower
loses his right to occupy the property, the entire indebtedness is accelerated,
and the buyer's equitable interest in the property is forfeited. The lender in
such a situation does not have to 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 Sales 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 Sales 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 Sales 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 Sales Contract may
be reinstated upon full payment of the default amount and the borrower may have
a post-foreclosure statutory redemption right. In other states, courts in equity
may permit a borrower with significant investment in the property under an
Installment Sales Contract for the sale of real estate to share in the proceeds
of sale of the property after the indebtedness is repaid or may otherwise refuse
to enforce the forfeiture clause. Nevertheless, generally speaking, the lender's
procedures for obtaining possession and clear title under an Installment Sales
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.

Soldiers' and Sailors' Civil Relief Act of 1940

         Under the Soldiers' and Sailors' Civil Relief Act of 1940, members of
all branches of the military on active duty, including draftees and reservists
in military service, (i) are entitled to have interest rates reduced and capped
at 6% per annum, on obligations (including Loans) incurred prior to the
commencement of military service for the duration of military service, (ii) may
be entitled to a stay of proceedings on any kind of foreclosure or repossession
action in the case of defaults on such obligations entered into prior to
military service for the duration of military service and (iii) may have the
maturity of such obligations incurred prior to military service extended, the
payments lowered and the payment schedule readjusted for a period of time after
the completion of military service. However, the benefits of (i), (ii), or (iii)
above are subject to challenge by creditors and if, in the opinion of the court,
the ability of a person to comply with such obligations is not materially
impaired by military service, the court may apply equitable principles
accordingly. If a borrower's obligation to repay amounts otherwise due on a Loan
included in a Trust Fund for a Series is relieved pursuant to the Soldiers' and
Sailors' Civil Relief Act of 1940, none of the Trust Fund, the Servicer, the
Depositor nor any Trustee will be required to advance such amounts, and any
related loss may reduce the amounts available to be paid to the Holders of the
related Securities. Unless otherwise specified in the related Prospectus
Supplement, any shortfalls in interest collections on Loans (or Underlying
Loans), included in a Trust Fund for a Series resulting from application of the
Soldiers' and Sailors' Civil Relief Act of 1940 will be allocated to each Class
of Securities of the Series that is entitled to receive interest in respect of
such Loans (or Underlying Loans) in proportion to the interest that each such
Class of Securities would have otherwise been entitled to receive in respect of
such Loans (or Underlying Loans) had the interest shortfall not occurred.


                                       52
<PAGE>

                                  THE DEPOSITOR

         The Depositor was incorporated in the State of Delaware in June 1995,
and is a wholly-owned subsidiary of The Bear Stearns Companies Inc. The
Depositor's principal executive offices are located at 245 Park Avenue, New
York, New York 10167. Its telephone number is (212) 272-4095.

         The Depositor will not engage in any activities other than to
authorize, issue, sell, deliver, purchase and invest in (and enter into
agreements in connection with), and/or to engage in the establishment of one or
more trusts, which will issue and sell, bonds, notes, debt or equity securities,
obligations and other securities and instruments ("Depositor Securities"). The
Depositor Securities must be collateralized or otherwise secured or backed by,
or otherwise represent an interest in, among other things, receivables or
pass-through certificates, (or participations or certificates of participation
or beneficial ownership in one or more pools of receivables), and the proceeds
of the foregoing, that arise in connection with loans secured by certain first
or junior mortgages on real estate or manufactured housing and any and all other
commercial transactions and commercial, sovereign, student or consumer loans or
indebtedness, In connection therewith or otherwise, the depositor may purchase,
acquire, own, hold, transfer, convey, service, sell, pledge, assign, finance and
otherwise deal with such receivables, pass-through certificates, or
participations or certificates of participation or beneficial ownership. Article
Third of the Depositor's Certificate of Incorporation limits the Depositor's
activities to the above activities and certain related activities, such as
credit enhancement with respect to such Depositor Securities, and to any
activities incidental to and necessary or convenient for the accomplishment of
those purposes.

                                 USE OF PROCEEDS

         The Depositor will apply all or substantially all of the net proceeds
from the sale of each Series of Securities for one or more of the following
purposes:

         o        to purchase the related Primary Assets,

         o        to repay indebtedness incurred to obtain funds to acquire such
                  Primary Assets,

         o        to establish any Reserve Funds described in the related
                  Prospectus Supplement and

         o        to pay costs of structuring and issuing the Securities,
                  including the costs of obtaining any Enhancement.

If so specified in the related Prospectus Supplement, the purchase of the
Primary Assets for a Series may be effected by an exchange of Securities with
the Seller of such Primary Assets.

                    CERTAIN FEDERAL INCOME TAX CONSIDERATIONS

General

         The following is a summary of certain anticipated material federal
income tax consequences of the purchase, ownership, and disposition of the
Securities and is based on the opinion of Brown & Wood LLP, special counsel to
the Depositor (in such capacity, "Tax Counsel"). The summary is based upon the
provisions of the Code, the regulations promulgated thereunder, including, where
applicable, proposed regulations, and the judicial and administrative rulings
and decisions now in effect, all of which are subject to change or possible
differing interpretations. The statutory provisions, regulations, and
interpretations on which this interpretation is based are subject to change, and
such a change could apply retroactively.


                                       53
<PAGE>

         The summary does not purport to deal with all aspects of federal income
taxation that may affect particular investors in light of their individual
circumstances. This summary focuses primarily upon investors who will hold
Securities as "capital assets" (generally, property held for investment) within
the meaning of Section 1221 of the Code. Prospective investors may wish to
consult their own tax advisers concerning the federal, state, local and any
other tax consequences as relates specifically to such investors in connection
with the purchase, ownership and disposition of the Securities.

         The federal income tax consequences to Holders will vary depending on
whether (i) the Securities of a Series are classified as indebtedness; (ii) an
election is made to treat the Trust Fund relating to a particular Series of
Securities as a real estate mortgage investment conduit (a "REMIC") under the
Code; (iii) the Securities represent an ownership interest in some or all of the
assets included in the Trust Fund for a Series; or (iv) an election is made to
treat the Trust Fund relating to a particular Series of Certificates as a
partnership; or (v) an election is made to treat the Trust Fund relating to a
particular Series of Securities as a Financial Asset Securitization Investment
Trust ("FASIT") under the Code. The Prospectus Supplement for each Series of
Securities will specify how the Securities will be treated for federal income
tax purposes and will discuss whether a REMIC election, if any, will be made
with respect to such Series.

         As used herein, the term "U.S. Person" means a citizen or resident of
the United States, a corporation, partnership or other entity created or
organized in or under the laws of the United States, any state thereof or the
District of Columbia (other than a partnership that is not treated as a United
States person under any applicable Treasury regulations), an estate whose income
is subject to U.S. federal income tax regardless of its source of income, or a
trust if a court within the United States is able to exercise primary
supervision of the trust and one or more United States persons have the
authority to control all substantial decisions of the trust. Notwithstanding the
preceding sentence, to the extent provided in regulations, certain trusts in
existence on August 20, 1996 and treated as United States persons prior to such
date that elect to continue to be treated as United States persons shall be
considered U.S. Persons as well.

Taxation of Debt Securities

         Status as Real Property Loans. Except to the extent otherwise provided
in the related Prospectus Supplement, if the Securities are regular interests in
a REMIC ("Regular Interest Securities") or represent interests in a grantor
trust, Tax Counsel is of the opinion that: (i) Securities held by a domestic
building and loan association will constitute "loans... secured by an interest
in real property" within the meaning of Code section 7701(a)(19)(C)(v); and (ii)
Securities held by a real estate investment trust will constitute "real estate
assets" within the meaning of Code section 856(c)(4)(A) and interest on
Securities will be considered "interest on obligations secured by mortgages on
real property or on interests in real property" within the meaning of Code
section 856(c)(3)(B).

         Interest and Acquisition Discount. In the opinion of Tax Counsel,
Regular Interest are generally taxable to Holders in the same manner as
evidences of indebtedness issued by the REMIC. Stated interest on the Regular
Interest Securities will be taxable as ordinary income and taken into account
using the accrual method of accounting, regardless of the Holder's normal
accounting method. Interest (other than original issue discount) on Securities
(other than Regular Interest Securities) that are characterized as indebtedness
for federal income tax purposes will be includible in income by Holders thereof
in accordance with their usual methods of accounting. Securities characterized
as debt for federal income tax purposes and Regular Interest Securities will be
referred to hereinafter collectively as "Debt Securities."


                                       54
<PAGE>

         Tax Counsel is of the opinion that Debt Securities that are Compound
Interest Securities will, and certain of the other Debt Securities issued at a
discount may, be issued with "original issue discount" ("OID"). The following
discussion is based in part on the rules governing OID, which are set forth in
Sections 1271-1275 of the Code and the Treasury regulations issued thereunder on
February 2, 1994 and amended on June 11, 1996 (the "OID Regulations"). A Holder
should be aware, however, that the OID Regulations do not adequately address
certain issues relevant to prepayable securities, such as the Debt Securities.

         In general, OID, if any, will equal the difference between the stated
redemption price at maturity of a Debt Security and its issue price. In the
opinion of Tax Counsel, a Holder of a Debt Security must include such OID in
gross income as ordinary interest income as it accrues under a method taking
into account an economic accrual of the discount. In general, OID must be
included in income in advance of the receipt of the cash representing that
income. The amount of OID on a Debt Security will be considered to be zero if it
is less than a de minimis amount determined under the Code.

         The issue price of a Debt Security is the first price at which a
substantial amount of Debt Securities of that Class are sold to the public
(excluding bond houses, brokers, underwriters or wholesalers). If less than a
substantial amount of a particular Class of Debt Securities is sold for cash on
or prior to the Closing Date, the issue price for such Class will be treated as
the fair market value of such Class on the Closing Date. The issue price of a
Debt Security also includes the amount paid by an initial Debt Security Holder
for accrued interest that relates to a period prior to the issue date of the
Debt Security. The stated redemption price at maturity of a Debt Security
includes the original principal amount of the Debt Security, but generally will
not include distributions of interest if such distributions constitute
"qualified stated interest."

         Under the OID Regulations, qualified stated interest generally means
interest payable at a single fixed rate or qualified variable rate (as described
below); provided, that such interest payments are unconditionally payable at
intervals of one year or less during the entire term of the Debt Security. The
OID Regulations state that interest payments are unconditionally payable only if
a late payment or nonpayment is expected to be penalized or reasonable remedies
exist to compel payment. Certain Debt Securities may provide for default
remedies in the event of late payment or nonpayment of interest. In the opinion
of Tax Counsel, the interest on such Debt Securities will be unconditionally
payable and constitute qualified stated interest, not OID. However, absent
clarification of the OID Regulations, where Debt Securities do not provide for
default remedies, the interest payments will be included in the Debt Security's
stated redemption price at maturity and taxed as OID. Interest is payable at a
single fixed rate only if the rate appropriately takes into account the length
of the interval between payments. Distributions of interest on Debt Securities
with respect to which deferred interest will accrue, will not constitute
qualified stated interest payments, in which case the stated redemption price at
maturity of such Debt Securities includes all distributions of interest as well
as principal thereon. Where the interval between the issue date and the first
Distribution Date on a Debt Security is either longer or shorter than the
interval between subsequent Distribution Dates, all or part of the interest
foregone, in the case of the longer interval, and all of the additional
interest, in the case of the shorter interval, will be included in the stated
redemption price at maturity and tested under the de minimis rule described
below. In the case of a Debt Security with a long first period that has non-de
minimis OID, all stated interest in excess of interest payable at the effective
interest rate for the long first period will be included in the stated
redemption price at maturity and the Debt Security will generally have OID.
Holders of Debt Securities should consult their own tax advisors to determine
the issue price and stated redemption price at maturity of a Debt Security.

         Under the de minimis rule, OID on a Debt Security will be considered to
be zero if such OID is less than 0.25% of the stated redemption price at
maturity of the Debt Security multiplied by the weighted


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<PAGE>

average maturity of the Debt Security. For this purpose, the weighted average
maturity of the Debt Security is computed as the sum of the amounts determined
by multiplying the number of full years (i.e., rounding down partial years) from
the issue date until each distribution in reduction of stated redemption price
at maturity is scheduled to be made by a fraction, the numerator of which is the
amount of each distribution included in the stated redemption price at maturity
of the Debt Security and the denominator of which is the stated redemption price
at maturity of the Debt Security. Holders generally must report de minimis OID
pro rata as principal payments are received, and such income will be capital
gain if the Debt Security is held as a capital asset. However, accrual method
Holders may elect to accrue all de minimis OID as well as market discount under
a constant interest method.

         Debt Securities may provide for interest based on a qualified variable
rate. Under the OID Regulations, interest is treated as payable at a qualified
variable rate and not as contingent interest if, generally, (i) such interest is
unconditionally payable at least annually, (ii) the issue price of the debt
instrument does not exceed the total noncontingent principal payments and (iii)
interest is based on a "qualified floating rate," an "objective rate," or a
combination of "qualified floating rates" that do not operate in a manner that
significantly accelerates or defers interest payments on such Debt Security. In
the case of Compound Interest Securities, certain Interest Weighted Securities,
and certain of the other Debt Securities, none of the payments under the
instrument will be considered qualified stated interest, and thus the aggregate
amount of all payments will be included in the stated redemption price.

         The Internal Revenue Service (the "IRS") recently issued final
regulations (the "Contingent Payment Regulations") governing the calculation of
OID on instruments having contingent interest payments. The Contingent Payment
Regulations, represent the only guidance regarding the views of the IRS with
respect to contingent interest instruments and specifically do not apply for
purposes of calculating OID on debt instruments subject to Code Section
1272(a)(6), such as the Debt Security. Additionally, the OID Regulations do not
contain provisions specifically interpreting Code Section 1272(a)(6). Until the
Treasury issues guidance to the contrary, the applicable Trustee intends to base
its computation on Code Section 1272(a)(6) and the OID Regulations as described
in this Prospectus. However, because no regulatory guidance currently exists
under Code Section 1272(a)(6), there can be no assurance that such methodology
represents the correct manner of calculating OID.

         The Holder of a Debt Security issued with OID must include in gross
income, for all days during its taxable year on which it holds such Debt
Security, the sum of the "daily portions" of such original issue discount. The
amount of OID includible in income by a Holder will be computed by allocating to
each day during a taxable year a pro rata portion of the original issue discount
that accrued during the relevant accrual period. In the case of a Debt Security
that is not a Regular Interest Security and the principal payments on which are
not subject to acceleration resulting from prepayments on the Loans, the amount
of OID includible in income of a Holder for an accrual period (generally the
period over which interest accrues on the debt instrument) will equal the
product of the yield to maturity of the Debt Security and the adjusted issue
price of the Debt Security, reduced by any payments of qualified stated
interest. The adjusted issue price is the sum of its issue price plus prior
accruals or OID, reduced by the total payments made with respect to such Debt
Security in all prior periods, other than qualified stated interest payments.

         The amount of OID to be included in income by a Holder of a debt
instrument, such as certain Classes of the Debt Securities, that is subject to
acceleration due to prepayments on other debt obligations securing such
instruments (a "Pay-Through Security"), is computed by taking into account the
anticipated rate of prepayments assumed in pricing the debt instrument (the
"Prepayment Assumption"). The amount of OID that will accrue during an accrual
period on a Pay-Through Security is the excess (if any) of the sum of (a) the
present value of all payments remaining to be made on the Pay-Through Security
as of the close of the accrual period and (b) the payments during the accrual
period of amounts included in the


                                       56
<PAGE>

stated redemption price of the Pay-Through Security, over the adjusted issue
price of the Pay-Through Security at the beginning of the accrual period. The
present value of the remaining payments is to be determined on the basis of
three factors: (i) the original yield to maturity of the Pay-Through Security
(determined on the basis of compounding at the end of each accrual period and
properly adjusted for the length of the accrual period), (ii) events that have
occurred before the end of the accrual period and (iii) the assumption that the
remaining payments will be made in accordance with the original Prepayment
Assumption. The effect of this method is to increase the portions of OID
required to be included in income by a Holder to take into account prepayments
with respect to the Loans at a rate that exceeds the Prepayment Assumption, and
to decrease (but not below zero for any period) the portions of OID required to
be included in income by a Holder of a Pay-Through Security to take into account
prepayments with respect to the Loans at a rate that is slower than the
Prepayment Assumption. Although OID will be reported to Holders of Pay-Through
Securities based on the Prepayment Assumption, no representation is made to
Holders that Loans will be prepaid at that rate or at any other rate.

         The Depositor may adjust the accrual of OID on a Class of Regular
Interest (or other regular interests in a REMIC) in a manner that it believes to
be appropriate, to take account of realized losses on the Loans, although the
OID Regulations do not provide for such adjustments. If the IRS were to require
that OID be accrued without such adjustments, the rate of accrual of OID for a
Class of Regular Interest Securities could increase.

         Certain Classes of Regular Interest Securities may represent more than
one Class of REMIC regular interests. Unless otherwise provided in the related
Prospectus Supplement, the applicable Trustee intends, based on the OID
Regulations, to calculate OID on such Securities as if, solely for the purposes
of computing OID, the separate regular interests were a single debt instrument.

         A subsequent Holder of a Debt Security will also be required to include
OID in gross income, but such a Holder who purchases such Debt Security for an
amount that exceeds its adjusted issue price will be entitled (as will an
initial Holder who pays more than a Debt Security's issue price) to offset such
OID by comparable economic accruals of portions of such excess.

         Effects of Defaults and Delinquencies. In the opinion of Tax Counsel,
Holders will be required to report income with respect to the related Securities
under an accrual method without giving effect to delays and reductions in
distributions attributable to a default or delinquency on the Loans, except
possibly to the extent that it can be established that such amounts are
uncollectible. As a result, the amount of income (including OID) reported by a
Holder of such a Security in any period could significantly exceed the amount of
cash distributed to such Holder in that period. The Holder will eventually be
allowed a loss (or will be allowed to report a lesser amount of income) to the
extent that the aggregate amount of distributions on the Securities is reduced
as a result of a Loan default. However, the timing and character of such losses
or reductions in income are uncertain and, accordingly, Holders of Securities
should consult their own tax advisors on this point.

         Interest Weighted Securities. It is not clear how income should be
accrued with respect to Regular Interest Securities or Stripped Securities (as
defined under "--Tax Status as a Grantor Trust; General" herein) the payments on
which consist solely or primarily of a specified portion of the interest
payments on qualified mortgages held by the REMIC or on Loans underlying
Pass-Through Securities ("Interest Weighted Securities"). The Trustee intends to
take the position that all of the income derived from an Interest Weighted
Security should be treated as OID and that the amount and rate of accrual of
such OID should be calculated by treating the Interest Weighted Security as a
Compound Interest Security. However, in the case of Interest Weighted Securities
that are entitled to some payments of principal and that are Regular Interest
Securities the Internal Revenue Service could assert that income derived from an
Interest Weighted Security should be calculated as if the Security were a
security


                                       57
<PAGE>


purchased at a premium equal to the excess of the price paid by such
Holder for such Security over its stated principal amount, if any. Under this
approach, a Holder would be entitled to amortize such premium only if it has in
effect an election under Section 171 of the Code with respect to all taxable
debt instruments held by such Holder, as described below. Alternatively, the IRS
could assert that an Interest Weighted Security should be taxable under the
rules governing bonds issued with contingent payments. Such treatment may be
more likely in the case of Interest Weighted Securities that are Stripped
Securities as described below. See "--Tax Status as a Grantor Trust--Discount or
Premium on Pass-Through Securities."

         Variable Rate Debt Securities. In the opinion of Tax Counsel, in the
case of Debt Securities bearing interest at a rate that varies directly,
according to a fixed formula, with an objective index, it appears that (i) the
yield to maturity of such Debt Securities and (ii) in the case of Pay-Through
Securities, the present value of all payments remaining to be made on such Debt
Securities, should be calculated as if the interest index remained at its value
as of the issue date of such Securities. Because the proper method of adjusting
accruals of OID on a variable rate Debt Security is uncertain, Holders of
variable rate Debt Securities should consult their own tax advisers regarding
the appropriate treatment of such Securities for federal income tax purposes.

         Market Discount. In the opinion of Tax Counsel, a purchaser of a
Security may be subject to the market discount rules of Sections 1276-1278 of
the Code. A Holder that acquires a Debt Security with more than a prescribed de
minimis amount of "market discount" (generally, the excess of the principal
amount of the Debt Security over the purchaser's purchase price) will be
required to include accrued market discount in income as ordinary income in each
month, but limited to an amount not exceeding the principal payments on the Debt
Security received in that month and, if the Securities are sold, the gain
realized. Such market discount would accrue in a manner to be provided in
Treasury regulations but, until such regulations are issued, such market
discount would in general accrue either (i) on the basis of a constant yield (in
the case of a Pay-Through Security, taking into account a prepayment assumption)
or (ii) in the ratio of (a) in the case of Securities (or in the case of a
Pass-Through Security, as set forth below, the Loans underlying such Security)
not originally issued with original issue discount, stated interest payable in
the relevant period to total stated interest remaining to be paid at the
beginning of the period or (b) in the case of Securities (or, in the case of a
Pass-Through Security, as described below, the Loans underlying such Security)
originally issued at a discount, OID in the relevant period to total OID
remaining to be paid.

         Section 1277 of the Code provides that, regardless of the origination
date of the Debt Security (or, in the case of a Pass-Through Security, the
Loans), the excess of interest paid or accrued to purchase or carry a Security
(or, in the case of a Pass-Through Security, as described below, the underlying
Loans) with market discount over interest received on such Security is allowed
as a current deduction only to the extent such excess is greater than the market
discount that accrued during the taxable year in which such interest expense was
incurred. In general, the deferred portion of any interest expense will be
deductible when such market discount is included in income, including upon the
sale, disposition, or repayment of the Security (or in the case of a
Pass-Through Security, an underlying Loan). A Holder may elect to include market
discount in income currently as it accrues, on all market discount obligations
acquired by such Holder during the taxable year such election is made and
thereafter, in which case the interest deferral rule will not apply.

         Premium. In the opinion of Tax Counsel, a Holder who purchases a Debt
Security (other than an Interest Weighted Security to the extent described
above) at a cost greater than its stated redemption price at maturity, generally
will be considered to have purchased the Security at a premium, which it may
elect to amortize as an offset to interest income on such Security (and not as a
separate deduction item) on a constant yield method. Although no regulations
addressing the computation of premium accrual on


                                       58
<PAGE>


securities similar to the Securities have been issued,  the legislative  history
of the 1986 Act  indicates  that  premium is to be accrued in the same manner as
market discount.  Accordingly, it appears that the accrual of premium on a Class
of Pay-Through  Securities  will be calculated  using the prepayment  assumption
used in pricing such Class. If a Holder makes an election to amortize premium on
a Debt  Security,  such  election  will apply to all  taxable  debt  instruments
(including  all  REMIC  regular  interests  and  all  pass-through  certificates
representing  ownership  interests in a trust holding debt  obligations) held by
the Holder at the  beginning  of the taxable year in which the election is made,
and to all taxable debt instruments acquired thereafter by such Holder, and will
be irrevocable  without the consent of the IRS. Purchasers who pay a premium for
the  Securities  should  consult  their tax advisers  regarding  the election to
amortize premium and the method to be employed.

         On December 30, 1997, the IRS issued final regulations (the
"Amortizable Bond Premium Regulations") dealing with amortizable bond premium.
The regulations specifically do not apply to prepayable debt instruments subject
to Code Section 1272(a)(6). Absent further guidance from the IRS, the Trustee
intends to account for amortizable bond premium in the manner described above.
Prospective Purchasers of the Debt Securities should consult their tax advisors
regarding the possible application of the Amortizable Bond Premium Regulations.

         Election to Treat All Interest as Original Issue Discount. The OID
Regulations permit a Holder of a Debt Security to elect to accrue all interest,
discount (including de minimis market or original issue discount) and premium in
income as interest, based on a constant yield method for Debt Securities
acquired on or after April 4, 1994. If such an election were to be made with
respect to a Debt Security with market discount, the Holder of the Debt Security
would be deemed to have made an election to include in income currently market
discount with respect to all other debt instruments having market discount that
such Holder of the Debt Security acquires during the year of the election or
thereafter. Similarly, a Holder of a Debt Security that makes this election for
a Debt Security that is acquired at a premium will be deemed to have made an
election to amortize bond premium with respect to all debt instruments having
amortizable bond premium that such Holder owns or acquires. The election to
accrue interest, discount and premium on a constant yield method with respect to
a Debt Security is irrevocable.

Taxation of the REMIC and its Holders

         General. In the opinion of Tax Counsel, if a REMIC election is made
with respect to a Series of Securities, then the arrangement by which the
Securities of that Series are issued will be treated as a REMIC as long as all
of the provisions of the applicable Agreement are complied with and the
statutory and regulatory requirements are satisfied. Securities will be
designated as "Regular Interests" or "Residual Interests" in a REMIC, as
specified in the related Prospectus Supplement.

         Except to the extent specified otherwise in a Prospectus Supplement, if
a REMIC election is made with respect to a Series of Securities, in the opinion
of Tax Counsel (i) Securities held by a domestic building and loan association
will constitute "a regular or a residual interest in a REMIC" within the meaning
of Code Section 7701(a)(19)(C)(xi) (assuming that at least 95% of the REMIC's
assets consist of cash, government securities, "loans secured by an interest in
real property," and other types of assets described in Code Section
7701(a)(19)(C)); and (ii) Securities held by a real estate investment trust will
constitute "real estate assets" within the meaning of Code Section 856(c)(4)(A),
and income with respect to the Securities will be considered "interest on
obligations secured by mortgages on real property or on interests in real
property" within the meaning of Code Section 856(c)(3)(B) (assuming, for both
purposes, that at least 95% of the REMIC's assets are qualifying assets). If
less than 95% of the REMIC's assets consist of assets described in (i) or (ii)
above, then a Security will qualify for the tax treatment described in (i) or
(ii) in the proportion that such REMIC assets are qualifying assets.


                                       59
<PAGE>

REMIC Expenses; Single Class REMICs

         As a general rule, in the opinion of Tax Counsel, all of the expenses
of a REMIC will be taken into account by Holders of the Residual Interest
Securities. In the case of a "single class REMIC," however, the expenses will be
allocated, under Treasury regulations, among the Holders of the Regular Interest
Securities and the Holders of the Residual Interest Securities on a daily basis
in proportion to the relative amounts of income accruing to each Holder on that
day. In the case of a Holder of a Regular Interest Security who is an individual
or a "pass-through interest holder" (including certain pass-through entities but
not including real estate investment trusts), such expenses will be deductible
only to the extent that such expenses, plus other "miscellaneous itemized
deductions" of the Holder, exceed 2% of such Holder's adjusted gross income. In
addition, for taxable years beginning after December 31, 1990, the amount of
itemized deductions otherwise allowable for the taxable year for an individual
whose adjusted gross income exceeds the applicable amount (which amount will be
adjusted for inflation for taxable years beginning after 1990) will be reduced
by the lesser of (i) 3% of the excess of adjusted gross income over the
applicable amount, or (ii) 80% of the amount of itemized deductions otherwise
allowable for such taxable year. The reduction or disallowance of this deduction
may have a significant impact on the yield of the Regular Interest Security to
such a Holder. In general terms, a single class REMIC is one that either (i)
would qualify, under existing Treasury regulations, as a grantor trust if it
were not a REMIC (treating all interests as ownership interests, even if they
would be classified as debt for federal income tax purposes) or (ii) is similar
to such a trust and that is structured with the principal purpose of avoiding
the single class REMIC rules. Unless otherwise specified in the related
Prospectus Supplement, the expenses of the REMIC will be allocated to Holders of
the related residual interest securities.

Taxation of the REMIC

         General. Although a REMIC is a separate entity for federal income tax
purposes, in the opinion of Tax Counsel, a REMIC is not generally subject to
entity-level tax. Rather, the taxable income or net loss of a REMIC is taken
into account by the Holders of residual interests. As described above, the
regular interests are generally taxable as debt of the REMIC. Qualification as a
REMIC requires ongoing compliance with certain conditions. Although a REMIC is
not generally subject to federal income tax, failure to comply with one or more
of the ongoing requirements of the Code for REMIC status during any taxable
year, including the implementation of restrictions on the purchase and transfer
of the residual interests in a REMIC as described below under "Taxation of
Owners of Residual Interest Securities", the Code provides that the Trust will
not be treated as a REMIC for such year and thereafter. In that event, such
entity may be taxable as a separate corporation and the related certificates may
not be accorded the status or given the tax treatment described below.

         Calculation of REMIC Income. In the opinion of Tax Counsel, the taxable
income or net loss of a REMIC is determined under an accrual method of
accounting and in the same manner as in the case of an individual, with certain
adjustments. In general, the taxable income or net loss will be the difference
between (i) the gross income produced by the REMIC's assets, including stated
interest and any original issue discount or market discount on loans and other
assets, and (ii) deductions, including stated interest and original issue
discount accrued on Regular Interest Securities, amortization of any premium
with respect to Loans, and servicing fees and other expenses of the REMIC. A
Holder of a Residual Interest Security that is an individual or a "pass-through
interest holder" (including certain pass-through entities, but not including
real estate investment trusts) will be unable to deduct servicing fees payable
on the loans or other administrative expenses of the REMIC for a given taxable
year, to the extent that such expenses, when aggregated with such Holder's other
miscellaneous itemized deductions for that year, do not exceed two percent of
such Holder's adjusted gross income.


                                       60
<PAGE>


         For purposes of computing its taxable income or net loss, the REMIC
should have an initial aggregate tax basis in its assets equal to the aggregate
fair market value of the regular interests and the residual interests on the
Startup Day (generally, the day that the interests are issued). That aggregate
basis will be allocated among the assets of the REMIC in proportion to their
respective fair market values.

         The OID provisions of the Code apply to loans of individuals originated
on or after March 2, 1984, and the market discount provisions apply to loans
originated after July 18, 1984. Subject to possible application of the de
minimis rules, the method of accrual by the REMIC of OID income on such loans
will be equivalent to the method under which Holders of Pay-Through Securities
accrue original issue discount (i.e., under the constant yield method taking
into account the Prepayment Assumption). The REMIC will deduct OID on the
Regular Interest Securities in the same manner that the Holders of the Regular
Interest Securities include such discount in income, but without regard to the
de minimis rules. See "Taxation of Debt Securities" above. However, a REMIC that
acquires loans at a market discount must include such market discount in income
currently, as it accrues, on a constant interest basis.

         To the extent that the REMIC's basis allocable to loans that it holds
exceeds their principal amounts, the resulting premium, if attributable to
mortgages originated after September 27, 1985, will be amortized over the life
of the loans (taking into account the Prepayment Assumption) on a constant yield
method. Although the law is somewhat unclear regarding recovery of premium
attributable to loans originated on or before such date, it is possible that
such premium may be recovered in proportion to payments of loan principal.

         Prohibited Transactions and Contributions Tax. The REMIC will be
subject to a 100% tax on any net income derived from a "prohibited transaction."
For this purpose, net income will be calculated without taking into account any
losses from prohibited transactions or any deductions attributable to any
prohibited transaction that resulted in a loss. In general, prohibited
transactions include: (i) subject to limited exceptions, the sale or other
disposition of any qualified mortgage transferred to the REMIC; (ii) subject to
a limited exception, the sale or other disposition of a cash flow investment;
(iii) the receipt of any income from assets not permitted to be held by the
REMIC pursuant to the Code; or (iv) the receipt of any fees or other
compensation for services rendered by the REMIC. It is anticipated that a REMIC
will not engage in any prohibited transactions in which it would recognize a
material amount of net income. In addition, subject to a number of exceptions, a
tax is imposed at the rate of 100% on amounts contributed to a REMIC after the
close of the three-month period beginning on the Startup Day. The Holders of
Residual Interest Securities will generally be responsible for the payment of
any such taxes imposed on the REMIC. To the extent not paid by such Holders or
otherwise, however, such taxes will be paid out of the Trust Fund and will be
allocated pro rata to all outstanding Classes of Securities of such REMIC.

Taxation of Holders of Residual Interest Securities

         In the opinion of Tax Counsel, the Holder of a Certificate representing
a residual interest (a "Residual Interest Security") will take into account the
"daily portion" of the taxable income or net loss of the REMIC for each day
during the taxable year on which such Holder held the Residual Interest
Security. The daily portion is determined by allocating to each day in any
calendar quarter its ratable portion of the taxable income or net loss of the
REMIC for such quarter, and by allocating that amount among the Holders (on such
day) of the Residual Interest Securities in proportion to their respective
holdings on such day.

         In the opinion of Tax Counsel, the Holder of a Residual Interest
Security must report its proportionate share of the taxable income of the REMIC
whether or not it receives cash distributions from the REMIC attributable to
such income or loss. The reporting of taxable income without corresponding


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<PAGE>

distributions could occur, for example, in certain REMIC issues in which the
loans held by the REMIC were issued or acquired at a discount, since mortgage
prepayments cause recognition of discount income, while the corresponding
portion of the prepayment could be used in whole or in part to make principal
payments on REMIC Regular Interests issued without any discount or at an
insubstantial discount (if this occurs, it is likely that cash distributions
will exceed taxable income in later years). Taxable income may also be greater
in earlier years of certain REMIC issues as a result of the fact that interest
expense deductions, as a percentage of outstanding principal on REMIC Regular
Interest Securities, will typically increase over time as lower yielding
Securities are paid, whereas interest income with respect to loans will
generally remain constant over time as a percentage of loan principal.

         In any event, because the Holder of a residual interest is taxed on the
net income of the REMIC the taxable income derived from a Residual Interest
Security in a given taxable year will not be equal to the taxable income
associated with investment in a corporate bond or stripped instrument having
similar cash flow characteristics and pretax yield. Therefore, the after-tax
yield on the Residual Interest Security may be less than that of such a bond or
instrument.

         Limitation on Losses. In the opinion of Tax Counsel, the amount of the
REMIC's net loss that a Holder may take into account currently is limited to the
Holder's adjusted basis at the end of the calendar quarter in which such loss
arises. A Holder's basis in a Residual Interest Security will initially equal
such Holder's purchase price, and will subsequently be increased by the amount
of the REMIC's taxable income allocated to the Holder, and decreased (but not
below zero) by the amount of distributions made and the amount of the REMIC's
net loss allocated to the Holder. Any disallowed loss may be carried forward
indefinitely, but may be used only to offset income of the REMIC generated by
the same REMIC. The ability of Holders of Residual Interest Securities to deduct
net losses may be subject to additional limitations under the Code, as to which
such Holders should consult their tax advisers.

         Distributions. In the opinion of Tax Counsel distributions on a
Residual Interest Security (whether at their scheduled times or as a result of
prepayments) will generally not result in any additional taxable income or loss
to a Holder of a Residual Interest Security. If the amount of such payment
exceeds a Holder's adjusted basis in the Residual Interest Security, however,
the Holder will recognize gain (treated as gain from the sale of the Residual
Interest Security) to the extent of such excess.

         Sale or Exchange. In the opinion of Tax Counsel a Holder of a Residual
Interest Security will recognize gain or loss on the sale or exchange of a
Residual Interest Security equal to the difference, if any, between the amount
realized and such Holder's adjusted basis in the Residual Interest Security at
the time of such sale or exchange. A Holder's adjusted basis in a Residual
Certificate generally equals the cost of such Residual Certificate increased by
the taxable income of the REMIC that was included in the income of such Residual
Certificate Holder and decreased by distributions received thereon by such
Residual Certificateholder. Except to the extent provided in regulations, which
have not yet been issued, any loss upon disposition of a Residual Interest
Security will be disallowed if the selling Holder acquires any residual interest
in a REMIC or similar mortgage pool within six months before or after such
disposition. In that event, the loss will be used to increase such Residual
Interest Security Holders adjusted basis in the newly acquired asset.

         Excess Inclusions. In the opinion of Tax Counsel, the portion of the
REMIC taxable income of a Holder of a Residual Interest Security consisting of
"excess inclusion" income may not be offset by other deductions or losses,
including net operating losses, on such Holder's federal income tax return.
Further, if the Holder of a Residual Interest Security is an organization
subject to the tax on unrelated business income imposed by Code Section 511,
such Holder's excess inclusion income will be treated as unrelated business
taxable income of such Holder. In addition, under Treasury regulations yet to be
issued, if a real estate investment trust, a regulated investment company, a
common trust fund, or certain cooperatives




                                       62
<PAGE>

were to own a Residual Interest Security, a portion of dividends (or other
distributions) paid by the real estate investment trust (or other entity) would
be treated as excess inclusion income. If a Residual Security is owned by a
foreign person, excess inclusion income is subject to tax at a rate of 30%,
which may not be reduced by treaty, is not eligible for treatment as "portfolio
interest" and is subject to certain additional limitations. See "Tax Treatment
of Foreign Investors." The Small Business Job Protection Act of 1996 has
eliminated the special rule permitting Section 593 institutions ("thrift
institutions") to use net operating losses and other allowable deductions to
offset their excess inclusion income from Residual Interest Securities that have
"significant value" within the meaning of the REMIC Regulations, effective for
taxable years beginning after December 31, 1995, except with respect to Residual
Interest Securities continuously held by a thrift institution since November 1,
1995.

         In addition, the Small Business Job Protection Act of 1996 provides
three rules for determining the effect on excess inclusions on the alternative
minimum taxable income of a residual Holder. First, alternative minimum taxable
income for such residual Holder is determined without regard to the special rule
that taxable income cannot be less than excess inclusions. Second, a residual
Holder's alternative minimum taxable income for a tax year cannot be less than
excess inclusions for the year. Third, the amount of any alternative minimum tax
net operating loss deductions must be computed without regard to any excess
inclusions. These rules are effective for tax years beginning after December 31,
1986, unless a residual Holder elects to have such rules apply only to tax years
beginning after August 20, 1996.

         The excess inclusion portion of a REMIC's income is generally equal to
the excess, if any, of REMIC taxable income for the quarterly period allocable
to a Residual Interest Security, over the daily accruals for such quarterly
period of (i) 120% of the long term applicable federal rate on the Startup Day
multiplied by (ii) the adjusted issue price of such Residual Interest Security
at the beginning of such quarterly period. The adjusted issue price of a
Residual Interest at the beginning of each calendar quarter will equal its issue
price (calculated in a manner analogous to the determination of the issue price
of a Regular Interest), increased by the aggregate of the daily accruals for
prior calendar quarters, and decreased (but not below zero) by the amount of
loss allocated to a Holder and the amount of distributions made on the Residual
Interest Security before the beginning of the quarter. The long-term federal
rate, which is announced monthly by the Treasury Department, is an interest rate
that is based on the average market yield of outstanding marketable obligations
of the United States government having remaining maturities in excess of nine
years.

         Under the REMIC Regulations, in certain circumstances, transfers of
Residual Securities may be disregarded. See "--Restrictions on Ownership and
Transfer of Residual Interest Securities" and "--Tax Treatment of Foreign
Investors" below.

         Restrictions on Ownership and Transfer of Residual Interest Securities.
As a condition to qualification as a REMIC, reasonable arrangements must be made
to prevent the ownership of a REMIC residual interest by any "Disqualified
Organization." Disqualified Organizations include the United States, any State
or political subdivision thereof, any foreign government, any international
organization, or any agency or instrumentality of any of the foregoing, a rural
electric or telephone cooperative described in Section 1381(a)(2)(C) of the
Code, or any entity exempt from the tax imposed by Sections 1-1399 of the Code,
if such entity is not subject to tax on its unrelated business income.
Accordingly, the applicable Pooling and Servicing Agreement will prohibit
Disqualified Organizations from owning a Residual Interest Security. In
addition, no transfer of a Residual Interest Security will be permitted unless
the proposed transferee shall have furnished to the Trustee an affidavit
representing and warranting that it is neither a Disqualified Organization nor
an agent or nominee acting on behalf of a Disqualified Organization.


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<PAGE>


         If a Residual Interest Security is transferred to a Disqualified
Organization after March 31, 1988 (in violation of the restrictions set forth
above), a substantial tax will be imposed on the transferor of such Residual
Interest Security at the time of the transfer. In addition, if a Disqualified
Organization holds an interest in a pass-through entity after March 31, 1988
(including, among others, a partnership, trust, real estate investment trust,
regulated investment company, or any person holding as nominee), that owns a
Residual Interest Security, the pass-through entity will be required to pay an
annual tax on its allocable share of the excess inclusion income of the REMIC.

         Under the REMIC Regulations, if a Residual Interest Security is a
"noneconomic residual interest," as described below, a transfer of a Residual
Interest Security to a United States person will be disregarded for all federal
tax purposes unless no significant purpose of the transfer was to impede the
assessment or collection of tax. A Residual Interest Security is a "noneconomic
residual interest" unless, at the time of the transfer (i) the present value of
the expected future distributions on the Residual Interest Security at least
equals the product of the present value of the anticipated excess inclusions and
the highest rate of tax for the year in which the transfer occurs and (ii) the
transferor reasonably expects that the transferee will receive distributions
from the REMIC at or after the time at which the taxes accrue on the anticipated
excess inclusions in an amount sufficient to satisfy the accrued taxes. If a
transfer of a Residual Interest is disregarded, the transferor would be liable
for any federal income tax imposed upon taxable income derived by the transferee
from the REMIC. The REMIC Regulations provide no guidance as to how to determine
if a significant purpose of a transfer is to impede the assessment or collection
of tax. A similar type of limitation exists with respect to certain transfers of
residual interests by foreign persons to United States persons. See "--Tax
Treatment of Foreign Investors."

         Mark to Market Rules. Prospective purchasers of a REMIC Residual
Interest Security should be aware that the IRS recently finalized regulations
(the "Final Mark-to-Market Regulations"), which provide that a REMIC Residual
Interest Security acquired after January 3, 1995 cannot be marked-to-market.
Prospective purchasers of a REMIC Residual Interest Security should consult
their tax advisors regarding the possible application of the Mark to Market
Regulations.

Administrative Matters

         The REMIC's books must be maintained on a calendar year basis and the
REMIC must file an annual federal income tax return. The REMIC will also be
subject to the procedural and administrative rules of the Code applicable to
partnerships, including the determination of any adjustments to, among other
things, items of REMIC income, gain, loss, deduction, or credit, by the IRS in a
unified administrative proceeding.

Tax Status as a Grantor Trust

         General. As further specified in the related Prospectus Supplement, if
a REMIC election is not made and the Trust Fund is not structured as a
partnership, then, in the opinion of Tax Counsel, the Trust Fund relating to a
Series of Securities will be classified for federal income tax purposes as a
grantor trust under Subpart E, Part 1 of Subchapter J of the Code and not as an
association taxable as a corporation (the Securities of such Series,
"Pass-Through Securities"). In some Series there will be no separation of the
principal and interest payments on the Loans. In such circumstances, a Holder
will be considered to have purchased a pro rata undivided interest in each of
the Loans. In other cases ("Stripped Securities"), sale of the Securities will
produce a separation in the ownership of all or a portion of the principal
payments from all or a portion of the interest payments on the Loans.

         In the opinion of Tax Counsel, each Holder must report on its federal
income tax return its share of the gross income derived from the Loans (not
reduced by the amount payable as fees to the applicable


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<PAGE>

Trustee and the Servicer and similar fees (collectively,  the "Servicing Fee")),
at the same time and in the same manner as such items  would have been  reported
under the Holder's tax  accounting  method had it held its interest in the Loans
directly,  received  directly its share of the amounts  received with respect to
the Loans,  and paid  directly its share of the  Servicing  Fees. In the case of
Pass-Through Securities other than Stripped Securities, such income will consist
of a pro rata share of all of the income  derived  from all of the Loans and, in
the case of Stripped Securities, such income will consist of a pro rata share of
the income  derived  from each  stripped  bond or  stripped  coupon in which the
Holder owns an interest.  The Holder of a Security will generally be entitled to
deduct such  Servicing  Fees under Section 162 or Section 212 of the Code to the
extent that such  Servicing  Fees represent  "reasonable"  compensation  for the
services  rendered by the applicable  Trustee and the Servicer (or third parties
that  are  compensated  for  the  performance  of  services).  In the  case of a
noncorporate  Holder,  however,  Servicing  Fees (to the  extent  not  otherwise
disallowed,   e.g.,  because  they  exceed  reasonable   compensation)  will  be
deductible in computing  such Holder's  regular tax liability only to the extent
that such fees, when added to other miscellaneous itemized deductions, exceed 2%
of adjusted  gross income and may not be  deductible  to any extent in computing
such Holder's alternative minimum tax liability.  In addition, for taxable years
beginning after December 31, 1990, the amount of itemized  deductions  otherwise
allowable for the taxable year for an  individual  whose  adjusted  gross income
exceeds the  applicable  amount  (which amount will be adjusted for inflation in
taxable years  beginning  after 1990) will be reduced by the lesser of (i) 3% of
the excess of adjusted  gross income over the  applicable  amount or (ii) 80% of
the amount of itemized deductions otherwise allowable for such taxable year.

         Discount or Premium on Pass-Through Securities. In the opinion of Tax
Counsel, the Holder's purchase price of a Pass-Through Security is to be
allocated among the Loans in proportion to their fair market values, determined
as of the time of purchase of the Securities. In the typical case, the Trustee
(to the extent necessary to fulfill its reporting obligations) will treat each
Loan as having a fair market value proportional to the share of the aggregate
Principal Balances of all of the Loans that it represents, since the Securities,
unless otherwise specified in the related Prospectus Supplement, will have a
relatively uniform interest rate and other common characteristics. To the extent
that the portion of the purchase price of a Pass-Through Security allocated to a
Loan (other than to a right to receive any accrued interest thereon and any
undistributed principal payments) is less than or greater than the portion of
the Principal Balance of the Loan allocable to the Security, the interest in the
Loan allocable to the Pass-Through Security will be deemed to have been acquired
at a discount or premium, respectively.

         The treatment of any discount will depend on whether the discount
represents OID or market discount. In the case of a Loan with OID in excess of a
prescribed de minimis amount or a Stripped Security, a Holder of a Security will
be required to report as interest income in each taxable year its share of the
amount of OID that accrues during that year in the manner described above. OID
with respect to a Loan could arise, for example, by virtue of the financing of
points by the originator of the Loan, or by virtue of the charging of points by
the originator of the Loan in an amount greater than a statutory de minimis
exception, in circumstances under which the points are not currently deductible
pursuant to applicable Code provisions. Any market discount or premium on a Loan
will be includible in income, generally in the manner described above, except
that in the case of Pass-Through Securities, market discount is calculated with
respect to the Loans underlying the Certificate, rather than with respect to the
Security. A Holder that acquires an interest in a Loan originated after July 18,
1984 with more than a de minimis amount of market discount (generally, the
excess of the principal amount of the Loan over the purchaser's allocable
purchase price) will be required to include accrued market discount in income in
the manner set forth above. See "--Taxation of Debt Securities Market Discount"
and "--Premium" above.

         In the case of market discount on a Pass-Through Security attributable
to Loans originated on or before July 18, 1984, the Holder generally will be
required to allocate the portion of such discount that is allocable to a loan
among the principal payments on the Loan and to include the discount allocable
to


                                       65
<PAGE>

each principal payment in ordinary income at the time such principal payment
is made. Such treatment would generally 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 in the preceding paragraph.

         Stripped Securities. A Stripped Security may represent a right to
receive only a portion of the interest payments on the Loans, a right to receive
only principal payments on the Loans, or a right to receive certain payments of
both interest and principal. Certain Stripped Securities ("Ratio Strip
Securities") may represent a right to receive differing percentages of both the
interest and principal on each Loan. Pursuant to Section 1286 of the Code, the
separation of ownership of the right to receive some or all of the interest
payments on an obligation from ownership of the right to receive some or all of
the principal payments results in the creation of "stripped bonds" with respect
to principal payments and "stripped coupons" with respect to interest payments.
Section 1286 of the Code applies the OID rules to stripped bonds and stripped
coupons. For purposes of computing original issue discount, a stripped bond or a
stripped coupon is treated as a debt instrument issued on the date that such
stripped interest is purchased with an issue price equal to its purchase price
or, if more than one stripped interest is purchased, the ratable share of the
purchase price allocable to such stripped interest.

         Servicing fees in excess of reasonable servicing fees (the "excess
servicing fee") will be treated under the stripped bond rules. If the excess
servicing fee is less than 100 basis points (i.e., 1% interest on the Loan's
Principal Balance) or the Securities are initially sold with a de minimis
discount (assuming no prepayment assumption is required), any non-de minimis
discount arising from a subsequent transfer of the Securities should be treated
as market discount. The IRS appears to require that reasonable servicing fees be
calculated on a Loan by Loan basis, which could result in some Loans being
treated as having more than 100 basis points of interest stripped off.

         The Code, OID Regulations and judicial decisions provide no direct
guidance as to how the interest and original issue discount rules are to apply
to Stripped Securities and other Pass-Through Securities. Under the method
described above for Pay-Through Securities (the "Cash Flow Bond Method"), a
prepayment assumption is used and periodic recalculations are made that take
into account with respect to each accrual period the effect of prepayments
during such period. However, the 1986 Act does not, absent Treasury regulations,
appear specifically to cover instruments such as the Stripped Securities, which
technically represent ownership interests in the underlying Loans, rather than
being debt instruments "secured by" those loans. Nevertheless, it is believed
that the Cash Flow Bond Method is a reasonable method of reporting income for
such Securities, and it is expected that OID will be reported on that basis
unless otherwise specified in the related Prospectus Supplement. In applying the
calculation to Pass-Through Securities, the Trustee will treat all payments to
be received by a Holder with respect to the underlying Loans as payments on a
single installment obligation. The IRS could, however, assert that original
issue discount must be calculated separately for each Loan underlying a
Security.

         Under certain circumstances, if the Loans prepay at a rate faster than
the Prepayment Assumption, the use of the Cash Flow Bond Method may accelerate a
Holder's recognition of income. If, however, the Loans prepay at a rate slower
than the Prepayment Assumption, in some circumstances the use of this method may
decelerate a Holder's recognition of income.

         In the case of a Stripped Security that is an Interest Weighted
Security, the applicable Trustee intends, absent contrary authority, to report
income to Holders as OID, in the manner described above for Interest Weighted
Securities.

         Possible Alternative Characterizations. The characterizations of the
Stripped Securities described above are not the only possible interpretations of
the applicable Code provisions. Among other possibilities, the Internal Revenue
Service could contend that (i) in certain Series, each non-Interest Weighted
Security is composed of an unstripped undivided ownership interest in Loans and
an installment obligation consisting of stripped principal payments; (ii) the
non-Interest

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<PAGE>

Weighted Securities are subject to the contingent payment provisions of the
Proposed Regulations; or (iii) each Interest Weighted Stripped Security is
composed of an unstripped undivided ownership interest in Loans and an
installment obligation consisting of stripped interest payments.

         Given the variety of alternatives for treatment of the Stripped
Securities and the different federal income tax consequences that result from
each alternative, potential purchasers are urged to consult their own tax
advisers regarding the proper treatment of the Securities for federal income tax
purposes.

         Character as Qualifying Loans. In the case of Stripped Securities,
there is no specific legal authority existing regarding whether the character of
the Securities, for federal income tax purposes, will be the same as the Loans.
The IRS could take the position that the Loans character is not carried over to
the Securities in such circumstances. Pass-Through Securities will be, and,
although the matter is not free from doubt, Stripped Securities should be
considered to represent "real estate assets" within the meaning of Section
856(c)(4)(A) of the Code, and "loans secured by an interest in real property"
within the meaning of Section 7701(a)(19)(C)(v) of the Code; and interest income
attributable to the Securities should be considered to represent "interest on
obligations secured by mortgages on real property or on interests in real
property" within the meaning of Section 856(c)(3)(B) of the Code. Reserves or
funds underlying the Securities may cause a proportionate reduction in the
above-described qualifying status categories of Securities.

Sale or Exchange

         Subject to the discussion below with respect to Trust Funds as to which
a partnership election is made, in the opinion of Tax Counsel, a Holder's tax
basis in its Security is the price such Holder pays for a Security, plus amounts
of original issue or market discount included in income and reduced by any
payments received (other than qualified stated interest payments) and any
amortized premium. Gain or loss recognized on a sale, exchange, or redemption of
a Security, measured by the difference between the amount realized and the
Security's basis as so adjusted, will generally be capital gain or loss,
assuming that the Security is held as a capital asset and will generally be
long-term capital gain or loss if the holding period of the Security is one year
or more and short-term capital gain or loss if the holding period of the
Security is less than one year. Non-corporate taxpayers are subject to reduced
maximum rates on long-term capital gains and are generally subject to tax at
ordinary income rates on short-term capital gains. The deductibility of capital
losses is subject to certain limitations. Prospective investors should consult
their own tax advisors concerning these tax law provisions.

         In the case of a Security held by a bank, thrift, or similar
institution described in Section 582 of the Code, however, gain or loss realized
on the sale or exchange of a Regular Interest Security will be taxable as
ordinary income or loss. In addition, gain from the disposition of a Regular
Interest Security that might otherwise be capital gain will be treated as
ordinary income to the extent of the excess, if any, of (i) the amount that
would have been includible in the Holder's income if the yield on such Regular
Interest Security had equaled 110% of the applicable federal rate as of the
beginning of such Holder's holding period, over the amount of ordinary income
actually recognized by the Holder with respect to such Regular Interest
Security.

Miscellaneous Tax Aspects

         Backup Withholding. Subject to the discussion below with respect to
Trust Funds as to which a partnership election is made, a Holder, other than a
Holder of a REMIC Residual Security, may, under certain circumstances, be
subject to "backup withholding" at a rate of 31% with respect to distributions
or

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<PAGE>

the proceeds of a sale of certificates to or through brokers that represent
interest or original issue discount on the Securities. This withholding
generally applies if the Holder of a Security (i) fails to furnish the
applicable Trustee with its taxpayer identification number (the "TIN"); (ii)
furnishes the applicable Trustee an incorrect TIN; (iii) fails to report
properly interest, dividends or other "reportable payments" as defined in the
Code; or (iv) under certain circumstances, fails to provide the applicable
Trustee or such Holder's securities broker with a certified statement, signed
under penalty of perjury, that the TIN provided is its correct number and that
the Holder is not subject to backup withholding. Backup withholding will not
apply, however, with respect to certain payments made to Holders, including
payments to certain exempt recipients (such as exempt organizations) and to
certain Nonresidents (as defined below). Holders should consult their tax
advisers as to their qualification for exemption from backup withholding and the
procedure for obtaining the exemption.

         The applicable Trustee will report to the Holders and to the Servicer
for each calendar year the amount of any "reportable payments" during such year
and the amount of tax withheld, if any, with respect to payments on the
Securities.

New Withholding Regulations

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

Tax Treatment of Foreign Investors

         Subject to the discussion below with respect to Trust Funds as to which
a partnership election is made, under the Code, unless interest (including OID)
paid on a Security (other than a Residual Interest Security is considered to be
"effectively connected" with a trade or business conducted in the United States
by a nonresident alien individual, foreign partnership or foreign corporation
("Nonresidents"), in the opinion of Tax Counsel, such interest will normally
qualify as portfolio interest (except where (i) the recipient is a holder,
directly or by attribution, of 10% or more of the capital or profits interest in
the issuer, or (ii) the recipient is a controlled foreign corporation to which
the issuer is a related person) and will be exempt from federal income tax. Upon
receipt of appropriate ownership statements, the issuer normally will be
relieved of obligations to withhold tax from such interest payments. These
provisions supersede the generally applicable provisions of United States law
that would otherwise require the issuer to withhold at a 30% rate (unless such
rate were reduced or eliminated by an applicable tax treaty) on, among other
things, interest and other fixed or determinable, annual or periodic income paid
to Nonresidents. Holders of Pass-Through Securities and Stripped Securities,
including Ratio Strip Securities, however, may be subject to withholding to the
extent that the Loans were originated on or before July 18, 1984.

         Interest and OID of Holders who are foreign persons are not subject to
withholding if they are effectively connected with a United States business
conducted by the Holder. They will, however, generally be subject to the regular
United States income tax.

         Payments to Holders of Residual Interest Securities who are foreign
persons will generally be treated as interest for purposes of the 30% (or lower
treaty rate) United States withholding tax. Holders should assume that such
income does not qualify for exemption from United States withholding tax as
"portfolio interest." It is clear that, to the extent that a payment represents
a portion of REMIC taxable


                                       68
<PAGE>

income that constitutes excess inclusion income, a Holder of a Residual Interest
Security will not be entitled to an exemption from or reduction of the 30% (or
lower treaty rate) withholding tax rule. If the payments are subject to United
States withholding tax, they generally will be taken into account for
withholding tax purposes only when paid or distributed (or when the Residual
Interest Security is disposed of). The Treasury has statutory authority,
however, to promulgate regulations that would require such amounts to be taken
into account at an earlier time in order to prevent the avoidance of tax. Such
regulations could, for example, require withholding prior to the distribution of
cash in the case of Residual Interest Securities that do not have significant
value. Under the REMIC Regulations, if a Residual Interest Security has tax
avoidance potential, a transfer of a Residual Interest Security to a Nonresident
will be disregarded for all federal tax purposes. A Residual Interest Security
has tax avoidance potential unless, at the time of the transfer the transferor
reasonably expects that the REMIC will distribute to the transferee residual
interest Holder amounts that will equal at least 30% of each excess inclusion,
and that such amounts will be distributed at or after the time at which the
excess inclusions accrue and not later than the calendar year following the
calendar year of accrual. If a Nonresident transfers a Residual Interest
Security to a United States person, and if the transfer has the effect of
allowing the transferor to avoid tax on accrued excess inclusions, then the
transfer is disregarded and the transferor continues to be treated as the owner
of the Residual Interest Security for purposes of the withholding tax provisions
of the Code. See "--Excess Inclusions."

Tax Characterization of the Trust Fund as a Partnership

         Tax Counsel is of the opinion that a Trust Fund structured as a
partnership will not be an association (or publicly traded partnership) taxable
as a corporation for federal income tax purposes. This opinion is based on the
assumption that the terms of the Trust Agreement and related documents will be
complied with, and on counsel's conclusions that the nature of the income of the
Trust Fund will exempt it from the rule that certain publicly traded
partnerships are taxable as corporations or the issuance of the Certificates has
been structured as a private placement under an IRS safe harbor, so that the
Trust Fund will not be characterized as a publicly traded partnership taxable as
a corporation.

         If the Trust Fund were taxable as a corporation for federal income tax
purposes, in the opinion of Tax Counsel, the Trust Fund would be subject to
corporate income tax on its taxable income. The Trust Fund's taxable income
would include all its income, possibly reduced by its interest expense on the
Notes. Any such corporate income tax could materially reduce cash available to
make payments on the Notes and distributions on the Certificates, and
Certificateholders could be liable for any such tax that is unpaid by the Trust
Fund.

Tax Consequences to Holders of the Notes

         Treatment of the Notes as Indebtedness. The Trust Fund will agree, and
the Noteholders will agree by their purchase of Notes, to treat the Notes as
debt for federal income tax purposes. In such a circumstance, Tax Counsel is,
except as otherwise provided in the related Prospectus Supplement, of the
opinion that the Notes will be classified as debt for federal income tax
purposes. The discussion below assumes this characterization of the Notes is
correct.

         OID, Indexed Securities, etc. The discussion below assumes that all
payments on the Notes are denominated in U.S. dollars, and that the Notes are
not Indexed Securities or Strip Notes. Moreover, the discussion assumes that the
interest formula for the Notes meets the requirements for "qualified stated
interest" under the OID Regulations, and that any OID on the Notes (i.e., any
excess of the principal amount of the Notes over their issue price) does not
exceed a de minimis amount (i.e., 0.25% of their principal amount multiplied by
the number of full years included in their term), all within the meaning of the
OID regulations. If these conditions are not satisfied with respect to any given
Series of Notes,


                                       69
<PAGE>

additional tax considerations with respect to such Notes will be disclosed in
the applicable Prospectus Supplement.

         Interest Income on the Notes. Based on the above assumptions, except as
discussed in the following paragraph, in the opinion of Tax Counsel, the Notes
will not be considered issued with OID. The stated interest thereon will be
taxable to a Noteholder as ordinary interest income when received or accrued in
accordance with such Noteholder's method of tax accounting. Under the OID
Regulations, a Holder of a Note issued with a de minimis amount of OID must
include such OID in income, on a pro rata basis, as principal payments are made
on the Note. It is believed that any prepayment premium paid as a result of a
mandatory redemption will be taxable as contingent interest when it becomes
fixed and unconditionally payable. A purchaser who buys a Note for more or less
than its principal amount will generally be subject, respectively, to the
premium amortization or market discount rules of the Code.

         A Holder of a Note that has a fixed maturity date of not more than one
year from the issue date of such Note (a "Short-Term Note") may be subject to
special rules. An accrual basis Holder of a Short-Term Note (and certain cash
method Holders, including regulated investment companies, as set forth in
Section 1281 of the Code) generally would be required to report interest income
as interest accrues on a straight-line basis over the term of each interest
period. Other cash basis Holders of a Short-Term Note would, in general, be
required to report interest income as interest is paid (or, if earlier, upon the
taxable disposition of the Short-Term Note). However, a cash basis Holder of a
Short-Term Note reporting interest income as it is paid may be required to defer
a portion of any interest expense otherwise deductible on indebtedness incurred
to purchase or carry the Short-Term Note until the taxable disposition of the
Short-Term Note. A cash basis taxpayer may elect under Section 1281 of the Code
to accrue interest income on all nongovernment debt obligations with a term of
one year or less, in which case the taxpayer would include interest on the
Short-Term Note in income as it accrues, but would not be subject to the
interest expense deferral rule referred to in the preceding sentence. Certain
special rules apply if a Short-Term Note is purchased for more or less than its
principal amount.

         Sale or Other Disposition. In the opinion of Tax Counsel, if a
Noteholder sells a Note, the Holder will recognize gain or loss in an amount
equal to the difference between the amount realized on the sale and the Holder's
adjusted tax basis in the Note. The adjusted tax basis of a Note to a particular
Noteholder will equal the Holder's cost for the Note, increased by any market
discount, acquisition discount, OID and gain previously included by such
Noteholder in income with respect to the Note and decreased by the amount of
bond premium (if any) previously amortized and by the amount of principal
payments previously received by such Noteholder with respect to such Note. Any
such gain or loss will be capital gain or loss if the Note was held as a capital
asset, except for gain representing accrued interest and accrued market discount
not previously included in income. Capital losses generally may be used only to
offset capital gains.

         Foreign Holders. In the opinion of Tax Counsel, interest payments made
(or accrued) to a Noteholder who is a nonresident alien, foreign corporation or
other non-United States person (a "foreign person") generally will be considered
"portfolio interest," and generally will not be subject to United States federal
income tax and withholding tax, if the interest is not effectively connected
with the conduct of a trade or business within the United States by the foreign
person and the foreign person (i) is not actually or constructively a "10
percent shareholder" of the Trust Fund or the Seller (including a Holder of 10%
of the outstanding Certificates) or a "controlled foreign corporation" with
respect to which the Trust Fund or the Seller is a "related person" within the
meaning of the Code and (ii) provides the Trustee or other person who is
otherwise required to withhold U.S. tax with respect to the Notes with an
appropriate statement (on Form W-8 or a similar form), signed under penalties of
perjury, certifying that the beneficial owner of the Note is a foreign person
and providing the foreign person's name and address. If a Note is held through a
securities clearing organization or certain other financial institutions, the


                                       70
<PAGE>

organization or institution may provide the relevant signed statement to the
withholding agent; in that case, however, the signed statement must be
accompanied by a Form W-8 or substitute form provided by the foreign person that
owns the Note. If such interest is not portfolio interest, then it will be
subject to United States federal income and withholding tax at a rate of 30
percent, unless reduced or eliminated pursuant to an applicable tax treaty.

         Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a Note by a foreign person will be exempt from United
States federal income and withholding tax; provided, that (i) such gain is not
effectively connected with the conduct of a trade or business in the United
States by the foreign person and (ii) in the case of an individual foreign
person, the foreign person is not present in the United States for 183 days or
more in the taxable year.

         Backup Withholding. Each Holder of a Note (other than an exempt Holder
such as a corporation, tax-exempt organization, qualified pension and
profit-sharing trust, individual retirement account or nonresident alien who
provides certification as to status as a nonresident) will be required to
provide, under penalties of perjury, a certificate containing the Holder's name,
address, correct federal taxpayer identification number and a statement that the
Holder is not subject to backup withholding. Should a nonexempt Noteholder fail
to provide the required certification, the Trust Fund will be required to
withhold 31 percent of the amount otherwise payable to the Holder, and remit the
withheld amount to the IRS as a credit against the Holder's federal income tax
liability.

         The New Regulations described herein make certain modifications to the
backup withholding and information reporting rules. The New Regulations
generally will be effective for payments made after December 31, 2000, subject
to certain transition rules. Prospective investors are urged to consult their
own tax advisors regarding the New Regulations.

         Possible Alternative Treatments of the Notes. If, contrary to the
opinion of Tax Counsel, the IRS successfully asserted that one or more of the
Notes did not represent debt for federal income tax purposes, the Notes might be
treated as equity interests in the Trust Fund. If so treated, the Trust Fund
might be taxable as a corporation with the adverse consequences described above
(and the taxable corporation would not be able to reduce its taxable income by
deductions for interest expense on Notes recharacterized as equity).
Alternatively, and most likely in the view of Tax Counsel, the Trust Fund might
be treated as a publicly traded partnership that would not be taxable as a
corporation because it would meet certain qualifying income tests. Nonetheless,
treatment of the Notes as equity interests in such a publicly traded partnership
could have adverse tax consequences to certain Holders. For example, income to
certain tax-exempt entities (including pension funds) would be "unrelated
business taxable income," income to foreign Holders generally would be subject
to U.S. tax and U.S. tax return filing and withholding requirements, and
individual Holders might be subject to certain limitations on their ability to
deduct their share of the Trust Fund's expenses.

Tax Consequences to Holders of the Certificates

         Treatment of the Trust Fund as a Partnership. The Trust Fund and the
Servicer will agree, and the Certificateholders will agree by their purchase of
Certificates, to treat the Trust Fund as a partnership for purposes of federal
and state income tax, franchise tax and any other tax measured in whole or in
part by income, with the assets of the partnership being the assets held by the
Trust Fund, the partners of the partnership being the Certificateholders, and
the Notes being debt of the partnership. However, the proper characterization of
the arrangement involving the Trust Fund, the Certificates, the Notes, the Trust
Fund and the Servicer is not clear because there is no authority on transactions
closely comparable to that contemplated herein.


                                       71
<PAGE>

         A variety of alternative characterizations are possible. For example,
because the Certificates have certain features characteristic of debt, the
Certificates might be considered debt of the Trust Fund. Any such
characterization would not result in materially adverse tax consequences to
Certificateholders as compared to the consequences from treatment of the
Certificates as equity in a partnership, described below. The following
discussion assumes that the Certificates represent equity interests in a
partnership.

         Indexed Securities, etc. The following discussion assumes that all
payments on the Certificates are denominated in U.S. dollars, none of the
Certificates are Indexed Securities or Strip Certificates, and that a Series of
Securities includes a single Class of Certificates. If these conditions are not
satisfied with respect to any given Series of Certificates, additional tax
considerations with respect to such Certificates will be disclosed in the
applicable Prospectus Supplement.

         Partnership Taxation. If the Trust Fund is a partnership, in the
opinion of Tax Counsel, the Trust Fund will not be subject to federal income
tax. Rather, in the opinion of Tax Counsel, each Certificateholder will be
required to separately take into account such Holder's allocated share of
income, gains, losses, deductions and credits of the Trust Fund. The Trust
Fund's income will consist primarily of interest and finance charges earned on
the Loans (including appropriate adjustments for market discount, OID and bond
premium) and any gain upon collection or disposition of Loans. The Trust Fund's
deductions will consist primarily of interest accruing with respect to the
Notes, servicing and other fees, and losses or deductions upon collection or
disposition of Loans.

         In the opinion of Tax Counsel, the tax items of a partnership are
allocable to the partners in accordance with the Code, Treasury regulations and
the partnership agreement (here, the Trust Agreement and related documents). The
Trust Agreement will provide, in general, that the Certificateholders will be
allocated taxable income of the Trust Fund for each month equal to the sum of
(i) the interest that accrues on the Certificates in accordance with their terms
for such month, including interest accruing at the Pass-Through Rate for such
month and interest on amounts previously due on the Certificates but not yet
distributed; (ii) any Trust Fund income attributable to discount on the Loans
that corresponds to any excess of the principal amount of the Certificates over
their initial issue price (iii) prepayment premium payable to the
Certificateholders for such month; and (iv) any other amounts of income payable
to the Certificateholders for such month. Such allocation will be reduced by any
amortization by the Trust Fund of premium on Loans that corresponds to any
excess of the issue price of Certificates over their principal amount. All
remaining taxable income of the Trust Fund will be allocated to the Depositor.
Based on the economic arrangement of the parties, in the opinion of Tax Counsel,
this approach for allocating Trust Fund income should be permissible under
applicable Treasury regulations, although no assurance can be given that the IRS
would not require a greater amount of income to be allocated to
Certificateholders. Moreover, in the opinion of Tax Counsel, even under the
foregoing method of allocation, Certificateholders may be allocated income equal
to the entire Pass-Through Rate plus the other items described above even though
the Trust Fund might not have sufficient cash to make current cash distributions
of such amount. Thus, cash basis Holders will in effect be required to report
income from the Certificates on the accrual basis and Certificateholders may
become liable for taxes on Trust Fund income even if they have not received cash
from the Trust Fund to pay such taxes. In addition, because tax allocations and
tax reporting will be done on a uniform basis for all Certificateholders but
Certificateholders may be purchasing Certificates at different times and at
different prices, Certificateholders may be required to report on their tax
returns taxable income that is greater or less than the amount reported to them
by the Trust Fund.

         In the opinion of Tax Counsel, all of the taxable income allocated to a
Certificateholder that is a pension, profit sharing or employee benefit plan or
other tax-exempt entity (including an individual retirement account) will
constitute "unrelated business taxable income" generally taxable to such a
Holder under the Code.


                                       72
<PAGE>

         In the opinion of Tax Counsel, an individual taxpayer's share of
expenses of the Trust Fund (including fees to the Servicer but not interest
expense) would be miscellaneous itemized deductions. Such deductions might be
disallowed to the individual in whole or in part and might result in such Holder
being taxed on an amount of income that exceeds the amount of cash actually
distributed to such Holder over the life of the Trust Fund.

         The Trust Fund intends to make all tax calculations relating to income
and allocations to Certificateholders on an aggregate basis. If the IRS were to
require that such calculations be made separately for each Loan, the Trust Fund
might be required to incur additional expense but it is believed that there
would not be a material adverse effect on Certificateholders.

         Discount and Premium. It is believed that the Loans were not issued
with OID, and, therefore, the Trust Fund should not have OID income. However,
the purchase price paid by the Trust Fund for the Loans may be greater or less
than the remaining Principal Balance of the Loans at the time of purchase. If
so, in the opinion of Tax Counsel, the Loan will have been acquired at a premium
or discount, as the case may be. (As indicated above, the Trust Fund will make
this calculation on an aggregate basis, but might be required to recompute it on
a Loan by Loan basis.)

         If the Trust Fund acquires the Loans at a market discount or premium,
the Trust Fund will elect to include any such discount in income currently as it
accrues over the life of the Loans or to offset any such premium against
interest income on the Loans. As indicated above, a portion of such market
discount income or premium deduction may be allocated to Certificateholders.

         Section 708 Termination. In the opinion of Tax Counsel, under Section
708 of the Code, the Trust Fund will be deemed to terminate for federal income
tax purposes if 50% or more of the capital and profits interests in the Trust
Fund are sold or exchanged within a 12-month period. Pursuant to final Treasury
regulations issued May 9, 1997 under Section 708 of the Code, if such a
termination occurs, the Trust Fund (the "old partnership") would be deemed to
contribute its assets to a new partnership (the "new partnership") in exchange
for interests in the new partnership. Such interests would be deemed distributed
to the partners of the old partnership in liquidation thereof, which would not
constitute a sale or exchange.

         Disposition of Certificates. Generally, in the opinion of Tax Counsel,
capital gain or loss will be recognized on a sale of Certificates in an amount
equal to the difference between the amount realized and the seller's tax basis
in the Certificates sold. A Certificateholder's tax basis in a Certificate will
generally equal the Holder's cost increased by the Holder's share of Trust Fund
income (includible in income) and decreased by any distributions received with
respect to such Certificate. In addition, both the tax basis in the Certificates
and the amount realized on a sale of a Certificate would include the Holder's
share of the Notes and other liabilities of the Trust Fund. A Holder acquiring
Certificates at different prices may be required to maintain a single aggregate
adjusted tax basis in such Certificates, and, upon sale or other disposition of
some of the Certificates, allocate a portion of such aggregate tax basis to the
Certificates sold (rather than maintaining a separate tax basis in each
Certificate for purposes of computing gain or loss on a sale of that
Certificate).

         Any gain on the sale of a Certificate attributable to the Holder's
share of unrecognized accrued market discount on the Loans would generally be
treated as ordinary income to the Holder and would give rise to special tax
reporting requirements. The Trust Fund does not expect to have any other assets
that would give rise to such special reporting requirements. Thus, to avoid
those special reporting requirements, the Trust Fund will elect to include
market discount in income as it accrues.


                                       73
<PAGE>

         If a Certificateholder is required to recognize an aggregate amount of
income (not including income attributable to disallowed itemized deductions
described above) over the life of the Certificates that exceeds the aggregate
cash distributions with respect thereto, such excess will generally give rise to
a capital loss upon the retirement of the Certificates.

         Allocations Between Transferors and Transferees. In general, the Trust
Fund's taxable income and losses will be determined monthly and the tax items
for a particular calendar month will be apportioned among the Certificateholders
in proportion to the principal amount of Certificates owned by them as of the
close of the last day of such month. As a result, a Holder purchasing
Certificates may be allocated tax items (which will affect its tax liability and
tax basis) attributable to periods before the actual transaction.

         The use of such a monthly convention may not be permitted by existing
regulations. If a monthly convention is not allowed (or only applies to
transfers of less than all of the partner's interest), taxable income or losses
of the Trust Fund might be reallocated among the Certificateholders. The Trust
Fund's method of allocation between transferors and transferees may be revised
to conform to a method permitted by future regulations.

         Section 754 Election. In the event that a Certificateholder sells its
Certificates at a profit (loss), the purchasing Certificateholder will have a
higher (lower) basis in the Certificates than the selling Certificateholder had.
The tax basis of the Trust Fund's assets will not be adjusted to reflect that
higher (or lower) basis unless the Trust Fund were to file an election under
Section 754 of the Code. In order to avoid the administrative complexities that
would be involved in keeping accurate accounting records, as well as potentially
onerous information reporting requirements, the Trust Fund will not make such
election. As a result, Certificateholders might be allocated a greater or lesser
amount of Trust Fund income than would be appropriate based on their own
purchase price for Certificates.

         Administrative Matters. The Trustee is required to keep or have kept
complete and accurate books of the Trust Fund. Such books will be maintained for
financial reporting and tax purposes on an accrual basis and the fiscal year of
the Trust Fund will be the calendar year. The Trustee will file a partnership
information return (IRS Form 1065) with the IRS for each taxable year of the
Trust Fund and will report each Certificateholder's allocable share of items of
Trust Fund income and expense to Holders and the IRS on Schedule K-1. The Trust
Fund will provide the Schedule K-l information to nominees that fail to provide
the Trust Fund with the information statement described below and such nominees
will be required to forward such information to the beneficial owners of the
Certificates. Generally, Holders must file tax returns that are consistent with
the information return filed by the Trust Fund or be subject to penalties unless
the Holder notifies the IRS of all such inconsistencies.

         Under Section 6031 of the Code, any person that holds Certificates as a
nominee at any time during a calendar year is required to furnish the Trust Fund
with a statement containing certain information on the nominee, the beneficial
owners and the Certificates so held. Such information includes (i) the name,
address and taxpayer identification number of the nominee and (ii) as to each
beneficial owner (a) the name, address and identification number of such person,
(b) whether such person is a United States person, a tax-exempt entity or a
foreign government, an international organization or any wholly owned agency or
instrumentality of either of the foregoing, and (c) certain information on
Certificates that were held, bought or sold on behalf of such person throughout
the year. In addition, brokers and financial institutions that hold Certificates
through a nominee are required to furnish directly to the Trust Fund information
as to themselves and their ownership of Certificates. A clearing agency
registered under Section 17A of the Exchange Act is not required to furnish any
such information statement to the Trust Fund. The information referred to above
for any calendar year must be furnished to


                                       74
<PAGE>

the Trust Fund on or before the following January 31. Nominees, brokers and
financial institutions that fail to provide the Trust Fund with the information
described above may be subject to penalties.

         The Depositor will be designated as the tax matters partner in the
related Trust Agreement and, as such, will be responsible for representing the
Certificateholders in any dispute with the IRS. The Code provides for
administrative examination of a partnership as if the partnership were a
separate and distinct taxpayer. Generally, the statute of limitations for
partnership items does not expire before three years after the date on which the
partnership information return is filed. Any adverse determination following an
audit of the return of the Trust Fund by the appropriate taxing authorities
could result in an adjustment of the returns of the Certificateholders, and,
under certain circumstances, a Certificateholder may be precluded from
separately litigating a proposed adjustment to the items of the Trust Fund. An
adjustment could also result in an audit of a Certificateholder's returns and
adjustments of items not related to the income and losses of the Trust Fund.

         Tax Consequences to Foreign Certificateholders. It is not clear whether
the Trust Fund would be considered to be engaged in a trade or business in the
United States for purposes of federal withholding taxes with respect to non-U.S.
persons because there is no clear authority dealing with that issue under facts
substantially similar to those described herein. Although it is not expected
that the Trust Fund would be engaged in a trade or business in the United States
for such purposes, the Trust Fund will withhold as if it were so engaged in
order to protect the Trust Fund from possible adverse consequences of a failure
to withhold. The Trust Fund expects to withhold on the portion of its taxable
income that is allocable to foreign Certificateholders pursuant to Section 1446
of the Code, as if such income were effectively connected to a U.S. trade or
business, at a rate of 35% for foreign Holders that are taxable as corporations
and 39.6% for all other foreign Holders. Subsequent adoption of Treasury
regulations or the issuance of other administrative pronouncements may require
the Trust Fund to change its withholding procedures. In determining a Holder's
withholding status, the Trust Fund may rely on IRS Form W-8, IRS Form W-9 or the
Holder's certification of nonforeign status signed under penalties of perjury.

         Each foreign Holder might be required to file a U.S. individual or
corporate income tax return (including, in the case of a corporation, the branch
profits tax) on its share of the Trust Fund's income. Each foreign Holder must
obtain a taxpayer identification number from the IRS and submit that number to
the Trust Fund on Form W-8 in order to assure appropriate crediting of the taxes
withheld. A foreign Holder generally would be entitled to file with the IRS a
claim for refund with respect to taxes withheld by the Trust Fund taking the
position that no taxes were due because the Trust Fund was not engaged in a U.S.
trade or business. However, interest payments made (or accrued) to a
Certificateholder who is a foreign person generally will be considered
guaranteed payments to the extent such payments are determined without regard to
the income of the Trust Fund. If these interest payments are properly
characterized as guaranteed payments, then the interest will not be considered
"portfolio interest." As a result, Certificateholders will be subject to United
States federal income tax and withholding tax at a rate of 30 percent, unless
reduced or eliminated pursuant to an applicable treaty. In such case, a foreign
Holder would only be entitled to claim a refund for that portion of the taxes in
excess of the taxes that should be withheld with respect to the guaranteed
payments.

         Backup Withholding. Distributions made on the Certificates and proceeds
from the sale of the Certificates will be subject to a "backup" withholding tax
of 31% if, in general, the Certificateholder fails to comply with certain
identification procedures, unless the Holder is an exempt recipient under
applicable provisions of the Code. The New Regulations described herein make
certain modifications to the backup withholding and information reporting rules.
The New Regulations will generally be effective for payments made after December
31, 2000, subject to certain transition rules. Prospective investors are urged
to consult their own tax advisors regarding the New Regulations.


                                       75
<PAGE>

                            STATE TAX CONSIDERATIONS

         In addition to the federal income tax considerations described in
"Certain Federal Income Tax Considerations," potential investors should consider
the state and local income tax consequences of the acquisition, ownership, and
disposition of the Securities. State and local income tax law may differ
substantially from the corresponding federal law, and this discussion does not
purport to describe any aspect of the income tax laws of any state or locality.
Therefore, potential investors should consult their own tax advisors with
respect to the various state and local tax consequences of an investment in the
Securities.

                                FASIT SECURITIES

         General. The FASIT provisions of the Code were enacted by the Small
Business Job Protection Act of 1996 and create a new elective statutory vehicle
for the issuance of mortgage-backed and asset-backed securities ("FASIT
Securities"). Although the FASIT provisions of the Code became effective on
September 1, 1997, no Treasury regulations or other administrative guidance has
been issued with respect to those provisions. Accordingly, definitive guidance
cannot be provided with respect to many aspects of the tax treatment of Holders
of FASIT Securities. Investors also should note that the FASIT discussions
contained herein constitutes only a summary of the federal income tax
consequences to Holders of FASIT Securities. With respect to each Series of
FASIT Securities, the related Prospectus Supplement will provide a detailed
discussion regarding the federal income tax consequences associated with the
particular transaction.

         FASIT Securities will be classified as either FASIT Regular Securities,
which generally will be treated as debt for federal income tax purposes, or
FASIT Ownership Securities, which generally are not treated as debt for such
purposes, but rather as representing rights and responsibilities with respect to
the taxable income or loss of the related Series. The Prospectus Supplement for
each Series of Securities will indicate whether one or more FASIT elections will
be made for such Series, and which Securities of such Series will be designated
as Regular Securities, and which, if any, will be designated as Ownership
Securities.

         Qualification as a FASIT. The Trust Fund underlying a Series (or one or
more designated pools of assets held in the Trust Fund) will qualify under the
Code as a FASIT in which the FASIT Regular Securities and the FASIT Ownership
Securities will constitute the "regular interests" and the "ownership
interests," respectively, if (i) a FASIT election is in effect, (ii) certain
tests concerning (a) the composition of the FASIT's assets and (b) the nature of
the Holders' interest in the FASIT are met on a continuing basis and (iii) the
Trust Fund is not a regulated company as defined in Section 851(a) of the Code.

         Asset Composition. In order for a Trust Fund (on one or more designated
pools of assets held by a Trust Fund) to be eligible for FASIT status,
substantially all of the assets of the Trust Fund (or the designated pool) must
consist of "permitted assets" as of the close of the third month beginning after
the Closing Date and at all times thereafter (the "FASIT Qualification Test").
Permitted assets include (i) cash or cash equivalents, (ii) debt instruments
with fixed terms that would qualify as REMIC regular interests if issued by a
REMIC (generally, instruments that provide for interest at a fixed rate, a
qualifying variable rate, or a qualifying interest-only type rate, (iii)
foreclosure property, (iv) certain hedging instruments (generally, interest and
currency rate swaps and credit enhancement contracts) that are reasonably
required to guarantee or hedge against the FASIT's risks associated with being
the obligor on FASIT interests, (v) contract rights to acquire qualifying debt
instruments or qualifying hedging instruments, (vi) FASIT regular interests and
(vii) REMIC regular interests. Permitted assets do not include any debt
instruments issued by the Holder of the FASIT's ownership interest or by any
person related to such Holder.


                                       76
<PAGE>

         Interests in a FASIT. In addition to the foregoing asset qualification
requirements, the interests in a FASIT also must meet certain requirements. All
of the interests in a FASIT must belong to either of the following: (i) one or
more Classes of regular interests or (ii) a single Class of ownership interest
that is held by a fully taxable domestic corporation. In the case of Series that
include FASIT Ownership Securities, the ownership interest will be represented
by the FASIT Ownership Securities.

         A FASIT interest generally qualifies as a regular interest if (i) it is
designated as a regular interest, (ii) it has a stated maturity no greater than
thirty years, (iii) it entitles its Holder to a specified principal amount, (iv)
the issue price of the interest does not exceed 125% of its stated principal
amount, (v) the yield to maturity of the interest is less than the applicable
Treasury rate published by the IRS plus 5% and (vi) if it pays interest, such
interest is payable at either (a) a fixed rate with respect to the principal
amount of the regular interest or (b) a permissible variable rate with respect
to such principal amount. Permissible variable rates for FASIT regular interests
are the same as those for REMIC regular interest (i.e., certain qualified
floating rates and weighted average rates). See "Certain Federal Income Tax
Considerations--Taxation of Debt Securities--Variable Rate Debt Securities."

         If a FASIT Security fails to meet one or more of the requirements set
out in clauses (iii), (iv) or (v) above, but otherwise meets the above
requirements, it may still qualify as a type of regular interest known as a
"High-Yield Interest." In addition, if a FASIT Security fails to meet the
requirements of clause (vi), but the interest payable on the Security consists
of a specified portion of the interest payments on permitted assets and that
portion does not vary over the life of the Security, the Security also will
qualify as a High-Yield Interest. A High-Yield Interest may be held only by
domestic corporations that are fully subject to corporate income tax ("Eligible
Corporations"), other FASITs and dealers in securities who acquire such
interests as inventory, rather than for investment. In addition, Holders of
High-Yield Interests are subject to limitations on offset of income derived from
such interest. See "Certain Federal Income Tax Considerations--FASIT
Securities--Tax Treatment of FASIT Regular Securities--Treatment of High-Yield
Interests."

         Consequences of Disqualification. If a Series of FASIT Securities fails
to comply with one or more of the Code's ongoing requirements for FASIT status
during any taxable year, the Code provides that its FASIT status may be lost for
that year and thereafter. If FASIT status is lost, the treatment of the former
FASIT and the interests therein for federal income tax purposes is uncertain.
The former FASIT might be treated as a grantor trust, as a separate association
taxed as a corporation, or as a partnership. The FASIT Regular Securities could
be treated as debt instruments for federal income tax purposes or as equity
interests. Although the Code authorizes the Treasury to issue regulations that
address situations where a failure to meet the requirements for FASIT status
occurs inadvertently and in good faith, such regulations have not yet been
issued. It is possible that disqualification relief might be accompanied by
sanctions, such as the imposition of a corporate tax on all or a portion of the
FASIT's income for a period of time in which the requirements for FASIT status
are not satisfied.

         Tax Treatment of FASIT Regular Securities. Payments received by Holders
of FASIT Regular Securities generally should be accorded the same tax treatment
under the Code as payments received on other taxable corporate debt instruments
and on REMIC Regular Securities. As in the case of Holders of REMIC Regular
Securities, Holders of FASIT Regular Securities must report income from such
Securities under an accrual method of accounting, even if they otherwise would
have used the case receipts and disbursements method. Except in the case of
FASIT Regular Securities issued with original issue discount or acquired with
market discount or premium, interest paid or accrued on a FASIT Regular Security
generally will be treated as ordinary income to the Holder and a principal
payment on such Security will be treated as a return of capital to the extent
that the Holder's basis is allocable to that payment. FASIT Regular Securities
issued with original issue discount or acquired with market discount or premium
generally will treat interest and principal payments on such Securities in the
same manner


                                       77
<PAGE>

described for REMIC Regular Securities. See "Certain Federal Income Tax
Considerations--Taxation of Debt Securities,""--Market Discount," and
"--Premium" above. High-Yield Securities may be held only by fully taxable
domestic corporations, other FASITs, and certain securities dealers. Holders of
High-Yield Securities are subject to limitations on their ability to use current
losses or net operating loss carryforwards or carrybacks to offset any income
derived from those Securities.

         If a FASIT Regular Security is sold or exchanged, the Holder generally
will recognize gain or loss upon the sale in the manner described above for
REMIC Regular Securities. See "Certain Federal Income Tax Considerations--Sale
or Exchange." In addition, if a FASIT Regular Security becomes wholly or
partially worthless as a result of Default and Delinquencies of the underlying
assets, the Holder of such Security should be allowed to deduct the loss
sustained (or alternatively be able to report a lesser amount of income). See
"Certain Federal Income Tax Considerations--Taxation of Debt
Instruments--Effects of Default and Delinquencies."

         FASIT Regular Securities held by a REIT will qualify as "real estate
assets" within the meaning of section 856(c) (4)(A) of the Code, and interest on
such Securities will be considered Qualifying REIT Interest to the same extent
that REMIC Securities would be so considered. FASIT Regular Securities held by a
Thrift Institution taxed as a "domestic building and loan association" will
represent qualifying assets for purposes of the qualification requirements set
forth in Code Section 7701(a)(19) to the same extent that REMIC Securities would
be so considered. See "Certain Federal Income Tax Considerations--Taxation of
Debt Securities--Status as Real Property Loans." In addition, FASIT Regular
Securities held by a financial institution to which Section 585 of the Code
applies will be treated as evidences of indebtedness for purposes of Section
582(c)(1) of the Code. FASIT Securities will not qualify as "Government
Securities" for either REIT or RIC qualification purposes.

         Treatment of High-Yield Interests. High-Yield Interests are subject to
special rules regarding the eligibility of Holders of such interests, and the
ability of such Holders to offset income derived from their FASIT Security with
losses. High-Yield Interests may be held only by Eligible Corporations other
FASITs, and dealers in securities who acquire such interests as inventory. If a
securities dealer (other than an Eligible Corporation) initially acquires a
High-Yield Interest as inventory, but later begins to hold it for investment,
the dealer will be subject to an excise tax equal to the income from the
High-Yield Interest multiplied by the highest corporate income tax rate. In
addition, transfers of High-Yield Interests to disqualified Holders will be
disregarded for federal income tax purposes, and the transferor still will be
treated as the Holder of the High-Yield Interest.

         The Holder of a High-Yield Interest may not use non-FASIT current
losses or net operating loss carryforwards or carrybacks to offset any income
derived from the High-Yield Interest, for either regular federal income tax
purposes or for alternative minimum tax purposes. In addition, the FASIT
provisions contain an anti-abuse rule that imposes corporate income tax on
income derived from a FASIT Regular Security that is held by a pass-through
entity (other than another FASIT) that issues debt or equity securities backed
by the FASIT Regular Security and that have the same features as High-Yield
Interests.

         Tax Treatment of FASIT Ownership Securities. A FASIT Ownership Security
represents the residual equity interest in a FASIT. As such, the Holder of a
FASIT Ownership Security determines its taxable income by taking into account
all assets, liabilities and items of income, gain, deduction, loss and credit of
a FASIT. In general, the character of the income to the Holder of a FASIT
Ownership Interest will be the same as the character of such income of the
FASIT, except that any tax-exempt interest income taken into account by the
Holder of a FASIT Ownership Interest is treated as ordinary income. In
determining that taxable income, the Holder of a FASIT Ownership Security must
determine the amount of interest, original issue discount, market discount and
premium recognized with respect to the FASIT's assets and the FASIT Regular
Securities issued by the FASIT according to a constant yield methodology


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<PAGE>

and under an accrual method of accounting. In addition, Holders of FASIT
Ownership Securities are subject to the same limitations on their ability to use
losses to offset income from their FASIT Security as are the Holders of
High-Yield Interests. See "Certain Federal Income Tax Considerations--Treatment
of High-Yield Interests."

         Rules similar to the wash sale rules applicable to REMIC Residual
Securities also will apply to FASIT Ownership Securities. Accordingly, losses on
dispositions of a FASIT Ownership Security generally will be disallowed where,
within six months before or after the disposition, the seller of such Security
acquires any other FASIT Ownership Security or, in the case of a FASIT holding
mortgage assets, any interest in a Taxable Mortgage Pool that is economically
comparable to a FASIT Ownership Security. In addition, if any security that is
sold or contributed to a FASIT by the Holder of the related FASIT Ownership
Security was required to be marked-to-market under Code section 475 by such
Holder, then section 475 will continue to apply to such securities, except that
the amount realized under the mark-to-market rules will be a greater of the
securities' value under present law or the securities' value after applying
special valuation rules contained in the FASIT provisions. Those special
valuation rules generally require that the value of debt instruments that are
not traded on an established securities market be determined by calculating the
present value of the reasonably expected payments under the instrument using a
discount rate of 120% of the applicable federal rate, compounded semiannually.

         The Holder of a FASIT Ownership Security will be subject to a tax equal
to 100% of the net income derived by the FASIT from any "prohibited
transactions." Prohibited transactions include (i) the receipt of income derived
from assets that are not permitted assets, (ii) certain dispositions of
permitted assets, (iii) the receipt of any income derived from any loan
originated by a FASIT and (iv) in certain cases, the receipt of income
representing a servicing fee or other compensation. Any Series for which a FASIT
election is made generally will be structured in order to avoid application of
the prohibited transaction tax.

         Backup Withholding, Reporting and Tax Administration. Holders of FASIT
Securities will be subject to backup withholding to the same extent Holders of
REMIC Securities would be subject. See "Certain Federal Income Tax
Considerations--Miscellaneous Tax Aspects--Backup Withholding." For purposes of
reporting and tax administration, Holders of record of FASIT Securities
generally will be treated in the same manner as Holders of REMIC Securities.

         Due to the complexity of the federal income tax rules applicable to
Holders and the considerable uncertainty that exists with respect to many
aspects of those rules, potential investors should consult their own tax
advisors regarding the tax treatment of the acquisition, ownership, and
disposition of the securities.

                              ERISA CONSIDERATIONS

         The following describes certain considerations under the Employment
Retirement Security Act of 1974, as amended ("ERISA"), and the Code, which apply
only to Securities of a Series that are not divided into subclasses. If
Securities are divided into subclasses, the related Prospectus Supplement will
contain information concerning considerations relating to ERISA and the Code
that are applicable to such Securities and such subclasses of Securities.

         ERISA imposes requirements on employee benefit plans (and on certain
other retirement plans and arrangements, including certain individual retirement
accounts and annuities, Keogh plans and collective investment funds and separate
accounts in which such plans, accounts or arrangements are invested)
(collectively "Plans") subject to ERISA and on persons who are fiduciaries with
respect to such Plans. Generally, ERISA applies to investments made by Plans.
Among other things, ERISA requires


                                       79
<PAGE>

that the assets of Plans be held in trust and that the trustee, or other duly
authorized fiduciary, have exclusive authority and discretion to manage and
control the assets of such Plans. ERISA also imposes certain duties on persons
who are fiduciaries of Plans. Under ERISA, any person who exercises any
authority or control respecting the management or disposition of the assets of a
Plan is considered to be a fiduciary of such Plan (subject to certain exceptions
not here relevant). Certain employee benefit plans, such as governmental plans
(as defined in ERISA Section 3(32)) and, if no election has been made under
Section 410(d) of the Code, church plans (as defined in ERISA Section 3(33)),
are not subject to ERISA requirements. Accordingly, assets of such plans may be
invested in Securities without regard to the ERISA considerations described
above and below, subject to the provisions of applicable law. Any such plan that
is qualified and exempt from taxation under Code Sections 401(a) and 501(a),
however, is subject to the prohibited transaction rules set forth in Code
Section 503.

         In addition to the imposition of general fiduciary standards of
investment prudence and diversification, ERISA and Section 4975 of the Code
prohibit a broad range of transactions involving Plan assets and persons
("Parties in Interest") having certain specified relationships to a Plan, and
impose additional prohibitions where Parties in Interest are fiduciaries with
respect to such Plan. Certain Parties in Interest that participate in a
prohibited transaction may be subject to an excise tax imposed pursuant to
Section 4975 of the Code, or a penalty imposed pursuant to Section 502(i) of
ERISA, unless a statutory, regulatory or administrative exemption is available.

         On November 13, 1986, the United States Department of Labor (the "DOL")
issued final regulations (Labor Reg. Section 2510.3-101) concerning the
definition of what constitutes the assets of a Plan (the "Plan Asset
Regulation"). Under this regulation, the underlying assets and properties of
corporations, partnerships and certain other entities in which a Plan acquires
an "equity" interest could be deemed for purposes of ERISA to be assets of the
investing Plan in certain circumstances, unless certain exceptions apply.

         Under the Plan Asset Regulation, the term "equity" interest is defined
as any interest in an entity other than an instrument that is treated as
indebtedness under "applicable local law" and which has no "substantial equity
features." If the Trust Fund issues Notes that are not treated as equity
interests in the Trust Fund for purposes of the Plan Asset Regulation, a Plan's
investment in such Notes would not cause the assets of the Trust to be deemed
Plan assets. However, the Seller, the Servicer, the Special Servicer, the Backup
Servicer, the Indenture Trustee, the Owner Trustee, the Underwriter and the
Depositor may be the sponsor of or investment advisor with respect to one or
more Plans. Because such parties may receive certain benefits in connection with
the sale of the Notes, the purchase of Notes using Plan assets over which any
such parties (or any affiliates thereof) has investment authority might be
deemed to be a violation of the prohibited transaction rules of ERISA and the
Code for which no exemption may be available. Accordingly, Notes may not be
purchased using the assets of any Plan if the Seller, the Servicer, the Special
Servicer, the Backup Servicer, the Indenture Trustee, the Owner Trustee, the
Underwriter, the Depositor or any of their affiliates (a) has investment or
administrative discretion with respect to such Plan assets; (b) has authority or
responsibility to give, or regularly gives, investment advice with respect to
such Plan assets for a fee and pursuant to an agreement of understanding that
such advice (i) will serve as a primary basis for investment decisions with
respect to such Plan assets and (ii) will be based on the particular investment
needs for such Plan; or (c) is an employer maintaining or contributing to such
Plan.

         In addition, the Trust Fund, any underwriter, trustee, servicer,
administrator or producer of credit support or their affiliates might be
considered or might become Parties in Interest with respect to a Plan. Also, any
holder of Notes, because of its activities or the activities of its respective
affiliates, may be deemed to be a Party in Interest with respect to certain
Plans, including but not limited to Plans sponsored by such holder. In either
case, the acquisition or holding of Notes by or on behalf of such a Plan could
be


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<PAGE>

considered to give rise to a prohibited transaction within the meaning of ERISA
and the Code, unless it is subject to one or more exemptions such as: Prohibited
Transaction Class Exemption ("PTCE") 84-14, which exempts certain transactions
effected on behalf of a Plan by a "qualified professional asset manager"; PTCE
90-1, which exempts certain transactions involving insurance company pooled
separate accounts; PTCE 91-38, which exempts certain transactions involving bank
collective investment funds; PTCE 95-60, which exempts certain transactions
involving insurance company general accounts; or PTCE 96-23, which exempts
certain transactions effected on behalf of a Plan by certain "in-house asset
managers." There can be no assurance that any of these class exemptions will
apply with respect to any particular Plan investment in Notes, or, even if it
did apply, that any exemption would apply to all prohibited transactions that
may occur in connection with such an investment. Each prospective purchaser or
transferee of a Note that is a Plan or a person acting on behalf or investing
the assets of a Plan shall be required to represent (or, with respect to any
transfer of a beneficial interest in a Global Note, shall be deemed to
represent) to the Indenture Trustee and the Note Registrar that the relevant
conditions for exemptive relief under at least one of the foregoing exemptions
have been satisfied.

         The Plan Asset Regulation provides that, generally, the assets of a
corporation or partnership in which a Plan invests will not be deemed for
purposes of ERISA to be assets of such Plan if the equity interest acquired by
the investing Plan is a publicly-offered security, of if equity participation by
benefit plan investors is not significant. A publicly-offered security, as
defined in the Plan Asset Regulation, is a security that is widely held, freely
transferable and registered under the Exchange Act. Equity participation in an
entity by benefit plan investors is not significant if, after the most recent
acquisition of an equity interest in the entity, less than 25% of the value of
each class of equity interest in the entity is held by "benefit plan investors,"
which include benefit plans described in ERISA or under section 4975 of the
Code, whether or not they are subject to ERISA, as well as entities whose
underlying assets include plan assets by reason of a plan's investment in the
entity.

         If no exception under the Plan Asset Regulation applies, then if a Plan
(or a person investing Plan assets, such as an insurance company general
account) acquires an equity interest in the Trust Fund, then the assets of the
Trust Fund would be considered to be assets of the Plan. Because the Loans held
by the Trust Fund may be deemed Plan assets of each Plan that purchases
Securities, an investment in the Securities by a Plan might be a prohibited
transaction under ERISA Sections 406 and 407 and subject to an excise tax under
Code Section 4975 and may cause transactions undertaken in the course of
operating the Trust Fund to constitute prohibited transactions, unless a
statutory or administrative exemption applies.

         In Prohibited Transaction Class Exemption 83-1 ("PTCE 83-1"), the DOL
exempted from ERISA's prohibited transaction rules certain transactions relating
to the operation of residential mortgage pool investment trusts and the
purchase, sale and holding of "mortgage pool pass-through certificates" in the
initial issuance of such certificates. PTCE 83-1 permits, subject to certain
conditions, transactions that might otherwise be prohibited between Plans and
Parties in Interest with respect to those Plans related to the origination,
maintenance and termination of mortgage pools consisting of mortgage loans
secured by first or second mortgages or deeds of trust on single-family
residential property, and the acquisition and holding of certain mortgage pool
pass-through certificates representing an interest in such mortgage pools by
Plans. If the general conditions (discussed below) of PTCE 83-1 are satisfied,
investments by a Plan in Securities that represent interests in a Pool
consisting of Loans conforming to these requirements ("Single Family
Securities") will be exempt from the prohibitions of ERISA Sections 406(a) and
407 (relating generally to transactions with Parties in Interest who are not
fiduciaries) if the Plan purchases the Single Family Securities at no more than
fair market value and will be exempt from the prohibitions of ERISA Sections
406(b)(1) and (2) (relating generally to transactions with fiduciaries) if, in
addition, the purchase is approved by an independent fiduciary, no sales
commission is paid to the pool sponsor, the Plan does not purchase more than 25%
of all Single Family Securities, and at least 50% of all Single


                                       81
<PAGE>

Family Securities are purchased by persons independent of the pool sponsor or
pool trustee. PTCE 83-1 does not provide an exemption for transactions involving
Subordinated Securities. Accordingly, unless otherwise provided in the related
Prospectus Supplement, no transfer of a Subordinated Security or a Security that
is not a Single Family Security may be made to a Plan.

         The discussion in this and the next succeeding paragraph applies only
to Single Family Securities The Depositor believes that, for purposes of PTCE
83-1, the term "mortgage pass-through certificate" would include: (i) Securities
issued in a Series consisting of only a single Class of Securities; and (ii)
Securities issued in a Series in which there is only one Class of those
particular Trust Securities; provided, that, in either case, the Securities,
evidence the beneficial ownership of both a specified percentage of future
interest payments (greater than 0%) and a specified percentage (greater than 0%)
of future principal payments on the Loans. It is not clear whether a Class of
Securities that evidences the beneficial ownership in a Trust Fund divided into
Loan groups, beneficial ownership of a specified percentage of interest payments
only or principal payments only, or a notional amount of either principal or
interest payments, or a Class of Securities entitled to receive payments of
interest and principal on the Loans only after payments to other Classes or
after the occurrence of certain specified events would be a "mortgage
pass-through certificate" for purposes of PTCE 83-1.

         PTCE 83-1 sets forth three general conditions that must be satisfied
for any transaction to be eligible for exemption: (i) the maintenance of a
system of insurance or other protection for the pooled mortgage loans and
property securing such loans, and for indemnifying Holders against reductions in
pass-through payments due to property damage or defaults in loan payments in an
amount not less than the greater of one percent of the aggregate principal
balance of all covered pooled mortgage loans or the principal balance of the
largest covered pooled mortgage loan; (ii) the existence of a pool trustee who
is not an affiliate of the pool sponsor; and (iii) a limitation on the amount of
the payment retained by the pool sponsor, together with other funds inuring to
its benefit, to not more than adequate consideration for selling the mortgage
loans plus reasonable compensation for services provided by the pool sponsor to
the Pool. The Depositor believes that the first general condition referred to
above will be satisfied with respect to the Securities in a Series issued
without a subordination feature, or the unsubordinated Securities only in a
Series issued with a subordination feature; provided, that the subordination and
Reserve Account, subordination by shifting of interests, the pool insurance or
other form of credit enhancement described herein (such subordination, pool
insurance or other form of credit enhancement being the system of insurance or
other protection referred to above) with respect to a Series of Securities is
maintained in an amount not less than the greater of one percent of the
aggregate Principal Balance of the Loans or the Principal Balance of the largest
Loan. See "Description of the Securities" herein. In the absence of a ruling
that the system of insurance or other protection with respect to a Series of
Securities satisfies the first general condition referred to above, there can be
no assurance that these features will be so viewed by the DOL. The Trustee will
not be affiliated with the Depositor.

         Each Plan fiduciary who is responsible for making the investment
decisions whether to purchase or commit to purchase and to hold Single Family
Securities must make its own determination as to whether the first and third
general conditions, and the specific conditions described briefly in the
preceding paragraph, of PTCE 83-1 have been satisfied, or as to the availability
of any other prohibited transaction exemptions. Each Plan fiduciary should also
determine whether, under the general fiduciary standards of investment prudence
and diversification, an investment in the Securities is appropriate for the
Plan, taking into account the overall investment policy of the Plan and the
composition of the Plan's investment portfolio.

         The DOL issued to Bear, Stearns & Co. Inc., an individual exemption
(Prohibited Transaction Exemption 90-30; Exemption Application No. D-8207, 55
Fed. Reg. 21461 (1990)) (the "Underwriter Exemption"), which applies to certain
sales and servicing of "certificates" that are obligations of a "trust"


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<PAGE>

with respect to which Bear, Stearns & Co. Inc. is the underwriter, or the
manager or co-manager of an underwriting syndicate. The Underwriter Exemption
provides relief generally similar to that provided by PTCE 83-1, but is broader
in several respects.

         The Underwriter Exemption contains several requirements, some of which
differ from those in PTCE 83-l. The Underwriter Exemption contains an expanded
definition of "certificate," which includes an interest that entitles the Holder
to pass-through payments of principal, interest and/or other payments. The
Underwriter Exemption contains an expanded definition of "trust," which permits
the trust corpus to consist of secured consumer receivables. The definition of
"trust," however, does not include any investment pool unless, inter alia, (i)
the investment pool consists only of assets of the type that have been included
in other investment pools, (ii) certificates evidencing interests in such other
investment pools have been purchased by investors other than Plans for at least
one year prior to the Plan's acquisition of certificates pursuant to the
Underwriter Exemption and (iii) certificates in such other investment pools have
been rated in one of the three highest generic rating categories of the four
credit rating agencies noted below. Generally, the Underwriter Exemption holds
that the acquisition of the certificates by a Plan must be on terms (including
the price for the certificates) that are at least as favorable to the Plan as
they would be in an arm's length transaction with an unrelated party. The
Underwriter Exemption requires that the rights and interests evidenced by the
certificates not be "subordinated" to the rights and interests evidenced by
other certificates of the same trust. The Underwriter Exemption requires that
certificates acquired by a Plan have received a rating at the time of their
acquisition that is in one of the three highest generic rating categories of
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. The
Underwriter Exemption specifies that the pool trustee must not be an affiliate
of the pool sponsor, nor an affiliate of the Underwriter, the pool servicer, any
obligor with respect to mortgage loans included in the trust constituting more
than five percent of the aggregate unamortized principal balance of the assets
in the trust, or any affiliate of such entities. Finally, the Underwriter
Exemption stipulates that any Plan investing in the certificates must be an
"accredited investor" as defined in Rule 501(a)(1) of Regulation D of the
Commission under the Securities Act.

         On July 21, 1997, the DOL published in the Federal Register an
amendment to the Underwriter Exemption, which extends exemptive relief to
certain mortgage-backed and asset-backed securities transactions using
pre-funding accounts for trusts issuing pass-through certificates. The amendment
generally allows mortgage loans or other secured receivables (the "Obligations")
supporting payments to certificateholders, and having a value equal to no more
than twenty-five percent (25%) of the total principal amount of the certificates
being offered by the trust, to be transferred to the trust within a 90-day or
three-month period following the closing date (the "Specified Funding Period"),
instead of requiring that all such Obligations be either identified or
transferred on or before the Closing Date. The relief is available when the
following conditions are met:

     (1)  The ratio of the amount allocated to the pre-funding account to the
          total principal amount of the certificates being offered (the
          "Specified Funding Limit") must not exceed twenty-five percent (25%).

     (2)  All Obligations transferred after the Closing Date (the "Additional
          Obligations") must meet the same terms and conditions for eligibility
          as the original Obligations used to create the trust, which terms and
          conditions have been approved by an Exemption Rating Agency.

     (3)  The transfer of such Additional Obligations to the trust during the
          Specified Funding Period must not result in the certificates to be
          covered by the Exemption receiving a lower credit rating from an
          Exemption Rating Agency upon termination of the


                                       83
<PAGE>

          Specified Funding Period than the rating that was obtained at the time
          of the initial issuance of the certificates by the trust.

     (4)  Solely as a result of the use of pre-funding, the weighted average
          annual percentage interest rate for all of the Obligations in the
          trust at the end of the Specified Funding Period must not be more than
          100 basis points lower than the average interest rate for the
          Obligations transferred to the trust on the Closing Date.

     (5)  In order to insure that the characteristics of the Additional
          Obligations are substantially similar to the original Obligations
          which were transferred to the Trust Fund:

          (i)  the characteristics of the Additional Obligations must be
               monitored by an insurer or other credit support provider that is
               independent of the depositor; or

          (ii) an independent accountant retained by the depositor must provide
               the depositor with a letter (with copies provided to each
               Exemption Rating Agency rating the certificates, the related
               underwriter and the related trustee) stating whether or not the
               characteristics of the Additional Obligations conform to the
               characteristics described in the related prospectus or Prospectus
               Supplement and/or pooling and servicing agreement. In preparing
               such letter, the independent accountant must use the same type of
               procedures as were applicable to the Obligations transferred to
               the trust as of the Closing Date.

     (6)  The period of pre-funding must end no later than three months or 90
          days after the Closing Date or earlier in certain circumstances if the
          pre-funding account falls below the minimum level specified in the
          pooling and servicing agreement or an Event of Default occurs.

     (7)  Amounts transferred to any pre-funding account and/or capitalized
          interest account used in connection with the pre-funding may be
          invested only in certain permitted investments ("Permitted
          Investments").

     (8)  The related prospectus or Prospectus Supplement must describe:

          (i)  any pre-funding account and/or capitalized interest account used
               in connection with a pre-funding account;

          (ii) the duration of the period of pre-funding;

          (iii) the percentage and/or dollar amount of the Specified Funding
               Limit for the trust; and

          (iv) that the amounts remaining in the pre-funding account at the end
               of the Specified Funding Period will be remitted to
               certificateholders as repayments of principal.

     (9)  The related pooling and servicing agreement must describe the
          Permitted Investments for the pre-funding account and/or capitalized
          interest account and, if not disclosed in


                                       84
<PAGE>

          the related prospectus or Prospectus Supplement, the terms and
          conditions for eligibility of Additional Obligations.

         Neither PTCE 83-1 nor the Underwriter Exemption applies to a trust
which contains unsecured obligations.

         Any Plan fiduciary that proposes to cause a Plan to purchase Securities
should consult with counsel concerning the impact of ERISA and the Code, the
applicability of PTCE 83-1, the Underwriter Exemption, or any other exemption
and the potential consequences in their specific circumstances, prior to making
such investment. Moreover, each Plan fiduciary should determine whether under
the general fiduciary standards of investment procedure and diversification an
investment in the Securities is appropriate for the Plan, taking into account
the overall investment policy of the Plan and the composition of the Plan's
investment portfolio.

                                  LEGAL MATTERS

         The legality of the Securities of each Series, including certain
material federal income tax consequences with respect thereto, will be passed
upon for the Depositor by Brown & Wood LLP, One World Trade Center, New York,
New York 10048.

                              FINANCIAL INFORMATION

         A new Trust Fund will be formed for each Series of Securities. No Trust
Fund will engage in any business activities or have any assets or obligations
prior to the issuance of the related Series of Securities. Accordingly, no
financial statements with respect to any Trust Fund will be included in this
prospectus or in the related Prospectus Supplement.

                              AVAILABLE INFORMATION

         The Depositor has filed with the SEC a Registration Statement under the
Securities Act of 1933, as amended, with respect to the Securities. This
Prospectus, which forms a part of the Registration Statement, and the Prospectus
Supplement relating to each Series of Securities contain summaries of the
material terms of the documents referred to herein and therein, but do not
contain all of the information set forth in the Registration Statement pursuant
to the Rules and Regulations of the SEC. For further information, reference is
made to such Registration Statement and the exhibits thereto. Such Registration
Statement and exhibits can be inspected and copied at prescribed rates at the
public reference facilities maintained by the SEC at its Public Reference
Section, 450 Fifth Street, N.W., Washington, D.C. 20549, and at its Regional
Offices located as follows: Midwest Regional Office, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511; and Northeast Regional Office, 7 World
Trade Center, Suite 1300, New York, New York 10048. In addition, the SEC
maintains a Web site at http://www.sec.gov containing reports, proxy and
information statements and other information regarding registrants, including
the Depositor, that file electronically with the Commission.

                INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

         This Prospectus incorporates by reference all documents and reports
filed on behalf of the Depositor with respect to a Trust Fund pursuant to
Section 13(a), 14 or 15(d) of the Securities Exchange Act of 1934, as amended,
prior to the termination of the offering the related Securities. Upon request by
any person to whom this prospectus is delivered in connection with the offering
of one or more Classes Securities, the Depositor will provide or cause to be
provided without charge a copy of any of the


                                       85
<PAGE>

documents and/or reports incorporated herein by reference, in each case to the
extent the documents or reports relate to such Classes of Securities, other than
the exhibits to such documents (unless those exhibits are specifically
incorporated by reference in such documents). Requests to the Depositor should
be directed in writing to: Bear Stearns Asset Backed Securities Inc., 245 Park
Avenue, New York, New York 10167, Telephone number (212) 272-4095 . The
Depositor has determined that its financial statements are not material to the
offering of any Certificates.

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

                                     RATING

         It is a condition to the issuance of the Securities of each Series
offered hereby and by the Prospectus Supplement that they shall have been rated
in one of the four highest rating categories by the nationally recognized
statistical rating agency or agencies (each, a "Rating Agency") specified in the
related Prospectus Supplement.

         Any such rating would be based on, among other things, the adequacy of
the value of the Trust Fund assets and any credit enhancement with respect to
the related Class and will reflect such Rating Agency's assessment solely of the
likelihood that the related Holders will receive payments to which such Holders
are entitled under the related Agreement. Such rating will not constitute an
assessment of the likelihood that principal prepayments on the related Loans
will be made, the degree to which the rate of such prepayments might differ from
that originally anticipated or the likelihood of early optional termination of
the Series of Securities. Such rating should not be deemed a recommendation to
purchase, hold or sell Securities, inasmuch as it does not address market price
or suitability for a particular investor. Such rating will not address the
possibility that prepayment at higher or lower rates than anticipated by an
investor may cause such investor to experience a lower than anticipated yield or
that an investor purchasing a Security at a significant premium might fail to
recoup its initial investment under certain prepayment scenarios.

         There is also no assurance that any such rating will remain in effect
for any given period of time or that it may not be lowered or withdrawn entirely
by the Rating Agencies in the future if in their judgment circumstances so
warrant. In addition to being lowered or withdrawn due to any erosion in the
adequacy of the value of the Trust Fund assets or any credit enhancement with
respect to a Series, such rating might also be lowered or withdrawn because of,
among other reasons, an adverse change in the financial or other condition of a
credit enhancement provider or a change in the rating of such credit enhancement
provider's long term debt.

         The amount, type and nature of credit enhancement, if any, established
with respect to a Series of Securities will be determined on the basis of
criteria established by each Rating Agency rating Classes of such Series. Such
criteria are sometimes based upon an actuarial analysis of the behavior of
mortgage loans in a larger group. Such analysis is often the basis upon which
each Rating Agency determines the amount of credit enhancement required with
respect to each such Class. There can be no assurance that the historical data
supporting any such actuarial analysis will accurately reflect future experience
nor any assurance that the data derived from a large pool of mortgage loans
accurately predicts the delinquency, foreclosure or loss experience of any
particular pool of Loans. No assurance can be given that values of any
Properties have remained or will remain at their levels on the respective dates
of origination of the


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<PAGE>

related Loans. If the residential real estate markets should experience an
overall decline in property values such that the Principal Balances of the Loans
in a particular Trust Fund and any secondary financing on the related Properties
become equal to or greater than the value of such Properties, the rates of
delinquencies, foreclosures and losses could be higher than those now generally
experienced in the mortgage lending industry. In additional, adverse economic
conditions (which may or may not affect real property values) may affect the
timely payment by mortgagors of scheduled payments of principal of and interest
on the Loans and, accordingly, the rates of delinquencies, foreclosures and
losses with respect to any Trust Fund. To the extent that such losses are not
covered by credit enhancement, such losses will be borne, at least in part, by
the Holders of one or more Classes of the Securities of the related Series.

                                LEGAL INVESTMENT

         Unless otherwise specified in the related Prospectus Supplement, the
Securities will not constitute "mortgage-related securities" within the meaning
of the Secondary Market Mortgage Enhancement Act. Accordingly, investors whose
investment authority is subject to legal restrictions should consult their own
legal advisors to determine whether and to what extent the Securities constitute
legal investments for them.

                              PLAN OF DISTRIBUTION

         The Depositor may offer each Series of Securities through Bear, Stearns
& Co. Inc. ("Bear Stearns") or one or more other firms that may be designated at
the time of each offering of such Securities. The participation of Bear Stearns
in any offering will comply with Schedule E to the By-Laws of the National
Association of Securities Dealers, Inc. The Prospectus Supplement relating to
each Series of Securities will set forth the specific terms of the offering of
such Series of Securities and of each Class within such Series, the names of the
underwriters, the purchase price of the Securities, the proceeds to the
Depositor from such sale, any securities exchange on which the Securities may be
listed, and, if applicable, the initial public offering prices, the discounts
and commissions to the underwriters and any discounts and concessions allowed or
reallowed to certain dealers. The place and time of delivery of each Series of
Securities will also be set forth in the Prospectus Supplement relating to such
Series. Bear Stearns is an affiliate of the Depositor.



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                Index of Defined Terms

Additional Obligations:............................83
Advances...........................................27
Agreements..........................................8
Amortizable Bond Premium Regulations...............59
Asset Value........................................10
Assumed Reinvestment Rate..........................10
Available Interest Amount..........................11
Capitalized Interest Account.......................22
Cash Flow Bond Method..............................66
CERCLA.............................................45
Certificates........................................8
Class...............................................9
Closed-End Loans...................................14
Code...............................................12
Collection Account..............................9, 26
Contingent Payment Regulations.....................56
Custodian..........................................33
Cut-off Date.......................................14
Debt Securities....................................54
Deleted Primary Asset..............................35
Depositor...........................................8
Depositor Securities...............................53
Disqualified Organization..........................63
Distribution Account................................9
Distribution Date...................................9
DOL................................................80
Eligible Investments...............................21
Enhancement....................................13, 22
EPA................................................45
ERISA..............................................79
Escrow Account.....................................25
Events of Default..............................37, 38
FASIT..............................................54
FASIT Qualification Test...........................76
FASIT Securities...................................76
FHA................................................16
Final Mark-to-Market Regulations...................64
Final Scheduled Distribution Date..................11
Garn-St. Germain Act...............................48
High-Yield Interest................................77
Holder..............................................9
Holders............................................41
Home Improvement Contracts.....................10, 16
Home Improvements..............................10, 16
HUD................................................17
Indenture...........................................8
Installment Sales Contract.........................51
Insurance Proceeds.................................27
Interest Weighted Securities.......................57
IRS................................................56
Liquidation Proceeds...............................26
Loans..............................................10
Mortgage...........................................33
Mortgage Loans......................................9
New Regulations....................................68
Nonresidents.......................................68
Notes...............................................8
Obligations:.......................................83
OID................................................55
OID Regulations....................................55
OTS................................................49
Parties in Interest................................80
Pass-Through Securities............................64
Pay-Through Security...............................56
Permitted Investments..............................84
Plan Asset Regulation..............................80
Plans..............................................79
Pool Insurance Policy..............................23
Pooling and Servicing Agreement.....................8
Pre-Funded Amount..................................21
Pre-Funding Account................................21
Pre-Funding Period.................................21
Prepayment Assumption..............................56
Primary Assets......................................9
Private Securities.................................10
Property...........................................16
PS Agreement.......................................19
PS Servicer........................................19
PS Sponsor.........................................19
PS Trustee.........................................19
PTCE...............................................81
PTCE 83-1..........................................81
Qualifying Substitute Primary Asset................35
Rating Agency...................................9, 86
Ratio Strip Securities.............................66
Regular Interest Securities........................54
Regular Interests..................................59
REMIC..........................................12, 54
REO Property.......................................13
Reserve Fund....................................9, 24
Residual Interest Security.........................61
Residual Interests.................................59
Revolving Credit Line Loans........................14
Revolving Mortgage Loans...........................14
Scheduled Payments.................................26
Securities..........................................8
Seller..............................................8
Servicing Fee..................................26, 65


                                       88
<PAGE>

Short-Term Note....................................70
Single Family Property.............................15
Single Family Securities...........................81
Special Redemption Date............................11
Specified Funding Limit............................83
Specified Funding Period...........................83
Stripped Securities................................64
Tax Counsel........................................53
TIN................................................68
Title V............................................49
Trust Agreement.................................8, 13
Trust Fund..........................................8
Trustee.............................................8
U.S. Person........................................54
UCC................................................50
Underlying Loans...............................10, 19
Underwriter Exemption..............................82


                                       89
<PAGE>

                                  $175,000,000

                          GMACM LOAN TRUST 1999-HLTV1
                                     ISSUER

                           GMAC MORTGAGE CORPORATION
                              SELLER AND SERVICER

                   BEAR STEARNS ASSET BACKED SECURITIES, INC.
                                   DEPOSITOR

                   LOAN-BACKED TERM NOTES, SERIES 1999-HLTV1

                            ------------------------
                             PROSPECTUS SUPPLEMENT
                            ------------------------

BEAR, STEARNS & CO. INC.                                PAINEWEBBER INCORPORATED
                               SEPTEMBER 15, 1999

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 IN THIS PROSPECTUS SUPPLEMENT IN ANY STATE
WHERE THE OFFER IS NOT PERMITTED.

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 14, 1999.



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