Filed Pursuant to Rule 424(b)(5)
                                                Registration File No. 333-135846


PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED AUGUST 28, 2006)

                                  $456,500,100
                                 (Approximate)

                                  CWABS, INC.
                                   DEPOSITOR

                          COUNTRYWIDE HOME LOANS, INC.
                               SPONSOR AND SELLER

                      COUNTRYWIDE HOME LOANS SERVICING LP
                                MASTER SERVICER

                CWABS ASSET-BACKED CERTIFICATES TRUST 2006-SPS2
                                 ISSUING ENTITY

                  ASSET-BACKED CERTIFICATES, SERIES 2006-SPS2


       Distributions are payable on the 25th day of each month, beginning
                               in September 2006

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

The issuing entity will issue certificates, including the following classes of
certificates that are offered pursuant to this prospectus supplement and the
accompanying prospectus:

--------------------------------------------------------------------------------
            INITIAL
          CERTIFICATE
           PRINCIPAL        PRICE TO     UNDERWRITING    PROCEEDS TO
 CLASS    BALANCE (1)      PUBLIC (2)      DISCOUNT     DEPOSITOR (3)
--------------------------------------------------------------------------------
  A      $315,000,000      100.00000%      0.052083%      99.94792%
--------------------------------------------------------------------------------
  M-1    $ 26,750,000       99.99554%      0.141667%      99.85387%
--------------------------------------------------------------------------------
  M-2    $ 22,500,000       99.99682%      0.208333%      99.78849%
--------------------------------------------------------------------------------
  M-3    $ 13,500,000       99.99939%      0.300000%      99.69939%
--------------------------------------------------------------------------------
  M-4    $ 12,500,000       99.99698%      0.625000%      99.37198%
--------------------------------------------------------------------------------
  M-5    $ 12,250,000       98.82540%      0.666667%      98.15873%
--------------------------------------------------------------------------------


--------------------------------------------------------------------------------
           INITIAL
         CERTIFICATE
          PRINCIPAL       PRICE TO       UNDERWRITING      PROCEEDS TO
 CLASS   BALANCE (1)     PUBLIC (2)        DISCOUNT       DEPOSITOR (3)
--------------------------------------------------------------------------------
  M-6    $11,750,000      96.98207%        0.833333%        96.14874%
--------------------------------------------------------------------------------
  M-7    $12,250,000      91.76364%        1.003333%        90.76031%
--------------------------------------------------------------------------------
  M-8    $10,750,000      82.00000%        1.250000%        80.75000%
--------------------------------------------------------------------------------
  M-9    $ 9,500,000      82.00000%        1.666667%        80.33333%
--------------------------------------------------------------------------------
  B      $ 9,750,000      60.00000%        1.833333%        58.16667%
--------------------------------------------------------------------------------
  A-R    $       100            (4)              (4)              (4)
--------------------------------------------------------------------------------


--------------------------------------------------------------------------------
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE S-14 IN THIS PROSPECTUS
SUPPLEMENT AND ON PAGE 2 IN THE PROSPECTUS.

The certificates represent obligations of the issuing entity only and do not
represent an interest in or obligation of CWABS, Inc., Countrywide Home Loans,
Inc. or any of their affiliates.

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

(1)  This amount is subject to a permitted variance in the aggregate of plus or
     minus 10%.

(2)  Plus accrued interest, if any, except in the case of the Class A and Class
     A-R Certificates.

(3)  Before deducting expenses payable by the Depositor estimated to be
     approximately $792,750 in the aggregate.


(4)  The Class A-R Certificates will not be purchased by the underwriters and
     are being transferred to Countrywide Home Loans, Inc. as partial
     consideration for the sale of the mortgage loans. See "Method of
     Distribution" in this prospectus supplement.

The classes of certificates offered by this prospectus supplement are listed,
together with their pass-through rates, the index, if any, on which the
pass-through rates are based and their initial ratings, in the tables under
"Summary -- Description of the Certificates" on pages S-4 and S-5 of this
prospectus supplement.

This prospectus supplement and the accompanying prospectus relate only to the
offering of the certificates listed above and not to the other classes of
certificates that will be issued by the issuing entity.

The certificates represent interests in a pool of credit-blemished, closed-end,
fixed rate loans that are secured by second liens on one- to four-family
residential properties.

Credit enhancement for the certificates consists of:

o    overcollateralization,

o    excess cashflow and

o    subordination.

The credit enhancement for each class of certificates varies. Not all credit
enhancement is available for every class. The credit enhancement for the
certificates is described in more detail in this prospectus supplement.


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

COUNTRYWIDE SECURITIES CORPORATION

                                     CREDIT SUISSE

                                                             MERRILL LYNCH & CO.
August 28, 2006

                                TABLE OF CONTENTS

PROSPECTUS SUPPLEMENT                                                       PAGE
---------------------                                                       ----
Summary..................................................................    S-1
Summary of Transaction Parties...........................................   S-13
Risk Factors.............................................................   S-14
The Mortgage Pool........................................................   S-26
   General...............................................................   S-26
   The Statistical Calculation Pool......................................   S-28
   Assignment of the Mortgage Loans......................................   S-28
   Pre-Funding...........................................................   S-31
   Underwriting Standards................................................   S-32
Servicing of the Mortgage Loans..........................................   S-36
   General...............................................................   S-36
   Countrywide Home Loans Servicing LP...................................   S-36
   Countrywide Home Loans................................................   S-37
   Loan Servicing........................................................   S-38
   Servicing Compensation and Payment of Expenses........................   S-39
   Adjustment to Master Servicing Fee in Connection With Certain Prepaid
      Mortgage Loans.....................................................   S-40
   Advances..............................................................   S-40
   Certain Modifications and Refinancings................................   S-41
   Auction of Charged-off Mortgage Loans.................................   S-41
The Issuing Entity.......................................................   S-41
Static Pool Data.........................................................   S-42
Description of the Certificates..........................................   S-43
   General...............................................................   S-43
   Book-Entry Certificates; Denominations................................   S-43
   Glossary of Terms.....................................................   S-44
   Deposits to the Certificate Account...................................   S-53
   Withdrawals from the Certificate Account..............................   S-54
   Deposits to the Distribution Account..................................   S-55
   Withdrawals from the Distribution Account.............................   S-55
   Investments of Amounts Held in Accounts...............................   S-56
   Fees and Expenses.....................................................   S-57
   Distributions.........................................................   S-59
   Overcollateralization Provisions......................................   S-61
   Calculation of One-Month LIBOR........................................   S-63
   Applied Realized Loss Amounts.........................................   S-63
   Reports to Certificateholders.........................................   S-64
   Amendment.............................................................   S-65
   Voting Rights.........................................................   S-66
   Optional Purchase of Defaulted Loans..................................   S-66
   Events of Default; Remedies...........................................   S-66
   Optional Termination..................................................   S-67
   Certain Matters Regarding the Master Servicer, the Depositor, the
      Sellers and the NIM Insurer........................................   S-68
   The Trustee...........................................................   S-68
   Restrictions on Transfer of the Class A-R Certificates................   S-70
   Ownership of the Residual Certificates................................   S-70
   Restrictions on Investment, Suitability Requirements..................   S-70
   Rights of the NIM Insurer Under the Pooling and Servicing Agreement...   S-70
Yield, Prepayment and Maturity Considerations............................   S-71
   General...............................................................   S-71
   Prepayments and Yields for the Offered Certificates...................   S-72
   Last Scheduled Distribution Date......................................   S-72
   Prepayment Model......................................................   S-73
   Decrement Tables; Weighted Average Lives..............................   S-73
Legal Proceedings........................................................   S-80
Material Federal Income Tax Consequences.................................   S-80
   Taxation of the REMIC Regular Interest Components of the Regular
      Certificates.......................................................   S-81
   Taxation of the Net Rate Carryover Components of the Regular
      Certificates.......................................................   S-82
   Dispositions of Regular Certificates..................................   S-82
   Tax Treatment For Certain Purposes....................................   S-83
   Residual Certificates.................................................   S-83
Other Taxes..............................................................   S-84
ERISA Considerations.....................................................   S-84
Method of Distribution...................................................   S-86
Use of Proceeds..........................................................   S-88
Legal Matters............................................................   S-88
Ratings..................................................................   S-88
Index of Defined Terms...................................................   S-90
Annex A: The Statistical Calculation Pool................................    A-1
Annex B: Prepayment Charge Schedule......................................    B-1
Annex I: Global Clearance, Settlement and Tax
     Documentation Procedures............................................    I-1
Exhibit A: Static Pool Information.......................................   EA-1


                                        i



PROSPECTUS                                                                  PAGE
----------                                                                  ----
Important Notice About Information in This Prospectus and Each
   Accompanying Prospectus Supplement....................................      1
Risk Factors.............................................................      2
The Trust Fund...........................................................     14
Use of Proceeds..........................................................     27
The Depositor............................................................     27
Loan Program.............................................................     27
Static Pool Data.........................................................     30
Description of the Securities............................................     31
Credit Enhancement.......................................................     46
Yield, Maturity and Prepayment Considerations............................     51
The Agreements...........................................................     54
Certain Legal Aspects of the Loans.......................................     73
Material Federal Income Tax Consequences.................................     86
Other Tax Considerations.................................................    107
ERISA Considerations.....................................................    107
Legal Investment.........................................................    111
Method of Distribution...................................................    112
Legal Matters............................................................    113
Financial Information....................................................    113
Rating...................................................................    113
Index to Defined Terms...................................................    115


                                       ii



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

                                     SUMMARY

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

WHILE THIS SUMMARY CONTAINS AN OVERVIEW OF CERTAIN CALCULATIONS, CASH FLOW
PRIORITIES AND OTHER INFORMATION TO AID YOUR UNDERSTANDING, YOU SHOULD READ
CAREFULLY THE FULL DESCRIPTION OF THESE CALCULATIONS, CASH FLOW PRIORITIES AND
OTHER INFORMATION IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
BEFORE MAKING ANY INVESTMENT DECISION.

ISSUING ENTITY

CWABS Asset-Backed Certificates Trust 2006-SPS2, a common law trust formed under
the laws of the State of New York.

See "The Issuing Entity" in this prospectus supplement.

DEPOSITOR

CWABS, Inc., a Delaware corporation and a limited purpose finance subsidiary of
Countrywide Financial Corporation, a Delaware corporation.

See "The Depositor" in the prospectus.

SPONSOR AND SELLERS

Countrywide Home Loans, Inc. will be the sponsor of the transaction and a seller
of a portion of the mortgage loans. Other sellers may include one or more
special purpose entities established by Countrywide Financial Corporation or one
of its subsidiaries, which acquired the mortgage loans they are selling directly
from Countrywide Home Loans, Inc.

See "Servicing of the Mortgage Loans--Countrywide Home Loans" in this prospectus
supplement.

MASTER SERVICER

Countrywide Home Loans Servicing LP.

See "Servicing of the Mortgage Loans--Countrywide Home Loans Servicing LP" in
this prospectus supplement.

TRUSTEE

The Bank of New York, a New York banking corporation.

See "Description of the Certificates--The Trustee" in this prospectus
supplement.

THE NIM INSURER

After the closing date, a separate trust or trusts (or other form of entity) may
be established to issue net interest margin securities secured by all or a
portion of the Class P, Class R and Class C Certificates. Those net interest
margin securities may have the benefit of one or more financial guaranty
insurance policies that guaranty payments on those securities. The insurer or
insurers issuing these financial guaranty insurance policies are referred to in
this prospectus supplement as the "NIM Insurer." The references to the NIM
Insurer in this prospectus supplement apply only if the net interest margin
securities are so insured.

Any NIM Insurer will have a number of rights under the pooling and servicing
agreement that will limit and otherwise affect the rights of the holders of the
offered certificates. Any insurance policy issued by a NIM Insurer will not
cover, and will not benefit in any manner whatsoever, the offered certificates.

See "Risk Factors--Rights of the NIM Insurer Limit Your Control and NIM Insurer
Actions May Negatively Affect You" in this prospectus supplement.

POOLING AND SERVICING AGREEMENT

The pooling and servicing agreement among the sellers, the master servicer, the
depositor and the trustee, under which the issuing entity will be formed.

CUT-OFF DATE

Initial Mortgage Loans:

For any initial mortgage loan, the later of August 1, 2006 and the origination
date of that mortgage loan (referred to as the initial cut-off date).

Subsequent Mortgage Loans:

For any subsequent mortgage loan, the later of the first day of the month of the
related subsequent transfer date and the origination date of that

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


                                       S-1



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

subsequent mortgage loan (referred to as the subsequent cut-off date).

CLOSING DATE

On or about August 29, 2006.

PRE-FUNDING

On the closing date, the depositor may deposit an amount of up to 25% of the
initial aggregate certificate principal balance of the certificates issued by
the issuing entity in a pre-funding account (referred to as the pre-funded
amount).

Funding Period:

Any funding period will begin on the closing date and end on the earlier of (x)
the date the amount in the pre-funding account is less than $40,000 and (y)
October 13, 2006.

Use of Pre-Funded Amount:

Any pre-funded amount is expected to be used to purchase subsequent mortgage
loans. Any pre-funded amount not used during the funding period to purchase
subsequent mortgage loans will be distributed to holders of the Class A
Certificates as a prepayment of principal on the distribution date immediately
following the end of the funding period.

Restrictions on Subsequent Mortgage Loan Purchases:

Purchases of subsequent mortgage loans are subject to the same criteria as the
initial mortgage loans and additional restrictions related to the composition of
the mortgage pool following the acquisition of the subsequent mortgage loans, as
described in this prospectus supplement.

Interest Shortfall Payments:

To the extent needed to make required interest payments on the interest-bearing
certificates on or prior to the November 2006 distribution date, Countrywide
Home Loans, Inc. will make interest shortfall payments to the issuing entity to
offset shortfalls in interest collections attributable to the pre-funding
mechanism or because newly originated loans do not have a payment due date in
the due period related to the subject distribution date.

See "The Mortgage Pool--Pre-Funding" in this prospectus supplement.

THE MORTGAGE LOANS

The mortgage pool will consist of credit-blemished, closed-end, fixed rate loans
that are secured by second liens on one- to four-family residential properties.
We sometimes refer to these loans as home equity loans or mortgage loans.

See "The Mortgage Pool" in this prospectus supplement.

STATISTICAL CALCULATION INFORMATION

The statistical information presented in this prospectus supplement relates to a
statistical calculation pool that does not reflect all of the mortgage loans
that will be included in the issuing entity. Additional mortgage loans will be
included in the mortgage pool on the closing date, and subsequent mortgage loans
may be included during the funding period. In addition, certain mortgage loans
in the statistical calculation pool may not be included in the mortgage pool on
the closing date because they were prepaid in full or were determined not to
meet the eligibility requirements for the mortgage pool.

The information with respect to the statistical calculation pool is, unless
otherwise specified, based on the scheduled principal balances as of August 1,
2006, which is the statistical calculation date. The aggregate stated principal
balance of the statistical calculation pool as of the statistical calculation
date is referred to as the statistical calculation date pool principal balance.

Unless otherwise noted, all statistical percentages are measured by the
statistical calculation date pool principal balance.

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

Statistical Calculation Date Pool Principal Balance      $503,130,444
Number of Mortgage Loans                                 11,559
Average Current Principal Balance                        $43,527
Range of Current Principal Balances                      $8,228 to $498,526
Weighted Average Mortgage Rate                           11.622%
Range of Mortgage Rates                                  5.625% to 16.625%

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


                                       S-2



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

Weighted Average Original Combined Loan-to-Value Ratio   96.63%
Percentage of Mortgage Loans with Original Combined
   Loan-to-Value Ratios Greater than 80%                 92.93%
Geographic Concentrations in excess of 10%:
California                                               21.90%
Florida                                                  11.63%
Weighted Average Original Term to Stated Maturity        184 months
Weighted Average Remaining Term to Stated Maturity       180 months
Percentage of Mortgage Loans with Prepayment Charges     49.98%
Minimum Credit Bureau Risk Score                         451 points
Maximum Credit Bureau Risk Score                         813 points
Weighted Average Credit Bureau Risk Score                635 points
Number of Mortgage Loans with Unknown Credit Bureau
   Risk Score                                            0
Percentage of Mortgage Loans with Unknown Credit
   Bureau Risk Score                                     0.00%

See "The Mortgage Pool" in this prospectus supplement.

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


                                      S-3



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

DESCRIPTION OF THE CERTIFICATES

The issuing entity will issue the following classes of certificates:



                                                                    LAST SCHEDULED      INITIAL      INITIAL     INITIAL
                    INITIAL CERTIFICATE                              DISTRIBUTION       RATING       RATING      RATING
      CLASS        PRINCIPAL BALANCE (1)            TYPE               DATE (2)      (MOODY'S)(3)   (S&P)(3)   (FITCH)(3)
----------------   ---------------------   ----------------------   --------------   ------------   --------   ----------

OFFERED
CERTIFICATES
A...............       $315,000,000         Senior/Floating Rate       May 2026           Aaa          AAA        AAA
M-1.............       $ 26,750,000        Subordinate/Fixed Rate    February 2026        Aa1          AA+        AA+
M-2.............       $ 22,500,000        Subordinate/Fixed Rate    December 2025        Aa2           AA        AA+
M-3.............       $ 13,500,000        Subordinate/Fixed Rate   September 2025        Aa3          AA-        AA
M-4.............       $ 12,500,000        Subordinate/Fixed Rate      July 2025          A1           A+         AA
M-5.............       $ 12,250,000        Subordinate/Fixed Rate      May 2025           A2           A          AA-
M-6.............       $ 11,750,000        Subordinate/Fixed Rate    February 2025        A3           A-          A
M-7.............       $ 12,250,000        Subordinate/Fixed Rate    November 2024       Baa1          BBB+       A-
M-8.............       $ 10,750,000        Subordinate/Fixed Rate    February 2009       Baa2          BBB       BBB+
M-9.............       $  9,500,000        Subordinate/Fixed Rate    February 2009       Baa3          BBB-       BBB
B...............       $  9,750,000        Subordinate/Fixed Rate    February 2009        Ba1          BB+       BBB-
A-R.............       $        100            REMIC Residual       September 2006        Aaa          AAA        AAA
NON-OFFERED
CERTIFICATES (4)
P...............       $        100(5)       Prepayment Charges           N/A             N/R          N/R        N/R
C...............           N/A                    Residual                N/A             N/R          N/R        N/R
R...............           N/A                   Charge-off               N/A             N/R          N/R        N/R


----------
(1)  This amount is subject to a permitted variance in the aggregate of plus or
     minus 10% depending on the amount of mortgage loans actually delivered on
     the closing date.

(2)  Each date was determined as described under "Yield, Prepayment and Maturity
     Considerations" in this prospectus supplement.

(3)  The offered certificates will not be offered unless they are assigned the
     indicated ratings by Moody's Investors Service, Inc. ("MOODY'S"), Standard
     & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc.
     ("S&P") and Fitch Ratings ("FITCH"). "N/R" indicates that the rating agency
     was not asked to rate the certificates. A rating is not a recommendation to
     buy, sell or hold securities. These ratings may be lowered or withdrawn at
     any time by either of the rating agencies. See "Ratings" in this prospectus
     supplement.

(4)  The Class P, Class C and Class R Certificates are not offered by this
     prospectus supplement. Any information contained in this prospectus
     supplement with respect to the Class P, Class C and Class R Certificates is
     provided only to permit a better understanding of the offered certificates.

(5)  The Class P Certificates also will have a notional amount equal to the
     aggregate stated principal balance of the mortgage loans that contain
     prepayment charge provisions as of the cut-off date.

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


                                       S-4



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

The certificates will also have the following characteristics:



               PASS-THROUGH RATE ON    PASS-THROUGH RATE
                OR BEFORE OPTIONAL       AFTER OPTIONAL                       INTEREST ACCRUAL
   CLASS       TERMINATION DATE (1)   TERMINATION DATE (1)   ACCRUAL PERIOD      CONVENTION
------------   --------------------   --------------------   --------------   ----------------

OFFERED
CERTIFICATES
A...........    LIBOR + 0.160% (2)     LIBOR + 0.320% (2)          (3)         Actual/360 (4)
M-1.........          6.3150%                6.8150%               (5)             30/360 (6)
M-2.........          6.3870%                6.8870%               (5)             30/360 (6)
M-3.........          6.4860%                6.9860%               (5)             30/360 (6)
M-4.........          6.8060%                7.3060%               (5)             30/360 (6)
M-5.........          7.0000%                7.5000%               (5)             30/360 (6)
M-6.........          7.0000%                7.5000%               (5)             30/360 (6)
M-7.........          7.0000%                7.5000%               (5)             30/360 (6)
M-8.........          7.0000%                7.5000%               (5)             30/360 (6)
M-9.........          7.0000%                7.5000%               (5)             30/360 (6)
B...........          7.0000%                7.5000%               (5)             30/360 (6)
A-R.........            (7)                    (7)                 N/A               N/A
NON-OFFERED
CERTIFICATES
P...........            N/A                    N/A                 N/A               N/A
C...........            N/A                    N/A                 N/A               N/A
R...........            N/A                    N/A                 N/A               N/A


----------
(1)  The pass-through rate of each class of certificates is subject to a cap
     based on the weighted average net mortgage rates of the mortgage loans
     (called the net rate cap) as further described in the definition of
     "Pass-Through Rate" under "Description of the Certificates--Glossary of
     Terms--Definitions related to Interest Calculations and Distributions".

(2)  The pass-through rate on the Class A Certificates may adjust monthly based
     on the level of one-month LIBOR, subject to a cap. LIBOR for the related
     accrual period is calculated as described in this prospectus supplement
     under "Description of the Certificates - Calculation of One-Month LIBOR".

(3)  The accrual period for any distribution date will be the period from and
     including the preceding distribution date (or from and including the
     closing date, in the case of the first distribution date) to and including
     the day prior to the current distribution date. The Class A Certificates
     will settle without accrued interest.

(4)  Interest accrues at the rate specified in this table based on a 360-day
     year and the actual number of days elapsed during the related accrual
     period.

(5)  The accrual period for any distribution date will be the calendar month
     before the month of that distribution date.

(6)  Interest will accrue at the rate described in this table on the basis of a
     360 day year divided into twelve 30 day months.

(7)  The Class A-R Certificates will not accrue any interest.

See "Description of the Certificates" in this prospectus supplement.

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


                                       S-5



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

DESIGNATIONS

We sometimes use the following designations to refer to the specified classes of
certificates in order to aid your understanding of the offered certificates.

    DESIGNATION           CLASS OF CERTIFICATES
----------------   -----------------------------------
Fixed Rate         Subordinated Certificates
   Certificates:
Subordinated       Class M-1, Class M-2, Class M-3,
   Certificates:   Class M-4, Class M-5, Class M-6,
                   Class M-7, Class M-8, Class M-9 and
                   Class B Certificates
Offered            Class A Certificates, Subordinated
   Certificates:   Certificates and Class A-R
                   Certificates
Private            Class P, Class C and Class R
   Certificates:   Certificates

RECORD DATE

Class A Certificates:

The business day immediately preceding a distribution date, or if the Class A
Certificates are no longer book-entry certificates, the last business day of the
month preceding the month of a distribution date.

Offered Certificates other than the Class A Certificates:

The last business day of the month preceding the month of a distribution date.

DENOMINATIONS

Offered Certificates other than the Class A-R Certificates:

$20,000 and multiples of $1 in excess thereof.

Class A-R Certificates:

Two certificates of $99.95 and $0.05, respectively.

REGISTRATION OF CERTIFICATES

Offered Certificates other than the Class A-R Certificates:

Book-entry form. Persons acquiring beneficial ownership interests in the offered
certificates (other than the Class A-R Certificates) will hold their beneficial
interests through The Depository Trust Company, in the United States, or
Clearstream, Luxembourg or the Euroclear System, in Europe.

Class A-R Certificates:

Fully registered certificated form. The Class A-R Certificates will be subject
to certain restrictions on transfer described in this prospectus supplement and
as more fully provided for in the pooling and servicing agreement.

See "Description of the Certificates--Book-Entry Certificates" and
"--Restrictions on Transfer of the Class A-R Certificates" in this prospectus
supplement.

DISTRIBUTION DATES

Beginning on September 25, 2006, and thereafter on the 25th day of each calendar
month, or if the 25th is not a business day, the next business day.

INTEREST PAYMENTS

On each distribution date, holders of each class of interest-bearing
certificates will be entitled to receive:

o    the interest that has accrued during the related accrual period at the
     related pass-through rate on the certificate principal balance immediately
     prior to the applicable distribution date, and

o    any interest carry forward amount (which is interest due on a prior
     distribution date that was not paid on a prior distribution date).

The accrual period, interest calculation convention and pass-through rate for
each class of interest-bearing certificates is shown in the table on page S-5.

There are certain circumstances that could reduce the amount of interest paid to
you.

See "Description of the Certificates--Distributions--Distributions of Interest"
in this prospectus supplement.

PRINCIPAL PAYMENTS

On each distribution date, certificateholders will receive a distribution of
principal on their certificates only if there is cash available on that date for
the payment of principal. The priority of principal payments to be made on the
offered certificates will differ, as described in this prospectus supplement,
depending upon whether a distribution date occurs before the stepdown date, or
on or after that date, and will depend on the loss and delinquency performance
of the mortgage loans. In addition, if a sufficient amount of distributions have
been made on the Class

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


                                       S-6



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

P, Class C and Class R Certificates, the amount of principal payments on the
Class M-8, Class M-9 and Class B Certificates may increase.

See "Description of the Certificates--Distributions--Distributions of Principal"
and "Description of the Certificates--Overcollateralization Provisions" in this
prospectus supplement.

AMOUNTS AVAILABLE FOR DISTRIBUTIONS ON THE CERTIFICATES

Amounts Available with respect to Interest Distributions

The amount available for interest distributions on the certificates on any
distribution date will generally consist of the following amounts (after the
fees and expenses as described below are subtracted):

o    scheduled payments of interest on the mortgage loans collected during the
     applicable period,

o    interest on prepayments to the extent not allocable to the master servicer
     as additional servicing compensation,

o    interest amounts advanced by the master servicer and any required
     compensating interest paid by the master servicer related to certain
     prepayments on certain mortgage loans,

o    liquidation proceeds on the mortgage loans during the applicable period (to
     the extent allocable to interest), and

o    the amount, if any, of the seller interest shortfall payment paid by
     Countrywide Home Loans, Inc. on any distribution date on or prior to the
     November 2006 distribution date.

Amounts Available with respect to Principal Distributions

The amount available for principal distributions on the certificates on any
distribution date will generally consist of the following amounts (after fees
and expenses as described below are subtracted):

o    scheduled payments of principal of the mortgage loans collected during the
     applicable period or advanced by the master servicer,

o    prepayments collected in the applicable period;

o    the stated principal balance of any mortgage loans repurchased by a seller
     or purchased by the master servicer,

o    the difference, if any, between the stated principal balance of a
     substitute mortgage loan and the related deleted mortgage loan,

o    liquidation proceeds on the mortgage loans during the applicable period (to
     the extent allocable to principal),

o    excess interest (to the extent available) to reach or maintain the targeted
     overcollateralization level as described under "Description of the
     Certificates--Overcollateralization Provisions" in this prospectus
     supplement,

o    charged-off loan proceeds (to the extent available) as described under
     "--Priority of Distributions; Distributions of Charged-off Loan Proceeds"
     below,

o    if the acceleration tracking amount has been reduced to zero, excess
     interest (to the extent available) as described under "Description of the
     Certificates--Overcollateralization Provisions" in this prospectus
     supplement, and

o    the amount (if any) remaining on deposit in the pre-funding account on the
     distribution date following the end of the funding period.

Fees and Expenses

The amounts available for distributions on the certificates on any distribution
date generally will not include the following amounts:

o    the master servicing fee and additional servicing compensation (as
     described in this prospectus supplement under "Description of the
     Certificates--Withdrawals from the Certificate Account" and "--Withdrawals
     from the Distribution Account") due to the master servicer,

o    the trustee fee due to the trustee,

o    amounts reimbursed to the master servicer and the trustee in respect of
     advances previously made by them and other amounts for which the master
     servicer and servicer are entitled to be reimbursed, and

o    all other amounts for which the depositor, a seller, the master servicer or
     any NIM Insurer is entitled to be reimbursed.

Any amounts netted from the amount available for distribution to the
certificateholders will reduce the amount distributed to the certificateholders.

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


                                       S-7



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

SERVICING COMPENSATION

Master Servicing Fee:

The master servicer will be paid a monthly fee (referred to as the master
servicing fee) with respect to each mortgage loan equal to one-twelfth of the
stated principal balance of that mortgage loan multiplied by 0.50% per annum
(referred to as the servicing fee rate). The master servicer will not be
entitled to receive the master servicing fee with respect to a charged-off
mortgage loan beginning with the due period after the charge-off date.

Additional Servicing Compensation:

The master servicer is also entitled to receive additional servicing
compensation from amounts in respect of interest paid on certain principal
prepayments, late payment fees, assumption fees and other similar charges
(excluding prepayment charges) and investment income earned on amounts on
deposit in certain of the issuing entity's accounts.

Source and Priority of Payments:

These amounts will be paid to the master servicer from collections on the
mortgage loans prior to any distributions on the certificates.

See "Servicing of the Mortgage Loans--Servicing Compensation and Payment of
Expenses," "Description of the Certificates--Withdrawals from the Certificate
Account" and "--Withdrawals from the Distribution Account" in this prospectus
supplement.

PRIORITY OF DISTRIBUTIONS; DISTRIBUTIONS OF INTEREST

In general, on any distribution date, interest funds will be distributed in the
following order:

o    to the Class A Certificates, current interest and any interest carry
     forward amount,

o    sequentially, in order of their distribution priorities, to each class of
     subordinated certificates, current interest, and

o    any remaining interest funds to be distributed as part of excess cashflow.

PRIORITY OF DISTRIBUTIONS; DISTRIBUTIONS OF PRINCIPAL

Effect of the Stepdown Date if a Trigger Event is not in Effect

On any distribution date on or after the stepdown date (and so long as no
trigger event is in effect), instead of allocating all amounts distributable as
principal to the Class A Certificates until that class is paid in full, a
portion of those amounts distributable as principal will be allocated to the
subordinated certificates.

The amount allocated to each class of certificates on or after the stepdown date
and so long as no trigger event is in effect will be based on the targeted level
of overcollateralization and subordination for each class of certificates. These
amounts are described in more detail under "Description of the
Certificates--Distributions--Distributions of Principal" in this prospectus
supplement.

Trigger Events:

A "trigger event" refers to certain specified levels of losses and/or
delinquencies on the mortgage loans. Prior to the stepdown date or if a trigger
event is in effect on or after the stepdown date, all amounts distributable as
principal on a distribution date will be allocated first to the Class A
Certificates, until that class is paid in full, before any distributions of
principal are made on the subordinated certificates.

The Stepdown Date:

The stepdown date will be the earlier of:

o    the distribution date on which the certificate principal balance of the
     Class A Certificates is reduced to zero; and

o    the later of: (a) the September 2009 distribution date and (b) the first
     distribution date on which the certificate principal balance of the Class A
     Certificates (after calculating anticipated distributions on such
     distribution date) is less than or equal to approximately 26.00% of the
     aggregate stated principal balance of the mortgage loans.

On any distribution date prior to the stepdown date or on which a trigger event
is in effect, the principal distribution amount will be distributed in the
following order:

o    to the Class A Certificates, until its certificate principal balance is
     reduced to zero;

o    from the remaining principal distribution amount, sequentially, in order of
     their distribution priorities, to each class of subordinated certificates,
     in each case until its respective certificate principal balance is reduced
     to zero; and

o    any remaining principal distribution amount, as part of the excess
     cashflow.

On any distribution date on or after the stepdown date and so long as a trigger
event is not in effect, the principal distribution amount will be distributed in
the following order:

o    to the Class A Certificates, in an amount up to the senior principal
     distribution target amount, until its certificate principal balance is
     reduced to zero;

o    from the remaining principal distribution amount, sequentially, in order of
     their distribution priorities, to each class of subordinated certificates,
     the subordinated class principal distribution target amount for each such
     class, in each case until its respective certificate principal balance is
     reduced to zero; and

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


                                       S-8



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

o    any remaining principal distribution amount, as part of the excess
     cashflow.

PRIORITY OF DISTRIBUTIONS; DISTRIBUTIONS OF CHARGED-OFF LOAN PROCEEDS

Any mortgage loan with a scheduled payment that has not been paid in full within
180 days of the due date for the scheduled payment will be a charged-off
mortgage loan. The last day of the due period in which the 180th day after the
due date related to a delinquent scheduled payment occurs is referred to as the
charge-off date. A mortgage loan that has been charged-off by the master
servicer as bad debt prior to the related charge-off date will not be a
charged-off mortgage loan.

Any net proceeds from the liquidation of a charged-off mortgage loan that are
received in any due period after the related charge-off date will be charged-off
loan proceeds. Charged-off loan proceeds will be distributable only in
accordance with the priorities set forth below and will not be available to make
any other distributions or to pay any fees or expenses of the issuing entity
other than the master servicer's expenses in connection with auctions of the
charged-off mortgage loans and the related auction fee.

On each distribution date, the charged-off loan proceeds received during the
related due period, if any, will be distributed in the following order:

o    to the Class A Certificates, the unpaid realized loss amount for such
     class, if any, after taking into account all distributions on that
     distribution date other than the distribution of charged-off loan proceeds;

o    sequentially, in order of their distribution priorities, to each class of
     subordinated certificates, the unpaid realized loss amount for each such
     class, if any, after taking into account all distributions on that
     distribution date other than the distribution of charged-off loan proceeds;

o    any remaining charged-off loan proceeds, concurrently as follows:

     o    50% of the remaining charged-off loan proceeds, to the Class R
          Certificates;

     o    50% of the remaining charged-off loan proceeds, sequentially, in the
          following order of priority:

          o    concurrently, to the Class M-7, Class M-8, Class M-9 and Class B
               Certificates, pro rata, based on their respective certificate
               principal balances, to reduce their certificate principal
               balances, until their respective certificate principal balances
               are reduced to zero, and

          o    any remaining amount, to the Class C Certificates.

CREDIT ENHANCEMENT

Credit enhancement provides limited protection to holders of certain
certificates against shortfalls in payments received on the mortgage loans. This
transaction employs the following forms of credit enhancement:

OVERCOLLATERALIZATION

"Overcollateralization" refers to the amount by which the aggregate stated
principal balance of the mortgage loans and any remaining pre-funded amount,
exceeds the aggregate certificate principal balance of the certificates.

On the closing date, it is expected that the sum of the aggregate stated
principal balance of the mortgage loans and any amounts on deposit in the
pre-funding account will exceed the initial aggregate certificate principal
balance of the certificates by approximately 8.70%.

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


                                      S-9



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

The amount of overcollateralization is equal to the initial level of
overcollateralization required by the pooling and servicing agreement. If the
amount of overcollateralization is reduced, excess interest on the mortgage
loans will be used to reduce the aggregate certificate principal balance of the
certificates until the required level of overcollateralization has been
restored.

On any distribution date, the amount of overcollateralization (if any) will be
available to absorb the losses from liquidated mortgage loans that would
otherwise be allocated to the offered certificates if those losses are not
otherwise covered by excess cashflow (if any). The required level of
overcollateralization may change over time.

See "Description of the Certificates--Overcollateralization Provisions" in this
prospectus supplement.

EXCESS CASHFLOW

Excess cashflow generally refers to the remaining amounts (if any) available for
distribution to the certificates after interest distributions have been made and
after the principal funds have been distributed.

On any distribution date, excess cashflow (if any) will be distributed in the
following order:

o    to the classes of offered certificates that are entitled to receive
     principal on that distribution date, to reduce their respective certificate
     principal balances, to the extent necessary to restore or maintain the
     required level of overcollateralization;

o    to the Class A Certificates, the unpaid realized loss amount for such
     class;

o    sequentially, in order of their distribution priorities, to each class of
     subordinated certificates, in each case first in an amount equal to any
     interest carry forward amount and then in an amount equal to the unpaid
     realized loss amount for each such class;

o    concurrently, to each class of interest-bearing certificates, pro rata
     based on their respective certificate principal balances to the extent
     needed to pay any unpaid net rate carryover for each such class; and then
     any excess cashflow remaining will be distributed to each class of
     interest-bearing certificates with respect to which there remains any
     unpaid net rate carryover, pro rata, based on the amount of such remaining
     unpaid net rate carryover;

o    if the acceleration tracking amount (as described under "Description of the
     Certificates--Overcollateralization Provisions" in this prospectus
     supplement) has been reduced to zero, remaining excess cashflow together
     with prepayment charges collected during the related prepayment period, to
     the Class M-8, Class M-9 and Class B Certificates, pro rata, based on their
     respective certificate principal balances, to reduce their certificate
     principal balances, until their respective certificate principal balances
     are reduced to zero;

o    to the Class C Certificates; and

o    to the Class A-R Certificates, as specified in the pooling and servicing
     agreement, although it is intended that the Class A-R Certificates will not
     be entitled to any distributions in excess of its certificate principal
     balance.

SUBORDINATION

The issuance of subordinated classes of certificates by the issuing entity is
designed to increase the likelihood that holders of more senior classes of
certificates will receive regular distributions of interest and principal.

The Class A Certificates will have a distribution priority over the subordinated
certificates. Within the classes with an "M" designation, the distribution
priority is in numerical order. Within the subordinated certificates, the Class
B Certificates have the lowest distribution priority.

Once the protection provided by excess cashflow and overcollateralization is
exhausted, subordination is designed to provide the holders of certificates
having a higher distribution priority with protection against losses realized
when the remaining unpaid principal balance of a mortgage loan exceeds the
proceeds recovered upon the liquidation of that mortgage loan. In general, this
loss protection is accomplished by allocating the realized losses on the
mortgage loans first, to the subordinated certificates, beginning with the class
of subordinated certificates then outstanding with the lowest distribution
priority, and second to the Class A Certificates.

See "Description of the Certificates--Allocation of Losses" in this prospectus
supplement and "Credit Enhancement" in the prospectus.

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


                                      S-10



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

ALLOCATION OF REALIZED LOSSES

After the credit enhancement provided by excess cashflow and
overcollateralization (if any) has been exhausted, collections otherwise payable
to the subordinated classes will comprise the sole source of funds from which
credit enhancement is provided to the more senior classes of certificates.
Realized losses on the mortgage loans will be allocated in the following order
of priority:

o    to the classes of subordinated certificates in the reverse order of their
     distribution priority, beginning with the class of subordinated
     certificates outstanding with the lowest distribution priority, until their
     respective certificate principal balances are reduced to zero, and

o    to the Class A Certificates, until its certificate principal balance is
     reduced to zero.

ADVANCES

The master servicer will make cash advances with respect to delinquent payments
of principal and interest on the mortgage loans to the extent that the master
servicer reasonably believes that the cash advances can be repaid from future
payments on the related mortgage loans. These cash advances are only intended to
maintain a regular flow of scheduled interest and principal payments on the
certificates and are not intended to guarantee or insure against losses. The
master servicer will not make any advances with respect to any charged-off
mortgage loan after the related charge-off date.

See "Servicing of the Mortgage Loans--Advances" in this prospectus supplement.

REPURCHASE, SUBSTITUTION AND PURCHASE OF MORTGAGE LOANS

The sellers may be required to repurchase, or substitute a replacement mortgage
loan for, any mortgage loan as to which there exists deficient documentation or
as to which there has been an uncured breach of any representation or warranty
relating to the characteristics of the mortgage loans that materially and
adversely affects the interests of the certificateholders in that mortgage loan.

Additionally, the master servicer may purchase from the issuing entity any
mortgage loan that is delinquent in payment by 150 days or more.

Countrywide Home Loans, Inc. also will be obligated to purchase any mortgage
loan with respect to which it has modified the mortgage rate at the request of
the borrower. See "Servicing of Mortgage Loans - Certain Modifications and
Refinancings" in this prospectus supplement.

The purchase price for any mortgage loans repurchased or purchased by a seller
or the master servicer will be generally equal to the stated principal balance
of the mortgage loan plus interest accrued at the applicable mortgage rate (and
in the case of purchases by the master servicer, less the servicing fee rate).

See "The Mortgage Pool--Assignment of the Mortgage Loans" and "Description of
the Certificates--Optional Purchase of Defaulted Loans" in this prospectus
supplement and "Loan Program--Representations by Sellers; Repurchases" in the
prospectus.

OPTIONAL TERMINATION

The master servicer may purchase all of the remaining assets of the issuing
entity on any distribution date on or after the first distribution date on which
the aggregate stated principal balance of the mortgage loans and any foreclosed
real estate owned by the issuing entity declines to or below 10% of the sum of
the aggregate stated principal balance of the initial mortgage loans as of the
initial cut-off date and the amount, if any, deposited into the pre-funding
account on the closing date. If the master servicer exercises the optional
termination right it will result in the early retirement of the certificates.
The NIM Insurer may also have the right to purchase all of the remaining assets
in the issuing entity.

See "Description of the Certificates--Optional Termination" in this prospectus
supplement.

MATERIAL FEDERAL INCOME TAX CONSEQUENCES

For federal income tax purposes, the issuing entity (exclusive of the assets
held in the pre-funding account) will consist of two or more REMICs: one or more
underlying REMICs and the master REMIC. The assets of the lowest underlying
REMIC in this tiered structure will consist of the mortgage loans and any other
assets designated in the pooling and servicing agreement. The offered
certificates (other than the Class A-R Certificates) will represent beneficial
ownership of "regular interests" in the master REMIC identified in the pooling
and servicing agreement and a beneficial interest in the right to receive
payments of net rate carryover pursuant to the pooling and servicing agreement.

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


                                      S-11



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

The Class A-R Certificates will represent ownership of both the residual
interest in the master REMIC and the residual interests in any underlying
REMICs.

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

LEGAL INVESTMENT CONSIDERATIONS

The certificates will not be mortgage related securities for purposes of the
Secondary Mortgage Market Enhancement Act of 1984, because the mortgages
securing the mortgage loans are not first mortgages. Accordingly, many
institutions with legal authority to invest in comparably rated securities based
solely on first mortgages may not be legally authorized to invest in the
certificates.

See "Legal Investment" in the prospectus.

ERISA CONSIDERATIONS

Generally, the offered certificates (other than the Class A-R Certificates) may
be purchased by a pension, employee benefit, or other plan subject to the
Employee Retirement Income Security Act of 1974, as amended, or Section 4975 of
the Internal Revenue Code of 1986, as amended, or by an entity investing the
assets of such a plan, so long as certain conditions are met.

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

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


                                      S-12



                         SUMMARY OF TRANSACTION PARTIES

                          ----------------------------
                         |     SPONSOR AND SELLER     |
                        /|Countrywide Home Loans, Inc.|
                       /  ----------------------------
                      /                             |
                     /                              |
     Mortgage Loans /                               | Mortgage Loans
                   /                                |
                  /                                 |
                 /                                  |
                /                                   |
               /                                    |
             \/_                                     |
 ----------------------------                       |
|        OTHER SELLERS       |                     \|/
|  Special Purpose Entities  | Mortgage Loans   ---------------
|Created by Affiliates of the|-----------------|   DEPOSITOR   |
|           Sponsor          |                 |  CWABS, Inc.  |
 ----------------------------                   ---------------
                                                    |
                                                    |
                                                    | Mortgage Loans
                                                    |
                                                   \|/
                                       ----------------------------
   -------------------    Mortgage    |       ISSUING ENTITY       |
  |MASTER SERVICER AND|   Loan        |     CWABS Asset-Backed     |
  |     SERVICER      |   Servicing   |Certificates Trust 2006-SPS2|
  | Countrywide Home  |---------------|                            |
  | Loans Servicing LP|               |           TRUSTEE          |
   -------------------                |    The Bank of New York    |
                                       ----------------------------


                                      S-13



                                  RISK FACTORS

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

JUNIOR LIEN PRIORITY COULD
RESULT IN PAYMENT DELAY OR
LOSS..........................   The mortgage loans are secured by mortgages
                                 that create second liens on residential
                                 properties. The master servicer may under
                                 certain circumstances consent to a new mortgage
                                 lien on the mortgaged property having priority
                                 over the mortgage loans in the issuing entity.
                                 Mortgage loans secured by junior liens are
                                 entitled to proceeds that remain from the sale
                                 of the related mortgaged property after the
                                 related senior mortgage loan and prior
                                 statutory liens have been satisfied. If the
                                 master servicer determines that the remaining
                                 proceeds are or would be insufficient to
                                 satisfy the mortgage loans secured by second
                                 mortgages and prior liens in the aggregate, it
                                 may charge-off the mortgage loan as a bad debt.
                                 If the credit enhancement has been exhausted or
                                 is otherwise not available to cover the losses,
                                 you will bear

                                 o    the risk of delay in payments while any
                                      deficiency judgment against the borrower
                                      is sought; and

                                 o    the risk of loss if the deficiency
                                      judgment is not pursued, cannot be
                                      obtained or is not realized upon for any
                                      other reason.

THE CERTIFICATES ARE BACKED BY
MORTGAGE LOANS THAT WILL
EXPERIENCE HIGHER RATES OF
DELINQUENCY AND LOSS THAN
MORTGAGE LOANS UNDERWRITTEN TO
MORE TRADITIONAL
STANDARDS.....................   Countrywide Home Loans, Inc.'s credit-blemished
                                 mortgage loan underwriting standards are more
                                 flexible than the standards generally used by
                                 banks for borrowers with non-blemished credit
                                 histories with regard to the borrower's credit
                                 standing and repayment ability. Borrowers who
                                 qualify generally have impaired credit
                                 histories, which may include a record of major
                                 derogatory credit items such as outstanding
                                 judgments or prior bankruptcies. On a case by
                                 case basis, Countrywide Home Loans, Inc. may
                                 determine that, based upon compensating
                                 factors, a prospective borrower not strictly
                                 qualifying under its applicable underwriting
                                 risk category guidelines warrants an
                                 underwriting exception. It is expected that a
                                 significant number of the mortgage loans will
                                 have been originated based on underwriting
                                 exceptions of these types. As a result of
                                 Countrywide Home Loans, Inc.'s underwriting
                                 standards, including the origination of
                                 mortgage loans based on underwriting
                                 exceptions, the mortgage loans in the mortgage
                                 pool are likely to experience rates of
                                 delinquency, foreclosure and bankruptcy that
                                 are higher, and that may be substantially
                                 higher, than those experienced by mortgage
                                 loans underwritten in a more traditional
                                 manner.

SUBORDINATED CERTIFICATES HAVE
A GREATER RISK OF LOSS BECAUSE
OF THE SUBORDINATION FEATURES;
CREDIT ENHANCEMENT MAY NOT BE
SUFFICIENT TO PROTECT MORE
SENIOR CLASSES OF CERTIFICATES
FROM LOSSES...................   When certain classes of certificates provide
                                 credit enhancement for other classes of
                                 certificates this is sometimes referred to as
                                 "subordination." The


                                      S-14



                                 subordination feature is intended to enhance
                                 the likelihood that holders of more senior
                                 classes of certificates will receive regular
                                 payments of interest and principal. For
                                 purposes of this prospectus supplement,
                                 "related subordinate classes" means:

                                 o    with respect to the Class A Certificates,
                                      the subordinated certificates, and

                                 o    with respect to each class of certificates
                                      having an "M" designation, (i) each other
                                      class of certificates having an "M"
                                      designation and a higher numerical
                                      designation than the class, if any, and
                                      (ii) the Class B Certificates.

                                 Credit enhancement in the form of subordination
                                 will be provided for the certificates, by:

                                 o    the right of the holders of the more
                                      senior classes of certificates to receive
                                      certain distributions prior to the
                                      subordinate classes; and

                                 o    the allocation of realized losses on the
                                      mortgage loans to the subordinate classes,
                                      beginning with the Class B Certificates.

                                 This type of credit enhancement is provided by:

                                 o    using collections on the mortgage loans
                                      otherwise payable to the holders of the
                                      subordinate classes to pay amounts due on
                                      the more senior classes; and

                                 o    allocating realized losses to the
                                      subordinated certificates, beginning with
                                      the class of subordinated certificates
                                      with the lowest distribution priority,
                                      until the certificate principal balance of
                                      that subordinate class has been reduced to
                                      zero.

                                 This means that after the credit enhancement
                                 provided by excess cashflow and
                                 overcollateralization (if any) have been
                                 exhausted,

                                 o    collections on the mortgage loans
                                      otherwise payable to the related
                                      subordinate classes will comprise the sole
                                      source of funds from which credit
                                      enhancement is provided to the related
                                      senior classes; and

                                 o    realized losses on the mortgage loans will
                                      be allocated to the most junior class of
                                      subordinated certificates outstanding,
                                      until the respective certificate principal
                                      balance of that class of subordinated
                                      certificates has been reduced to zero.

                                 If the aggregate certificate principal balance
                                 of the subordinated certificates were to be
                                 reduced to zero, additional realized losses
                                 will be allocated to the Class A Certificates.

                                 You should fully consider the risks of
                                 investing in a subordinated certificate,
                                 including the risk that you may not fully
                                 recover your initial investment as a result of
                                 realized losses. In addition, investors in the
                                 Class A Certificates should consider the risk
                                 that, after the credit enhancement provided by
                                 excess cashflow and overcollateralization (if
                                 any) has been exhausted, the subordination of
                                 the subordinated certificates may not be
                                 sufficient to protect the Class A Certificates
                                 from losses.


                                      S-15



                                 The Class M-7, Class M-8, Class M-9 and Class B
                                 Certificates may receive certain charged-off
                                 loan proceeds as payments of principal. The
                                 Class M-8, Class M-9 and Class B Certificates
                                 also will receive additional distributions of
                                 excess cashflow and prepayment charges as
                                 payments of principal when the acceleration
                                 tracking amount has been reduced to zero. The
                                 receipt of charged-off loan proceeds may reduce
                                 the acceleration tracking amount more quickly.
                                 Although the overcollateralization target
                                 amount will increase in order to compensate for
                                 the accelerated amortization of these classes
                                 of subordinated certificates due to the
                                 distribution of charged-off loan proceeds,
                                 excess cashflow and prepayment charges as
                                 payments of principal, there is no assurance
                                 that the increased level of required
                                 overcollateralization will be maintained.

                                 See "Description of the Certificates" in this
                                 prospectus supplement.

OVERCOLLATERALIZATION AND
EXCESS INTEREST MAY NOT BE
SUFFICIENT TO PROTECT
CERTIFICATES FROM LOSSES ON
THE MORTGAGE LOANS............   The amount by which the sum of the aggregate
                                 stated principal balance of the mortgage loans
                                 and the amount on deposit in the pre-funding
                                 account exceeds the aggregate certificate
                                 principal balance of the certificates is called
                                 "overcollateralization." The mortgage loans are
                                 expected to generate more interest than is
                                 needed to pay interest on the certificates
                                 because the weighted average interest rate on
                                 those mortgage loans is expected to be higher
                                 than the weighted average pass-through rate on
                                 the certificates plus servicing fees and
                                 expenses of the issuing entity. This "excess
                                 interest" will be used to make additional
                                 principal payments on the certificates to the
                                 extent described in this prospectus supplement.
                                 Overcollateralization is intended to provide
                                 limited protection to certificateholders by
                                 absorbing losses from liquidated mortgage
                                 loans. However, we cannot assure you that
                                 enough excess interest will be generated on the
                                 mortgage loans to maintain or restore the
                                 required level of overcollateralization.

                                 The excess interest available on any
                                 distribution date will be affected by the
                                 actual amount of interest received, collected
                                 or advanced in respect of the mortgage loans
                                 during the preceding month. The amount of
                                 interest received, collected or advanced will
                                 be influenced by changes in the weighted
                                 average of the mortgage rates resulting from
                                 prepayments and liquidations of the mortgage
                                 loans. Because the amount of excess interest
                                 available may vary and because the pass-through
                                 rate on the Class A certificates may increase,
                                 it may be necessary to apply all or a portion
                                 of the available interest to cover the interest
                                 requirements. As a result, available excess
                                 interest may be reduced. Furthermore, a
                                 disproportionately high rate of prepayments of
                                 high interest rate mortgage loans would have a
                                 negative effect on future excess interest.

EXCESS INTEREST WILL ALSO BE
REDUCED BY PREPAYMENTS ON THE
MORTGAGE LOANS................   When a borrower makes a full or partial
                                 prepayment on a mortgage loan, the amount of
                                 interest that the borrower is required to pay
                                 may be less than the amount of interest
                                 certificateholders would otherwise be entitled
                                 to receive with respect to the mortgage loan.
                                 The master servicer is required to reduce its
                                 master servicing fee to offset this shortfall,
                                 but the reduction for any distribution date is
                                 limited to one-half of the master servicing fee
                                 for the related month. If the aggregate amount
                                 of interest shortfalls resulting from
                                 prepayments exceeds the amount of the reduction
                                 in the master


                                      S-16



                                 servicing fee, the amount of interest available
                                 to make distributions of interest to the
                                 certificates and to maintain or restore the
                                 level of overcollateralization will be reduced.

BALLOON LOANS MAY HAVE HIGH
RATES OF DEFAULT..............   Approximately 91.26% of the mortgage loans in
                                 the statistical calculation pool, by stated
                                 principal balance of the mortgage loans in the
                                 statistical calculation pool, require the
                                 related borrower to make monthly payments of
                                 principal that are less than sufficient to
                                 amortize such mortgage loans by their maturity.
                                 These loans are commonly called "balloon
                                 loans." As a result of these lower monthly
                                 payments, a borrower generally will be required
                                 to pay a large remaining principal balance upon
                                 the maturity of such balloon loan. The ability
                                 of a borrower to make such a payment may depend
                                 on his or her ability to obtain refinancing of
                                 the balance due on the mortgage loan. In
                                 addition, an increase in prevailing market
                                 interest rates over the loan rate on the
                                 mortgage loan at origination may reduce the
                                 borrower's ability to obtain refinancing and to
                                 pay the principal balance of the mortgage loan
                                 at its maturity.

NET RATE CAP PUTS A LIMIT ON
THE PASS-THROUGH RATES OF THE
CERTIFICATES..................   The pass-through rates on the interest-bearing
                                 certificates will be limited by a cap called
                                 the "net rate cap" which is generally equal to
                                 the weighted average mortgage rate of the
                                 mortgage loans less the servicing fee rate and
                                 the trustee fee rate, as further described in
                                 this prospectus supplement. As a result,
                                 prepayments of mortgage loans with relatively
                                 higher mortgage rates will reduce or limit the
                                 net rate cap and may reduce the pass-through
                                 rate for one or more classes of
                                 interest-bearing certificates. We intend that
                                 the amount by which a certificateholder's
                                 interest payment has been reduced by operation
                                 of the net rate cap be paid from remaining
                                 excess cashflow (if any) as described in this
                                 prospectus supplement. However, we cannot
                                 assure you that these funds will be available,
                                 or sufficient, to make any payments with
                                 respect to these reductions. The ratings on the
                                 certificates do not address the likelihood of
                                 the payment of any net rate carryover amount.

RISKS REGARDING MORTGAGE
RATES.........................   The pass-through rate on the Class A
                                 Certificates may adjust monthly and is based on
                                 one-month LIBOR. The mortgage rates on the
                                 mortgage loans are fixed and therefore there is
                                 an absence of correlation between the mortgage
                                 rates on the mortgage loans and the
                                 pass-through rate on the Class A Certificates.
                                 The absence of a correlation between the
                                 mortgage rates on the mortgage loans and the
                                 pass-through rate on the Class A Certificates
                                 may reduce the interest payable on the Class A
                                 Certificates because of the imposition of net
                                 rate cap.

                                 In addition, an increase in one-month LIBOR and
                                 the resulting increase in the pass-through rate
                                 on the Class A Certificates would result in
                                 less amounts being available as excess
                                 interest.

                                 Borrowers may be offered reductions in their
                                 mortgage rates. If a borrower requests a
                                 reduction in its mortgage rate, the mortgage
                                 rate may not be reduced unless the mortgage
                                 loan will be purchased from the issuing entity
                                 and the purchase price will be deposited as
                                 collections in the relevant due period.
                                 Mortgage loans may be purchased from the
                                 issuing entity to accommodate any reductions in
                                 mortgage rates to the extent the aggregate
                                 principal balance of the mortgage loans so
                                 purchased does not exceed 5%


                                      S-17



                                 of the original certificate principal balance
                                 of the certificates.

PREPAYMENTS ON THE MORTGAGE
LOANS ARE UNPREDICTABLE AND
COULD ADVERSELY AFFECT YOUR
YIELD AND REINVESTMENT........   No one can accurately predict the level of
                                 prepayments that the mortgage loans will
                                 experience. The prepayment experience of the
                                 mortgage loans may be affected by many factors,
                                 including:

                                 o    general economic conditions,

                                 o    the level of prevailing interest rates,

                                 o    the availability of alternative financing,

                                 o    the applicability of prepayment charges,
                                      and

                                 o    homeowner mobility.

                                 Any mortgage loan may be prepaid in full or in
                                 part at any time. However, approximately 49.98%
                                 of the mortgage loans in the statistical
                                 calculation pool, by stated principal balance
                                 of the mortgage loans in the statistical
                                 calculation pool, provide, and any subsequent
                                 mortgage loans may provide, for the payment by
                                 the borrower of a prepayment charge on certain
                                 prepayments during the period of time specified
                                 in the related mortgage note. In addition,
                                 substantially all of the mortgage loans contain
                                 due-on-sale provisions, and the master servicer
                                 intends to enforce those provisions unless
                                 doing so is not permitted by applicable law or
                                 the master servicer, in a manner consistent
                                 with reasonable commercial practice, permits
                                 the purchaser of the mortgaged property in
                                 question to assume the related mortgage loan.

                                 See "The Mortgage Pool" and "Yield, Prepayment
                                 and Maturity Considerations" in this prospectus
                                 supplement and "Certain Legal Aspects of the
                                 Loans--Due-on-Sale Clauses" in the prospectus
                                 for a description of certain provisions of the
                                 mortgage loans that may affect their prepayment
                                 experience.

                                 The weighted average lives of the offered
                                 certificates will be sensitive to the rate and
                                 timing of principal payments (including
                                 prepayments) on the mortgage loans, which may
                                 fluctuate significantly from time to time, and
                                 will be affected by any prepayment resulting
                                 from the distribution of amounts (if any) on
                                 deposit in the pre-funding account after the
                                 end of the funding period.

                                 You should note that:

                                 o    generally, if you purchase your
                                      certificates at a discount and principal
                                      is repaid on the mortgage loans slower
                                      than you anticipate, then your yield may
                                      be lower than you anticipate,

                                 o    if you purchase your certificates at a
                                      premium, and principal is repaid on the
                                      mortgage loans faster than you anticipate,
                                      then your yield may be lower than you
                                      anticipate,

                                 o    if you purchase the Class A Certificates,
                                      your yield will also be


                                      S-18



                                      sensitive to:

                                      (1)  the level of one-month LIBOR,

                                      (2)  the timing of adjustment of the
                                           pass-through rate on the Class A
                                           Certificates as it relates to the
                                           interest rates on the mortgage loans,
                                           and

                                      (3)  other limitations on the pass-through
                                           rate of such certificate,

                                 o    the yield on your certificates will also
                                      be sensitive to limitations on the
                                      pass-through rates of such certificates
                                      resulting from the net rate cap, as
                                      described further in this prospectus
                                      supplement, and

                                 o    you bear the reinvestment risks resulting
                                      from a faster or slower rate of principal
                                      payments than you expect.

                                 See "Yield, Prepayment and Maturity
                                 Considerations" in this prospectus supplement.

YOUR YIELD WILL BE AFFECTED BY
HOW DISTRIBUTIONS ARE
ALLOCATED TO THE
CERTIFICATES..................   The timing of principal distributions on the
                                 certificates will be affected by a number of
                                 factors, including:

                                 o    the extent of prepayments on the mortgage
                                      loans,

                                 o    how distributions of principal are
                                      allocated among the classes of
                                      certificates,

                                 o    whether the master servicer exercises its
                                      right, in its sole discretion, to
                                      terminate the issuing entity in its
                                      entirety, and whether the NIM Insurer
                                      exercises any similar right that it may
                                      have,

                                 o    the rate and timing of payment defaults
                                      and losses on the mortgage loans,

                                 o    repurchases of mortgage loans for material
                                      breaches of representations and
                                      warranties, and

                                 o    the extent of principal prepayments on the
                                      mortgage loans.

                                 Because distributions on the certificates are
                                 dependent upon the payments on the mortgage
                                 loans, we cannot guarantee the amount of any
                                 particular distribution or the amount of time
                                 that will elapse before the issuing entity is
                                 terminated.

                                 See "Description of the
                                 Certificates--Principal," and "--Optional
                                 Termination" in this prospectus supplement for
                                 a description of the manner in which principal
                                 will be distributed to the certificates. See
                                 "The Mortgage Pool--Assignment of the Mortgage
                                 Loans" in this prospectus supplement for more
                                 information regarding the repurchase or
                                 substitution of mortgage loans.

THE CERTIFICATES MAY NOT BE
APPROPRIATE FOR SOME
INVESTORS....................    The offered certificates may not be an
                                 appropriate investment for investors who do not
                                 have sufficient resources or expertise to
                                 evaluate the particular characteristics of each
                                 applicable class of offered certificates. This
                                 may be


                                      S-19



                                 the case because, among other things:

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

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

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

                                 o    the Class M-7, Class M-8, Class M-9 and
                                      Class B Certificates involve risks that
                                      are not present for the other classes of
                                      offered certificates; and

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

                                 See "Yield, Prepayment and Maturity
                                 Considerations" in this prospectus supplement.

HURRICANE KATRINA MAY POSE
SPECIAL RISKS.................   At the end of August 2005, Hurricane Katrina
                                 caused catastrophic damage to areas in the Gulf
                                 Coast region of the United States. Countrywide
                                 Home Loans, Inc. will represent and warrant as
                                 of the closing date that each mortgaged
                                 property (including each mortgaged property
                                 located in the areas affected by Hurricane
                                 Katrina) is free of material damage and in good
                                 repair. In the event of a breach of that
                                 representation and warranty, Countrywide Home
                                 Loans, Inc. will be obligated to repurchase or
                                 substitute for the related mortgage loan. Any
                                 such repurchase would have the effect of
                                 increasing the rate of principal payment on the
                                 certificates. Any damage to a mortgaged
                                 property that secures a mortgage loan in the
                                 issuing entity occurring after the closing date
                                 as a result of any other casualty event will
                                 not cause a breach of this representation and
                                 warranty.

                                 The full economic impact of Hurricane Katrina
                                 is uncertain but may affect the ability of
                                 borrowers to make payments on their mortgage
                                 loans. Initial economic effects appear to
                                 include:

                                 o    localized areas of nearly complete
                                      destruction of the economic infrastructure
                                      and cessation of economic activity,

                                 o    regional interruptions in travel and
                                      transportation, tourism and economic
                                      activity generally, and

                                 o    nationwide decreases in petroleum
                                      availability with a corresponding increase
                                      in price.


                                      S-20



                                 We have no way to determine whether other
                                 effects will arise, how long any of these
                                 effects may last, or how these effects may
                                 impact the performance of the mortgage loans.
                                 Any impact of these events on the performance
                                 of the mortgage loans may increase the amount
                                 of losses borne by the holders of the
                                 certificates or impact the weighted average
                                 lives of the certificates.

GEOGRAPHIC CONCENTRATION OF
MORTGAGED PROPERTIES IN
CERTAIN STATES INCREASES THE
IMPACT THAT EVENTS IN THOSE
STATES COULD HAVE ON THE
CERTIFICATES..................   The table in Annex A related to the state
                                 distribution of the mortgaged properties sets
                                 forth the geographic concentration of the
                                 mortgaged properties in the statistical
                                 calculation pool, including the percentage by
                                 aggregate stated principal balance of the
                                 mortgage loans in the statistical calculation
                                 pool, that are secured by mortgaged properties
                                 that are located in states with concentrations
                                 above 10%. Homes in California are more
                                 susceptible than homes located in other parts
                                 of the country to certain types of uninsurable
                                 hazards, such as earthquakes, floods, mudslides
                                 and other natural disasters. Homes in Florida
                                 and other parts of the southeastern United
                                 States are more likely to suffer uninsurable
                                 damage from tropical storms and hurricanes than
                                 homes in other parts of the country. In
                                 addition:

                                 o    economic conditions in states with
                                      significant concentrations (which may or
                                      may not affect real property values) may
                                      affect the ability of borrowers to repay
                                      their loans,

                                 o    declines in the residential real estate
                                      markets in states with significant
                                      concentrations may reduce the values of
                                      properties located in those states, which
                                      would result in an increase in the
                                      combined loan-to-value ratios, and

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

INABILITY TO REPLACE SERVICER
COULD AFFECT COLLECTIONS AND
RECOVERIES ON THE MORTGAGE
LOANS.........................   The structure of the master servicing fee might
                                 affect the ability to find a replacement master
                                 servicer. Although the trustee is required to
                                 replace the master servicer if the master
                                 servicer is terminated or resigns, if the
                                 trustee is unwilling (including for example
                                 because the master servicing fee is
                                 insufficient) or unable (including for example,
                                 because the trustee does not have the systems
                                 to service mortgage loans), it may be necessary
                                 to appoint a replacement master servicer.
                                 Because the master servicing fee is structured
                                 as a percentage of the stated principal balance
                                 of each mortgage loan, it may be difficult to
                                 replace the master servicer at a time when the
                                 balance of the mortgage loans has been
                                 significantly reduced because the fee may be
                                 insufficient to cover the costs associated with
                                 servicing the credit-blemished mortgage loans
                                 and related REO properties remaining in the
                                 pool. The performance of the mortgage loans may
                                 be negatively impacted, beyond the expected
                                 transition period during a servicing transfer,
                                 if a replacement master servicer is not
                                 retained within a reasonable amount of time.


                                      S-21



YOU MAY RECEIVE A PREPAYMENT
BECAUSE SUBSEQUENT MORTGAGE
LOANS ARE NOT ACQUIRED........   The ability of the issuing entity to acquire
                                 subsequent mortgage loans will depend on the
                                 ability of Countrywide Home Loans, Inc. to
                                 originate or acquire mortgage loans, if
                                 necessary, during the funding period that meet
                                 the eligibility criteria for subsequent
                                 mortgage loans as described in this prospectus
                                 supplement. The ability of Countrywide Home
                                 Loans, Inc. to originate or acquire loans for
                                 subsequent transfer will be affected by a
                                 number of factors including prevailing interest
                                 rates, employment levels, the rate of inflation
                                 and economic conditions generally.

                                 If the full amount of any deposit in the
                                 pre-funding account cannot be used by the end
                                 of the funding period to acquire subsequent
                                 mortgage loans, the amount remaining on deposit
                                 in the pre-funding account will be distributed
                                 to the holders of the Class A Certificates as a
                                 prepayment of principal on the distribution
                                 date immediately following the end of the
                                 funding period. We cannot assure you of the
                                 magnitude of any amount on deposit in the
                                 pre-funding account at the end of the funding
                                 period.

RIGHTS OF THE NIM INSURER
LIMIT YOUR CONTROL AND NIM
INSURER ACTIONS MAY NEGATIVELY
AFFECT YOU....................   If there is a NIM Insurer, pursuant to the
                                 pooling and servicing agreement, unless the NIM
                                 Insurer fails to make a required payment under
                                 the policy insuring the net interest margin
                                 securities and the failure is continuing or the
                                 NIM Insurer is the subject of a bankruptcy
                                 proceeding, referred to as a "NIM Insurer
                                 Default", the NIM Insurer will be entitled to
                                 exercise, among others, the following rights
                                 without the consent of holders of the offered
                                 certificates, and the holders of the offered
                                 certificates may exercise these rights only
                                 with the prior written consent of the NIM
                                 Insurer:

                                 o    the right to provide notices of master
                                      servicer defaults and the right to direct
                                      the trustee to terminate the rights and
                                      obligations of the master servicer under
                                      the pooling and servicing agreement upon a
                                      default by the master servicer,

                                 o    the right to remove the trustee or any
                                      co-trustee or custodian pursuant to the
                                      pooling and servicing agreement, and

                                 o    the right to direct the trustee to make
                                      investigations and take actions pursuant
                                      to the pooling and servicing agreement.

                                 In addition, unless a NIM Insurer Default
                                 exists, the NIM Insurer's consent will be
                                 required before, among other things,

                                 o    any removal of the master servicer, any
                                      successor servicer or the trustee and any
                                      appointment of any co-trustee,

                                 o    any otherwise permissible waivers of
                                      prepayment charges or extensions of due
                                      dates for payment granted by the master
                                      servicer with respect to more than 5% of
                                      the mortgage loans, or

                                 o    any amendment to the pooling and servicing
                                      agreement.

                                 Investors in the offered certificates should
                                 note that:

                                 o    the rights granted to the NIM Insurer are
                                      extensive,


                                      S-22



                                 o    the interests of the NIM Insurer may be
                                      inconsistent with, and adverse to, the
                                      interests of the holders of the offered
                                      certificates, and the NIM Insurer has no
                                      obligation or duty to consider the
                                      interests of the offered certificates in
                                      connection with the exercise or
                                      nonexercise of the NIM Insurer's rights,

                                 o    the NIM Insurer's exercise of its rights
                                      and consents may negatively affect the
                                      offered certificates and the existence of
                                      the NIM Insurer's rights, whether or not
                                      exercised, may adversely affect the
                                      liquidity of the offered certificates,
                                      relative to other securities backed by
                                      comparable mortgage loans and with
                                      comparable payment priorities and ratings,
                                      and

                                 o    any insurance policy issued by the NIM
                                      Insurer will not cover, and will not
                                      benefit in any manner whatsoever, the
                                      offered certificates.

                                 See "Description of the Certificates--Rights of
                                 the NIM Insurer Under the Pooling and Servicing
                                 Agreement" in this prospectus supplement.

CHARGE-OFF POLICY COULD RESULT
IN REDUCED OR DELAYED
DISTRIBUTIONS; THE
DISTRIBUTION OF CHARGED-OFF
LOAN PROCEEDS COULD REDUCE
SUBORDINATION.................   A realized loss with respect to a charged-off
                                 mortgage loan will arise beginning with the due
                                 period immediately after the charge-off date.
                                 Since it is unlikely that any liquidation
                                 proceeds will have been received prior to such
                                 date, the stated principal balance of that
                                 charged-off mortgage loan will be reduced to
                                 zero resulting in a realized loss in the amount
                                 of the stated principal balance of that
                                 mortgage loan. If the credit enhancement
                                 provided by overcollateralization and excess
                                 cashflow has been reduced to zero, this
                                 realized loss will be applied to reduce the
                                 certificate principal balance of the
                                 certificates beginning with the class of
                                 subordinated certificates with the lowest
                                 distribution priority, until the certificate
                                 principal balance of that subordinate class has
                                 been reduced to zero. This accelerated
                                 recognition of realized losses may reduce the
                                 certificate principal balances of the
                                 applicable classes of certificates more quickly
                                 which would reduce the interest entitlement of
                                 those classes of certificates, further reducing
                                 the yield on those classes of certificates.

                                 The master servicer is required to conduct an
                                 auction with respect to the charged-off
                                 mortgage loans as described under "Servicing of
                                 Mortgage Loans--Auction of Charged-off Mortgage
                                 Loans". There can be no assurance that the
                                 requisite number of bids will be received by
                                 the master servicer or that a significant
                                 amount of proceeds will be received from any
                                 auction of charged-off mortgage loans. The net
                                 proceeds from any such auction may be less than
                                 the net proceeds that the master servicer would
                                 have received had it foreclosed upon the
                                 mortgaged property related to a charged-off
                                 mortgage loan and liquidated that property. In
                                 addition, any outstanding advances from the
                                 master servicer with respect to a mortgage loan
                                 that has become a charged-off mortgage loan
                                 will not be reimbursable out of the charged-off
                                 loan proceeds. Instead, those advances will
                                 become nonrecoverable advances and will be
                                 reimbursed to the master servicer from funds in
                                 the collection account prior to distributions
                                 to certificateholders.

                                 In addition, if the master servicer does not
                                 initiate foreclosure proceedings with respect
                                 to a delinquent mortgage loan prior to the
                                 related charge-off


                                      S-23



                                 date, the master servicer will be required to
                                 auction the charged-off mortgage loan and will
                                 not be able to initiate foreclosure proceedings
                                 unless the master servicer receives fewer than
                                 two bids for the related charged-off mortgage
                                 loan. The delay in initiation of the
                                 foreclosure proceeding may result in reduced
                                 net proceeds and will result in a delay in the
                                 liquidation of the mortgaged property resulting
                                 in a delay in the distribution of the related
                                 proceeds.

                                 Any proceeds that are received from the
                                 liquidation of a charged-off mortgage loan
                                 after the related charge-off date will be
                                 charged-off loan proceeds and will be
                                 distributable only in accordance with the
                                 priorities set forth under "Description of the
                                 Certificates--Distributions--Distributions of
                                 Charged-off Loan Proceeds". The manner of
                                 distribution of the charged-off loan proceeds,
                                 if any, is likely to result in earlier and/or
                                 increased principal distributions to the Class
                                 M-7, Class M-8, Class M-9 and Class B
                                 Certificates than if the principal portion of
                                 the charged-off loan proceeds were distributed
                                 as part of principal funds.

RATE OF PRINCIPAL
DISTRIBUTIONS ON THE CLASS
M-8, CLASS M-9 AND CLASS B
CERTIFICATES FROM PREPAYMENT
CHARGES AND EXCESS CASHFLOW IS
DEPENDENT ON RATE OF
DISTRIBUTIONS ON THE CLASS C,
CLASS P AND CLASS R
CERTIFICATES..................   The Class M-8, Class M-9 and Class B
                                 Certificates will receive additional
                                 distributions of excess cashflow, to the extent
                                 available, and distributions of prepayment
                                 charges if the acceleration tracking amount has
                                 been reduced to zero. The acceleration tracking
                                 amount is reduced on each distribution date by
                                 distributions on the Class C, Class P and Class
                                 R Certificates and certain other distributions
                                 as described under "Description of the
                                 Certificates--Overcollateralization
                                 Provisions". Those other distributions
                                 generally will be increased, thereby
                                 accelerating amortization of the acceleration
                                 tracking amount, if one-month LIBOR increases.

                                 On each distribution date, the Class C
                                 Certificates will receive distributions from
                                 excess cashflow, to the extent available. On
                                 each distribution date, the Class P
                                 Certificates will receive distributions of
                                 prepayment charges collected on the mortgage
                                 loans during the related prepayment period. The
                                 Class R Certificates may receive distributions
                                 of a portion of the charged-off loan proceeds
                                 received during the related due period. If the
                                 amount of excess cashflow, prepayment charges
                                 and charged-off loan proceeds is less than
                                 expected, the acceleration tracking amount will
                                 not be reduced to zero as quickly, if at all,
                                 and the Class M-8, Class M-9 and Class B
                                 Certificates will not receive distributions of
                                 excess cashflow in reduction of their
                                 respective certificate principal balances for a
                                 longer period of time, if at all. Investors in
                                 the Class M-8, Class M-9 and Class B
                                 Certificates should be aware that under certain
                                 circumstances the acceleration tracking amount
                                 may not be reduced to zero, and even if the
                                 acceleration tracking amount is reduced to
                                 zero, significant amounts of excess cashflow
                                 and/or prepayment charges may not be available
                                 for distribution to reduce their respective
                                 certificate principal balances.

                                 Distributions on the Class C Certificates are
                                 dependent on the amount of excess cashflow
                                 available to make payments to such class.
                                 Realized losses will reduce the amount of
                                 excess cashflow. Other events, such as the
                                 prepayment of mortgage loans with higher
                                 interest rates, may also reduce


                                      S-24



                                 the amount of excess cashflow. In addition,
                                 increases in one-month LIBOR will increase the
                                 amount of interest payable to the Class A
                                 Certificates which will reduce the amount of
                                 excess cashflow. Lower than expected amounts of
                                 excess cashflow will reduce distributions on
                                 the Class C Certificates.

                                 Distributions on the Class R Certificates are
                                 dependent on the amount of charged-off loan
                                 proceeds collected by the master servicer and
                                 the amount of unpaid realized loss amounts, if
                                 any, at the time these proceeds are
                                 distributed. A greater amount of charged-off
                                 mortgage loans would be expected to increase
                                 the amount of charged-off loan proceeds;
                                 however, the increased amount of charged-off
                                 mortgage loans would make the existence of
                                 unpaid realized loss amounts more likely. There
                                 can be no assurance that significant amounts of
                                 charged-off loan proceeds will be received from
                                 the sale of the charged-off mortgage loans. The
                                 market for charged-off mortgage loans is
                                 neither extensive nor liquid and is sensitive
                                 to a variety of factors including general
                                 economic conditions. A general downturn in the
                                 economy is likely to reduce the auction prices
                                 for charged-off mortgage loans.

                                 Distributions on the Class P Certificates are
                                 dependent on the rate of prepayment of the
                                 mortgage loans (which are structured to
                                 discourage prepayment) and the rate of
                                 collection (or payments by the master servicer
                                 due to waivers) of the prepayment charges on
                                 the mortgage loans. Thus, the Class P
                                 Certificates may not receive any distributions
                                 of prepayment charges from time to time or over
                                 its life. There is no mechanism in place to
                                 monitor whether the correct amount of
                                 prepayment charges are being collected or
                                 otherwise remitted. If none of the mortgage
                                 loans with prepayment charges were to prepay
                                 during the related prepayment charge periods,
                                 the Class P Certificates would not receive any
                                 distributions of prepayment charges. If there
                                 are fewer prepayments by borrowers on the
                                 mortgage loans than expected during the related
                                 prepayment charge periods or a lesser than
                                 expected rate of collection, a reduced amount
                                 of prepayment charges on the mortgage loans
                                 will be collected resulting in a lower amount
                                 of distributions on the Class P Certificates.
                                 Investors should conduct their own analysis of
                                 the effect that prepayment charges, or the
                                 ability of the master servicer to waive or
                                 enforce prepayment charges, may have on the
                                 performance of the mortgage loans and on the
                                 amount of distributions to be made to the Class
                                 P Certificates.

                                 The table titled "Prepayment Charge Schedule"
                                 attached to this prospectus supplement as Annex
                                 B and the table titled "Prepayment Charge
                                 Periods" included as part of Annex A in this
                                 prospectus supplement provide more detailed
                                 information with respect to the prepayment
                                 charges applicable to the mortgage loans in the
                                 statistical calculation pool.

SOME STATEMENTS CONTAINED IN OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS CONSIST OF FORWARD-LOOKING STATEMENTS
RELATING TO FUTURE ECONOMIC PERFORMANCE OR PROJECTIONS AND OTHER FINANCIAL
ITEMS. THESE STATEMENTS CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING WORDS
SUCH AS "MAY," "WILL," "SHOULD," "EXPECTS," "BELIEVES," "ANTICIPATES,"
"ESTIMATES," OR OTHER COMPARABLE WORDS. FORWARD-LOOKING STATEMENTS ARE SUBJECT
TO A VARIETY OF RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO
DIFFER FROM THE PROJECTED RESULT. THOSE RISKS AND UNCERTAINTIES INCLUDE, AMONG
OTHERS, GENERAL ECONOMIC AND BUSINESS CONDITIONS, REGULATORY INITIATIVES AND
COMPLIANCE WITH GOVERNMENTAL REGULATIONS, CUSTOMER PREFERENCES AND VARIOUS OTHER
MATTERS, MANY OF WHICH ARE BEYOND OUR CONTROL. BECAUSE WE CANNOT PREDICT THE
FUTURE, WHAT ACTUALLY HAPPENS MAY BE VERY DIFFERENT FROM WHAT WE PREDICT IN OUR
FORWARD-LOOKING STATEMENTS.


                                      S-25



                                THE MORTGAGE POOL

GENERAL

          CWABS, Inc. (the "DEPOSITOR") will purchase the Mortgage Loans from
Countrywide Home Loans, Inc. and one or more other sellers affiliated with
Countrywide Financial Corporation (each of which is referred to in this
prospectus supplement as a "SELLER" and together they are referred to as the
"SELLERS") pursuant to a Pooling and Servicing Agreement dated as of August 1,
2006 among the Sellers, Countrywide Home Loans Servicing LP, as master servicer
(the "MASTER SERVICER"), the Depositor and The Bank of New York, as trustee (the
"TRUSTEE"), and will cause the Mortgage Loans to be assigned to the Trustee for
the benefit of the holders of the Certificates.

          Set forth below and in Annex A of this prospectus supplement is
certain statistical information based on scheduled principal balances as of
August 1, 2006, which is the "STATISTICAL CALCULATION DATE," concerning a pool
of mortgage loans to be included in the issuing entity. This pool of mortgage
loans is referred to as the "STATISTICAL CALCULATION POOL," and the mortgage
loans are referred to as the "STATISTICAL CALCULATION POOL MORTGAGE LOANS."

          A detailed description (the "DETAILED DESCRIPTION") of the pool of
credit-blemished, closed-end, fixed rate, second-lien mortgage loans (the
"INITIAL MORTGAGE LOANS") to be included in the issuing entity on the Closing
Date (the "INITIAL MORTGAGE POOL") will be filed on Form 8-K with the Securities
and Exchange Commission (the "SEC") after the Closing Date. Additionally, in
accordance with applicable securities laws, if there are material changes in the
characteristics of the Initial Mortgage Pool, the Depositor will file on Form
8-K with the SEC additional information related to those material changes. The
Detailed Description will specify the aggregate of the Stated Principal Balances
of the Initial Mortgage Loans included in the Initial Mortgage Pool as of the
later of (x) August 1, 2006 and (y) the date of origination of each such Initial
Mortgage Loan (the "INITIAL CUT-OFF DATE"). The aggregate of the Stated
Principal Balances of these Initial Mortgage Loans is referred to as the
"INITIAL CUT-OFF DATE POOL PRINCIPAL BALANCE" and the Stated Principal Balance
of any Initial Mortgage Loan as of the Initial Cut-off Date is referred to as
the "INITIAL CUT-OFF DATE PRINCIPAL BALANCE." The Detailed Description will
include for the Initial Mortgage Loans, the information in the same categories
that are presented in Annex A with respect to the Statistical Calculation Pool.

          The Statistical Calculation Pool consists of approximately 11,559
mortgage loans. The aggregate Stated Principal Balance of the mortgage loans
included in the Statistical Calculation Pool as of the Statistical Calculation
Date is approximately $503,130,444 (the "STATISTICAL CALCULATION DATE POOL
PRINCIPAL BALANCE"). The Depositor believes that the information set forth in
this prospectus supplement with respect to the Statistical Calculation Pool as
presently constituted is representative of the characteristics of the Initial
Mortgage Pool as it will be constituted on the Closing Date, although some
characteristics of the Initial Mortgage Loans in the Initial Mortgage Pool will
vary. See "--The Statistical Calculation Pool" below. Unless otherwise
indicated, information presented below expressed as a percentage (other than
rates of interest) are approximate percentages based on the Statistical
Calculation Date Pool Principal Balance.

          All of the Mortgage Loans to be included in the issuing entity will be
evidenced by promissory notes (the "MORTGAGE NOTES"). The Mortgage Notes will be
secured by second-lien deeds of trust, security deeds or mortgages on one- to
four-family residential properties (the "MORTGAGED PROPERTIES").

          Certain of the Statistical Calculation Pool Mortgage Loans are 30/15
Balloon Mortgage Loans. A "30/15 BALLOON MORTGAGE LOAN" has an original
amortization term of 30 years and an original term to maturity of 15 years. The
remainder of the Statistical Calculation Pool Mortgage Loans have terms to
maturity of 10, 15, 20 or 30 years as specified in Annex A.

          Except for the 30/15 Balloon Mortgage Loans, the Mortgage Loans to be
included in the issuing entity will provide for the full amortization of the
amount financed over a series of monthly payments, and substantially all of the
Mortgage Loans are expected to provide for payments due as of the first day of
each month. The Mortgage Loans to be included in the issuing entity will have
been originated or purchased by Countrywide Home Loans, Inc. ("COUNTRYWIDE HOME
LOANS") and will have been originated substantially in accordance with
Countrywide Home Loans' underwriting criteria for credit-blemished, closed-end
second-lien mortgage loans described in this


                                      S-26



prospectus supplement under "--Underwriting Standards." Credit-blemished
mortgage loans are generally mortgage loans made to borrowers with credit
difficulties.

          Scheduled monthly payments made by the borrowers on the Mortgage Loans
("SCHEDULED PAYMENTS") either earlier or later than the scheduled due dates
thereof will not affect the amortization schedule or the relative application of
the payments to principal and interest. All of the Mortgage Notes will provide
for a fifteen (15) day grace period for monthly payments.

          Countrywide Home Loans will represent and warrant that none of the
Mortgage Loans will be 30 days or more delinquent as of the related Cut-off
Date. Delinquencies with respect to the Mortgage Loans will be recognized in
accordance with the methodology used by the Office of Thrift Supervision. Hence,
a Mortgage Loan is considered "30 days delinquent" if the borrower fails to make
a Scheduled Payment prior to the close of business on the Due Date that
immediately follows the Due Date on which the Scheduled Payment was originally
due. For example, a Mortgage Loan will be considered 30 days delinquent if the
borrower fails to make a Scheduled Payment originally due on January 1 by the
close of business on February 1. As of the Statistical Calculation Date, no
Statistical Calculation Pool Mortgage Loan has been 30 or more days delinquent
since its origination.

          Any Mortgage Loan may be prepaid in full or in part at any time;
however, approximately 49.98% of the Statistical Calculation Pool Mortgage
Loans, by Stated Principal Balance of the Mortgage Loans in the Statistical
Calculation Pool, and any Subsequent Mortgage Loans may, provide for the payment
by the borrower of a prepayment charge on certain prepayments made with respect
to the Mortgage Loans within a period of up to five years from the date of
execution of the related Mortgage Note. In general, the related Mortgage Note
will provide that a prepayment charge will apply if, during the applicable
period, the borrower prepays the Mortgage Loan in full. The "MORTGAGE RATE" with
respect to a Mortgage Loan is the annual rate of interest borne by the Mortgage
Loan pursuant to the terms of the related Mortgage Note.

          The Mortgage Loans will be selected from among the outstanding one- to
four-family mortgage loans in the applicable Seller's portfolio which meet the
criteria described in this prospectus supplement. No selection will be made in a
manner that would adversely affect the interests of certificateholders.

          Countrywide Home Loans will make all of the representations specified
in the prospectus under "Loan Program--Representations by Sellers; Repurchases"
with respect to all of the Mortgage Loans. Each other Seller will be a special
purpose entity established by Countywide Financial Corporation or one of its
subsidiaries and will sell mortgage loans that were previously acquired from
Countrywide Home Loans. Consequently, each Seller other than Countrywide Home
Loans will only represent that immediately prior to the assignment of the
Mortgage Loans to be sold by it to the Depositor, the Seller had good title to,
and was the sole owner of, those Mortgage Loans free and clear of any pledge,
lien, encumbrance or security interest and had full right and authority, subject
to no interest or participation of, or agreement with, any other party, to sell
and assign the Mortgage Loans pursuant to the Pooling and Servicing Agreement.
In addition, the Depositor will represent that following the transfer of the
Mortgage Loans to it by the Sellers, the Depositor had good title to the
Mortgage Loans and that each of the Mortgage Notes was subject to no offsets,
claims, defenses or counterclaims.

          Combined Loan-to-Value Ratio. The "COMBINED LOAN-TO-VALUE RATIO" of a
Mortgage Loan at any given time is the ratio, expressed as a percentage, of:

               (1) the sum of:

                    (a) the original principal balance of the Mortgage Loan and

                    (b) the outstanding principal balance at the date of
               origination of the Mortgage Loan of the senior mortgage loan or,
               in the case of any open-ended senior mortgage loan, the maximum
               available line of credit with respect to such mortgage loan,
               regardless of any lesser amount actually outstanding at the date
               of origination of the Mortgage Loan, to

               (2) the Collateral Value of the related Mortgaged Property.


                                      S-27



          The "COLLATERAL VALUE" of a Mortgaged Property is the lesser of:

               (1) the appraised value based on an appraisal made for
          Countrywide Home Loans by an independent fee appraiser at the time of
          the origination of the related Mortgage Loan, and

               (2) the sales price of the Mortgaged Property at the time of
          origination.

          With respect to a Mortgage Loan the proceeds of which were used to
refinance an existing mortgage loan, the Collateral Value is the appraised value
of the Mortgaged Property based upon the appraisal obtained at the time of
refinancing.

          Stated Principal Balance. "STATED PRINCIPAL BALANCE" means, for any
Mortgage Loan and (1) the Initial Cut-off Date or the Subsequent Cut-off Date,
as applicable (the "CUT-OFF DATE"), the unpaid principal balance of the Mortgage
Loan as of the Cut-Off Date, as specified in its amortization schedule at the
time (before any adjustment to the amortization schedule for any moratorium or
similar waiver or grace period), after giving effect to any partial prepayments
and Liquidation Proceeds received prior to the Cut-Off Date and to the payment
of principal due on the Cut-Off Date and irrespective of any delinquency in
payment by the related borrower or (2) any Distribution Date, the Stated
Principal Balance of the Mortgage Loan as of its Cut-off Date, minus the sum of
(i) the principal portion of any Scheduled Payments due with respect to the
Mortgage Loan on or prior to the end of the most recent Due Period that were
received by the Master Servicer on or prior to the most recent Determination
Date or were advanced by the Master Servicer on or prior to the most recent
Master Servicer Advance Date, (ii) principal prepayments with respect to the
Mortgage Loan received on or prior to the end of the most recent prepayment
period (the period from the 16th day of the month prior to a Distribution Date
(or, in the case of the first Distribution Date, from the Cut-off Date) to and
including the 15th day of the month in which the Distribution Date occurs (each
a "PREPAYMENT PERIOD")) and (iii) Liquidation Proceeds received by the Master
Servicer prior to the end of the most recent Due Period to the extent applied as
recoveries of principal with respect to the Mortgage Loan. The Stated Principal
Balance of any Mortgage Loan as to which the related Mortgaged Property has been
liquidated and as to which a Final Recovery Determination has been made will be
zero on each date following the Due Period in which the Final Recovery
Determination is made, and the Stated Principal Balance of a Charged-off
Mortgage Loan will be zero on each date following the Charge-off Date. When used
with respect to the Mortgage Pool, Stated Principal Balance means the aggregate
Stated Principal Balance of all Mortgage Loans in the Mortgage Pool. A
"DETERMINATION DATE" means with respect to any Distribution Date, the 22nd day
of the month of the Distribution Date or, if the 22nd day is not a Business Day,
the immediately preceding Business Day; provided that the Determination Date in
each month will be at least two business days before the Distribution Date.

THE STATISTICAL CALCULATION POOL

          The statistical information presented in this prospectus supplement is
based on the number and the Stated Principal Balances of the Mortgage Loans as
of the Statistical Calculation Date. The Statistical Calculation Pool is smaller
than the Initial Mortgage Pool. It is expected that additional Mortgage Loans
will be included in the Initial Mortgage Pool on the Closing Date and that
certain of the Statistical Calculation Pool Mortgage Loans may prepay in part or
in full prior to the Closing Date, or may be determined not to meet the
eligibility criteria requirements for the Initial Mortgage Pool and therefore
may not be included in the Initial Mortgage Pool. As a result of the foregoing,
the statistical distribution of characteristics for the Initial Mortgage Pool
will vary from the statistical distribution of the characteristics of the
Statistical Calculation Pool as presented in this prospectus supplement,
although the variance will not be material. Further statistical information
regarding the Statistical Calculation Pool Mortgage Loans is set forth in Annex
A of this prospectus supplement.

ASSIGNMENT OF THE MORTGAGE LOANS

          Pursuant to the pooling and servicing agreement dated as of August 1,
2006 (the "POOLING AND SERVICING AGREEMENT"), among the Depositor, the Master
Servicer, the Sellers and the Trustee, the Depositor on the Closing Date will
sell, transfer, assign, set over and otherwise convey without recourse to the
Trustee in trust for the benefit of the certificateholders, all right, title and
interest of the Depositor in and to each Initial Mortgage Loan and all right,
title and interest in and to all other assets included in the issuing entity,
including all principal and interest received on or with respect to the Initial
Mortgage Loans after the Initial Cut-off Date (exclusive of any scheduled


                                      S-28



principal due on or prior to the Initial Cut-off Date and any interest accruing
prior to the Initial Cut-off Date) and the Pre-Funded Amount, if any, deposited
in the Pre-Funding Account on the Closing Date.

          In connection with the transfer and assignment of the Mortgage Loans,
the Depositor will deliver the following documents to the Trustee (collectively
constituting the "MORTGAGE FILE") with respect to each Initial Mortgage Loan and
each Subsequent Mortgage Loan, if any (collectively, the "MORTGAGE LOANS"):

               (1) the original Mortgage Note, endorsed by manual or facsimile
          signature in blank in the following form: "Pay to the order of
          _______________ without recourse", with all intervening endorsements
          that show a complete chain of endorsement from the originator to the
          person endorsing the Mortgage Note, or, if the original Mortgage Note
          has been lost or destroyed and not replaced, an original lost note
          affidavit, stating that the original Mortgage Note was lost or
          destroyed, together with a copy of the related Mortgage Note and all
          such intervening endorsements,

               (2) the original recorded Mortgage or a copy thereof with
          recording information,

               (3) a duly executed assignment of the Mortgage to "Asset-Backed
          Certificates, Series 2006-SPS2, CWABS, Inc., by The Bank of New York,
          a New York banking corporation, as trustee under the Pooling and
          Servicing Agreement dated as of August 1, 2006, without recourse," in
          recordable form, or a copy thereof with recording information as
          described in the Pooling and Servicing Agreement,

               (4) the original recorded assignment or assignments of the
          Mortgage or a copy of such assignments, with recording information,
          together with all interim recorded assignments of such Mortgage or a
          copy of such assignments, with recording information,

               (5) the original or copies of each assumption, modification,
          written assurance or substitution agreement, if any, and

               (6) the original or duplicate original lender's title policy and
          all riders thereto or a copy of lender's title policy and all riders
          thereto or a printout of the electronic equivalent and all riders
          thereto or, in the event such original title policy has not been
          received from the insurer, such original or duplicate original
          lender's title policy and all riders thereto will be delivered within
          one year of the Closing Date.

          Notwithstanding the foregoing, in lieu of providing the documents set
forth in clauses (3) and (4) above, the Depositor may at its discretion provide
evidence that the related Mortgage is held through the MERS(R) System. In
addition, the Mortgages for some or all of the Mortgage Loans in the issuing
entity that are not already held through the MERS(R) System may, at the
discretion of the Master Servicer, in the future be held through the MERS(R)
System. For any Mortgage held through the MERS(R) System, the Mortgage is
recorded in the name of Mortgage Electronic Registration Systems, Inc., or
MERS(R), as nominee for the owner of the Mortgage Loan, and subsequent
assignments of the Mortgage were, or in the future may be, at the discretion of
the Master Servicer, registered electronically through the MERS(R) System. For
each of these Mortgage Loans, MERS(R) serves as mortgagee of record on the
Mortgage solely as a nominee in an administrative capacity on behalf of the
Trustee, and does not have any interest in the Mortgage Loan.

          Pursuant to the Pooling and Servicing Agreement, the Depositor will be
required to deliver (or cause delivery of) the Mortgage Files:

               (A) not later than the Closing Date, with respect to at least 50%
          of the Initial Mortgage Loans, and not later than the relevant
          Subsequent Transfer Date, with respect to at least 10% of the
          Subsequent Mortgage Loans conveyed on any related Subsequent Transfer
          Date,

               (B) not later than twenty days after the Closing Date, with
          respect to at least an additional 40% of the Initial Mortgage Loans,
          and not later than twenty days after the relevant Subsequent Transfer
          Date with respect to the remaining Subsequent Mortgage Loans conveyed
          on any related Subsequent Transfer Date, and


                                      S-29



               (C) not later than thirty days after the Closing Date, with
          respect to the remaining Initial Mortgage Loans.

          Assignments of the Mortgage Loans to the Trustee (or its nominee) will
be recorded in the appropriate public office for real property records, except
in states as to which an opinion of counsel is delivered to the effect that the
recording is not required to protect the Trustee's interests in the Mortgage
Loan against the claim of any subsequent transferee or any successor to or
creditor of the Depositor or the applicable Seller. As to any Mortgage Loan, the
recording requirement exception described in the preceding sentence is
applicable only so long as the related Mortgage File is maintained in the
possession of the Trustee in one of the states to which the exception applies.
In the event an assignment is delivered to the Trustee in blank and the related
Mortgage File is released by the Trustee pursuant to applicable provisions of
the Pooling and Servicing Agreement, the Trustee will complete the assignment as
provided in subparagraph (3) above prior to the release. If the assignment of
the Mortgage Loan is required to be recorded to protect the interest of the
Trustee in the Mortgage Loans, the Master Servicer is required to cause each
previously unrecorded assignment to be submitted for recording.

          The Trustee will review the Initial Mortgage Loan documents on or
prior to the Closing Date (or promptly after the Trustee's receipt of any
document permitted to be delivered after the Closing Date), and the Subsequent
Mortgage Loan documents promptly after the Trustee's receipt thereof on or after
the related Subsequent Transfer Date as described above, and the Trustee will
hold the Mortgage Loan documents in trust for the benefit of the holders of the
Certificates in accordance with its customary procedures, including storing the
documents in fire-resistant facilities. After review of the Mortgage Loan
documents, if any document is found to be missing or defective in any material
respect, the Trustee is required to notify the Master Servicer and Countrywide
Home Loans in writing. If Countrywide Home Loans cannot or does not cure the
omission or defect within 90 days of its receipt of notice from the Trustee,
Countrywide Home Loans is required to repurchase the related Mortgage Loan from
the issuing entity at a price (the "PURCHASE PRICE") equal to the sum of:

          (i)   100% of the unpaid principal balance (or, if the purchase or
                repurchase, as the case may be, is effected by the Master
                Servicer, the Stated Principal Balance) of the Mortgage Loan as
                of the date of the purchase,

          (ii)  accrued interest thereon at the applicable Mortgage Rate (or, if
                the purchase or repurchase, as the case may be, is effected by
                the Master Servicer, at the Net Mortgage Rate) from (a) the date
                through which interest was last paid by the borrower (or, if the
                purchase or repurchase, as the case may be, is effected by the
                Master Servicer, the date through which interest was last
                advanced by, and not reimbursed to, the Master Servicer) to (b)
                the Due Date in the month in which the Purchase Price is to be
                distributed to certificateholders, and

          (iii) any costs, expenses and damages incurred by the issuing entity
                resulting from any violation of any predatory or abusive lending
                law in connection with the Mortgage Loan.

          Rather than repurchase the Mortgage Loan as provided above,
Countrywide Home Loans may remove the Mortgage Loan (a "DELETED MORTGAGE LOAN")
from the issuing entity and substitute in its place another Mortgage Loan of
like kind (a "REPLACEMENT MORTGAGE LOAN"); however, a substitution is only
permitted within two years after the Closing Date, and may not be made unless an
opinion of counsel is provided to the effect that the substitution would not
disqualify any REMIC election made by the Trustee or result in a prohibited
transaction tax under the Internal Revenue Code of 1986, as amended (the
"CODE"). Any Replacement Mortgage Loan generally will, on the date of
substitution, among other characteristics set forth in the Pooling and Servicing
Agreement:

               (1) have a Stated Principal Balance, after deduction of the
          principal portion of the Scheduled Payment due in the month of
          substitution, not in excess of, and not less than 90% of, the Stated
          Principal Balance of the Deleted Mortgage Loan (the amount of any
          shortfall to be forwarded by Countrywide Home Loans to the Master
          Servicer and deposited by the Master Servicer in the Certificate
          Account not later than the succeeding Determination Date and held for
          distribution to the holders of the Certificates on the related
          Distribution Date),


                                      S-30



               (2) have the same or higher credit quality characteristics than
          that of the Deleted Mortgage Loan,

               (3) be accruing interest at a rate not more than 1% per annum
          higher or lower than that of the Deleted Mortgage Loan,

               (4) have a Combined Loan-to-Value Ratio no higher than that of
          the Deleted Mortgage Loan,

               (5) have a remaining term to maturity not greater than (and not
          more than one year less than) that of the Deleted Mortgage Loan,

               (6) not permit conversion of the Mortgage Rate from a fixed rate
          to a variable rate,

               (7) provide for a prepayment charge on terms substantially
          similar to those of the prepayment charge, if any, of the Deleted
          Mortgage Loan,

               (8) have the same occupancy type and lien priority as the Deleted
          Mortgage Loan, and

               (9) comply with all of the representations and warranties set
          forth in the Pooling and Servicing Agreement as of the date of
          substitution.

          This cure, repurchase or substitution obligation constitutes the sole
remedy available to the certificateholders, the Trustee or the Depositor for
omission of, or a material defect in, a Mortgage Loan document.

PRE-FUNDING

          On the Closing Date, the Depositor may deposit an amount of up to 25%
of the initial Certificate Principal Balance of the Certificates issued by the
issuing entity (the "PRE-FUNDED AMOUNT") in a pre-funding account (the
"PRE-FUNDING ACCOUNT") established and maintained by the Trustee on behalf of
the certificateholders. Any investment income earned from amounts in the
Pre-Funding Account will be paid to Countrywide Home Loans, and will not be
available for payments on the Certificates. During the period from the Closing
Date until the earlier of (x) the date the amount in the Pre-Funding Account is
less than $40,000 and (y) October 13, 2006 (the "FUNDING PERIOD"), the Depositor
will be expected to purchase additional mortgage loans originated or purchased
by a Seller (the "SUBSEQUENT MORTGAGE LOANS") from a Seller and sell the
Subsequent Mortgage Loans to the issuing entity as described below. The purchase
price for each Subsequent Mortgage Loan will equal the Stated Principal Balance
of that Subsequent Mortgage Loan as of the later of (x) the first day of the
month of the related Subsequent Transfer Date and (y) the origination date of
that Subsequent Mortgage Loan (the related "SUBSEQUENT CUT-OFF DATE") and will
be paid from the Pre-Funding Account. Accordingly, the purchase of Subsequent
Mortgage Loans will decrease the amount on deposit in the Pre-Funding Account
and increase the Stated Principal Balance of the Mortgage Pool.

          Pursuant to the Pooling and Servicing Agreement and a Subsequent
Transfer Agreement to be executed by the applicable Seller, the Depositor and
the Trustee, the conveyance of Subsequent Mortgage Loans may be made on any
Business Day during the Funding Period (a "SUBSEQUENT TRANSFER DATE"), subject
to the fulfillment of certain conditions in the Pooling and Servicing Agreement,
including that:

     o    the Subsequent Mortgage Loans conveyed on the Subsequent Transfer Date
          satisfy the same representations and warranties in the Pooling and
          Servicing Agreement applicable to all Mortgage Loans,

     o    the Subsequent Mortgage Loans conveyed on the Subsequent Transfer Date
          were selected in a manner reasonably believed not to be adverse to the
          interests of the certificateholders,

     o    the Trustee receives an opinion of counsel with respect to the
          validity of the conveyance of the Subsequent Mortgage Loans conveyed
          on the Subsequent Transfer Date,


                                      S-31



     o    the Trustee receives an opinion of counsel to the effect that the
          conveyance of the Subsequent Mortgage Loans conveyed on the Subsequent
          Transfer Date will not (i) result in the imposition of the tax on
          "prohibited transactions" on the issuing entity or contributions after
          the Startup Date, as defined in Sections 860F(a)(2) and 860G(d) of the
          Code, respectively, or (ii) cause the issuing entity to fail to
          qualify as a REMIC at any time that any Certificates are outstanding,

     o    the Trustee receives opinions of counsel to the effect that the
          conveyance of the Subsequent Mortgage Loans conveyed on the Subsequent
          Transfer Date from the applicable Seller to the Depositor and the
          simultaneous conveyance of the Subsequent Mortgage Loans from the
          Depositor to the issuing entity will be characterized as true sales
          and not loans secured by the Subsequent Mortgage Loans,

     o    the conveyance of the Subsequent Mortgage Loans on the Subsequent
          Transfer Date will not result in a reduction or withdrawal of any
          ratings assigned to the Certificates,

     o    no Subsequent Mortgage Loan conveyed on the Subsequent Transfer Date
          was 30 or more days delinquent, and

     o    following the conveyance of the Subsequent Mortgage Loans on the
          Subsequent Transfer Date to the issuing entity, the characteristics of
          the Mortgage Loans will not vary by more than the permitted variance
          specified in the table below; provided that for the purpose of making
          the calculations, the characteristics for any Initial Mortgage Loan
          will be taken as of the Initial Cut-off Date and the characteristics
          for any Subsequent Mortgage Loan will be taken as of the Subsequent
          Cut-off Date:



                                                                         PERMITTED VARIANCE OR
CHARACTERISTIC                                                                   RANGE
---------------------------------------------------------                ---------------------

Average Stated Principal Balance.........................    $43,527               5%
Weighted Average Mortgage Rate...........................     11.622%            0.10%
Weighted Average Original Combined Loan-to-Value Ratio...      96.63%            3.00%
Weighted Average Remaining Term to Maturity..............   180 months          3 months
Weighted Average Credit Bureau Risk Score................   635 points          5 points


          Within thirty days after each Subsequent Transfer Date, the Depositor
is required to deliver to the Trustee a letter of a nationally recognized firm
of independent public accountants stating whether or not the Subsequent Mortgage
Loans conveyed on the related Subsequent Transfer Date conform to the
characteristics described in the last two bullet points set forth above. Other
than the delivery of that letter, no other party will independently verify
satisfaction of the conditions set forth above with respect to a transfer of
Subsequent Mortgage Loans.

UNDERWRITING STANDARDS

          The following is a description of the underwriting procedures
customarily employed by Countrywide Home Loans with respect to credit-blemished,
second-lien mortgage loans. Countrywide Home Loans has been originating
credit-blemished, second-lien mortgage loans since 1997. Countrywide Home Loans
produces its credit-blemished, second-lien mortgage loans through its Consumer
Markets, Full Spectrum Lending, Correspondent Lending and Wholesale Lending
Divisions. Prior to the funding of any credit-blemished, second-lien mortgage
loan, Countrywide Home Loans underwrites the related mortgage loan in accordance
with the underwriting standards established by Countrywide Home Loans. In
general, the mortgage loans are underwritten centrally by a specialized group of
underwriters who are familiar with the unique characteristics of
credit-blemished, second-lien mortgage loans. In general, Countrywide Home Loans
does not purchase any credit-blemished, second-lien mortgage loan that it has
not itself underwritten.

          Countrywide Home Loans' underwriting standards are intended to
evaluate the value and adequacy of the mortgaged property as collateral for the
proposed mortgage loan and the borrower's credit standing and repayment ability.
On a case by case basis, Countrywide Home Loans may determine that, based upon
compensating factors, a prospective borrower not strictly qualifying under the
underwriting risk category guidelines described below


                                      S-32



warrants an underwriting exception. Compensating factors may include low
combined loan-to-value ratio, low debt-to-income ratio, stable employment, time
in the same residence or other factors. It is expected that a significant number
of the Mortgage Loans will have been originated based on these types of
underwriting exceptions.

          Each prospective borrower completes an application for credit which
includes information with respect to the applicant's assets, liabilities, income
and employment history, as well as certain other personal information.
Countrywide Home Loans requires an independent credit bureau report on the
credit history of each applicant in order to evaluate the applicant's prior
willingness and/or ability to repay. The report typically contains information
relating to credit history with local and national merchants and lenders,
installment debt payments and any record of defaults, bankruptcy, repossession,
suits or judgments, among other matters.

          After obtaining all applicable employment, credit and property
information, Countrywide Home Loans uses a debt-to-income ratio to assist in
determining whether the prospective borrower has sufficient monthly income
available to support the payments of principal and interest on the mortgage loan
in addition to other monthly credit obligations. The "DEBT-TO-INCOME RATIO" is
the ratio of the borrower's total monthly credit obligations to the borrower's
gross monthly income. The maximum monthly debt-to-income ratio varies depending
upon a borrower's credit grade and documentation level (as described below) but
does not generally exceed 55%. Variations in the monthly debt-to-income ratios
limit are permitted based on compensating factors.

          Countrywide Home Loans' underwriting standards are applied in
accordance with applicable federal and state laws and regulations and require an
independent appraisal of the mortgaged property prepared on a Uniform
Residential Appraisal Report (Form 1004) or other appraisal form as applicable
to the specific mortgaged property type. Each appraisal includes a market data
analysis based on recent sales of comparable homes in the area and, where deemed
appropriate, replacement cost analysis based on the current cost of constructing
a similar home and generally is required to have been made not earlier than 180
days prior to the date of origination of the mortgage loan. Every independent
appraisal is reviewed by a representative of Countrywide Home Loans before the
loan is funded, and an additional review appraisal is generally performed in
connection with appraisals not provided by Landsafe Appraisals, Inc., a wholly
owned subsidiary of Countrywide Home Loans. In most cases, properties that are
not at least in average condition (including properties requiring major deferred
maintenance) are not acceptable as collateral for a credit-blemished,
second-lien mortgage loan. The maximum loan amount varies depending upon a
borrower's credit grade, Credit Bureau Risk Score, and documentation level but
does not generally exceed $175,000 for credit-blemished, second-lien mortgage
loans. Variations in maximum loan amount limits are permitted based on
compensating factors.

          Countrywide Home Loans' underwriting standards permit
credit-blemished, second-lien mortgage loans with combined loan-to-value ratios
at origination of up to 100% depending on the program, type and use of the
property, documentation level, creditworthiness of the borrower, debt-to-income
ratio and loan amount.

          Countrywide Home Loans requires title insurance on all
credit-blemished, second-lien mortgage loans. Countrywide Home Loans also
requires that fire and extended coverage casualty insurance be maintained on the
mortgaged property in an amount at least equal to the principal balance or the
replacement cost of the mortgaged property, whichever is less.

          Countrywide Home Loans' credit-blemished, second-lien mortgage loan
underwriting standards are more flexible than the standards generally acceptable
to Countrywide Home Loans for its non-credit blemished mortgage loans with
regard to the borrower's credit standing and repayment ability. While more
flexible, Countrywide Home Loans' underwriting guidelines still place primary
reliance on a borrower's ability to repay; however Countrywide Home Loans may
require lower combined loan-to-value ratios than for loans underwritten to more
traditional standards. Borrowers who qualify generally have payment histories
and debt-to-income ratios which would not satisfy more traditional underwriting
guidelines and may have a record of major derogatory credit items such as
outstanding judgments or prior bankruptcies. Countrywide Home Loans'
credit-blemished, second-lien mortgage loan underwriting guidelines establish
the maximum permitted combined loan-to-value ratio for each loan type based upon
these and other risk factors with more risk factors resulting in lower ratios.

          Countrywide Home Loans underwrites or originates credit-blemished,
second-lien mortgage loans pursuant to alternative sets of underwriting criteria
under its Full Documentation Loan Program (the "FULL DOC PROGRAM"),


                                      S-33



and Stated Income Loan Program (the "STATED INCOME PROGRAM"). Under each of the
underwriting programs, Countrywide Home Loans verifies the loan applicant's
sources and amounts of income (except under the Stated Income Program where the
amount of income is not verified), calculates the amount of income from all
sources indicated on the loan application, reviews the credit history of the
applicant, calculates the debt-to-income ratio to determine the applicant's
ability to repay the loan, and reviews the appraisal of the mortgaged property
for compliance with Countrywide Home Loans' underwriting standards.

          Under the Stated Income Program, the borrower's employment and income
sources and amounts must be stated on the borrower's application for credit. The
borrower's income as stated must be reasonable for the related occupation and
the determination as to reasonableness is subject to the loan underwriter's
discretion. However, the borrower's income as stated on the application is not
independently verified. Except as otherwise stated above, the same mortgage
credit, consumer credit and collateral related underwriting guidelines apply.

          Under the Full Doc and Stated Income Programs, various risk categories
are used to grade the likelihood that the borrower will satisfy the repayment
conditions of the mortgage loan. These risk categories establish the maximum
permitted combined loan-to-value ratio, debt-to-income ratio and loan amount,
given the borrower's credit history, the occupancy status of the mortgaged
property and the type of mortgaged property. In general, more (or more recent)
derogatory credit items such as delinquent mortgage payments or prior
bankruptcies result in a loan being assigned to a higher credit risk category.

          Countrywide Home Loans' underwriting guidelines for credit-blemished,
second-lien mortgage loans utilize credit grade categories to grade the
likelihood that the borrower will satisfy the repayment conditions of the
mortgage loans. In general, a credit grade category is assigned by evaluating a
borrower's mortgage history, time since bankruptcy, and time since foreclosure
or notice of default. In the case of borrowers with less than twelve months'
mortgage history, credit grade category is assigned by evaluating, time since
bankruptcy, and time since foreclosure or notice of default. The credit grade
categories establish guidelines for determining maximum allowable combined
loan-to-value ratios and loan amounts given the borrower's Credit Bureau Risk
Score, and maximum allowable debt-to-income ratios for a given mortgage loan. A
summary of the credit grade categories is set forth below.

Credit Grade Category: "A"

          COMBINED LOAN-TO-VALUE RATIO: Maximum of 100%

          DEBT-TO-INCOME RATIO: Maximum of 55%

          LOAN AMOUNT: Maximum of $175,000.

          CREDIT BUREAU RISK SCORE: Minimum of--

          560 for loan amounts up to $100,000,

          580 for loan amounts of $100,001 to $125,000,

          600 for loan amounts of $125,001 to $137,500,

          620 for loan amounts of $137,501 to $162,500, and

          640 for loan amounts of $162,501 to $175,000.

          MORTGAGE HISTORY: No more than 1 non-consecutive delinquency of 30
          days during the past 12 months.

          BANKRUPTCY: At least 1 day since discharge or 2 years since dismissal
          of Chapter 7 or 13 Bankruptcy.

          FORECLOSURE/NOTICE OF DEFAULT: At least 3 years since
          foreclosure/notice of default released.

Credit Grade Category: "A-"

          COMBINED LOAN-TO-VALUE RATIO: Maximum of 85%

          DEBT-TO-INCOME RATIO: Maximum of 55%

          LOAN AMOUNT: Maximum of $100,000.

          CREDIT BUREAU RISK SCORE: Minimum of 560.

          MORTGAGE HISTORY: No more than 2 non-consecutive delinquencies of 30
          days during the past 12 months.

          BANKRUPTCY: At least 1 day since discharge or 2 years since dismissal
          of Chapter 7 or 13 Bankruptcy.

          FORECLOSURE/NOTICE OF DEFAULT: At least 3 years since
          foreclosure/notice of default released.


                                      S-34



Credit Grade Category: "B"

          COMBINED LOAN-TO-VALUE RATIO: Maximum of 80%

          DEBT-TO-INCOME RATIO: Maximum of 55%

          LOAN AMOUNT: Maximum of $100,000.

          CREDIT BUREAU RISK SCORE: Minimum of 560.

          MORTGAGE HISTORY: No more than 1 delinquency of 60 days in the past 12
          months. Delinquencies of 30 days are not restricted.

          BANKRUPTCY: At least 1 day since discharge or 1 year since dismissal
          of Chapter 7 or 13 Bankruptcy.

          FORECLOSURE/NOTICE OF DEFAULT: At least 2 years since
          foreclosure/notice of default released.

Credit Grade Category: "C"

          COMBINED LOAN-TO-VALUE RATIO: Maximum of 70%

          DEBT-TO-INCOME RATIO: Maximum of 55%

          LOAN AMOUNT: Maximum of $100,000.

          CREDIT BUREAU RISK SCORE: Minimum of 560.

          MORTGAGE HISTORY: No more than 1 delinquency of 90 days during the
          past 12 months. Delinquencies of 30 days and 60 days are not
          restricted.

          BANKRUPTCY: At least 1 day since discharge or 1 year since dismissal
          of Chapter 7 or 13 Bankruptcy.

          FORECLOSURE/NOTICE OF DEFAULT: At least 1 year since
          foreclosure/notice of default released.

          The combined loan-to-value ratios, debt-to-income ratios, and loan
amounts stated above are maximum levels for a given credit grade category. There
are additional restrictions on combined loan-to-value ratios, debt-to-income
ratios, and loan amounts depending on, but not limited to, the occupancy status
of the mortgaged property, the type of mortgaged property, and the documentation
program.

          The "CREDIT BUREAU RISK SCORE" is a statistical credit score obtained
by Countrywide Home Loans in connection with the loan application to help assess
a borrower's creditworthiness. Credit Bureau Risk Scores are generated by models
developed by a third party and are made available to mortgage lenders through
three national credit bureaus. The models were derived by analyzing data on
consumers in order to establish patterns which are believed to be indicative of
the borrower's probability of default. The Credit Bureau Risk Scores are based
on a borrower's historical credit data, including, among other things, payment
history, delinquencies on accounts, levels of outstanding indebtedness, length
of client history, types of credit, and bankruptcy experience. Credit Bureau
Risk Scores range from approximately 250 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 Bureau Risk Score purports
only to be a measurement of the relative degree of risk a borrower represents to
a lender, i.e., that 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 Bureau Risk 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 Bureau Risk
Scores were not developed specifically for use in connection with mortgage
loans, but for consumer loans in general. Therefore, a Credit Bureau Risk Score
does not take into consideration the effect of mortgage loan characteristics on
the probability of repayment by the borrower. The Credit Bureau Risk Scores set
forth in Annex A of this prospectus supplement were obtained either at the time
of origination of the Mortgage Loan or more recently. The Credit Bureau Risk
Score is used as an aid to, not a substitute for, the underwriter's judgment.

          In determining a Credit Bureau Risk Score for a particular borrower,
Countrywide Home Loans attempts to obtain Credit Bureau Risk Scores from each of
the three national credit bureaus that produce these scores. Although different
scores may be available from each of the three national credit bureaus for a
particular borrower, Countrywide Home Loans will use only one score in its
determination of whether to underwrite a mortgage loan, based on the following
methodology: if scores are available from each of the three national credit
bureaus, Countrywide Home Loans will disregard the highest and lowest scores,
and use the remaining score; and if scores are available from only two of the
three national credit bureau, Countrywide Home Loans will use the lower of the
two scores. In the case of a mortgage loan with more than one applicant,
Countrywide Home Loans will use the Credit Bureau Risk Score of the applicant
contributing the highest percentage of the total qualifying income.


                                      S-35



          If only one score is available, or no score is available, Countrywide
Home Loans will follow its limited credit guidelines. Under the limited credit
guidelines, credit histories may be developed using rent verification from
current and/or previous landlords, proof of payment to utilities such as
telephone, or verification from other sources of credit or services for which
the applicant has (or had) a regular financial obligation. In general,
applications with the aforementioned type of credit documentation are limited to
A- risk and 80% combined loan-to-value ratio. For applicants with established
mortgage payment history of at least 12 months and one credit score or no credit
score, the mortgage payment history may be used in lieu of a credit score to
determine a risk grade.

                         SERVICING OF THE MORTGAGE LOANS

GENERAL

          The Master Servicer will master service all of the Mortgage Loans in
accordance with the terms set forth in the Pooling and Servicing Agreement. The
Master Servicer has agreed to service and administer the mortgage loans in
accordance with customary and usual standards of practice of prudent mortgage
loan lenders. The Master Servicer has also agreed to represent and protect the
interest of the Trustee in the Mortgage Loans in the same manner as it currently
protects its own interest in mortgage loans in its own portfolio in any claim,
proceeding or litigation regarding a Mortgage Loan. The Master Servicer is
permitted to make a modification, waiver or amendment of a Mortgage Loan so long
as the modification, waiver or amendment would comply with the general servicing
standard described above, not cause any REMIC to fail to qualify as a REMIC, not
result in the imposition of certain taxes and not extend the due date for a
payment due on the related Mortgage Note for a period greater than 180 days. A
modification, waiver or amendment may initially result in a reduction in the
payments made under a Mortgage Loan, but it is expected that a modification,
waiver or amendment will increase the payments made under the Mortgage Loan over
the life of the Mortgage Loan.

          The Master Servicer may perform any of its obligations under the
Pooling and Servicing Agreement through one or more subservicers.
Notwithstanding any subservicing arrangement, the Master Servicer will remain
liable for its servicing duties and obligations under the Pooling and Servicing
Agreement as if the Master Servicer alone were servicing the Mortgage Loans. It
is expected that, as of the Closing Date, Countrywide Home Loans Servicing LP
will directly service all of the Mortgage Loans.

COUNTRYWIDE HOME LOANS SERVICING LP

          The principal executive offices of Countrywide Home Loans Servicing LP
("COUNTRYWIDE SERVICING") are located at 7105 Corporate Drive, Plano, Texas
75024. Countrywide Servicing is a Texas limited partnership directly owned by
Countrywide GP, Inc. and Countrywide LP, Inc., each a Nevada corporation and a
direct wholly owned subsidiary of Countrywide Home Loans, Inc. Countrywide GP,
Inc. owns a 0.1% interest in Countrywide Servicing and is the general partner.
Countrywide LP, Inc. owns a 99.9% interest in Countrywide Servicing and is a
limited partner.

          Countrywide Home Loans established Countrywide Servicing in February
2000 to service mortgage loans originated by Countrywide Home Loans that would
otherwise have been serviced by Countrywide Home Loans. In January and February,
2001, Countrywide Home Loans transferred to Countrywide Servicing all of its
rights and obligations relating to mortgage loans serviced on behalf of Freddie
Mac and Fannie Mae, respectively. In October 2001, Countrywide Home Loans
transferred to Countrywide Servicing all of its rights and obligations relating
to the bulk of its non-agency loan servicing portfolio (other than the servicing
of home equity lines of credit), including with respect to those mortgage loans
(other than home equity lines of credit) formerly serviced by Countrywide Home
Loans and securitized by affiliates of the Depositor. While Countrywide Home
Loans expects to continue to directly service a portion of its loan portfolio,
it is expected that the servicing rights for most newly originated Countrywide
Home Loans mortgage loans will be transferred to Countrywide Servicing upon sale
or securitization of the related mortgage loans. Countrywide Servicing is
engaged in the business of servicing mortgage loans and will not originate or
acquire loans, an activity that will continue to be performed by Countrywide
Home Loans. In addition to acquiring mortgage servicing rights from Countrywide
Home Loans, it is expected that Countrywide Servicing will service mortgage
loans for non-Countrywide Home Loans affiliated parties as well as subservice
mortgage loans on behalf of other master servicers.


                                      S-36



          In connection with the establishment of Countrywide Servicing, certain
employees of Countrywide Home Loans became employees of Countrywide Servicing.
Countrywide Servicing has engaged Countrywide Home Loans as a subservicer to
perform certain loan servicing activities on its behalf.

          Countrywide Servicing is an approved mortgage loan servicer for Fannie
Mae, Freddie Mac, Ginnie Mae, HUD and VA and is licensed to service mortgage
loans in each state where a license is required. Its loan servicing activities
are guaranteed by Countrywide Financial and/or Countrywide Home Loans when
required by the owner of the mortgage loans.

COUNTRYWIDE HOME LOANS

          Countrywide Home Loans is the sponsor for the transaction and also a
seller. Countrywide Home Loans is a New York corporation and a direct wholly
owned subsidiary of Countrywide Financial Corporation, a Delaware corporation
("COUNTRYWIDE FINANCIAL"). The principal executive offices of Countrywide Home
Loans are located at 4500 Park Granada, Calabasas, California 91302. Countrywide
Home Loans is engaged primarily in the mortgage banking business, and as part of
that business, originates, purchases, sells and services mortgage loans.
Countrywide Home Loans originates mortgage loans through a retail branch system
and through mortgage loan brokers and correspondents nationwide. Mortgage loans
originated by Countrywide Home Loans are principally first-lien, fixed or
adjustable rate mortgage loans secured by single-family residences.

          Countrywide Home Loans has historically sold substantially all the
mortgage loans that it has originated and purchased, generally through
securitizations. Countrywide Home Loans does not always sell mortgage loans
immediately after origination or acquisition, but may decide to sell certain
mortgage loans in later periods as part of its overall management of interest
rate risk. Countrywide Home Loans has been involved in the securitization of
mortgage loans since 1969 when it was approved as a Federal National Mortgage
Association seller/servicer. Countrywide Home Loans reviews the structure of its
securitizations and discusses the structure with the related underwriters.

          Except as otherwise indicated, reference in the remainder of this
prospectus supplement to "COUNTRYWIDE HOME LOANS" should be read to include
Countrywide Home Loans and its consolidated subsidiaries, including Countrywide
Servicing. Countrywide Home Loans services substantially all of the mortgage
loans it originates or acquires. In addition, Countrywide Home Loans has
purchased in bulk the rights to service mortgage loans originated by other
lenders. Countrywide Home Loans has in the past and may in the future sell to
mortgage bankers and other institutions a portion of its portfolio of loan
servicing rights. As of December 31, 2002, December 31, 2003, December 31, 2004,
December 31, 2005 and June 30, 2006, Countrywide Home Loans provided servicing
for mortgage loans with an aggregate principal balance of approximately $452.405
billion, $644.855 billion, $838.322 billion, $1,111.090 billion and $1,196.720,
respectively, substantially all of which were being serviced for unaffiliated
persons. As of December 31, 2005 and June 30, 2006, Countrywide Home Loans
provided servicing for credit-blemished mortgage loans (excluding mortgage loans
being subserviced by Countrywide Home Loans) with an aggregate principal balance
of approximately $121.734 billion and $119.178 billion, respectively.

          Mortgage Loan Production

          The following table sets forth, by number and dollar amount of
mortgage loans, Countrywide Home Loans' residential mortgage loan production for
the periods indicated.


                                      S-37





                                                                 CONSOLIDATED MORTGAGE LOAN PRODUCTION
                                          -----------------------------------------------------------------------------
                                           TEN MONTHS                      YEARS ENDED                       SIX MONTHS
                                              ENDED                        DECEMBER 31,                         ENDED
                                          DECEMBER 31,                -----------------------                 JUNE 30,
                                              2001          2002         2003         2004         2005         2006
                                          ------------   ----------   ----------   ----------   ----------   ----------
                                                       (DOLLARS IN MILLIONS, EXCEPT AVERAGE LOAN AMOUNT)

Conventional Conforming Loans
   Number of Loans ....................      504,975        999,448    1,517,743      846,395      809,630      353,101
   Volume of Loans ....................     $ 76,432     $  150,110   $  235,868   $  138,845   $  167,675   $   69,363
      Percent of Total Dollar Volume ..         61.7%          59.6%        54.2%        38.2%        34.1%        31.5%
Conventional Non-conforming Loans
   Number of Loans ....................      137,593        277,626      554,571      509,711      826,178      322,108
   Volume of Loans ....................     $ 22,209     $   61,627   $  136,664   $  140,580   $  225,217   $  100,537
      Percent of Total Dollar Volume ..         17.9%          24.5%        31.4%        38.7%        45.9%        45.7%
FHA/VA Loans
   Number of Loans ....................      118,734        157,626      196,063      105,562       80,528       43,381
   Volume of Loans ....................     $ 14,109     $   19,093   $   24,402   $   13,247   $   10,712   $    6,192
      Percent of Total Dollar Volume ..         11.4%           7.6%         5.6%         3.6%         2.2%         2.8%
Prime Home Equity Loans
   Number of Loans ....................      164,503        316,049      453,817      587,046      683,887      348,542
   Volume of Loans ....................     $  5,639     $   11,650   $   18,103   $   30,893   $   42,706   $   23,524
      Percent of Total Dollar Volume ..          4.5%           4.6%         4.2%         8.5%         8.7%        10.7%
Nonprime Mortgage Loans
   Number of Loans ....................       43,359         63,195      124,205      250,030      278,112      127,162
   Volume of Loans ....................     $  5,580     $    9,421   $   19,827   $   39,441   $   44,637   $   20,411
      Percent of Total Dollar Volume ..          4.5%           3.7%         4.6%        11.0%         9.1%         9.3%
Total Loans
   Number of Loans ....................      969,164      1,813,944    2,846,399    2,298,744    2,678,335    1,194,294
   Volume of Loans ....................     $123,969     $  251,901   $  434,864   $  363,006   $  490,947   $  220,027
   Average Loan Amount ................     $128,000     $  139,000   $  153,000   $  158,000   $  183,000   $  184,000
   Non-Purchase Transactions(1) .......           63%            66%          72%          51%          53%          54%
   Adjustable-Rate Loans(1) ...........           12%            14%          21%          52%          52%          49%


----------
(1)  Percentage of total loan production (excluding commercial real estate
     loans) based on dollar volume.

LOAN SERVICING

          The Master Servicer has established standard policies for the
servicing and collection of mortgages. Servicing includes, but is not limited
to:

               (a)  collecting, aggregating and remitting mortgage loan
                    payments;

               (b)  accounting for principal and interest;

               (c)  holding escrow (impound) funds for payment of taxes and
                    insurance;

               (d)  making inspections as required of the mortgaged properties;

               (e)  preparation of tax related information in connection with
                    the mortgage loans;

               (f)  supervision of delinquent mortgage loans;

               (g)  loss mitigation efforts;

               (h)  foreclosure proceedings and, if applicable, the disposition
                    of mortgaged properties; and

               (i)  generally administering the mortgage loans, for which it
                    receives servicing fees.

          Billing statements with respect to mortgage loans are mailed monthly
by the Master Servicer. The statement details all debits and credits and
specifies the payment due. Notice of changes in the applicable loan rate are
provided by the Master Servicer to the borrower with these statements.


                                      S-38



COLLECTION PROCEDURES

          When a borrower fails to make a payment on a credit-blemished, second
lien mortgage loan, the Master Servicer attempts to cause the deficiency to be
cured by corresponding with the borrower. In most cases, deficiencies are cured
promptly. Pursuant to the Master Servicer's servicing procedures for
credit-blemished, second lien mortgage loans, the Master Servicer generally
mails to the borrower a notice of intent to foreclose after the loan becomes 31
days past due (two payments due but not received) and, generally within 59 days
thereafter, if the loan remains delinquent, institutes appropriate legal action
to foreclose on the mortgaged property. Foreclosure proceedings may be
terminated if the delinquency is cured. Mortgage loans to borrowers in
bankruptcy proceedings may be restructured in accordance with law and with a
view to maximizing recovery of such loans, including any deficiencies.

          Once foreclosure is initiated by the Master Servicer, a foreclosure
tracking system is used to monitor the progress of the proceedings. The system
includes state specific parameters to monitor whether proceedings are
progressing within the time frame typical for the state in which the mortgaged
property is located. During the foreclosure proceeding, the Master Servicer
determines the amount of the foreclosure bid and whether to liquidate the
mortgage loan.

          If the mortgaged property was subject to a senior lien, the Master
Servicer will either directly manage the foreclosure sale of the property and
satisfy the lien at the time of sale or take other action deemed necessary to
protect the interest in the mortgaged property. After foreclosure, if the
mortgaged property securing a credit-blemished, second lien mortgage loan is
also securing a first lien mortgage loan, the Master Servicer may liquidate the
mortgaged property and charge off the credit-blemished, second lien mortgage
loan balance that was not recovered through liquidation proceeds. If, in the
judgment of the Master Servicer, the cost of maintaining or purchasing the
senior lien mortgage loan exceeds the economic benefit of such action, the
Master Servicer will generally charge off the entire credit-blemished, second
lien mortgage loan and may seek a money judgment against the borrower. If
foreclosed, the mortgaged property is sold at a public or private sale and may
be purchased by Countrywide Home Loans. Generally, the Master Servicer will
charge off the entire credit-blemished, second lien mortgage loan when the
related mortgaged property is liquidated, unless the Master Servicer has
determined that liquidation proceeds in respect of such mortgaged property,
which have not been received by that date, may be received by the Master
Servicer subsequently.

          Servicing and charge-off policies and collection practices with
respect to credit-blemished mortgage loans may change over time in accordance
with, among other things, the Master Servicer's business judgment, changes in
the servicing portfolio and applicable laws and regulations.

          The Master Servicer will also attempt to liquidate Mortgage Loans that
are Charged-off Mortgage Loans through the auction process described under
"--Auction of Charged-off Mortgage Loans" below. The Master Servicer and its
affiliates will not be permitted to purchase Charged-off Mortgage Loans in any
such auction.

SERVICING COMPENSATION AND PAYMENT OF EXPENSES

          The Master Servicer will be paid a monthly fee (the "MASTER SERVICING
FEE") from collections with respect to each Mortgage Loan (as well as from any
liquidation proceeds or Subsequent Recoveries) equal to one-twelfth of the
Stated Principal Balance thereof multiplied by the Servicing Fee Rate. The
Master Servicing Fee will not be payable for any Charged-off Mortgage Loan
beginning with the Due Period immediately after the Charge-off Date. The
"SERVICING FEE RATE" for each Mortgage Loan will equal 0.50% per annum. The
amount of the monthly Master Servicing Fee is subject to adjustment with respect
to Mortgage Loans that are prepaid in full, as described in this prospectus
supplement under "--Adjustment to Master Servicing Fee in Connection with
Certain Prepaid Mortgage Loans."

          The Master Servicer is also entitled to receive, as additional
servicing compensation, amounts in respect of interest paid on Principal
Prepayments received during that portion of a Prepayment Period from the related
Due Date to the end of the Prepayment Period ("PREPAYMENT INTEREST EXCESS"), all
late payment fees, assumption fees and other similar charges (excluding
prepayment charges), with respect to the Mortgage Loans, and all investment
income earned on amounts on deposit in the Certificate Account and Distribution
Account. The Master Servicer is


                                      S-39



obligated to pay certain ongoing expenses associated with the Mortgage Loans and
incurred by the Trustee in connection with its responsibilities under the
Pooling and Servicing Agreement.

ADJUSTMENT TO MASTER SERVICING FEE IN CONNECTION WITH CERTAIN PREPAID MORTGAGE
LOANS

          When a borrower prepays all or a portion of a Mortgage Loan between
scheduled monthly payment dates ("DUE DATES"), the borrower pays interest on the
amount prepaid only to the date of prepayment. Principal Prepayments which are
received during that portion of the Prepayment Period from the related Due Date
in the Prepayment Period to the end of the Prepayment Period reduce the
Scheduled Payment of interest for the following Due Date but are included in a
distribution that occurs on or prior to the distribution of the Scheduled
Payment, and accordingly no shortfall in interest otherwise distributable to
holders of the Certificates results. Conversely, Principal Prepayments received
from that portion of the Prepayment Period from the beginning of the Prepayment
Period to related Due Date in that Prepayment Period reduce the Scheduled
Payment of interest for that Due Date and are included in a distribution that
occurs on or after the distribution of the Scheduled Payment, and accordingly an
interest shortfall (a "PREPAYMENT INTEREST SHORTFALL") could result. In order to
mitigate the effect of any Prepayment Interest Shortfall on interest
distributions to holders of the Certificates on any Distribution Date, one-half
of the amount of the Master Servicing Fee otherwise payable to the Master
Servicer for the month will, to the extent of the Prepayment Interest Shortfall,
be deposited by the Master Servicer in the Certificate Account for distribution
to holders of the Certificates entitled thereto on the Distribution Date. The
amount of this deposit by the Master Servicer is referred to as "COMPENSATING
INTEREST" and will be reflected in the distributions to holders of the
Certificates entitled thereto made on the Distribution Date on which the
Principal Prepayments received would be distributed.

ADVANCES

          Subject to the following limitations, on the Business Day prior to
each Distribution Date, the Master Servicer will be required to advance (an
"ADVANCE") from its own funds, or funds in the Certificate Account that are not
required to be distributed on the Distribution Date, on the Business Day
immediately preceding the Distribution Date (a "MASTER SERVICER ADVANCE DATE"),
the sum of:

     o    an amount equal to the aggregate of payments of principal and interest
          on the Mortgage Loans (with the Mortgage Rate adjusted to a rate equal
          to the Mortgage Rate minus the Servicing Fee Rate (as so adjusted, the
          "NET MORTGAGE RATE")) that were due on the related Due Date and
          delinquent on the related Determination Date; and

     o    an amount equivalent to interest (adjusted to the Net Mortgage Rate)
          deemed due on each Mortgage Loan (i) as to which the related Mortgaged
          Property has been acquired by the Master Servicer through foreclosure
          or deed-in-lieu of foreclosure in connection with a defaulted Mortgage
          Loan ("REO PROPERTY"), which is calculated after taking into account
          any rental income from such Mortgaged Property or (ii) as to which the
          related Mortgaged Property has been liquidated but as to that Mortgage
          Loan a Final Recovery Determination has not been made.

          Advances are intended to maintain a regular flow of scheduled interest
and principal payments on the Certificates rather than to guarantee or insure
against losses. The Master Servicer is obligated to make Advances to the extent
that those Advances are, in its judgment, reasonably recoverable from future
payments and collections or insurance payments or proceeds of liquidation of the
related Mortgage Loan. The Master Servicer is not required to, and will not,
make any Advances with respect to a Charged-off Mortgage Loan after the related
Charge-off Date. If the Master Servicer determines on any Determination Date to
make an Advance, that Advance will be included with the distribution to holders
of the Certificates on the related Distribution Date. Any failure by the Master
Servicer to make an Advance as required under the Pooling and Servicing
Agreement will constitute an event of default thereunder, in which case the
Trustee, as successor master servicer, or any other entity that is appointed as
successor master servicer, will be obligated to make Advances in accordance with
the terms of the Pooling and Servicing Agreement. An Advance will be reimbursed
from the payments on the Mortgage Loan with respect to which the Advance was
made. However, if an Advance is determined to be nonrecoverable and the Master
Servicer delivers an officer's certificate to the Trustee indicating that the
Advance is nonrecoverable, the Master Servicer will be


                                      S-40



entitled to withdraw from the Certificate Account an amount equal to the
nonrecoverable Advance. Reimbursement for Advances and nonrecoverable Advances
will be made prior to distributions on the Certificates.

CERTAIN MODIFICATIONS AND REFINANCINGS

          Countrywide Home Loans will be permitted under the Pooling and
Servicing Agreement to solicit borrowers for reductions to the Mortgage Rates of
their respective Mortgage Loans. If a borrower requests such a reduction, the
Master Servicer will be permitted to agree to the rate reduction provided that
(i) Countrywide Home Loans purchases the Mortgage Loan from the issuing entity
immediately following the modification and (ii) the Stated Principal Balance of
such Mortgage Loan, when taken together with the aggregate of the Stated
Principal Balances of all other Mortgage Loans that have been so modified since
the Closing Date at the time of those modifications, does not exceed an amount
equal to 5% of the aggregate initial Certificate Principal Balance of the
Certificates. Any purchase of a Mortgage Loan subject to a modification will be
for a price equal to 100% of the Stated Principal Balance of that Mortgage Loan,
plus accrued and unpaid interest on the Mortgage Loan up to the next Due Date at
the applicable Net Mortgage Rate, net of any unreimbursed Advances of principal
and interest on the Mortgage Loan made by the Master Servicer. Countrywide Home
Loans will remit the purchase price to the Master Servicer for deposit into the
Certificate Account within one Business Day of the purchase of that Mortgage
Loan. Purchases of Mortgage Loans may occur when prevailing interest rates are
below the Mortgage Rates on the Mortgage Loans and borrowers request
modifications as an alternative to refinancings. Countrywide Home Loans will
indemnify the issuing entity against liability for any prohibited transactions
taxes and related interest, additions or penalties incurred by any REMIC as a
result of any modification or purchase.

AUCTION OF CHARGED-OFF MORTGAGE LOANS

          Any Mortgage Loan with a Scheduled Payment that that has not been paid
in full within 180 days of the Due Date for such Scheduled Payment will be a
"CHARGED-OFF MORTGAGE LOAN". The last day of the Due Period in which the 180th
day after the Due Date related to a delinquent Scheduled Payment occurs is
referred to as the "CHARGE-OFF DATE". A Mortgage Loan that has been charged-off
by the Master Servicer as bad debt prior to the Charge-off Date will not be a
Charged-off Mortgage Loan.

          The Master Servicer is required under the Pooling and Servicing
Agreement to use reasonable efforts to solicit bids from at least two
unaffiliated third parties for the purchase of a Charged-off Mortgage Loan
during the period commencing on the related Charge-off Date and ending one year
after the related Charge-off Date (such time period, the "AUCTION PERIOD"). If
more than one Charged-off Mortgage Loan exists, the Master Servicer may solicit
bids for a single Charged-off Mortgage Loan, a portion of the outstanding
Charged-off Mortgage Loans or all of the outstanding Charged-off Mortgage Loans.
If fewer than two bids with respect to a Charged-off Mortgage Loan are received
during the related Auction Period, the Master Servicer will use reasonable
efforts to foreclose the property securing the related Charged-off Mortgage Loan
to the extent that the Master Servicer determines that the proceeds of such
foreclosure would exceed the costs and expenses of bringing such a proceeding.
If two or more bids with respect to a Charged-off Mortgage Loan are received
during the related Auction Period, the Master Servicer will arrange for the sale
of the Charged-off Mortgage Loan to the highest bidder. The Master Servicer will
prepare on behalf of the issuing entity any necessary documentation required to
transfer title to the Charged-off Mortgage Loans from the issuing entity to the
purchaser. The Master Servicer will deduct from the proceeds of the sale of such
Charged-off Mortgage Loan its reimbursable expenses incurred in connection with
the liquidation and sale of a Charged-off Mortgage Loan and a fee equal to 10%
of the proceeds of the sale of such Charged-off Mortgage Loan.

                               THE ISSUING ENTITY

          In connection with the issuance of the Certificates, the Depositor has
formed CWABS Asset-Backed Certificates Trust 2006-SPS2, a common law trust
created under the laws of the State of New York pursuant to the Pooling and
Servicing Agreement. CWABS Asset-Backed Certificates Trust 2006-SPS2 is referred
to in this prospectus supplement as the "ISSUING ENTITY" and is referred to in
the prospectus as the "TRUST" or the "TRUST FUND." The Trustee serves as trustee
of the issuing entity and acts on behalf of the issuing entity as the issuing
entity does not have any directors, officers or employees. The fiscal year end
of the issuing entity is December 31.


                                      S-41



          The issuing entity's activities are limited to the transactions and
activities entered into in connection with the securitization described in this
prospectus supplement, and except for those activities, the issuing entity is
not authorized and has no power to borrow money or issue debt, merge with
another entity, reorganize, liquidate or sell assets or engage in any business
or activities. Consequently, the issuing entity is not permitted to hold any
assets, or incur any liabilities, other than those described in this prospectus
supplement. Since the issuing entity is created pursuant to the Pooling and
Servicing Agreement, the issuing entity and its permissible activities can only
be amended or modified by amending the Pooling and Servicing Agreement.

          Since the issuing entity is a common law trust, it may not be eligible
for relief under the federal bankruptcy laws, unless it can be characterized as
a "business trust" for purposes of the federal bankruptcy laws. Bankruptcy
courts look at various considerations in making this determination, so it is not
possible to predict with any certainty whether or not the issuing entity would
be characterized as a "business trust."

                                STATIC POOL DATA

          Certain static pool data with respect to the delinquency, cumulative
loss and prepayment performance of credit-blemished, fixed rate, closed-end,
second lien mortgage loans originated by Countrywide Home Loans is attached as
Exhibit A. This static pool data is not deemed part of the prospectus or the
registration statement of which the prospectus is a part to the extent that the
static pool data relates to:

     o    prior securitized pools of Countrywide Home Loans that do not include
          the Mortgage Loans and that were established before January 1, 2006
          and information regarding Countrywide Home Loans overall mortgage loan
          portfolio for the origination years before January 1, 2006; or

     o    in the case of information regarding the Mortgage Loans, information
          about the Mortgage Loans for periods before January 1, 2006.

          The Characteristics Report contained in Exhibit A identifies the
characteristics of all credit-blemished, fixed rate, closed-end, second lien
mortgage loans originated by Countrywide Home Loans during each of the 2003,
2004 and 2005 calendar years. The information in the Characteristics Report is
based on the characteristics of each mortgage loan as of its origination date.

          Each Performance Report contained in Exhibit A relates to an
origination year and sets forth the delinquency, cumulative loss and prepayment
data in monthly increments beginning with the first calendar month after the end
of the applicable origination year. Each monthly increment of data in each
Performance Report provides data regarding the mortgage loans from the
applicable origination year, but the performance data for each monthly increment
does not include performance data related to mortgage loans that were (i)
prepaid in full by the related borrower prior to the end of the related
origination year, (ii) charged-off by Countrywide Home Loans prior to the end of
the related origination year or (iii) sold to unaffiliated parties on a
servicing-released basis prior to the end of the applicable origination year or
prior to the beginning of the calendar month related to the monthly increment
for which performance data is shown. Definitions related to the headings of each
column of the Performance Reports have been included at the end of Exhibit A.

          We cannot assure you that the prepayment, loss or delinquency
experience of the Mortgage Loans will be comparable to the historical
prepayment, loss or delinquency experience of the mortgage loans for which
performance data is included in Exhibit A. You should note how the
characteristics of the mortgage loans in those origination years differ from the
characteristics of the Mortgage Loans. Such differences, along with the varying
economic conditions to which those mortgage loans were subject, may make it
unlikely that the Mortgage Loans will perform in the same way that those
mortgage loans have performed.


                                      S-42



                         DESCRIPTION OF THE CERTIFICATES

GENERAL

          The Certificates will be issued pursuant to the Pooling and Servicing
Agreement. We summarize below the material terms and provisions pursuant to
which the Certificates will be issued. The summaries are subject to, and are
qualified in their entirety by reference to, the provisions of the Pooling and
Servicing Agreement. When particular provisions or terms used in the Pooling and
Servicing Agreement are referred to, the actual provisions (including
definitions of terms) are incorporated by reference. We will file a final copy
of the Pooling and Servicing Agreement after the issuing entity issues the
Certificates.

          The CWABS, Inc., Asset-Backed Certificates, Series 2006-SPS2 (the
"CERTIFICATES") will consist of the Class A, Class M-1, Class M-2, Class M-3,
Class M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class M-9, Class B, Class
A-R, Class P, Class C and Class R Certificates.

          When describing the Certificates in this prospectus supplement we use
the following terms:



       DESIGNATION                                     CLASS OF CERTIFICATES
-------------------------   --------------------------------------------------------------------------

Subordinated Certificates   Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class
                            M-7, Class M-8, Class M-9 and Class B Certificates
Fixed Rate Certificates     Subordinated Certificates
Offered Certificates        Class A Certificates, Subordinated Certificates and Class A-R Certificates
Private Certificates        Class P, Class C and Class R Certificates


       The Certificates are generally referred to as the following types:

                     CLASS                                TYPE
----------------------------------------------   ----------------------
Class A Certificates                             Senior/Floating Rate
Class A-R Certificates                           REMIC Residual
Class M-1, Class M-2, Class M-3, Class M-4,
   Class M-5, Class M-6, Class M-7, Class M-8,
   Class M-9 and Class B Certificates            Subordinate/Fixed Rate
Class P                                          Prepayment Charges
Class C                                          Residual
Class R                                          Charge-off

BOOK-ENTRY CERTIFICATES; DENOMINATIONS

          The Offered Certificates (other than the Class A-R Certificates) will
be book-entry certificates (the "BOOK-ENTRY CERTIFICATES"). The Class A-R
Certificates will be issued as two certificates in fully registered certificated
form in an aggregate denomination of $100. Persons acquiring beneficial
ownership interests in the Book-Entry Certificates ("CERTIFICATE OWNERS") may
elect to hold their Book-Entry Certificates through the Depository Trust Company
("DTC") in the United States, or Clearstream, Luxembourg or the Euroclear System
("EUROCLEAR"), in Europe, if they are participants of these systems, or
indirectly through organizations which are participants in these systems. Each
class of Book-Entry Certificates will be issued in one or more certificates
which equal the aggregate Certificate Principal Balance of the applicable class
of the Book-Entry Certificates and will initially be registered in the name of
Cede & Co., the nominee of DTC. Beneficial interests in the Book-Entry
Certificates may be held in minimum denominations representing Certificate
Principal Balances of $20,000 and integral multiples of $1 in excess thereof.
Except as set forth under "Description of the Securities--Book-Entry
Registration of Securities" in the prospectus, no person acquiring a beneficial
ownership interest in a Book-Entry


                                      S-43



Certificate (each, a "BENEFICIAL OWNER") will be entitled to receive a physical
certificate representing the person's beneficial ownership interest in the
Book-Entry Certificate (a "DEFINITIVE CERTIFICATE"). Unless and until Definitive
Certificates are issued, it is anticipated that the only certificateholder of
the Book-Entry Certificates will be Cede & Co., as nominee of DTC. Certificate
Owners will not be certificateholders as that term is used in the Pooling and
Servicing Agreement. Certificate Owners are only permitted to exercise their
rights indirectly through the participating organizations that utilize the
services of DTC, including securities brokers and dealers, banks and trust
companies and clearing corporations and certain other organizations
("PARTICIPANTS") and DTC. See "Description of the Securities--Book-Entry
Registration of Securities" in the prospectus.

GLOSSARY OF TERMS

          The following terms have the meanings shown below to help describe the
cash flow on the Certificates. The definitions are organized based on the
context in which they are most frequently used. However, certain definitions may
be used in multiple contexts.

          General Definitions.

          "ADJUSTED NET MORTGAGE RATE" with respect to each Mortgage Loan means
the Mortgage Rate less the related Expense Fee Rate.

          "BUSINESS DAY" is any day other than:

               (1) a Saturday or Sunday or

               (2) a day on which banking institutions in the state of New York
          or California are required or authorized by law to be closed.

          "CERTIFICATE PRINCIPAL BALANCE" means for any class of Offered
Certificates, the aggregate outstanding principal balance of all Certificates of
the class, less:

               (1) all amounts previously distributed to holders of Certificates
          of that class as payments of principal; and

               (2) the Applied Realized Loss Amounts allocated to the class;

          provided, however, that if Applied Realized Loss Amounts have been
allocated to the Certificate Principal Balance of any class of Offered
Certificates, the Certificate Principal Balance thereof will be increased on
each Distribution Date after the allocation of Applied Realized Loss Amounts,
sequentially by class in the order of distribution priority, by the amount of
Subsequent Recoveries collected during the related Due Period (if any) (but not
by more than the amount of the Unpaid Realized Loss Amount for the class).

          After any allocation of amounts in respect of Subsequent Recoveries to
the Certificate Principal Balance of a class of Offered Certificates, a
corresponding decrease will be made on the Distribution Date to the Unpaid
Realized Loss Amount for that class or classes. Holders of these Certificates
will not be entitled to any payment in respect of interest that would have
accrued on the amount of the increase in Certificate Principal Balance for any
Accrual Period preceding the Distribution Date on which the increase occurs.

          "CHARGED-OFF LOAN PROCEEDS" means any Insurance Proceeds and all other
net proceeds received with respect to a Charged-off Mortgage Loan after the
related Charge-off Date in connection with the partial or complete liquidation
of a Charged-off Mortgage Loan (whether through trustee's sale, foreclosure
sale, the auction process described under "Servicing of the Mortgage
Loans--Auction of Charged-off Mortgage Loans" or otherwise) or in connection
with any condemnation or partial release of the related Mortgaged Property,
together with the net proceeds received after the related Charge-off Date with
respect to any Mortgaged Property acquired by the Master Servicer by foreclosure
or deed in lieu of foreclosure in connection with a Charged-off Mortgage Loan
(net of reimbursable expenses and the related auction fee).


                                      S-44



          "DISTRIBUTION DATE" means the 25th day of each month, or if the 25th
day is not a Business Day, on the first Business Day thereafter, commencing in
September 2006.

          "DUE PERIOD" means with respect to any Distribution Date, the period
beginning on the second day of the calendar month preceding the calendar month
in which the Distribution Date occurs and ending on the first day of the month
in which the Distribution Date occurs.

          "EXCESS PROCEEDS" with respect to a liquidated Mortgage Loan, other
than a Charged-off Mortgage Loan, means the amount, if any, by which the sum of
any Liquidation Proceeds and Subsequent Recoveries exceed the sum of (a) the
unpaid principal balance of the Mortgage Loan, (b) accrued interest on the
Mortgage Loan at the Mortgage Rate during each Due Period as to which interest
was not paid or advanced on the Mortgage Loan and (c) any fees or expenses
payable or reimbursable to the Master Servicer.

          "FINAL RECOVERY DETERMINATION" means a determination by the Master
Servicer that it has received all proceeds it expects to receive with respect to
the liquidation of a Mortgage Loan.

          "INSURANCE PROCEEDS" means all proceeds of any insurance policy
received prior to or in connection with a Final Recovery Determination (to the
extent that the proceeds are not applied to the restoration of the property or
released to the borrower in accordance with the Master Servicer's normal
servicing procedures), other than proceeds that represent reimbursement of the
Master Servicer's costs and expenses incurred in connection with presenting
claims under the related insurance policy.

          "LIQUIDATION PROCEEDS" means any Insurance Proceeds and all other net
proceeds received prior to or in connection with a Final Recovery Determination
in connection with the partial or complete liquidation of a Mortgage Loan
(whether through trustee's sale, foreclosure sale or otherwise) or in connection
with any condemnation or partial release of the related Mortgaged Property,
together with the net proceeds received prior to or in connection with a Final
Recovery Determination with respect to any Mortgaged Property acquired by the
Master Servicer by foreclosure or deed in lieu of foreclosure in connection with
a defaulted Mortgage Loan (other than the amount of the net proceeds
representing Excess Proceeds and net of reimbursable expenses). For the
avoidance of doubt, Liquidation Proceeds do not include Charged-off Loan
Proceeds.

          "PERCENTAGE INTEREST" with respect to any Certificate, means the
percentage derived by dividing the denomination of the Certificate by the
aggregate denominations of all Certificates of the applicable class.

          "RECORD DATE" means:

               (1) in the case of the Class A Certificates, the Business Day
          immediately preceding the Distribution Date, unless the Class A
          Certificates are no longer book-entry certificates, in which case the
          Record Date will be the last Business Day of the month preceding the
          month of the Distribution Date, and

               (2) in the case of each other class of certificates, the last
          Business Day of the month preceding the month of the Distribution
          Date.

          "SUBSEQUENT RECOVERIES" means, with respect to any Mortgage Loan in
respect of which a Realized Loss was incurred, any proceeds of the type
described in the definitions of "Insurance Proceeds" and "Liquidation Proceeds"
received in respect of the Mortgage Loan after a Final Recovery Determination
(other than the amount of the net proceeds representing Excess Proceeds and net
of reimbursable expenses). Subsequent Recoveries do not include Charged-off Loan
Proceeds.

          Definitions related to Interest Calculations and Distributions.

          "ACCRUAL PERIOD" for any Distribution Date, means (i) for the Class A
Certificates, the period from and including the preceding Distribution Date (or
from and including the Closing Date in the case of the first Distribution Date)
to and including the day prior to the current Distribution Date and (ii) for the
Fixed Rate Certificates, the calendar month before the month of that
Distribution Date.


                                      S-45



          "CURRENT INTEREST" with respect to each class of interest-bearing
Certificates and each Distribution Date means the interest accrued at the
Pass-Through Rate for the applicable Accrual Period on the Certificate Principal
Balance of the class immediately prior to the Distribution Date.

          "EXPENSE FEE RATE" with respect to each Mortgage Loan is equal to the
sum of the Servicing Fee Rate and the Trustee Fee Rate. As of the Initial
Cut-off Date, the weighted average Expense Fee Rate is expected to equal
approximately 0.509% per annum.

          "INTEREST CARRY FORWARD AMOUNT," with respect to each class of
interest-bearing Certificates and each Distribution Date, is the excess of:

               (a) Current Interest for such class with respect to prior
          Distribution Dates over

               (b) the amount actually distributed to such class with respect to
          interest on prior Distribution Dates.

          "INTEREST DETERMINATION DATE" means for the Class A Certificates, the
second LIBOR Business Day preceding the commencement of each Accrual Period.

          "INTEREST FUNDS" means for any Distribution Date, (1) the Interest
Remittance Amount for that Distribution Date, less (2) the Trustee Fee for that
Distribution Date.

          "INTEREST REMITTANCE AMOUNT" means with respect to any Distribution
Date:

               (a) the sum, without duplication, of:

                    (1) all scheduled interest collected during the related Due
               Period, less the related Master Servicing Fee,

                    (2) all interest on prepayments, other than Prepayment
               Interest Excess,

                    (3) all Advances relating to interest,

                    (4) all Compensating Interest,

                    (5) all Liquidation Proceeds collected during the related
               Due Period (to the extent that the Liquidation Proceeds relate to
               interest), and

                    (6) any Seller Shortfall Interest Requirement, less

               (b) all Advances relating to interest and certain expenses
          reimbursed during the related Due Period.

          "NET RATE CAP" for each Distribution Date means the weighted average
Adjusted Net Mortgage Rate of the Mortgage Loans as of the first day of the
related Due Period (after giving effect to principal prepayments received during
the Prepayment Period that ends during such Due Period), adjusted in the case of
the Class A Certificates only, to an effective rate reflecting the calculation
of interest on the basis of the actual number of days elapsed during the related
Accrual Period and a 360-day year.

          "NET RATE CARRYOVER" for a class of interest-bearing Certificates on
any Distribution Date means the excess of:

               (1) the amount of interest that the class would have accrued for
          the Distribution Date had the Pass-Through Rate for that class and the
          related Accrual Period not been calculated based on the Net Rate Cap,
          over


                                      S-46



               (2) the amount of interest the class accrued on the Distribution
          Date based on the Net Rate Cap,

          plus the unpaid portion of this excess from prior Distribution Dates
(and interest accrued thereon at the then applicable Pass-Through Rate, without
giving effect to the Net Rate Cap).

          The "PASS-THROUGH MARGIN" for the Class A Certificates is as follows:

CLASS OF CERTIFICATES                                PASS-THROUGH MARGIN
---------------------                                -------------------
                                                         (1)     (2)
                                                        -----   -----
Class A............................................     0.160%  0.320%

----------
(1)  For the Accrual Period related to any Distribution Date occurring on or
     prior to the Optional Termination Date.

(2)  For the Accrual Period related to any Distribution Date occurring after the
     Optional Termination Date.

          "PASS-THROUGH RATE" with respect to each Accrual Period and the Class
A Certificates means a per annum rate equal to the lesser of:

               (1) One-Month LIBOR for the Accrual Period (calculated as
          described below under "--Calculation of One-Month LIBOR") plus the
          Pass-Through Margin for the class and Accrual Period, and

               (2) the Net Rate Cap for the related Distribution Date.

          "PASS-THROUGH RATE" with respect to each Accrual Period and the Fixed
Rate Certificates means a per annum rate equal to the lesser of:

               (1) the per annum fixed rate for the class set forth in the table
          below, and

               (2) the Net Rate Cap for the related Distribution Date.

CLASS OF CERTIFICATES                                      PASS-THROUGH RATE
---------------------                                      -----------------
                                                          (1)              (2)
                                                        ------           ------
Class M-1............................................   6.3150%          6.8150%
Class M-2............................................   6.3870%          6.8870%
Class M-3............................................   6.4860%          6.9860%
Class M-4............................................   6.8060%          7.3060%
Class M-5............................................   7.0000%          7.5000%
Class M-6............................................   7.0000%          7.5000%
Class M-7............................................   7.0000%          7.5000%
Class M-8............................................   7.0000%          7.5000%
Class M-9............................................   7.0000%          7.5000%
Class B..............................................   7.0000%          7.5000%

----------
(1)  For the Accrual Period related to any Distribution Date occurring on or
     prior to the Optional Termination Date.

(2)  For the Accrual Period related to any Distribution Date occurring after the
     Optional Termination Date.

          "SELLER SHORTFALL INTEREST REQUIREMENT" with respect to the Master
Servicer Advance Date in each of September 2006, October 2006 and November 2006
means the sum of:

               (a) the product of (1) the excess of the aggregate Stated
          Principal Balance for the Distribution Date of all the Mortgage Loans
          in the Mortgage Pool (including the Subsequent Mortgage Loans, if any)
          owned by the issuing entity at the beginning of the related Due
          Period, over the aggregate Stated Principal Balance for the
          Distribution Date of the Mortgage Loans (including the Subsequent
          Mortgage Loans, if any) that have a scheduled payment of interest due
          in the related Due Period, and (2) a


                                      S-47



          fraction, the numerator of which is the weighted average Net Mortgage
          Rate of all the Mortgage Loans in the Mortgage Pool (including the
          Subsequent Mortgage Loans, if any) (weighted on the basis of the
          Stated Principal Balances thereof for the Distribution Date) and the
          denominator of which is 12; and

               (b) the product of (1) the amount on deposit in the Pre-Funding
          Account at the beginning of the related Due Period, and (2) a
          fraction, the numerator of which is the weighted average Net Mortgage
          Rate of the Mortgage Loans (including Subsequent Mortgage Loans, if
          any) owned by the issuing entity at the beginning of the related Due
          Period (weighted on the basis of the Stated Principal Balances thereof
          for the Distribution Date) and the denominator of which is 12.

          "TRUSTEE FEE RATE" means a rate equal to 0.009% per annum.

          Definitions related to Principal Calculations and Distributions.

          A "CUMULATIVE LOSS TRIGGER EVENT" with respect to any Distribution
Date on or after the Stepdown Date, a Cumulative Loss Trigger Event is in effect
if (x) the aggregate amount of Realized Losses on the Mortgage Loans from the
Cut-off Date for each Mortgage Loan to (and including) the last day of the
related Due Period (reduced by the aggregate amount of any Subsequent Recoveries
and Charged-off Loan Proceeds received through the last day of that Due Period)
exceeds (y) the applicable percentage, for the Distribution Date, of the sum of
the aggregate Initial Cut-off Date Pool Principal Balance and the original
Pre-Funded Amount, as set forth below:



DISTRIBUTION DATE                                 PERCENTAGE
-----------------                                 ----------

September 2008 - August 2009...................   3.50% with respect to September 2008, plus an additional
                                                      1/12th of 4.35% for each month thereafter through August 2009

September 2009- August 2010....................   7.85% with respect to September 2009, plus an additional
                                                      1/12th of 2.90% for each month thereafter through August 2010

September 2010 - August 2011...................   10.75% with respect to September 2010, plus an additional
                                                      1/12th of 2.25% for each month thereafter through August 2011

September 2011 - August 2012...................   13.00% with respect to September 2011, plus an additional
                                                      1/12th of 0.50% for each month thereafter through August 2012

September 2012 and thereafter..................   13.50%


          A "DELINQUENCY TRIGGER EVENT" with respect to any Distribution Date on
or after the Stepdown Date exists if the Rolling Sixty-Day Delinquency Rate for
the outstanding Mortgage Loans equals or exceeds the product of (x) the Senior
Enhancement Percentage for such Distribution Date and (y) the applicable
percentage listed below for the most senior class of outstanding Certificates:


                                      S-48



                   CLASS           PERCENTAGE
          ----------------------   ----------
          A.....................     10.81%
          M-1...................     12.63%
          M-2...................     14.73%
          M-3...................     16.35%
          M-4...................     18.22%
          M-5...................     20.51%
          M-6...................     23.32%
          M-7...................     27.21%
          M-8...................     31.87%
          M-9...................     37.55%
          B.....................     45.97%

          "EXCESS OVERCOLLATERALIZATION AMOUNT" for any Distribution Date, is
the excess, if any, of the Overcollateralized Amount for the Distribution Date
over the Overcollateralization Target Amount for the Distribution Date.

          "EXTRA PRINCIPAL DISTRIBUTION AMOUNT" with respect to any Distribution
Date means the lesser of (1) the Overcollateralization Deficiency Amount and (2)
the Excess Cashflow.

          The "INITIAL TARGET SUBORDINATION PERCENTAGE" and "STEPDOWN TARGET
SUBORDINATION PERCENTAGE" for any class of Subordinated Certificates will
approximately equal the respective percentages indicated in the following table:



                                         Initial Target             Stepdown Target
                                    Subordination Percentage   Subordination Percentage
                                    ------------------------   ------------------------

Class M-1........................            31.65%                     63.30%
Class M-2........................            27.15%                     54.30%
Class M-3........................            24.45%                     48.90%
Class M-4........................            21.95%                     43.90%
Class M-5........................            19.50%                     39.00%
Class M-6........................            17.15%                     34.30%
Class M-7........................            14.70%                     29.40%
Class M-8........................            12.55%                     25.10%
Class M-9........................            10.65%                     21.30%
Class B..........................             8.70%                     17.40%


          The Initial Target Subordination Percentages will not be used to
calculate distributions on the Subordinated Certificates, but rather are
presented in order to provide a better understanding of the credit enhancement
provided by the Subordinated Certificates and the related overcollateralization
amount. The Initial Target Subordination Percentage for any class of
Subordinated Certificates is equal to a fraction, expressed as a percentage, the
numerator of which is equal to the aggregate original Certificate Principal
Balance of any class(es) of Certificates subordinate to the subject class plus
the initial Overcollateralization Target Amount and the denominator of which is
equal to the sum of the aggregate Initial Cut-off Date Pool Principal Balance
and the original Pre-Funded Amount.

          "OC ADJUSTED MEASURE" means an amount equal to the sum of

               (i) 17.40% of the aggregate Stated Principal Balance of the
          Mortgage Loans for the current Distribution Date,

               (ii) the product of

                    (x) a fraction, the numerator of which is (1) an amount
               equal to the excess, if any, of the aggregate Certificate
               Principal Balance of the Class M-7, Class M-8, Class M-9 and
               Class B


                                      S-49



               Certificates as of the Closing Date over the aggregate
               Certificate Principal Balance of the Class M-7, Class M-8, Class
               M-9 and Class B Certificates for the related Distribution Date
               and the denominator of which is (2) the sum of the Initial
               Cut-off Date Pool Principal Balance and the original Pre-Funded
               Amount, the aggregate Stated Principal Balance,

                    (y) 2, and

                    (z) the aggregate Stated Principal Balance of the Mortgage
               Loans for the current Distribution Date.

          "OC FLOOR" means an amount equal to 0.50% of the sum of the Initial
Cut-off Date Pool Principal Balance and the original Pre-Funded Amount.

          "OC MEASURE" means an amount equal to the sum of (i) 8.70% of the sum
of the Initial Cut-off Date Pool Principal Balance and the original Pre-Funded
Amount, (ii) the aggregate amount of Charged-off Loan Proceeds distributed to
the Class M-7, Class M-8, Class M-9 and Class B Certificates on all prior
Distribution Dates pursuant to clause (3)(B) under
"--Distributions--Distributions of Charged-off Loan Proceeds" below and (iii)
the aggregate amount of Excess Cashflow and prepayment charges distributed to
the Class M-8, Class M-9 and Class B Certificates on all prior Distribution
Dates pursuant to clause (5) of the Excess Cashflow allocation described under
"--Overcollateralization Provisions" below.

          "OVERCOLLATERALIZATION DEFICIENCY AMOUNT" with respect to any
Distribution Date means the amount, if any, by which the Overcollateralization
Target Amount exceeds the Overcollateralized Amount on the Distribution Date
(after giving effect to distribution of the Principal Distribution Amount (other
than the portion thereof consisting of the Extra Principal Distribution Amount)
on the Distribution Date).

          "OVERCOLLATERALIZATION REDUCTION AMOUNT" for any Distribution Date is
an amount equal to the lesser of (i) the Excess Overcollateralization Amount for
the Distribution Date and (ii) the Principal Remittance Amount for the
Distribution Date.

          "OVERCOLLATERALIZATION TARGET AMOUNT" with respect to any Distribution
Date:

               (1) prior to the Stepdown Date, an amount equal to the OC
          Measure, and

               (2) on or after the Stepdown Date, the greater of

                    (a) the OC Adjusted Measure, and

                    (b) the OC Floor;

          provided, however, that if a Trigger Event is in effect on any
Distribution Date, the Overcollateralization Target Amount will be the sum of
(i) the Overcollateralization Target Amount as in effect for the prior
Distribution Date, (ii) the aggregate amount of Charged-off Loan Proceeds
distributed to the Class M-7, Class M-8, Class M-9 and Class B Certificates on
the prior Distribution Date pursuant to clause (3)(B) under
"--Distributions--Distributions of Charged-off Loan Proceeds" below and (iii)
the aggregate amount of Excess Cashflow and prepayment charges distributed to
the Class M-8, Class M-9 and Class B Certificates on the prior Distribution Date
pursuant to clause (5) of the Excess Cashflow allocation described under
"--Overcollateralization Provisions" below.

          "OVERCOLLATERALIZED AMOUNT" for any Distribution Date means the
amount, if any, by which (x) the sum of the aggregate Stated Principal Balance
of the Mortgage Loans for the Distribution Date and any amount on deposit in the
Pre-Funding Account on the Distribution Date exceeds (y) the sum of the
Certificate Principal Balance of the Offered Certificates as of the Distribution
Date (after giving effect to distribution of the Principal Remittance Amount to
be made on the Distribution Date) and, in the case of the Distribution Date
immediately following the end of the Funding Period, any amounts to be released
from the Pre-Funding Account.


                                      S-50



          "PRINCIPAL DISTRIBUTION AMOUNT" with respect to each Distribution Date
means the sum of:

               (1) the Principal Remittance Amount for the Distribution Date,

               (2) the Extra Principal Distribution Amount for the Distribution
          Date,

               (3) with respect to the Distribution Date immediately following
          the end of the Funding Period, the amount, if any, remaining in the
          Pre-Funding Account at the end of the Funding Period (net of any
          investment income therefrom),

               minus

               (4) the Overcollateralization Reduction Amount for the
          Distribution Date.

          "PRINCIPAL REMITTANCE AMOUNT" with respect to any Distribution Date
means:

               (a) the sum, without duplication, of:

                    (1) the scheduled principal collected during the related Due
               Period or advanced with respect to the Distribution Date,

                    (2) prepayments collected in the related Prepayment Period,

                    (3) the Stated Principal Balance of each Mortgage Loan that
               was repurchased by a Seller or purchased by the Master Servicer,

                    (4) the amount, if any, by which the aggregate unpaid
               principal balance of any Replacement Mortgage Loans delivered by
               Countrywide Home Loans in connection with a substitution of a
               Mortgage Loan is less than the aggregate unpaid principal balance
               of any Deleted Mortgage Loans,

                    (5) all Liquidation Proceeds (to the extent that the
               Liquidation Proceeds relate to principal) and Subsequent
               Recoveries collected during the related Due Period, less

               (b) all Advances relating to principal and certain expenses
          reimbursed during the related Due Period.

          "REALIZED LOSS" means (i) with respect to any defaulted Mortgage Loan
other than a Charged-off Mortgage Loan, the excess of the Stated Principal
Balance of the defaulted Mortgage Loan over the Liquidation Proceeds allocated
to principal that have been received with respect to the defaulted Mortgage Loan
on or at any time prior to the last day of the related Due Period during which
the defaulted Mortgage Loan is liquidated and (ii) with respect to any
Charged-off Mortgage Loan, the Stated Principal Balance of the Charged-off
Mortgage Loan immediately preceding the related Charge-off Date.

          "ROLLING SIXTY-DAY DELINQUENCY RATE" with respect to any Distribution
Date means the average of the Sixty-Day Delinquency Rates for the Distribution
Date and the two immediately preceding Distribution Dates.

          "SENIOR ENHANCEMENT PERCENTAGE" with respect to any Distribution Date
on or after the Stepdown Date means a fraction (expressed as a percentage):

               (1) the numerator of which is the excess of:

                    (a) the aggregate Stated Principal Balance of the Mortgage
               Loans for the preceding Distribution Date over


                                      S-51



                    (b) (i) before the Certificate Principal Balance of the
               Class A Certificates has been reduced to zero, the Certificate
               Principal Balance of the Class A Certificates, or (ii) after the
               Certificate Principal Balance of the Class A Certificates has
               been reduced to zero, the Certificate Principal Balance of the
               most senior class of Subordinated Certificates outstanding, as of
               the preceding Master Servicer Advance Date, and

               (2) the denominator of which is the aggregate Stated Principal
          Balance of the Mortgage Loans for the preceding Distribution Date.

          "SENIOR PRINCIPAL DISTRIBUTION TARGET AMOUNT" for any Distribution
Date, will equal the excess of:

               (1) the Certificate Principal Balance of the Class A Certificates
          immediately prior to such Distribution Date, over

               (2) the lesser of (A) the product of approximately 26.00% and the
          aggregate Stated Principal Balance of the Mortgage Loans as of the Due
          Date in the month of that Distribution Date (after giving effect to
          principal prepayments received in the related Prepayment Period) and
          (B) the aggregate Stated Principal Balance of the Mortgage Loans as of
          the Due Date in the month of that Distribution Date (after giving
          effect to principal prepayments received in the related Prepayment
          Period) minus the OC Floor.

          "SIXTY-DAY DELINQUENCY RATE" with respect to any Distribution Date
means a fraction, expressed as a percentage, the numerator of which is the
aggregate Stated Principal Balance for the Distribution Date of all Mortgage
Loans 60 or more days delinquent as of the close of business on the last day of
the calendar month preceding the Distribution Date (including Mortgage Loans in
foreclosure, bankruptcy and REO Properties) and the denominator of which is the
aggregate Stated Principal Balance for the Distribution Date of all Mortgage
Loans.

          "STEPDOWN DATE" is the earlier to occur of:

               (a) the Distribution Date on which the Certificate Principal
          Balance of the Class A Certificates is reduced to zero, and

               (b) the later to occur of (x) the Distribution Date in September
          2009 and (y) the first Distribution Date on which the Certificate
          Principal Balance of the Class A Certificates (after calculating
          anticipated distributions on the Distribution Date) is less than or
          equal to 26.00% of the aggregate Stated Principal Balance of the
          Mortgage Loans for the Distribution Date.

         "SUBORDINATED CLASS PRINCIPAL DISTRIBUTION TARGET AMOUNT" for each
class of Subordinated Certificates and Distribution Date means the excess of:

               (1) the sum of:

                    (a) the Certificate Principal Balance of the Class A
               Certificates (after taking into account distribution of the
               Senior Principal Distribution Target Amount for the Distribution
               Date),

                    (b) the aggregate Certificate Principal Balance of any
               classes of Subordinated Certificates that are senior to the
               subject class (in each case, after taking into account
               distribution of the Subordinated Class Principal Distribution
               Target Amount(s) for the senior class(es) of Certificates for the
               Distribution Date), and

                    (c) the Certificate Principal Balance of the subject class
               of Subordinated Certificates immediately prior to the
               Distribution Date, over

               (2) the lesser of (a) the product of (x) 100% minus the Stepdown
          Target Subordination Percentage for the subject class of Certificates
          and (y) the aggregate Stated Principal Balance of the


                                      S-52



          Mortgage Loans for the Distribution Date and (b) the aggregate Stated
          Principal Balance of the Mortgage Loans for the Distribution Date
          minus the OC Floor;

          provided, however, that if a class of Subordinated Certificates is the
only class of Subordinated Certificates outstanding on the Distribution Date,
that class will be entitled to receive the entire remaining Principal
Distribution Amount until the Certificate Principal Balance thereof is reduced
to zero.

          "TRIGGER EVENT" with respect to any Distribution Date on or after the
Stepdown Date means either a Delinquency Trigger Event with respect to that
Distribution Date or a Cumulative Loss Trigger Event with respect to that
Distribution Date.

          "UNPAID REALIZED LOSS AMOUNT" means for any class of Certificates, (i)
the portion of the aggregate Applied Realized Loss Amount previously allocated
to that class remaining unpaid from prior Distribution Dates minus (ii) the sum
of (a) any increase in the Certificate Principal Balance of that class due to
the allocation of Subsequent Recoveries to the Certificate Principal Balance of
that class and (ii) the Charged-off Loan Proceeds previously distributed to such
class in respect of Unpaid Realized Loss Amounts.

DEPOSITS TO THE CERTIFICATE ACCOUNT

          The Master Servicer will establish and initially maintain a
certificate account (the "CERTIFICATE ACCOUNT") for the benefit of the Trustee
on behalf of the certificateholders. The Master Servicer will initially
establish the Certificate Account at Countrywide Bank, N.A., which is an
affiliate of the Master Servicer. On a daily basis within two Business Days
after receipt, the Master Servicer will deposit or cause to be deposited into
the Certificate Account the following payments and collections received by it in
respect to the Mortgage Loans after the Cut-off Date (other than any scheduled
principal due on or prior to the Cut-off Date and any interest accruing prior to
the Cut-off Date):

               (1) all payments on account of principal, including Principal
          Prepayments, on the Mortgage Loans,

               (2) all payments on account of interest (other than interest
          accruing on the Mortgage Loans prior to the Cut-off Date) on the
          Mortgage Loans, net of the related Master Servicing Fees on the
          Mortgage Loans and net of Prepayment Interest Excess,

               (3) all Insurance Proceeds, Liquidation Proceeds, Subsequent
          Recoveries and Charged-off Loan Proceeds,

               (4) all payments made by the Master Servicer in respect of
          Compensating Interest,

               (5) all payments made by a Seller in connection with the
          repurchase of any Mortgage Loan due to the breach of certain
          representations, warranties or covenants by the Seller that obligates
          the Seller to repurchase the Mortgage Loan in accordance with the
          Pooling and Servicing Agreement,

               (6) all payments made by the Master Servicer in connection with
          the purchase of any Mortgage Loans which are 150 days delinquent in
          accordance with the Pooling and Servicing Agreement,

               (7) all prepayment charges paid by a borrower in connection with
          the full or partial prepayment of the related Mortgage Loan,

               (8) any amount required to be deposited by the Master Servicer in
          connection with any losses on investment of funds in the Certificate
          Account,

               (9) any amounts required to be deposited by the Master Servicer
          with respect to any deductible clause in any blanket hazard insurance
          policy maintained by the Master Servicer in lieu of requiring each
          borrower to maintain a primary hazard insurance policy,


                                      S-53



               (10) all amounts required to be deposited in connection with
          shortfalls in the principal amount of Replacement Mortgage Loans, and

               (11) all Advances.

          On the Business Day prior to the Master Servicer Advance Date in each
of September 2006, October 2006 and November 2006, Countrywide Home Loans will
remit to the Master Servicer, and the Master Servicer will deposit in the
Certificate Account, the Seller Shortfall Interest Requirement (if any) for the
Master Servicer Advance Date. Prior to their deposit in the Collection Account,
payments and collections on the Mortgage Loans will be commingled with payments
and collections on other mortgage loans and other funds of the Master Servicer.
For a discussion of the risks that arise from the commingling of payments and
collections, see "Risk Factors--Bankruptcy or Insolvency May Affect the Timing
and Amount of Distributions on the Securities" in the prospectus.

WITHDRAWALS FROM THE CERTIFICATE ACCOUNT

          The Master Servicer may from time to time withdraw funds from the
Certificate Account prior to the related Distribution Account Deposit Date for
the following purposes:

               (1) to pay to the Master Servicer the Master Servicing Fees on
          the Mortgage Loans to the extent not previously paid to or withheld by
          the Master Servicer (subject, in the case of Master Servicing Fees, to
          reduction as described above under "Servicing of the Mortgage
          Loans--Adjustment to Master Servicing Fee in Connection with Certain
          Prepaid Mortgage Loans") and, as additional servicing compensation,
          assumption fees, late payment charges (excluding prepayment charges),
          net earnings on or investment income with respect to funds in or
          credited to the Certificate Account and the amount of Prepayment
          Interest Excess for the related Prepayment Period,

               (2) to reimburse the Master Servicer and the Trustee for
          Advances, which right of reimbursement with respect to any Mortgage
          Loan pursuant to this clause (2) is limited to amounts received that
          represent late recoveries of payments of principal and/or interest on
          the related Mortgage Loan (or Insurance Proceeds, Liquidation Proceeds
          or Subsequent Recoveries with respect thereto but not Charged-off Loan
          Proceeds) with respect to which the Advance was made,

               (3) to reimburse the Master Servicer and the Trustee for any
          Advances previously made that the Master Servicer has determined to be
          nonrecoverable (and prior to the reimbursement, the Master Servicer
          will deliver to the Trustee and the Certificate Insurer an officer's
          certificate indicating the amount of the nonrecoverable Advance and
          identifying the related Mortgage Loan(s), and their respective
          portions of the nonrecoverable advance),

               (4) to reimburse the Master Servicer from Insurance Proceeds for
          expenses incurred by the Master Servicer and covered by the related
          insurance policies,

               (5) to pay to the Master Servicer any unpaid Master Servicing
          Fees and to reimburse it for any unreimbursed ordinary and necessary
          out-of-pocket costs and expenses incurred by the Master Servicer in
          the performance of its master servicing obligations including, but not
          limited to, the cost of (i) the preservation, restoration and
          protection of a Mortgaged Property, (ii) any enforcement or judicial
          proceedings, including foreclosures, (iii) the management and
          liquidation of any REO Property and (iv) maintaining any required
          insurance policies ("SERVICING ADVANCES"), which right of
          reimbursement pursuant to this clause (5) is limited to amounts
          received representing late recoveries of the payments of these costs
          and expenses (or Liquidation Proceeds, Subsequent Recoveries,
          Charged-off Loan Proceeds, purchase proceeds or repurchase proceeds
          with respect thereto),

               (6) to pay to the applicable Seller or the Master Servicer, as
          applicable, with respect to each Mortgage Loan or Mortgaged Property
          acquired in respect thereof that has been purchased by that Seller or
          the Master Servicer from the issuing entity pursuant to the Pooling
          and Servicing Agreement, all amounts


                                      S-54



          received thereon and not taken into account in determining the related
          Purchase Price of the purchased Mortgage Loan,

               (7) after the transfer from the Certificate Account for deposit
          to the Distribution Account of the Interest Remittance Amount and the
          Principal Remittance Amount on the related Distribution Account
          Deposit Date, to reimburse the applicable Seller, the Master Servicer,
          the NIM Insurer or the Depositor for expenses incurred and
          reimbursable pursuant to the Pooling and Servicing Agreement,

               (8) to withdraw any amount deposited in the Certificate Account
          and not required to be deposited therein, and

               (9) to clear and terminate the Certificate Account upon
          termination of the Pooling and Servicing Agreement.

          In addition, not later than 1:00 p.m. Pacific Time on the Business Day
immediately preceding each Distribution Date (the "DISTRIBUTION ACCOUNT DEPOSIT
DATE"), the Master Servicer will withdraw from the Certificate Account and remit
to the Trustee the prepayment charges collected, the Interest Remittance Amount
and the Principal Remittance Amount to the extent on deposit in the Certificate
Account, and the Trustee will deposit the amount in the Distribution Account, as
described below.

          The Master Servicer is required to maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Certificate Account pursuant to clauses (1) through (6)
above.

DEPOSITS TO THE DISTRIBUTION ACCOUNT

          The Trustee will establish and maintain a distribution account (the
"DISTRIBUTION ACCOUNT") on behalf of the certificateholders. The Trustee will,
promptly upon receipt, deposit in the Distribution Account and retain therein:

               (1) the aggregate amount remitted by the Master Servicer to the
          Trustee,

               (2) any amount required to be deposited by the Master Servicer in
          connection with any losses on investment of funds in the Distribution
          Account, and

               (3) the amount, if any, remaining in the Pre-Funding Account (net
          of any investment income therefrom) on the Distribution Date
          immediately following the end of the Funding Period.

WITHDRAWALS FROM THE DISTRIBUTION ACCOUNT

          The Trustee will withdraw funds from the Distribution Account for
distribution to the certificateholders as described below under
"--Distributions" and may from time to time make withdrawals from the
Distribution Account:

               (1) to pay the Trustee Fee to the Trustee,

               (2) to pay to the Master Servicer, as additional servicing
          compensation, earnings on or investment income with respect to funds
          in or credited to the Distribution Account,

               (3) to withdraw any amount deposited in the Distribution Account
          and not required to be deposited therein (which withdrawal may be at
          the direction of the Master Servicer through delivery of a written
          notice to the Trustee describing the amounts deposited in error),

               (4) to reimburse the Trustee for any unreimbursed Advances, such
          right of reimbursement being limited to (x) amounts received on the
          related Mortgage Loans in respect of which any such Advance


                                      S-55



          was made other than Charged-off Loan Proceeds and (y) amounts not
          otherwise reimbursed to the Trustee pursuant to clause (2) under
          "--Withdrawals from the Certificate Account" above,

               (5) to reimburse the Trustee for any nonrecoverable Advance
          previously made by it, such right of reimbursement being limited to
          amounts not otherwise reimbursed to it pursuant to clause (3) under
          "--Withdrawals from the Certificate Account", and

               (6) to clear and terminate the Distribution Account upon the
          termination of the Pooling and Servicing Agreement.

          There is no independent verification of the transaction accounts or
the transaction activity with respect to the Distribution Account.

          Prior to each Determination Date, the Master Servicer is required to
provide the Trustee a report containing the data and information concerning the
Mortgage Loans that is required by the Trustee to prepare the monthly statement
to certificateholders for the related Distribution Date. See "--Reports to
Certificateholders" in this prospectus supplement. The Trustee is not
responsible for recomputing, recalculating or verifying the information provided
to it by the Master Servicer in that report and will be permitted to
conclusively rely on any information provided to it by the Master Servicer.

INVESTMENTS OF AMOUNTS HELD IN ACCOUNTS

          The Certificate Account, the Distribution Account and the Pre-Funding
Account. All funds in the Certificate Account, the Distribution Account and the
Pre-Funding Account will be invested in Permitted Investments at the direction
of the Master Servicer. In the case of:

          o    the Certificate Account and the Distribution Account, all income
               and gain net of any losses realized from the investment will be
               for the benefit of the Master Servicer as additional servicing
               compensation and will be remitted to it monthly as described
               herein; and

          o    the Pre-Funding Account, all income and gain net of any losses
               realized from the investment will be for the benefit of
               Countrywide Home Loans and will be remitted to Countrywide Home
               Loans as described herein.

          The amount of any losses incurred in the Certificate Account or the
Distribution Account in respect of the investments will be deposited by the
Master Servicer in the Certificate Account or paid to the Trustee for deposit
into the Distribution Account out of the Master Servicer's own funds immediately
as realized. The amount of any losses incurred in the Pre-Funding Account in
respect of the investments will be paid by Countrywide Home Loans to the Trustee
for deposit into the Pre-Funding Account out of Countrywide Home Loans' own
funds immediately as realized. The Trustee will not be liable for the amount of
any loss incurred in respect of any investment or lack of investment of funds
held in the Certificate Account, the Distribution Account or the Pre-Funding
Account and made in accordance with the Pooling and Servicing Agreement.


                                      S-56



FEES AND EXPENSES

          The following summarizes the related fees and expenses to be paid from
the assets of the issuing entity and the source of payments for the fees and
expenses:



    TYPE / RECIPIENT (1)                         AMOUNT                 GENERAL PURPOSE           SOURCE (2)            FREQUENCY
---------------------------  -----------------------------------------  ---------------  --------------------------  ---------------

FEES

Master Servicing Fee /       One-twelfth of the Servicing Fee Rate      Compensation     Collections with respect            Monthly
Master Servicer              multiplied by the Stated Principal                          to each Mortgage Loan and
                             Balance of each Mortgage Loan other than                    any Liquidation Proceeds
                             a Charged-off Mortgage Loan (3)                             or Subsequent Recoveries

Additional Servicing         o    Prepayment Interest Excess (4)        Compensation     Interest collections with      Time to time
Compensation / Master                                                                    respect to each Mortgage
Servicer                                                                                 Loan

                             o    All late payment fees, assumption     Compensation     Payments made by obligors      Time to time
                                  fees and other similar charges                         with respect to the
                                  (excluding prepayment charges)                         Mortgage Loans

                             o    All investment income earned on        Compensation    Investment income related           Monthly
                                  amounts on deposit in the Certificate                  to the Certificate Account
                                  Account and Distribution Account                       and Distribution Account

                             o    Excess Proceeds (5)                   Compensation     Liquidation Proceeds and       Time to time
                                                                                         Subsequent Recoveries with
                                                                                         respect to each Mortgage
                                                                                         Loan

                             o    10% of Charged-off Loan Proceeds      Compensation     Charged-off Loan Proceeds      Time to time

Trustee Fee (the "TRUSTEE    One-twelfth of the Trustee Fee Rate        Compensation     Interest Remittance Amount          Monthly
FEE") / Trustee              multiplied by the sum of (i) the
                             aggregate Stated Principal Balance of the
                             outstanding Mortgage Loans and (ii) any
                             amounts remaining in the Pre-Funding
                             Account (excluding any investment
                             earnings thereon) (6)

EXPENSES

Insurance expenses / Master  Expenses incurred by the Master Servicer   Reimbursement    To the extent the expenses     Time to time
Servicer                                                                of Expenses      are covered by an
                                                                                         insurance policy with
                                                                                         respect to the Mortgage
                                                                                         Loan



                                      S-57





    TYPE / RECIPIENT (1)                         AMOUNT                 GENERAL PURPOSE           SOURCE (2)            FREQUENCY
---------------------------  -----------------------------------------  ---------------  --------------------------  ---------------

Servicing Advances / Master  To the extent of funds available, the      Reimbursement    With respect to each           Time to time
Servicer                     amount of any Servicing Advances           of Expenses      Mortgage Loan, late
                                                                                         recoveries of the payments
                                                                                         of the costs and expenses,
                                                                                         Liquidation Proceeds,
                                                                                         Subsequent Recoveries,
                                                                                         Charged-off Loan Proceeds,
                                                                                         purchase proceeds or
                                                                                         repurchase proceeds for
                                                                                         that Mortgage Loan (7)

Indemnification expenses /   Amounts for which the Sellers, the Master  Indemnification  Amounts on deposit on the           Monthly
the Sellers, the Master      Servicer, the NIM Insurer and Depositor                     Certificate Account on any
Servicer, the NIM Insurer    are entitled to indemnification (8)                         Distribution Account
and the Depositor                                                                        Deposit Date, following
                                                                                         the transfer to the
                                                                                         Distribution Account


----------
(1)  If the Trustee succeeds to the position of Master Servicer, it will be
     entitled to receive the same fees and expenses of the Master Servicer
     described in this prospectus supplement. Any change to the fees and
     expenses described in this prospectus supplement would require an amendment
     to the Pooling and Servicing Agreement. See "--Amendment" in this
     prospectus supplement.

(2)  Unless otherwise specified, the fees and expenses shown in this table are
     paid (or retained by the Master Servicer in the case of amounts owed to the
     Master Servicer) prior to distributions on the Certificates.

(3)  The Servicing Fee Rate for each Mortgage Loan will equal 0.50% per annum.
     The amount of the monthly Master Servicing Fee is subject to adjustment
     with respect to Mortgage Loans that are prepaid in full, as described in
     this prospectus supplement under "Servicing of the Mortgage
     Loans--Adjustment to Master Servicing Fee in Connection with Certain
     Prepaid Mortgage Loans."

(4)  Prepayment Interest Excess is described above in the prospectus supplement
     under "Servicing of the Mortgage Loans--Servicing Compensation and Payment
     of Expenses."

(5)  Excess Proceeds is described above in this prospectus supplement under
     "--Glossary of Terms--General Definitions."

(6)  The "TRUSTEE FEE RATE" is equal to 0.009% per annum.

(7)  Reimbursement of Servicing Advances for a Mortgage Loan is limited to the
     late recoveries of the payments of the costs and expenses, Liquidation
     Proceeds, Subsequent Recoveries, Charged-off Loan Proceeds, purchase
     proceeds or repurchase proceeds for that Mortgage Loan.

(8)  Each of the Sellers, the Master Servicer, the NIM Insurer and the Depositor
     are entitled to indemnification of certain expenses as described in this
     prospectus supplement under "--Certain Matters Regarding the Master
     Servicer, the Depositor, the Sellers and the NIM Insurer."


                                      S-58



DISTRIBUTIONS

          General. Distributions on the Certificates will be made by the Trustee
on each Distribution Date to the persons in whose names the Certificates are
registered at the close of business on the Record Date.

          Distributions will be made by check mailed to the address of the
person entitled thereto as it appears on the Certificate Register or, in the
case of any certificateholder that holds 100% of a class of Certificates or who
holds a class of Certificates with an aggregate initial Certificate Principal
Balance of $1,000,000 or more and that has so notified the Trustee in writing in
accordance with the Pooling and Servicing Agreement, by wire transfer in
immediately available funds to the account of the certificateholder at a bank or
other depository institution having appropriate wire transfer facilities;
provided, however, that the final distribution in retirement of the Certificates
will be made only upon presentation and surrender of the Certificates at the
Corporate Trust Office of the Trustee. On each Distribution Date, a holder of a
Certificate will receive its Percentage Interest of the amounts required to be
distributed with respect to the applicable class of Certificates.

          Distributions of Prepayment Charges. Prior to the reduction of the
Acceleration Tracking Amount to zero, on each Distribution Date, the Trustee
will withdraw all prepayment charges in the Distribution Account and distribute
them to the Class P Certificates. On or after the time when the Acceleration
Tracking Amount has been reduced to zero, prepayment charges collected in the
related Prepayment Period will be distributed, together with Excess Cashflow
pursuant to clause (5) of the Excess Cashflow allocation described under
"--Overcollateralization Provisions" below, to pay principal on the Class M-8,
Class M-9 and Class B Certificates. On or after the time when the Certificate
Principal Balances of the Class M-8, Class M-9 and Class B Certificates are
reduced to zero, any prepayment charges collected in the related Prepayment
Period will be distributed to the Class P Certificates.

          The Master Servicer may not waive any prepayment charge or portion
thereof unless (i) the Master Servicer determines that such waiver would
maximize recovery of liquidation proceeds for the Mortgage Loan, taking into
account the value of the prepayment charge, or (ii) (A) the enforceability of
the prepayment charge is limited (1) by bankruptcy, insolvency, moratorium,
receivership, or other similar law relating to creditors' rights generally or
(2) due to acceleration in connection with a foreclosure or other involuntary
payment, or (B) the enforceability of the prepayment charge is otherwise limited
or prohibited by applicable law. If the Master Servicer has waived or does not
collect all or a portion of a prepayment charge relating to a principal
prepayment in full or in part due to any action or omission of the Master
Servicer, other than as provided above, the Master Servicer will deliver to the
Trustee, together with the principal prepayment in full or in part, the amount
of such prepayment charge (or such portion as had been waived) for deposit into
the Certificate Account, and the Class P Certificates or Class M-8, Class M-9
and Class B Certificates, as applicable, will be entitled to receive the amount
deposited by the Master Servicer in respect of such waived prepayment charge as
if such prepayment charge was made by the related borrower.

          Distributions of Interest. On each Distribution Date, the interest
distributable with respect to the interest-bearing certificates is the interest
which has accrued on the Certificate Principal Balance thereof immediately prior
to that Distribution Date at the Pass-Through Rate during the applicable Accrual
Period, and in the case of the Class A Certificates, any Interest Carry Forward
Amount. For each class of Subordinated Certificates, any Interest Carry Forward
Amount will be payable only from excess cashflow (if any) as and to the extent
described under "--Overcollateralization Provisions."

          All calculations of interest on the Class A Certificates will be made
on the basis of a 360-day year and the actual number of days elapsed in the
applicable Accrual Period. All calculations of interest on the Fixed Rate
Certificates will be made on the basis of a 360-day year assumed to consist of
twelve 30-day months.

          The Pass-Through Rate for the Class A Certificates is a floating rate
that may change from Distribution Date to Distribution Date. Additionally, the
Pass-Through Rate for each of the interest-bearing Certificates is subject to
increase after the Optional Termination Date. On each Distribution Date, the
Pass-Through Rate for each class of interest-bearing Certificates will be
subject to the Net Rate Cap. See the related definitions in "--Glossary of
Terms--Definitions related to Interest Calculations and Distributions" for a
more detailed understanding as to how the Net Rate Cap is calculated, and
applied to the Pass-Through Rate.


                                      S-59



          If on any Distribution Date, the Pass-Through Rate for a class of
interest-bearing Certificates is based on the Net Rate Cap, the holders of the
applicable class of Certificates will be entitled to receive the resulting
shortfall only from remaining excess cashflow (if any) to the extent described
in this prospectus supplement under "--Overcollateralization Provisions".

          On each Distribution Date, the Interest Funds for such Distribution
Date are required to be distributed in the following order of priority, until
such Interest Funds have been fully distributed:

               (1) to the Class A Certificates, the Current Interest and
          Interest Carry Forward Amount for such class;

               (2) sequentially, to the Class M-1, Class M-2, Class M-3, Class
          M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class M-9 and Class B
          Certificates, in that order, the Current Interest for each such class;
          and

               (3) the remaining Interest Funds, as part of the Excess Cashflow
          to be allocated as described under "--Overcollateralization
          Provisions" below.

          Distributions of Principal. On each Distribution Date, the Principal
Distribution Amount for such Distribution Date is required to be distributed as
follows (with the Principal Distribution Amount exclusive of the portion thereof
consisting of the Extra Principal Distribution Amount being applied first and
the Extra Principal Distribution Amount being applied thereafter):

          (1) For each Distribution Date prior to the Stepdown Date or on which
a Trigger Event is in effect, in the following order:

               (A) to the Class A Certificates, until its Certificate Principal
          Balance is reduced to zero;

               (B) sequentially, to the Class M-1, Class M-2, Class M-3, Class
          M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class M-9 and Class B
          Certificates, in that order, in each case until its Certificate
          Principal Balance is reduced to zero; and

               (C) any remainder as part of the Excess Cashflow to be allocated
          as described under "--Overcollateralization Provisions" below.

          (2) For each Distribution Date on or after the Stepdown Date and so
long as a Trigger Event is not in effect, in the following order:

               (A) in an amount up to the Senior Principal Distribution Target
          Amount, to the Class A Certificates, until its Certificate Principal
          Balance is reduced to zero; and

               (B) sequentially, to the Class M-1, Class M-2, Class M-3, Class
          M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class M-9 and Class B
          Certificates, in that order, the Subordinated Class Principal
          Distribution Target Amount for each such class, in each case until its
          Certificate Principal Balance is reduced to zero; and

               (C) any remainder as part of the Excess Cashflow to be allocated
          as described under "--Overcollateralization Provisions" below.

          Distributions of Charged-off Loan Proceeds. On each Distribution Date,
the Charged-off Loan Proceeds received during the related Due Period, if any,
will be distributed sequentially in the following order:


                                      S-60



          (1) to the Class A Certificates, the Unpaid Realized Loss Amount for
such class (after taking into account all distributions on that Distribution
Date other than the distribution of Charged-off Loan Proceeds);

          (2) sequentially, to the Class M-1, Class M-2, Class M-3, Class M-4,
Class M-5, Class M-6, Class M-7, Class M-8, Class M-9 and Class B Certificates,
in that order, the Unpaid Realized Loss Amount for each such class (after taking
into account all distributions on that Distribution Date other than the
distribution of Charged-off Loan Proceeds);

          (3) any remaining Charged-off Loan Proceeds, concurrently as follows:

               (A)  50% of the remaining Charged-off Loan Proceeds, to the Class
                    R Certificates;

               (B)  50% of the remaining Charged-off Loan Proceeds, in the
                    following order of priority:

                    (i) concurrently, to the Class M-7, Class M-8, Class M-9 and
               Class B Certificates, pro rata, based on their respective
               Certificate Principal Balances, to reduce their Certificate
               Principal Balances, until their respective Certificate Principal
               Balances are reduced to zero, and

                    (ii) any remaining amount, to the Class C Certificates.

          Residual Certificates. The Class A-R Certificates do not bear
interest. The Class A-R Certificates will receive a distribution of $100 of
principal on the first Distribution Date, after which their Certificate
Principal Balance will equal zero. The $100 will be withdrawn from a reserve
account established by the Trustee and funded by the Depositor on the Closing
Date for the purposes of making distributions on the Class A-R and Class P
Certificates. The Class A-R Certificates will remain outstanding for so long as
the issuing entity will exist. In addition to the distribution of principal on
the first Distribution Date, on each Distribution Date, the holders of the Class
A-R Certificates, as provided in the Pooling and Servicing Agreement, will be
entitled to receive any available funds remaining after payment of interest and
principal on the Offered Certificates (as described above) and the Class C,
Class R and Class P Certificates (as provided in the Pooling and Servicing
Agreement). It is not anticipated that there will be any significant amounts
remaining for distribution to the Class A-R Certificates.

OVERCOLLATERALIZATION PROVISIONS

          On the Closing Date, it is expected that the sum of the Initial
Cut-off Date Pool Principal Balance and the original Pre-Funded Amount will
exceed the initial aggregate Certificate Principal Balance of the Offered
Certificates by approximately 8.70%.

          The amount of overcollateralization is equal to the initial level of
overcollateralization required by the Pooling and Servicing Agreement. The
weighted average Adjusted Net Mortgage Rate for the Mortgage Loans is generally
expected to be higher than the weighted average of the Pass-Through Rates on the
interest-bearing Certificates. As a result, interest collections on the Mortgage
Loans are expected to be generated in excess of the amount of interest payable
to the holders of the interest-bearing Certificates and the related fees and
expenses payable by the issuing entity. Any interest payments received in
respect of the Mortgage Loans in excess of the amount that is needed to pay
interest on the interest-bearing Certificates and the issuing entity's expenses
will be used to reduce the total Certificate Principal Balance of the
Certificates, until the required level of overcollateralization has been
maintained or restored. The excess cashflow, if any, will be applied on each
Distribution Date as a payment of principal on the class or classes of
Certificates then entitled to receive distributions in respect of principal, but
only to the limited extent hereafter described. Thereafter, any remaining excess
cashflow will be allocated to pay Net Rate Carryover and Unpaid Realized Loss
Amounts in the amount and the priority described below.

          The "EXCESS CASHFLOW" with respect to any Distribution Date is the sum
of (i) the amounts remaining as set forth in clause (3) in
"--Distributions--Distributions of Interest" and clause (1)(C) or (2)(C), as
applicable, in "--


                                      S-61



Distributions--Distributions of Principal" and (ii) the Overcollateralization
Reduction Amount for that Distribution Date, if any.

          With respect to any Distribution Date, any Excess Cashflow will be
paid to the classes of Certificates in the following order of priority, in each
case to the extent of the remaining Excess Cashflow:

               (1) to the class or classes of Offered Certificates then entitled
          to received distributions in respect of principal, to reduce their
          respective certificate principal balances, in an aggregate amount
          equal to the Extra Principal Distribution Amount, payable to those
          holders as part of the Principal Distribution Amount as described
          under "--Distributions--Distributions of Principal" above,

               (2) to the Class A Certificates, the Unpaid Realized Loss Amount
          for such class,

               (3) sequentially, to the Class M-1, Class M-2, Class M-3, Class
          M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class M-9 and Class B
          Certificates, in each case, first in an amount equal to any Interest
          Carry Forward Amount for that class and Distribution Date, and second
          in an amount equal to any Unpaid Realized Loss Amount for that class;

               (4) concurrently, to the classes of interest-bearing
          certificates, pro rata based on their respective Certificate Principal
          Balances to the extent needed to pay any unpaid Net Rate Carryover for
          each such class; and then any Excess Cashflow remaining after such
          allocation will be distributed to each class of interest-bearing
          Certificates with respect to which there remains any unpaid Net Rate
          Carryover, pro rata, based on the amount of such remaining unpaid Net
          Rate Carryover;

               (5) if the Acceleration Tracking Amount has been reduced to zero,
          remaining Excess Cashflow together with available prepayment charges
          collected during the related Prepayment Period, concurrently, to the
          Class M-8, Class M-9 and Class B Certificates, pro rata, based on
          their respective Certificate Principal Balances, to reduce their
          Certificate Principal Balances, until their respective Certificate
          Principal Balances are reduced to zero;

               (6) to the Class C Certificates; and

               (7) to the Class A-R Certificates, as specified in the pooling
          and servicing agreement, although it is intended that the Class A-R
          Certificates will not be entitled to any distributions in excess of
          its Certificate Principal Balance.

          The "ACCELERATION TRACKING AMOUNT" is a notional amount initially
equal to $24,450,000. Notional interest will accrue on the Acceleration Tracking
Amount during each notional interest accrual period at a rate of 6.000% per
annum on the basis of a 360 day year divided into twelve 30 day months, and any
notional interest that has accrued and is not reduced on a Distribution Date as
provided in the following sentence will be added to the notional amount of the
Acceleration Tracking Amount on that Distribution Date. The notional interest
accrual period for the Acceleration Tracking Amount will be deemed to be a
period of 30 days commencing on the immediately preceding Distribution Date to
and ending on the day immediately preceding the current Distribution Date, or in
the case of the first Distribution Date, it will be the actual number of days
from and including the Closing Date to but excluding such Distribution Date.
Notional fees will also accrue with respect to the Acceleration Tracking Amount
in an amount equal to $21,000 with respect to the first Distribution Date and
$3,000 with respect to each anniversary of the first Distribution Date. On each
Distribution Date, an amount equal to the sum of (i) the aggregate amount of
distributions on the Class C, Class P and Class R Certificates on such
Distribution Date and (ii) the Acceleration Limitation Interest Amount for such
Distribution Date, will be applied first, to reduce any notional fees accrued
with respect to the Acceleration Tracking Amount, second, to reduce any notional
interest accrued on the notional amount of the Acceleration Tracking Amount and
third, to reduce the notional amount of the Acceleration Tracking Amount until
the notional amount of the Acceleration Tracking Amount is reduced to zero.

          The "ACCELERATION LIMITATION INTEREST AMOUNT" for any Distribution
Date is an amount equal to the product of (i) the excess (if any) of (x) the
lesser of (a) One-Month LIBOR and (b) 5.680% over (y) 9.680%, (ii) an


                                      S-62



amount equal to the related Notional Balance for such Distribution Date, and
(iii) the actual number of days in the related notional interest accrual period,
divided by 360.

          The "NOTIONAL BALANCE" for each Distribution Date is as described in
the following table:

          MONTH OF DISTRIBUTION DATE      NOTIONAL BALANCE ($)

          September 2006                       315,000,000
          October 2006                         305,744,111
          November 2006                        296,133,552
          December 2006                        286,202,663
          January 2007                         275,986,486
          February 2007                        265,520,883
          March 2007                           254,841,769
          April 2007                           243,986,054
          May 2007                             232,991,075
          June 2007                            221,954,584
          July 2007                            211,358,156
          August 2007                          201,207,972
          September 2007 and thereafter                  0

CALCULATION OF ONE-MONTH LIBOR

          On the second LIBOR Business Day preceding the commencement of each
Accrual Period for the Class A Certificates (each such date, an "INTEREST
DETERMINATION DATE"), the Trustee will determine the London interbank offered
rate for one-month United States dollar deposits ("ONE-MONTH LIBOR") for the
Accrual Period on the basis of such rate as it is quoted on the Bloomberg
Terminal for that Interest Determination Date.

          If on any LIBOR Determination Date, the calculation agent is unable to
calculate LIBOR in accordance with the method set forth in the immediately
preceding paragraph, LIBOR for the related Accrual Period shall be calculated in
accordance with the method described in the prospectus under "Description of the
Securities--Indices Applicable to Floating Rate and Inverse Floating Rate
Classes--BBA Method."

          If on the initial LIBOR Determination Date, the calculation agent is
required but unable to determine LIBOR in the manner provided in this prospectus
supplement, LIBOR for the next Accrual Period will be 5.372%.

          The establishment of One-Month LIBOR on each Interest Determination
Date by the Trustee and the Trustee's calculation of the rate of interest
applicable to the Class A Certificates for the related Accrual Period will (in
the absence of manifest error) be final and binding.

APPLIED REALIZED LOSS AMOUNTS

          If on any Distribution Date, after giving effect to the distributions
described above, the aggregate Certificate Principal Balance of the Offered
Certificates exceeds the sum of the aggregate Stated Principal Balance of the
Mortgage Loans and the amount on deposit in the Pre-Funding Account, the amount
of the excess will be applied first to reduce the Certificate Principal Balances
of the Class B, Class M-9, Class M-8, Class M-7, Class M-6, Class M-5, Class
M-4, Class M-3, Class M-2, Class M-1 and Class A Certificates, in that order, in
each case until the Certificate Principal Balance of the class has been reduced
to zero. A reduction described in this paragraph is referred to as an "APPLIED
REALIZED LOSS AMOUNT."

          If the Certificate Principal Balance of a class of Certificates has
been reduced through the application of Applied Realized Loss Amounts as
described above, interest will accrue on the Certificate Principal Balance as so
reduced unless the Certificate Principal Balance is subsequently increased due
to the allocation of Subsequent Recoveries to the Certificate Principal Balance
of the class as described in the definition of "Certificate Principal


                                      S-63



Balance" described in this prospectus supplement under "--Glossary of
Terms--Definitions Related to Distribution Dates and Collections."

REPORTS TO CERTIFICATEHOLDERS

          On each Distribution Date, the Trustee will forward by first class
mail to each certificateholder, the Master Servicer and the Depositor a
statement generally setting forth, among other information:

               (1) the amount of the related distribution to holders of the
          Certificates allocable to principal, separately identifying:

                    (a)  the aggregate amount of any Principal Prepayments
                         included therein, and

                    (b)  the aggregate of all Scheduled Payments of principal
                         included therein,

               (2) the amount of the distribution to holders of the Certificates
          allocable to interest,

               (3) the Interest Carry Forward Amounts for each class of
          Certificates (if any),

               (4) the Certificate Principal Balance of each class of
          Certificates after giving effect to (i) all distributions allocable to
          principal on the Distribution Date, (ii) the allocation of any Applied
          Realized Loss Amounts for the Distribution Date, (iii) the allocation
          of any Subsequent Recoveries for the Distribution Date, and (iv) the
          allocation of any Charged-off Loan Proceeds for the Distribution Date,

               (5) the aggregate Stated Principal Balance of the Mortgage Loans
          for the following Distribution Date,

               (6) the amount of the Master Servicing Fees paid to or retained
          by the Master Servicer for the related Due Period,

               (7) the Pass-Through Rate for each class of Certificates for the
          Distribution Date,

               (8) the amount of Advances included in the distribution on the
          Distribution Date,

               (9) the number and aggregate principal amounts of Mortgage Loans:

                    (a)  delinquent (exclusive of related Mortgage Loans in
                         foreclosure):

                         30 to 59 days,

                         60 to 89 days and

                         90 or more days, and

                    (b)  in foreclosure and delinquent:

                         30 to 59 days,

                         60 to 89 days and

                         90 or more days,

          in each case as of the close of business on the last day of the
          calendar month preceding the Distribution Date,

               (10) with respect to any Mortgage Loan that became an REO
          Property during the preceding calendar month, the loan number and
          Stated Principal Balance for the Distribution Date of the Mortgage
          Loan and the date of acquisition thereof,

               (11) whether a Trigger Event is in effect,


                                      S-64



               (12) the total number and Stated Principal Balance of any REO
          Properties as of the close of business on the Determination Date
          preceding the Distribution Date,

               (13) any Net Rate Carryover paid and all remaining Net Rate
          Carryover remaining on each class of Certificates on the Distribution
          Date,

               (14) the amount of Applied Realized Loss Amounts and Subsequent
          Recoveries, if any, applied to each class of Certificates for the
          Distribution Date,

               (15) all payments made by the Master Servicer in respect of
          Compensating Interest for the Distribution Date,

               (16) the amount of Charged-off Loan Proceeds included in the
          distribution on the Distribution Date, and

               (17) the Acceleration Tracking Amount before and after giving
          effect to the distributions on the Distribution Date.

          The monthly statement is prepared by the Trustee based on information
provided by the Master Servicer. The Trustee is not responsible for recomputing,
recalculating or verifying the information provided to it by the Master Servicer
and will be permitted to conclusively rely on any information provided to it by
the Master Servicer. The report to certificateholders may include additional or
other information of a similar nature to that specified above.

          The Trustee may, at its option, make the statements described above
available to certificateholders on the Trustee's website (assistance in using
the website service may be obtained by calling the Trustee's customer service
desk at (800) 254-2826). In addition, within 60 days after the end of each
calendar year, the Trustee will prepare and deliver to each certificateholder of
record during the previous calendar year a statement containing information
necessary to enable certificateholders to prepare their tax returns. The
statements will not have been examined and reported upon by an independent
public accountant.

AMENDMENT

          The Pooling and Servicing Agreement may be amended by the Depositor,
the Master Servicer, the Sellers and the Trustee, with the consent of the NIM
Insurer but without the consent of any of the certificateholders, for any of the
purposes set forth under "The Agreements--Amendment" in the prospectus. In
addition, the Pooling and Servicing Agreement may be amended by the Depositor,
the Master Servicer, the Sellers, the Trustee and the holders of a majority in
interest of each class of Certificates affected thereby for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of the Pooling and Servicing Agreement or of modifying in any manner
the rights of the certificateholders; provided, however, that no amendment may:

               (1) reduce in any manner the amount of, or delay the timing of,
          payments required to be distributed on any Certificate without the
          consent of the holder of the Certificate,

               (2) adversely affect in any material respect the interests of the
          holders of any class of Certificates in a manner other than as set
          forth in clause (1) above, without the consent of the holders of
          Certificates of the class evidencing, as to that class, Percentage
          Interests aggregating 66%, or

               (3) reduce the aforesaid percentage of aggregate outstanding
          principal amounts of Certificates of each class, the holders of which
          are required to consent to an amendment, without the consent of the
          holders of all Certificates of the class.


                                      S-65



VOTING RIGHTS

          As of any date of determination:

     o    the Class P, Class C, Class R and Class A-R Certificates will each be
          allocated 1% of all voting rights in respect of the Certificates
          (collectively, the "VOTING RIGHTS") (for a total of 4% of the Voting
          Rights), and

     o    the other classes of Certificates will be allocated the remaining
          Voting Rights in proportion to their respective outstanding
          Certificate Principal Balances.

          Voting Rights will be allocated among the Certificates of each class
in accordance with their respective Percentage Interests.

OPTIONAL PURCHASE OF DEFAULTED LOANS

          As to any Mortgage Loan that is delinquent in payment by 150 days or
more, the Master Servicer may, at its option but subject to certain conditions
specified in the Pooling and Servicing Agreement, purchase the Mortgage Loan at
a price equal to 100% of the Stated Principal Balance thereof plus accrued
interest thereon at the applicable Net Mortgage Rate from the date through which
interest was last paid by the related borrower or advanced to the first day of
the month in which the amount is to be distributed to certificateholders. The
Master Servicer must exercise this right, if at all, on or before the last day
of the calendar month in which the related Mortgage Loan became 150 days
delinquent.

EVENTS OF DEFAULT; REMEDIES

          Events of Default will consist of:

               (1) any failure by the Master Servicer to deposit in the
          Certificate Account or the Distribution Account the required amounts
          or remit to the Trustee any payment (including an Advance required to
          be made under the terms of the Pooling and Servicing Agreement) which
          continues unremedied for five calendar days (or in the case of an
          Advance, one Business Day) after written notice of the failure shall
          have been given to the Master Servicer by the Trustee, the NIM Insurer
          or the Depositor, or to the Trustee, the NIM Insurer and the Master
          Servicer by the holders of Certificates evidencing not less than 25%
          of the Voting Rights,

               (2) any failure by the Master Servicer to observe or perform in
          any material respect any other of its covenants or agreements, or any
          breach of a representation or warranty made by the Master Servicer, in
          the Pooling and Servicing Agreement, which in each case continues
          unremedied for 60 days after the giving of written notice of the
          failure to the Master Servicer by the Trustee, the NIM Insurer or the
          Depositor, or to the Trustee by the holders of Certificates evidencing
          not less than 25% of the Voting Rights,

               (3) a decree or order of a court or agency or supervisory
          authority having jurisdiction in the premises for the appointment of a
          receiver or liquidator in any insolvency, readjustment of debt,
          marshalling of assets and liabilities or similar proceedings, or for
          the winding-up or liquidation of its affairs, shall have been entered
          against the Master Servicer and the decree or order shall have
          remained in force undischarged or unstayed for a period of 60
          consecutive days,

               (4) the Master Servicer shall consent to the appointment of a
          receiver or liquidator in any insolvency, readjustment of debt,
          marshalling of assets and liabilities or similar proceedings of or
          relating to the Master Servicer or all or substantially all of the
          property of the Master Servicer,

               (5) the Master Servicer shall admit in writing its inability to
          pay its debts generally as they become due, file a petition to take
          advantage of, or commence a voluntary case under, any applicable


                                      S-66



          insolvency or reorganization statute, make an assignment for the
          benefit of its creditors, or voluntarily suspend payment of its
          obligations, or

               (6) the Master Servicer shall fail to reimburse, in full, the
          Trustee not later than 6:00 p.m., New York City time, on the Business
          Day following the related Distribution Date for any Advance made by
          the Trustee together with accrued and unpaid interest.

          So long as an Event of Default under the Pooling and Servicing
Agreement remains unremedied, subject to the rights of the NIM Insurer, the
Trustee shall, but only upon the receipt of instructions from the NIM Insurer or
from holders of Certificates having not less than 25% of the Voting Rights
terminate all of the rights and obligations of the Master Servicer under the
Pooling and Servicing Agreement and in and to the Mortgage Loans, whereupon the
Trustee will succeed to all of the responsibilities and duties of the Master
Servicer under the Pooling and Servicing Agreement, including the obligation to
make Advances. Additionally, if the Master Servicer fails to provide certain
information or perform certain duties related to the Depositor's reporting
obligations under the Exchange Act, with respect to the issuing entity, the
Depositor, may, without the consent of any of the certificateholders, terminate
the Master Servicer. We cannot assure you that termination of the rights and
obligations of the Master Servicer under the Pooling and Servicing Agreement
would not adversely affect the servicing of the Mortgage Loans, including the
delinquency experience of the Mortgage Loans.

          No certificateholder, solely by virtue of the holder's status as a
certificateholder, will have any right under the Pooling and Servicing Agreement
to institute any proceeding with respect thereto, unless the holder previously
has given to the Trustee written notice of the continuation of an Event of
Default and unless the holders of Certificates having not less than 25% of the
Voting Rights have made a written request to 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 the proceeding and in which case the rights of the certificateholders
shall be subject to the rights of the NIM Insurer.

          Within 60 days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to all holders of the Certificates notice of each
Event of Default known to the Trustee, except for any Event of Default that has
been cured or waived.

OPTIONAL TERMINATION

          The Master Servicer will have the right to purchase all remaining
Mortgage Loans and REO Properties in the issuing entity and thereby effect early
retirement of all the Certificates, on any Distribution Date on or after the
first Distribution Date on which the aggregate Stated Principal Balance of the
Mortgage Loans and REO Properties in the issuing entity is less than or equal to
10% of the sum of the Initial Cut-off Date Pool Principal Balance and the
original Pre-Funded Amount (the "OPTIONAL TERMINATION Date"). The Master
Servicer is an affiliate of the Sellers and the Depositor.

          In the event the option is exercised by the Master Servicer, the
purchase will be made at a price equal to the sum of:

               (1) 100% of the Stated Principal Balance of each Mortgage Loan in
          the issuing entity (other than in respect of REO Property) plus
          accrued interest thereon at the applicable Net Mortgage Rate, and

               (2) the appraised value of any REO Property (up to the Stated
          Principal Balance of the related Mortgage Loan) in the issuing entity;

provided, however, that unless the NIM Insurer otherwise consents, the purchase
price will in no event be less than an amount that would result in a final
distribution on any NIM Insurer guaranteed notes that is sufficient (x) to pay
the notes in full and (y) to pay any amounts due and payable to the NIM Insurer
pursuant to the indenture related to the notes.


                                      S-67



          The NIM Insurer may also have the right to purchase all remaining
Mortgage Loans and REO Properties in the issuing entity at the price set forth
above (plus any unreimbursed Servicing Advances, and the principal portion of
any unreimbursed Advances, made on the Mortgage Loans prior to the exercise of
the option), subject to the same restrictions. The identity of any NIM Insurer
is not known as of the date of this prospectus supplement. It is possible that
the NIM Insurer will be an affiliate of one of the Underwriters.

          Notice of any termination, specifying the Distribution Date on which
certificateholders may surrender their Certificates for payment of the final
distribution and cancellation, will be given promptly by the Trustee by letter
to certificateholders mailed not earlier than the 10th day and no later than the
15th day of the month immediately preceding the month of the final distribution.
The notice will specify (a) the Distribution Date upon which final distribution
on related Certificates will be made upon presentation and surrender of the
Certificates at the office therein designated, (b) the amount of the final
distribution, (c) the location of the office or agency at which the presentation
and surrender must be made, and (d) that the Record Date otherwise applicable to
the Distribution Date is not applicable, distributions being made only upon
presentation and surrender of the Certificates at the office therein specified.

          In the event a notice of termination is given, the Master Servicer
will cause all funds in the Certificate Account to be remitted to the Trustee
for deposit in the Distribution Account on the Business Day prior to the
applicable Distribution Date in an amount equal to the final distribution in
respect of the Certificates. At or prior to the time of making the final payment
on the Certificates, the Master Servicer as agent of the Trustee will sell all
of the assets of the issuing entity to the Master Servicer or the NIM Insurer,
as applicable, for cash. Proceeds from a purchase will be distributed to the
certificateholders in the priority described above under "--Distributions" and
"--Overcollateralization Provisions" and will reflect the current Certificate
Principal Balance and other entitlements of each class at the time of
liquidation. As a result, if any Applied Realized Loss Amounts have been
allocated to any class or classes of Certificates, any Unpaid Realized Loss
Amounts would be paid in the order and priority set forth above under
"--Overcollateralization Provisions."

          The proceeds from any sale in connection the exercise of the option
may not be sufficient to distribute the full amount to which each class of
Certificates is entitled if the purchase price is based in part on the appraised
value of any REO Property and that appraised value is less than the Stated
Principal Balance of the related Mortgage Loan. Any purchase of the Mortgage
Loans and REO Properties will result in an early retirement of the Certificates.
At the time of the making of the final payment on the Certificates, the Trustee
shall distribute or credit, or cause to be distributed or credited, to the
holder of the Class A-R Certificates all cash on hand related to the Class A-R
Certificates, and the issuing entity will terminate at that time. Once the
issuing entity has been terminated, certificateholders will not be entitled to
receive any amounts that are recovered subsequent to the termination.

CERTAIN MATTERS REGARDING THE MASTER SERVICER, THE DEPOSITOR, THE SELLERS AND
THE NIM INSURER

          The prospectus describes the indemnification to which the Master
Servicer and the Depositor (and their respective directors, officers, employees
and agents) are entitled and also describes the limitations on any liability of
the Master Servicer and the Depositor (and their respective directors, officers,
employees and agents) to the issuing entity. See "The Agreements--Certain
Matters Regarding the Master Servicer and the Depositor" in the prospectus. The
Pooling and Servicing Agreement provides that these same provisions regarding
indemnification and exculpation apply to each Seller and any NIM Insurer.

THE TRUSTEE

          The Bank of New York will be the Trustee under the Pooling and
Servicing Agreement. The Bank of New York has been, and currently is, serving as
indenture trustee and trustee for numerous securitization transactions and
programs involving pools of residential mortgages. The depositor, Countrywide
Home Loans and any unaffiliated seller have, and may in the future may maintain,
other banking relationships in the ordinary course of business with the trustee.
The offered certificates may be surrendered at the corporate trust office of the
trustee located at 101 Barclay Street, 8W, New York, New York 10286, Attention:
Corporate Trust Administration or another address that the trustee may designate
from time to time.


                                      S-68



          The Trustee will be liable for its own grossly negligent action, its
own grossly negligent failure to act or its own misconduct, its grossly
negligent failure to perform its obligations in compliance with the Pooling and
Servicing Agreement, or any liability that would be imposed by reason of its
willful misfeasance or bad faith. However, the Trustee will not be liable,
individually or as trustee,

     o    for an error of judgment made in good faith by a responsible officer
          of the Trustee, unless the Trustee was grossly negligent or acted in
          bad faith or with willful misfeasance,

     o    with respect to any action taken, suffered or omitted to be taken by
          it in good faith in accordance with the direction of the holders of
          each Class of Certificates evidencing not less than 25% of the Voting
          Rights of the Class relating to 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 under the
          Pooling and Servicing Agreement,

     o    for any action taken or suffered or omitted by it under the Pooling
          and Servicing Agreement in good faith and in accordance with an
          opinion of counsel, or

     o    for any loss on any investment of funds pursuant to the Pooling and
          Servicing Agreement (other than as issuer of the investment security).

          The Trustee is also entitled to rely without further investigation
upon any resolution, officer's certificate, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice, request, consent,
order, appraisal, bond or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties.

          The Trustee and any successor trustee will, at all times, be a
corporation or association organized and doing business under the laws of a
state or the United States of America, authorized under the laws of the United
States of America to exercise corporate trust powers, having a combined capital
and surplus of at least $50,000,000, subject to supervision or examination by
federal or state authority and with a credit rating that would not cause any of
the Rating Agencies to reduce their respective ratings of any Class of
Certificates below the ratings issued on the Closing Date (or having provided
security from time to time as is sufficient to avoid the reduction). If the
Trustee no longer meets the foregoing requirements, the Trustee has agreed to
resign immediately.

          The Trustee may at any time resign by giving written notice of
resignation to the Depositor, the Master Servicer, each Rating Agency and the
certificateholders, not less than 60 days before the specified resignation date.
The resignation shall not be effective until a successor trustee has been
appointed. If a successor trustee has not been appointed within 30 days after
the Trustee gives notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor trustee.

          The Depositor, the NIM Insurer or the Master Servicer may remove the
Trustee and appoint a successor trustee reasonably acceptable to the NIM Insurer
if:

     o    the Trustee ceases to meet the eligibility requirements described
          above and fails to resign after written request to do so is delivered
          to the Trustee by the NIM Insurer or the Depositor,

     o    the Trustee becomes incapable of acting, or is adjudged as bankrupt or
          insolvent, or a receiver of the Trustee or of its property is
          appointed, or any public officer takes charge or control of the
          Trustee or of its property or affairs for the purpose of
          rehabilitation, conservation or liquidation, or

     o    (iii)(A) a tax is imposed with respect to the issuing entity by any
          state in which the Trustee or the issuing entity is located, (B) the
          imposition of the tax would be avoided by the appointment of a
          different trustee and (C) the Trustee fails to indemnify the issuing
          entity against the tax.

          In addition, the holders of Certificates evidencing at least 51% of
the Voting Rights of each Class of Certificates may at any time remove the
Trustee and appoint a successor trustee. In addition, if the Trustee fails to


                                      S-69



provide certain information or perform certain duties related to the Depositor's
reporting obligations under the Exchange Act with respect to the issuing entity,
the Depositor, may, without the consent of any of the certificateholders,
terminate the Trustee. Notice of any removal of the Trustee shall be given to
each Rating Agency by the successor Trustee.

          Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions described above will become
effective upon acceptance of appointment by the successor trustee.

          A successor trustee will not be appointed unless the successor trustee
meets the eligibility requirements described above, is reasonably acceptable to
the NIM Insurer and its appointment does not adversely affect the then-current
ratings of the Certificates.

RESTRICTIONS ON TRANSFER OF THE CLASS A-R CERTIFICATES

          The Class A-R Certificates will be subject to the restrictions on
transfer described in the prospectus under "Material Federal Income Tax
Consequences--Taxation of Holders of REMIC Residual Interests--Restrictions on
Ownership and Transfer of REMIC Residual Interests." The Class A-R Certificates
(in addition to other ERISA restricted classes of Certificates, as described in
the Pooling and Servicing Agreement), may not be acquired by a Plan or with
assets of a Plan unless certain conditions are met. See "ERISA Considerations"
in this prospectus supplement. Each Class A-R Certificate will contain a legend
describing the foregoing restrictions.

OWNERSHIP OF THE RESIDUAL CERTIFICATES

          On the Closing Date, the Class A-R Certificates (except as described
below) will be acquired by CW Securities Holdings, Inc., an affiliate of the
Depositor, the Sellers and the Master Servicer. On the Closing Date, the Class C
Certificates will be acquired by CWIBH, Inc., an affiliate of the Depositor, the
Sellers and the Master Servicer. However, CWIBH, Inc. may retain these
Certificates or transfer any of them in other transactions. See "--Rights of the
NIM Insurer Under the Pooling and Servicing Agreement" in this prospectus
supplement.

          The Trustee will be initially designated as "tax matters person" under
the Pooling and Servicing Agreement and in that capacity will hold a Class A-R
Certificate in the amount of $0.05. As tax matters person, the Trustee will be
the primary representative of the issuing entity with respect to any tax
administrative or judicial matter. As trustee, the Trustee will be responsible
for making a REMIC election with respect to each REMIC created under the Pooling
and Servicing Agreement and for preparing and filing tax returns with respect to
each REMIC.

RESTRICTIONS ON INVESTMENT, SUITABILITY REQUIREMENTS

          An investment in the Certificates may not be appropriate for all
investors due to tax, ERISA or other legal requirements. Investors should review
the disclosure included in this prospectus supplement and the prospectus under
"Material Federal Income Tax Consequences," "ERISA Considerations" and "Legal
Matters" prior to any acquisition and are encouraged to consult with their
advisors prior to purchasing the Certificates.

RIGHTS OF THE NIM INSURER UNDER THE POOLING AND SERVICING AGREEMENT

          After the Closing Date, a separate trust or trusts (or other form of
entity) may be established to issue net interest margin securities secured by
all or a portion of the Class P, Class R and Class C Certificates. Those net
interest margin securities may or may not have the benefit of a financial
guaranty insurance policy. The insurer or insurers (the "NIM INSURER") that
would issue a policy will be a third party beneficiary of the Pooling and
Servicing Agreement and will have a number of rights under the Pooling and
Servicing Agreement, which will include the following:

     o    The right to consent to the Master Servicer's exercise of its
          discretion to waive assumption fees, late payment or other charges in
          connection with a Mortgage Loan or to arrange for the extension of due
          dates for payments due on a mortgage note for no more than 180 days,
          if the waivers or extensions relate to more than 5% of the Mortgage
          Loans;


                                      S-70



     o    the right to direct the Trustee to terminate all of the rights and
          obligations of the Master Servicer under the Pooling and Servicing
          Agreement relating to the issuing entity and the assets of the issuing
          entity following the occurrence of an event of default under the
          Pooling and Servicing Agreement;

     o    the right to approve or reject the appointment of any successor
          servicer other than the Trustee, if the Master Servicer is required to
          be replaced and the Trustee is unwilling or unable to act as successor
          servicer;

     o    the right to consent to any amendment to the Pooling and Servicing
          Agreement; and

     o    each of the rights under "Risk Factors--Rights of the NIM Insurer
          Limit Your Control and NIM Insurer Actions May Negatively Affect You"
          in this prospectus supplement.

          You should note the rights that the NIM Insurer would have and
carefully evaluate its potential impact on your investment.

                  YIELD, PREPAYMENT AND MATURITY CONSIDERATIONS

GENERAL

          The weighted average life of, and the yield to maturity on, each class
of interest-bearing Certificates generally will be directly related to the rate
of payment of principal (including prepayments) of the Mortgage Loans. The
actual rate of principal prepayments on mortgage loans is influenced by a
variety of economic, tax, geographic, demographic, social, legal and other
factors and has fluctuated considerably in recent years. Specifically, the
prepayment experience of the Mortgage Loans may be affected by prevailing
interest rate levels, the availability of alternative financing, homeowner
mobility and changes affecting the deductibility for federal income tax purposes
of interest payments on second-lien mortgage loans. In addition, the rate of
principal prepayments may differ among pools of mortgage loans at any time
because of specific factors relating to the mortgage loans in the particular
pool, including, among other things, the age of the mortgage loans, the
geographic locations of the properties securing the loans, the extent of the
borrower's equity in the properties, and changes in the borrowers' housing
needs, job transfers and employment status. Generally, it is assumed that
second-lien mortgage loans are not viewed by borrowers as permanent financing.
Accordingly, the Mortgage Loans may experience a higher rate of prepayment than
traditional first-lien mortgage loans.

          Substantially all of the Mortgage Loans contain "due-on-sale"
provisions, and the Master Servicer intends to enforce them unless

          o    enforcement is not permitted by applicable law or

          o    the Master Servicer permits the purchaser of the related
               mortgaged property to assume the Mortgage Loan in a manner
               consistent with reasonable commercial practice.

          The enforcement of a "due-on-sale" provision 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 the prospectus.

          Furthermore, as described under "The Mortgage Pool--Assignment of the
Mortgage Loans" with respect to up to 50% of the Initial Mortgage Loans and 90%
of the Subsequent Mortgage Loans (the "DELAY DELIVERY MORTGAGE LOANS"), the
Depositor may deliver the related Mortgage Files after the Closing Date. Should
a Seller fail to deliver to the Depositor or other designee of the Depositor all
or a portion of the Mortgage Files relating to Mortgage Loans sold by it, or, at
the Depositor's direction, to the Trustee within the time periods described
under "The Mortgage Pool--Assignment of the Mortgage Loans", Countrywide Home
Loans will be required to use its best efforts to deliver a Substitute Mortgage
Loan for the related Delay Delivery Mortgage Loan or repurchase the related
Delay Delivery Mortgage Loan. Any repurchases pursuant to this provision would
also have the effect of accelerating the rate of prepayments on the Mortgage
Loans.


                                      S-71



          In addition, no less than approximately 49.98% of the Mortgage Loans
in the Statistical Calculation Pool, by Stated Principal Balance of the Mortgage
Loans in the Statistical Calculation Pool, require the payment of a prepayment
charge in connection with certain prepayments, generally within periods of up to
five years following origination of the related Mortgage Loan. These charges, if
enforced by the Master Servicer, may affect the rate of prepayments on the
Mortgage Loans.

          The timing of changes in the rate of prepayments may significantly
affect the actual yield to investors who purchase the Certificates at prices
other than par, even if the average rate of principal prepayments is consistent
with the expectations of investors. In general, the earlier the payment of
principal of the Mortgage Loans the greater the effect on an investor's yield to
maturity. As a result, the effect on an investor's yield of principal
prepayments occurring at a rate higher (or lower) than the rate anticipated by
the investor during the period immediately following the issuance of the
Certificates may not be offset by a subsequent like reduction (or increase) in
the rate of principal prepayments. Investors must make their own decisions as to
the appropriate prepayment assumptions to be used in deciding whether to
purchase any of the Certificates. The Depositor does not make any
representations or warranties as to the rate of prepayment or the factors to be
considered in connection with these determinations.

PREPAYMENTS AND YIELDS FOR THE OFFERED CERTIFICATES

          The extent to which the yield to maturity of the Certificates may vary
from the anticipated yield will depend upon the degree to which it is purchased
at a discount or premium and, correspondingly, the degree to which the timing of
payments thereon is sensitive to prepayments, liquidations and purchases of the
Mortgage Loans. In particular, in the case of a Certificate purchased at a
discount, an investor should consider the risk that a slower than anticipated
rate of principal payments, liquidations and purchases of the Mortgage Loans
could result in an actual yield to the investor that is lower than the
anticipated yield and, in the case of an Offered Certificate purchased at a
premium, the risk that a faster than anticipated rate of principal payments,
liquidations and purchases of the Mortgage Loans could result in an actual yield
to the investor that is lower than the anticipated yield.

          In general with respect to fixed rate mortgage loans, if prevailing
interest rates fall significantly below the interest rates on fixed rate
mortgage loans, these mortgage loans are likely to be subject to higher
prepayment rates than if prevailing rates remain at or above the interest rates
on these mortgage loans. Conversely, if prevailing interest rates rise
appreciably above the interest rates on fixed rate mortgage loans, the fixed
rate mortgage loans are likely to experience a lower prepayment rate than if
prevailing rates remain at or below the interest rates on these mortgage loans.
In the event that Mortgage Loans with higher Mortgage Rates prepay at rates
higher than other Mortgage Loans, the Net Rate Cap may be lower than otherwise
would be the case. As a result, the interest payable on the related Certificates
on a Distribution Date could be reduced because of the imposition of the Net
Rate Cap. We cannot give any assurance as to the level of prepayment that the
Mortgage Loans will experience.

          The effective yield to the holders of the Fixed Rate Certificates will
be lower than the yield otherwise produced by the applicable rate at which
interest is passed through to these holders and the purchase price of the
Certificates because monthly distributions will not be payable to the holders
until the 25th day (or, if the 25th day is not a Business Day, the following
Business Day) of the month following the month in which interest accrues on the
Mortgage Loans (without any additional distribution of interest or earnings
thereon in respect of the delay).

LAST SCHEDULED DISTRIBUTION DATE

          Assuming that, among other things,

          o    no prepayments are received on the Mortgage Loans and

          o    scheduled monthly payments of principal of and interest on each
               of the Mortgage Loans are timely received,

the Distribution Date (the "LAST SCHEDULED DISTRIBUTION DATE") that occurs six
months following the Distribution Date (or, in the case of the Class A-R
Certificates, zero months) on which the Certificate Principal Balance of the
applicable class of Certificates would be reduced to zero is:


                                      S-72



                  CLASS OF CERTIFICATES           DISTRIBUTION DATE
          -------------------------------------   -----------------
          Class A..............................        May 2026
          Class M-1............................     February 2026
          Class M-2............................     December 2025
          Class M-3............................     September 2025
          Class M-4............................       July 2025
          Class M-5............................        May 2025
          Class M-6............................     February 2025
          Class M-7............................     November 2024
          Class M-8............................     February 2009
          Class M-9............................     February 2009
          Class B..............................     February 2009
          Class A-R............................     September 2006

          The actual final Distribution Date with respect to each class of these
Certificates could occur significantly earlier than its Last Scheduled
Distribution Date because:

     o    prepayments are likely to occur which will be applied to the payment
          of the Certificate Principal Balances thereof, and

     o    the Master Servicer may purchase all the Mortgage Loans in the issuing
          entity when the aggregate Stated Principal Balance of the Mortgage
          Loans and REO Properties in the issuing entity is less than or equal
          to 10% of the sum of the Initial Cut-off Date Pool Principal Balance
          and the original Pre-Funded Amount.

PREPAYMENT MODEL

          Prepayments on mortgage loans are commonly measured relative to a
prepayment model or standard. The prepayment model used in this prospectus
supplement (the "PREPAYMENT MODEL") is based on an assumed rate of prepayment
each month of the then unpaid principal balance of a pool of mortgage loans
similar to the Mortgage Loans. The Prepayment Model used in this prospectus
supplement is a prepayment assumption which represents an assumed rate of
prepayment each month relative to the then outstanding principal balance of a
pool of mortgage loans for the life of the mortgage loans. For example, a 100%
Prepayment Model assumes a constant prepayment rate ("CPR") of 15% per annum of
the then outstanding principal balance of the Mortgage Loans in the first month
of the life of the Mortgage Loans and an additional approximately 1.363636% per
annum (precisely 15%/11) in each month thereafter up to and including the
twelfth month. Beginning in the thirteenth month and in each month thereafter
during the life of the Mortgage Loans, a 100% Prepayment Model assumes a CPR of
30% per annum. The various percentages of the Prepayment Model used in this
prospectus supplement are subject to a CPR cap of 85% per annum.

          We cannot assure you, however, that prepayments on the Mortgage Loans
will conform to any level of the Prepayment Model, and no representation is made
that the Mortgage Loans will prepay at the prepayment rates shown or any other
prepayment rate. The rate of principal payments on mortgage loans is influenced
by a variety of economic, geographic, social and other factors, including the
level of interest rates. Other factors affecting prepayment of mortgage loans
include changes in obligors' housing needs, job transfers and unemployment. In
the case of mortgage loans in general, if prevailing interest rates fall
significantly below the interest rates on the mortgage loans, the mortgage loans
are likely to be subject to higher prepayment rates than if prevailing interest
rates remain at or above the rates borne by the mortgage loans. Conversely, if
prevailing interest rates rise above the interest on the mortgage loans, the
rate of prepayment would be expected to decrease.

DECREMENT TABLES; WEIGHTED AVERAGE LIVES

          The tables below set forth the percentages of the initial Certificate
Principal Balance of each class of Offered Certificates (other than the Class
A-R Certificates) that will be outstanding as of the twelfth Distribution Date
and every twelfth Distribution Date thereafter at the respective percentages of
the Prepayment Model. Those percentages have been rounded to the nearest whole
percentages. In addition, the tables below set forth the


                                      S-73



weighted average lives of each class of Offered Certificates to maturity and to
optional termination at the respective percentages of the Prepayment Model. Each
weighted average life of any class of Certificates presented below is determined
by (a) multiplying the amount of each principal payment by the number of years
from the date of issuance to the related Distribution Date, (b) adding the
results, and (c) dividing the sum by the initial respective Certificate
Principal Balance for that class of Certificates.

          The following tables have been prepared on the basis of the following
assumptions (collectively, the "MODELING ASSUMPTIONS"):

               (1) the Mortgage Loans prepay at the indicated percentage of the
          related Prepayment Model,

               (2) distributions on the Certificates are received, in cash, on
          the 25th day of each month, commencing in September 2006, in
          accordance with the payment priorities defined in this prospectus
          supplement,

               (3) no defaults or delinquencies in, or modifications, waivers or
          amendments respecting, the payment by the borrowers of principal and
          interest on the Mortgage Loans occur,

               (4) Scheduled Payments are assumed to be received on the first
          day of each month commencing in September 2006, and prepayments
          represent payment in full of individual Mortgage Loans and are assumed
          to be received on the last day of each month, commencing in August
          2006, and include 30 days' interest thereon,

               (5) the level of One-Month LIBOR remains constant at 5.372% per
          annum,

               (6) the Certificates are issued on August 29, 2006,

               (7) except as indicated with respect to the weighted average
          lives to maturity, the optional termination is exercised on the
          Optional Termination Date,

               (8) the scheduled monthly payment for each Mortgage Loan is
          calculated based on its principal balance, mortgage rate and remaining
          amortization term so that each Mortgage Loan will amortize in amounts
          sufficient to repay the remaining principal balance of the Mortgage
          Loan over the remaining term to maturity (except in the case of
          balloon loans), as indicated in the table below,

               (9) the scheduled amortization for all Mortgage Loans is based
         upon their respective gross interest rates,

               (10) all of the Pre-Funded Amount, if any, is used to purchase
         Subsequent Mortgage Loans for inclusion on the Closing Date,

               (11) the collection rate of prepayment charges on the Mortgage
         Loans is 100%; and

               (12) the Mortgage Loans have the approximate characteristics
          described below:


                                      S-74



                                 MORTGAGE LOANS



                                                                                                          ORIGINAL
                  ADJUSTED                 REMAINING      ORIGINAL     REMAINING   ORIGINAL              PREPAYMENT
                    NET                  AMORTIZATION   AMORTIZATION    TERM TO     TERM TO                CHARGE
  PRINCIPAL       MORTGAGE    MORTGAGE       TERM           TERM        MATURITY   MATURITY      AGE       PERIOD     PREPAYMENT
  BALANCE($)      RATE (%)    RATE (%)     (MONTHS)       (MONTHS)      (MONTHS)   (MONTHS)   (MONTHS)    (MONTHS)      TYPE(1)
--------------   ---------   ---------   ------------   ------------   ---------   --------   --------   ----------   ----------

    292,925.86   11.080723   11.589723        117            120          117         120         3          N/A          N/A
    217,277.21   11.004997   11.513997        118            120          118         120         2           36         CW01
     14,857.73   13.116000   13.625000        119            120          119         120         1           36         CW09
     99,633.85   10.508591   11.017591        117            120          117         120         3           60         CW01
  6,755,338.89   11.479419   11.988419        177            180          177         180         3          N/A          N/A
     84,760.47   11.341000   11.850000        176            180          176         180         4           12         CW01
     44,155.66   11.241000   11.750000        172            180          172         180         8           12         CW12
    758,587.93   11.317621   11.826621        178            180          178         180         2           24         CW01
     25,792.90   12.866000   13.375000        179            180          179         180         1           24         CW08
    102,056.12   11.782315   12.291315        178            180          178         180         2           24         CW09
     35,456.18   10.466000   10.975000        176            180          176         180         4           24         CW12
  1,157,410.15   10.865284   11.374284        176            180          176         180         3           36         CW01
     70,140.25   11.741000   12.250000        177            180          177         180         3           36         CW04
    393,232.16   11.740485   12.249485        177            180          177         180         3           36         CW08
    361,845.01   10.788809   11.297809        177            180          177         180         3           36         CW09
    130,536.74   11.055092   11.564092        174            180          174         180         6           36         CW12
     92,732.16   10.612996   11.121996        178            180          178         180         2           36         CW13
  1,546,898.42   10.655327   11.164327        177            180          177         180         3           60         CW01
    101,997.76   12.999780   13.508780        172            180          172         180         2           60         CW09
     39,603.96   12.366000   12.875000        178            180          178         180         2           60         CW13
    565,436.21   10.850187   11.359187        147            180          147         180        31          N/A          N/A
     39,888.85   10.366000   10.875000        161            180          161         180        19           36         CW01
     80,117.36   10.417244   10.926244        154            180          154         180        26           36         CW08
    146,453.92   11.136756   11.645756        101            180          101         180        74           60         CW01
215,625,832.58   11.242479   11.751479        357            360          177         180         3          N/A          N/A
  6,107,391.38   11.374911   11.883911        357            360          177         180         3           12         CW01
    115,880.87   11.470847   11.979847        357            360          177         180         3           12         CW08
  1,313,753.76   12.697773   13.206773        357            360          177         180         3           12         CW09
     68,634.49    9.525600   10.034600        357            360          177         180         3           12         CW10
    208,176.34   11.646195   12.155195        355            360          175         180         5           12         CW12
    185,461.13   11.353779   11.862779        352            360          172         180         8           12         CW20
     62,188.33   10.491000   11.000000        359            360          179         180         1           13         CW01
117,058,920.00   11.124132   11.633132        357            360          177         180         3           24         CW01
    295,658.87   10.709803   11.218803        356            360          176         180         4           24         CW04
     50,668.18   11.491000   12.000000        359            360          179         180         1           24         CW06
    333,664.61   11.325143   11.834143        360            360          180         180         0           24         CW07
  6,247,749.44   11.753244   12.262244        358            360          178         180         2           24         CW08
  6,877,168.45   11.780189   12.289189        358            360          178         180         2           24         CW09
    134,154.77    9.341000    9.850000        356            360          176         180         4           24         CW10
  3,269,713.78   11.519791   12.028791        357            360          177         180         3           24         CW12
    796,164.85   11.756475   12.265475        358            360          178         180         2           24         CW13
    218,611.79   12.041460   12.550460        357            360          177         180         3           24         CW16
    408,035.43   12.006439   12.515439        357            360          177         180         3           24         CW19
    100,778.85   10.292583   10.801583        353            360          173         180         7           24         CW20
     82,462.47   11.991000   12.500000        359            360          179         180         1           24         CW22
     82,973.48   11.761382   12.270382        355            360          175         180         5           24         CW28
     30,380.66   11.066000   11.575000        357            360          177         180         3           30         CW08
 46,054,371.35   10.711718   11.220718        356            360          176         180         4           36         CW01
    666,652.57    9.927537   10.436537        354            360          174         180         6           36         CW04
     40,425.19   10.491000   11.000000        352            360          172         180         8           36         CW06
     68,327.53   10.941000   11.450000        358            360          178         180         2           36         CW07
  8,863,377.68   11.491747   12.000747        357            360          177         180         3           36         CW08
  3,176,726.83   10.958492   11.467492        356            360          176         180         4           36         CW09
    230,348.12    9.513384   10.022384        355            360          175         180         5           36         CW10
  1,842,009.71   10.852194   11.361194        356            360          176         180         4           36         CW12
    209,597.00   11.502410   12.011410        357            360          177         180         3           36         CW13
    107,526.57   11.638508   12.147508        357            360          177         180         3           36         CW19
     24,039.83    9.971000   10.480000        359            360          179         180         1           36         CW20
    107,492.13   11.225583   11.734583        359            360          179         180         1           36         CW23
    111,128.20   11.243091   11.752091        355            360          175         180         5           36         CW28
 16,692,232.53   10.370979   10.879979        357            360          177         180         3           60         CW01
    609,332.96   11.596824   12.105824        357            360          177         180         3           60         CW09
    107,878.52   10.676991   11.185991        357            360          177         180         3           60         CW13



                                      S-75





                                                                                                          ORIGINAL
                  ADJUSTED                 REMAINING      ORIGINAL     REMAINING   ORIGINAL              PREPAYMENT
                    NET                  AMORTIZATION   AMORTIZATION    TERM TO     TERM TO                CHARGE
  PRINCIPAL       MORTGAGE    MORTGAGE       TERM           TERM        MATURITY   MATURITY      AGE       PERIOD     PREPAYMENT
  BALANCE($)      RATE (%)    RATE (%)     (MONTHS)       (MONTHS)      (MONTHS)   (MONTHS)   (MONTHS)    (MONTHS)      TYPE(1)
--------------   ---------   ---------   ------------   ------------   ---------   --------   --------   ----------   ----------

  8,162,769.20   10.342567   10.851567        344            360          164         180        16          N/A          N/A
    139,155.74   10.552083   11.061083        346            360          166         180        14           12         CW01
  2,511,079.92    9.982348   10.491348        346            360          166         180        14           24         CW01
    101,030.39   10.597944   11.106944        346            360          166         180        14           24         CW08
     92,572.86   10.217495   10.726495        348            360          168         180        12           24         CW09
    141,571.81   10.160951   10.669951        345            360          165         180        15           24         CW12
  4,317,735.89   10.017988   10.526988        344            360          164         180        16           36         CW01
  1,140,907.21   10.682125   11.191125        344            360          164         180        16           36         CW08
    186,516.21   10.502551   11.011551        347            360          167         180        13           36         CW09
    371,387.77   10.661671   11.170671        345            360          165         180        15           36         CW12
     36,988.97   11.183436   11.692436        345            360          165         180        15           36         CW19
     61,958.73    8.769460    9.278460        347            360          167         180        13           36         CW20
     32,496.25    7.991000    8.500000        346            360          166         180        14           36         CW03
    376,417.36    8.982470    9.491470        346            360          166         180        14           60         CW01
     46,975.55   10.736984   11.245984        338            360          158         180        22           60         CW08
 16,937,444.59   11.280662   11.789662        237            240          237         240         3          N/A          N/A
     50,131.54   10.991000   11.500000        239            240          239         240         1           12         CW23
  1,127,025.54   11.119975   11.628975        237            240          237         240         2           24         CW01
     71,578.96   11.491000   12.000000        239            240          239         240         1           24         CW04
    337,574.36   10.206059   10.715059        236            240          236         240         4           24         CW08
    855,860.56   12.424132   12.933132        238            240          238         240         1           24         CW09
    564,646.09   10.923939   11.432939        237            240          237         240         3           24         CW12
  2,850,118.49   10.909921   11.418921        238            240          238         240         2           36         CW01
     66,507.22   10.591749   11.100749        239            240          239         240         1           36         CW07
  1,278,043.48   11.084745   11.593745        236            240          236         240         4           36         CW08
    401,912.64   10.780643   11.289643        236            240          236         240         1           36         CW09
    657,356.69   10.311287   10.820287        235            240          235         240         5           36         CW12
     24,442.05    8.991000    9.500000        237            240          237         240         3           36         CW15
     35,481.94    9.391000    9.900000        238            240          238         240         2           36         CW28
  1,945,621.82   10.814870   11.323870        237            240          237         240         2           60         CW01
    155,857.06   12.145481   12.654481        237            240          237         240         2           60         CW09
     13,898.83   11.491000   12.000000        239            240          239         240         1           60         CW13
  1,481,065.21   10.474673   10.983673        223            240          223         240        16          N/A          N/A
     28,343.14   10.791000   11.300000        226            240          226         240        14           24         CW01
    156,001.38    9.650976   10.159976        222            240          222         240        18           36         CW01
     51,409.01    5.991000    6.500000        227            240          227         240        13           36         CW04
    240,967.97   11.095109   11.604109        224            240          224         240        15           36         CW08
     54,004.61   10.031201   10.540201        228            240          228         240        12           36         CW09
     13,701.52   11.481000   11.990000        205            240          205         240        19           36         CW12
    308,268.66    9.891244   10.400244        223            240          223         240        17           60         CW01
     92,284.87   10.617849   11.126849        359            360          359         360         1          N/A          N/A
    207,407.26   11.414520   11.923520        357            360          357         360         3           24         CW01
     99,831.70   10.496051   11.005051        359            360          359         360         1           36         CW01
     24,739.44    9.366000    9.875000        351            360          351         360         9           42         CW09
    199,948.63   11.663474   12.172474        347            360          347         360        13          N/A          N/A
    143,221.20    9.382808    9.891808        341            360          341         360        19           24         CW01
     62,712.70   10.341000   10.850000        348            360          348         360        12           36         CW01



                                      S-76



(1) CODES FOR PREPAYMENT TYPE

TYPE   DESCRIPTION
----   -----------
CW01   6 months interest on 80% of the prepaid principal balance
CW03   3 months interest on 80% of the prepaid principal balance
CW04   3 months interest on 100% of the prepaid principal balance
CW06   2 months interest on 80% of the prepaid principal balance
CW07   2 months interest on 66% of the prepaid principal balance
CW08   1% each year of prepaid principal balance
CW09   2% each year of prepaid principal balance
CW10   3% each year of prepaid principal balance
CW12   5% each year of prepaid principal balance
CW13   5%, 4%, 3%, 2% and 1% of prepaid principal balance for the first, second,
       third, fourth and fifth years, respectively
CW15   3%, 2% and 1% of prepaid principal balance for the first, second and
       third years, respectively
CW16   2% and 1% of prepaid principal balance for the first and second years,
       respectively
CW19   1% of 80% of prepaid principal balance
CW20   2% of 80% of prepaid principal balance
CW22   5%, 1%, 1%, 1% and 1% of prepaid principal balance for the first, second,
       third, fourth and fifth years, respectively
CW23   6% each year of prepaid principal balance
CW28   5% of 80% of prepaid principal balance


                                      S-77



      PERCENTAGES OF THE INITIAL CERTIFICATE PRINCIPAL BALANCES OUTSTANDING
              AT THE RESPECTIVE PERCENTAGES OF THE PREPAYMENT MODEL



                                            CLASS A                           CLASS M-1
                               --------------------------------   --------------------------------
DISTRIBUTION DATE               50%    75%   100%   125%   150%    50%    75%   100%   125%   150%
----------------------------   ----   ----   ----   ----   ----   ----   ----   ----   ----   ----

Initial Percentage..........    100    100    100    100    100    100    100    100    100    100
August 25, 2007.............     78     68     58     47     37    100    100    100    100    100
August 25, 2008.............     57     39     22      7      0    100    100    100    100     89
August 25, 2009.............     39     16      0      0      0    100    100     92     97     89
August 25, 2010.............     24     15      0      0      0    100     73     92     97      0
August 25, 2011.............     18     12      0      0      0     88     56     92      0      0
August 25, 2012.............     15      9      0      0      0     74     43     81      0      0
August 25, 2013.............     13      7      0      0      0     62     33      0      0      0
August 25, 2014.............     11      5      0      0      0     52     25      0      0      0
August 25, 2015.............      9      0      0      0      0     44      0      0      0      0
August 25, 2016.............      8      0      0      0      0     36      0      0      0      0
August 25, 2017.............      6      0      0      0      0     30      0      0      0      0
August 25, 2018.............      5      0      0      0      0     25      0      0      0      0
August 25, 2019.............      4      0      0      0      0     21      0      0      0      0
August 25, 2020.............      0      0      0      0      0      0      0      0      0      0
Weighted Average Life to
   Optional Termination
   (in years)...............   3.39   2.25   1.31   1.04   0.86   8.81   5.92   6.11   4.81   3.71
Weighted Average Life
   to Maturity (in years)...   3.44   2.37   1.31   1.04   0.86   9.05   6.49   7.84   6.15   4.77





                                             CLASS M-2                        CLASS M-3
                               --------------------------------   --------------------------------
DISTRIBUTION DATE               50%    75%   100%   125%   150%    50%    75%   100%   125%   150%
----------------------------   ----   ----   ----   ----   ----   ----   ----   ----   ----   ----

Initial Percentage..........    100    100    100    100    100    100    100    100    100    100
August 25, 2007.............    100    100    100    100    100    100    100    100    100    100
August 25, 2008.............    100    100    100    100    100    100    100    100    100    100
August 25, 2009.............    100    100    100    100     77    100    100    100    100     36
August 25, 2010.............    100     73    100     47      0    100     73    100     32      0
August 25, 2011.............     88     56     64      0      0     88     56     34      0      0
August 25, 2012.............     74     43     24      0      0     74     43     24      0      0
August 25, 2013.............     62     33      0      0      0     62     33      0      0      0
August 25, 2014.............     52     25      0      0      0     52     25      0      0      0
August 25, 2015.............     44      0      0      0      0     44      0      0      0      0
August 25, 2016.............     36      0      0      0      0     36      0      0      0      0
August 25, 2017.............     30      0      0      0      0     30      0      0      0      0
August 25, 2018.............     25      0      0      0      0     25      0      0      0      0
August 25, 2019.............     21      0      0      0      0     21      0      0      0      0
August 25, 2020.............      0      0      0      0      0      0      0      0      0      0
Weighted Average Life to
   Optional Termination (in
   years)...................   8.81   5.89   5.42   4.13   3.37   8.81   5.88   4.98   3.82   3.10
Weighted Average Life to
   Maturity (in years)......   9.05   6.47   5.91   4.51   3.68   9.05   6.45   5.47   4.20   3.40



                                      S-78



      PERCENTAGES OF THE INITIAL CERTIFICATE PRINCIPAL BALANCES OUTSTANDING
              AT THE RESPECTIVE PERCENTAGES OF THE PREPAYMENT MODEL



                                             CLASS M-4                        CLASS M-5
                               --------------------------------   --------------------------------
DISTRIBUTION DATE               50%    75%   100%   125%   150%    50%    75%   100%   125%   150%
----------------------------   ----   ----   ----   ----   ----   ----   ----   ----   ----   ----

Initial Percentage..........    100    100    100    100    100    100    100    100    100    100
August 25, 2007.............    100    100    100    100    100    100    100    100    100    100
August 25, 2008.............    100    100    100    100    100    100    100    100    100    100
August 25, 2009.............    100    100    100     82     36    100    100    100     52     36
August 25, 2010.............    100     73     68     32      0    100     73     49     32      0
August 25, 2011.............     88     56     34      0      0     88     56     34      0      0
August 25, 2012.............     74     43     24      0      0     74     43     24      0      0
August 25, 2013.............     62     33      0      0      0     62     33      0      0      0
August 25, 2014.............     52     25      0      0      0     52     25      0      0      0
August 25, 2015.............     44      0      0      0      0     44      0      0      0      0
August 25, 2016.............     36      0      0      0      0     36      0      0      0      0
August 25, 2017.............     30      0      0      0      0     30      0      0      0      0
August 25, 2018.............     25      0      0      0      0     25      0      0      0      0
August 25, 2019.............     21      0      0      0      0     21      0      0      0      0
August 25, 2020.............      0      0      0      0      0      0      0      0      0      0
Weighted Average Life to
   Optional Termination (in
   years)...................   8.81   5.88   4.81   3.70   2.99   8.81   5.87   4.71   3.62   2.92
Weighted Average Life to
   Maturity (in years)......   9.05   6.45   5.30   4.07   3.29   9.05   6.45   5.18   3.99   3.22




                                             CLASS M-6                        CLASS M-7
                               --------------------------------   --------------------------------
DISTRIBUTION DATE               50%    75%   100%   125%   150%    50%    75%   100%   125%   150%
----------------------------   ----   ----   ----   ----   ----   ----   ----   ----   ----   ----

Initial Percentage..........    100    100    100    100    100    100    100    100    100    100
August 25, 2007.............    100    100    100    100    100    100    100    100    100    100
August 25, 2008.............    100    100    100    100    100    100    100    100    100    100
August 25, 2009.............    100    100    100     52     36    100    100    100     52     36
August 25, 2010.............    100     73     49     32      0    100     73     49     32      0
August 25, 2011.............     88     56     34      0      0     88     56     34      0      0
August 25, 2012.............     74     43     24      0      0     74     43     24      0      0
August 25, 2013.............     62     33      0      0      0     62     33      0      0      0
August 25, 2014.............     52     25      0      0      0     52     25      0      0      0
August 25, 2015.............     44      0      0      0      0     44      0      0      0      0
August 25, 2016.............     36      0      0      0      0     36      0      0      0      0
August 25, 2017.............     30      0      0      0      0     30      0      0      0      0
August 25, 2018.............     25      0      0      0      0     25      0      0      0      0
August 25, 2019.............     21      0      0      0      0     21      0      0      0      0
August 25, 2020.............      0      0      0      0      0      0      0      0      0      0
Weighted Average Life to
   Optional Termination
   (in years)...............   8.81   5.87   4.63   3.57   2.88   8.81   5.87   4.57   3.53   2.84
Weighted Average Life to
   Maturity (in years)......   9.05   6.44   5.10   3.93   3.16   9.05   6.44   5.03   3.88   3.12



                                      S-79



      PERCENTAGES OF THE INITIAL CERTIFICATE PRINCIPAL BALANCES OUTSTANDING
              AT THE RESPECTIVE PERCENTAGES OF THE PREPAYMENT MODEL



                                          CLASS M-8                        CLASS M-9
                            --------------------------------   --------------------------------
DISTRIBUTION DATE            50%    75%   100%   125%   150%    50%    75%   100%   125%   150%
-------------------------   ----   ----   ----   ----   ----   ----   ----   ----   ----   ----

Initial Percentage.......    100    100    100    100    100    100    100    100    100    100
August 25, 2007..........     93     93     93     94     94     93     93     93     94     94
August 25, 2008..........     10     17     24     31      0     10     17     24     31      0
August 25, 2009..........      0      0      0      0      0      0      0      0      0      0
Weighted Average Life to
Optional Termination
   (in years)............   1.54   1.58   1.65   1.70   1.62   1.54   1.58   1.65   1.70   1.62
Weighted Average Life to
   Maturity (in years)...   1.54   1.58   1.65   1.70   1.62   1.54   1.58   1.65   1.70   1.62


                                          CLASS B
                            --------------------------------
DISTRIBUTION DATE            50%    75%   100%   125%   150%
-------------------------   ----   ----   ----   ----   ----
Initial Percentage.......    100    100    100    100    100
August 25, 2007..........     93     93     93     94     94
August 25, 2008..........     10     17     24     31      0
August 25, 2009..........      0      0      0      0      0
Weighted Average Life to
   Optional Termination
   (in years)............   1.54   1.58   1.65   1.70   1.62
Weighted Average Life to
   Maturity (in years)...   1.54   1.58   1.65   1.70   1.62

                                LEGAL PROCEEDINGS

          There are no legal proceedings against Countrywide Home Loans, the
Depositor, the Trustee, the issuing entity or the Master Servicer, or to which
any of their respective properties are subject, that is material to the
certificateholders, nor is the Depositor aware of any proceedings of this type
contemplated by governmental authorities.

                    MATERIAL FEDERAL INCOME TAX CONSEQUENCES

          The following discussion and the discussion in the prospectus under
the caption "Material Federal Income Tax Consequences" is the opinion of Sidley
Austin LLP ("TAX COUNSEL") on the anticipated material federal income tax
consequences of the purchase, ownership, and disposition of the Offered
Certificates. It is based on the current provisions and interpretations of the
Internal Revenue Code of 1986, as amended (the "CODE) and the accompanying
Treasury regulations and on current judicial and administrative rulings. All of
these authorities are subject to change and any change can apply retroactively.

          For federal income tax purposes, the issuing entity (exclusive of the
Pre-Funding Account) will consist of two or more REMICs in a tiered structure.
The highest REMIC will be referred to as the "MASTER REMIC," and each REMIC
below the Master REMIC will be referred to as an "UNDERLYING REMIC." Each
underlying REMIC


                                      S-80



will issue multiple classes of uncertificated, regular interests (the
"UNDERLYING REMIC REGULAR INTERESTS") that will be held by another REMIC above
it in the tiered structure. The assets of the lowest underlying REMICs will
consist of the Mortgage Loans and any other assets designated in the Pooling and
Servicing Agreement. The Master REMIC will issue the Offered Certificates
(together, excluding the Class A-R Certificate, the "REGULAR CERTIFICATES"),
which will be designated as regular interests in the Master REMIC. The Class A-R
Certificates (also, the "RESIDUAL CERTIFICATES") will represent the beneficial
ownership of the residual interest in each underlying REMIC and the residual
interest in the Master REMIC. The assets of the Master REMIC will consist of the
underlying REMIC Regular Interests. Aggregate distributions on the underlying
REMIC Regular Interests held by the Master REMIC will equal the aggregate
distributions on the regular interests (including the Regular Certificates)
issued by the Master REMIC.

          For purposes of the discussion under "Material Federal Income Tax
Consequences", the term Net Rate Carryover will not include any monies
contributed by the Depositor to the issuing entity during the 90 day period
following the Closing Date. Any such contributed monies that are paid to any
Class of Certificates on one or more of the first three Distribution Dates will
be treated as interest distributed by the Master REMIC with respect to each of
the respective Classes of Certificates that are entitled to such monies.

          All classes of the Regular Certificates will be treated as
representing interests in REMIC regular interests (the "REMIC REGULAR INTEREST
COMPONENT") and entitlement to receive payments of Net Rate Carryover (the
entitlement to payments of Net Rate Carryover, the "NET RATE CARRYOVER
COMPONENT"). Holders of the Regular Certificates ("REGULAR CERTIFICATEHOLDERS")
must allocate the purchase price for their Regular Certificates between the
REMIC Regular Interest Component and the Net Rate Carryover Component.

          Upon the issuance of the certificates, Tax Counsel will deliver its
opinion concluding, assuming compliance with the Pooling and Servicing
Agreement, for federal income tax purposes, that each REMIC created under the
Pooling and Servicing Agreement will qualify as a REMIC within the meaning of
Section 860D of the Code, and that the Regular Certificates will represent
regular interests in a REMIC. Moreover, Tax Counsel will deliver an opinion
concluding that the rights of the holders of the Regular Certificates with
respect to the Net Rate Carryover Component will represent, for federal income
tax purposes, contractual rights coupled with regular interests within the
meaning of Treasury regulations Section 1.860G-2(i).

TAXATION OF THE REMIC REGULAR INTEREST COMPONENTS OF THE REGULAR CERTIFICATES

          The REMIC Regular Interest Components of the Regular Certificates will
be treated as debt instruments issued by the Master REMIC for federal income tax
purposes. Income on the REMIC Regular Interest Components of the Regular
Certificates must be reported under an accrual method of accounting. Under an
accrual method of accounting, interest income may be required to be included in
a holder's gross income in advance of the holder's actual receipt of that
interest income.

          The REMIC Regular Interest components of the Regular Certificates may,
be treated for federal income tax purposes as having been issued with original
issue discount ("OID"). For purposes of determining the amount and rate of
accrual of OID and market discount, the issuing entity intends to assume that
there will be prepayments on the Mortgage Loans at a rate equal to 100% of the
Prepayment Model. No representation is made regarding whether the Mortgage Loans
will prepay at the foregoing rate or at any other rate. Computing accruals of
OID in the manner described in the prospectus may (depending on the actual rate
of prepayments during the accrual period) result in the accrual of negative
amounts of OID on the Certificates issued with OID in an accrual period. Holders
will be entitled to offset negative accruals of OID only against future OID
accrual on their certificates. See "Material Federal Income Tax
Consequences--Taxation of Debt Securities" in the prospectus.

          If the holders of any Regular Certificates are treated as acquiring
their REMIC Regular Interest Components at a premium, the holders are encouraged
to consult their tax advisors regarding the election to amortize bond premium
and the method to be employed. See "Material Federal Income Tax
Consequences--Taxation of Debt Securities" in the prospectus.


                                      S-81



TAXATION OF THE NET RATE CARRYOVER COMPONENTS OF THE REGULAR CERTIFICATES

In General

          The following discussions assume that the rights of the holders of the
Regular Certificates with respect to the Net Rate Carryover Component will be
treated as rights under a notional principal contract rather than as interests
in a partnership for federal income tax purposes. If these rights were treated
as representing interests in an entity taxable as a partnership for federal
income tax purposes, then there could be different tax timing consequences to
all such certificateholders and different withholding tax consequences on
payments to certificateholders who are non-U.S. Persons. Prospective investors
in the Regular Certificates are encouraged to consult their tax advisors
regarding their appropriate tax treatment.

The Rights and Obligations of the Regular Certificates With Respect to the Net
Rate Carryover Component

          For tax information reporting purposes, the Trustee (1) will treat the
Net Rate Carryover Component of the Regular Certificateholders as rights to
receive payments under a notional principal contract and (2) anticipates
assuming that these rights will have an insubstantial value relative to the
value of the REMIC Regular Interest Components of the Regular Certificates. The
IRS could, however, successfully argue that the Net Rate Carryover Component of
one or more classes of Regular Certificates has a greater value. Similarly, the
Trustee could determine that the Net Rate Carryover Component of one or more
classes of the Regular Certificates has a greater value. In either case, the
REMIC Regular Interest Component of the Regular Certificates could be viewed as
having been issued with either an additional amount of OID (which could cause
the total amount of discount to exceed a statutorily defined de minimis amount)
or with less premium (which would reduce the amount of premium available to be
used as an offset against interest income). See "Material Federal Income Tax
Consequences--Taxation of Debt Securities" in the prospectus. In addition, the
Net Rate Carryover Component could be viewed as having been purchased at a
higher cost. These changes could affect the timing and amount of income and
deductions on the REMIC Regular Interest Component and Net Rate Carryover
Component.

          The portion of the overall purchase price of a Regular Certificate
attributable to the Net Rate Carryover Component must be amortized over the life
of the Certificate, taking into account the declining balance of the related
REMIC Regular Interest Component. Treasury regulations concerning notional
principal contracts provide alternative methods for amortizing the purchase
price of an interest rate cap contract. Under one method--the level yield
constant interest method--the price paid for an interest rate cap agreement is
amortized over the life of the cap as though it were the principal amount of a
loan bearing interest at a reasonable rate. Holders are encouraged to consult
their tax advisors concerning the methods that can be employed to amortize the
portion of the purchase price paid for the Net Rate Carryover Component of such
a Certificate.

          Any payments received by a holder of a Regular Certificate as Net Rate
Carryover will be treated as periodic payments received under a notional
principal contract. For any taxable year, to the extent the periodic payments
received exceeds the amortization of the purchase price of the Net Rate
Carryover Component, such excess will be ordinary income. Conversely, to the
extent the amortization of the purchase price exceeds the periodic payments,
such excess will be allowable as an ordinary deduction. In the case of an
individual, such deduction will be subject to the 2-percent floor imposed on
miscellaneous itemized deductions under section 67 of the Code and may be
subject to the overall limitation on itemized deductions imposed under section
68 of the Code. In addition, miscellaneous itemized deductions are not allowed
for purposes of computing the alternative minimum tax.

DISPOSITIONS OF REGULAR CERTIFICATES

          Upon the sale, exchange, or other disposition of a Regular
Certificate, the Regular Certificateholder must allocate the amount realized
between the REMIC Regular Interest Component and the Net Rate Carryover
Component based on the relative fair market values of those components at the
time of sale. Assuming that the Regular Certificates are held as "capital
assets" within the meaning of Section 1221 of the Code, any gain or loss on the
disposition of the Net Rate Carryover Component should result in capital gain or
loss and any gain or loss on the disposition of the REMIC Regular Interest
Component should result in capital gain or loss. Gain with respect to the


                                      S-82



REMIC Regular Interest Component, however, will be treated as ordinary income,
to the extent it does not exceed the excess (if any) of:

               (1)  the amount that would have been includible in the holder's
                    gross income with respect to the REMIC Regular Interest
                    Component had income thereon accrued at a rate equal to 110%
                    of the applicable federal rate as defined in section 1274(d)
                    of the Code determined as of the date of purchase of the
                    Certificate

                    over

               (2)  the amount actually included in the holder's income.

TAX TREATMENT FOR CERTAIN PURPOSES

          As described more fully under "Material Federal Income Tax
Consequences--Taxation of the REMIC and Its Holders" in the prospectus, the
REMIC Regular Interest Components of the Regular Certificates will represent
"real estate assets" under Section 856(c)(5)(B) of the Code and qualifying
assets under Section 7701(a)(19)(C) of the Code in the same (or greater)
proportion that the assets of the issuing entity will be so treated, and income
on the REMIC Regular Interest Components of the Regular Certificates will
represent "interest on obligations secured by mortgages on real property or on
interests in real property" under Section 856(c)(3)(B) of the Code in the same
(or greater) proportion that the income on the assets of the issuing entity will
be so treated. The Net Rate Carryover Component of the Regular Certificates will
not qualify as assets described in Section 7701(a)(19)(C) of the Code or as real
estate assets under Section 856(c)(5)(B) of the Code. The REMIC Regular Interest
Component of the Regular Certificates (but not the Net Rate Carryover Component)
will represent qualifying assets under Section 860G(a)(3) of the Code if
acquired by a REMIC within the presecribed time periods of the Code. Because of
the Net Rate Carryover Components, however, holders of the Regular Certificates
are encouraged to consult with their tax advisors before resecuritizing those
Certificates in a REMIC.

RESIDUAL CERTIFICATES

          The holders of the Residual Certificates must include the taxable
income of each underlying REMIC and the Master REMIC in their federal taxable
income. The resulting tax liability of the holders may exceed cash distributions
to them during certain periods. All or a portion of the taxable income from a
Residual Certificate recognized by a holder may be treated as "excess inclusion"
income, which with limited exceptions, cannot be reduced by deductions
(including net operating losses) and in all cases, is subject to U.S. federal
income tax.

          In computing alternative minimum taxable income, the special rule
providing that taxable income cannot be less than the sum of the taxpayer's
excess inclusions for the year does not apply. However, a taxpayer's alternative
minimum taxable income cannot be less than the sum of the taxpayer's excess
inclusions for the year. In addition, the amount of any alternative minimum tax
net operating loss is determined without regard to any excess inclusions.

          Effective August 1, 2006, temporary regulations issued by the Internal
Revenue Service (the "Temporary regulations") have modified the general rule
that excess inclusions from a REMIC residual interest are not includible in the
income of a foreign person (or subject to withholding tax) until paid or
distributed. The new regulations accelerate the time both for reporting, and tax
withholding on, excess inclusions allocated to the foreign equity holders of
partnerships and certain other pass-through entities. The new rules also provide
that excess inclusions are United States sourced income. The timing rules apply
to a particular REMIC residual interest and a particular foreign person, if the
first allocation of income from the residual interest to the foreign person
occurs after July 31, 2006. The source rules apply for taxable years ending
after August 1, 2006.

          Under the Temporary regulations, in the case of REMIC residual
interests held by a foreign person through a partnership, the amount of excess
inclusion income allocated to the foreign partner is deemed to be received by
the foreign partner on the last day of the partnership's taxable year except to
the extent that the excess inclusion was required to be taken into account by
the foreign partner at an earlier time under section 860G(b) of the Code as a
result of a distribution by the partnership to the foreign partner or a
disposition in whole or in part of the foreign


                                      S-83



partner's indirect interest in the REMIC residual interest. A disposition in
whole or in part of the foreign partner's indirect interest in the REMIC
residual interest may occur as a result of a termination of the REMIC, a
disposition of the partnership's residual interest in the REMIC, a disposition
of the foreign partner's interest in the partnership, or any other reduction in
the foreign partner's allocable share of the portion of the REMIC net income or
deduction allocated to the partnership.

          Similarly, in the case of a REMIC residual interest held by a foreign
person as a shareholder of a real estate investment trust or regulated
investment company, as a participant in a common trust fund or as a patron in an
organization subject to part I of subchapter T (cooperatives), the amount of
excess inclusion allocated to the foreign person must be taken into income at
the same time that other income from the trust, company, fund, or organization
would be taken into account.

          Under the Temporary regulations, excess inclusions allocated to a
foreign person (whether as a partner or holder of an interest in a pass-through
entity) are expressly made subject to withholding tax. In addition, in the case
of excess inclusions allocable to a foreign person as a partner, the Temporary
regulations eliminate an important exception to the withholding requirements
under which a withholding agent unrelated to a payee is obligated to withhold on
a payment only to the extent that the withholding agent has control over the
payee's money or property and knows the facts giving rise to the payment.

          Purchasers of a Residual Certificate (that is, one of the Class A-R
Certificates) are encouraged to consider carefully the tax consequences of an
investment in Residual Certificates discussed in the prospectus and consult
their tax advisors with respect to those consequences. See "Material Federal
Income Tax Consequences--Taxation of Holders of REMIC Residual Interests" in the
prospectus. In particular, prospective holders of Residual Certificates are
encouraged to consult their tax advisors regarding whether a Residual
Certificate will be treated as a "noneconomic" residual interest, as a "tax
avoidance potential" residual interest, or as both. Among other things, holders
of Noneconomic Residual Certificates should be aware of REMIC regulations that
govern the treatment of "inducement fees" and that may affect their ability to
transfer their Residual Certificates. See "Material Federal Income Tax
Consequences--Taxation of Holders of REMIC Residual Interests--Restrictions on
Ownership and Transfer of REMIC Residual Interests," "--Treatment of Inducement
Fees," and "Material Federal Income Tax Consequences--Tax Treatment of Foreign
Investors" in the prospectus.

          Additionally, for information regarding Prohibited Transactions and
Treatment of Realized Losses, see "Material Federal Income Tax
Consequences--Taxation of the REMIC" in the prospectus.

          As a result of the Economic Growth and Tax Relief Reconciliation Act
of 2001 (the "2001 ACT"), limitations imposed by section 68 of the Code on
claiming itemized deductions will be phased-out commencing in 2006, which will
affect individuals holding Residual Certificates. In addition, as a result of
the Jobs and Growth Tax Reconciliation Act of 2003 (the "2003 ACT"), the backup
withholding rate has been reduced to 28%. Unless they are amended, all
provisions of the 2001 Act and the 2003 Act will no longer apply for taxable
years beginning on or after December 31, 2010. See "Material Federal Income Tax
Consequences" in the prospectus. Investors are encouraged to consult their tax
advisors with respect to both statutes.

                                   OTHER TAXES

          No representations are made regarding the tax consequences of the
purchase, ownership or disposition of the Certificates under any state, local or
foreign tax law.

          ALL INVESTORS ARE ENCOURAGED TO CONSULT THEIR TAX ADVISORS REGARDING
THE FEDERAL, STATE, LOCAL OR FOREIGN TAX CONSEQUENCES OF PURCHASING, OWNING OR
DISPOSING OF THE CERTIFICATES.

                              ERISA CONSIDERATIONS

          Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), prohibits "PARTIES IN INTEREST" with respect to an employee
benefit plan or other arrangement subject to ERISA from engaging in certain
transactions involving the plan and its assets unless a statutory, regulatory or
administrative exemption


                                      S-84



applies to the transaction. Section 4975 of the Code imposes certain excise
taxes on prohibited transactions involving "DISQUALIFIED PERSONS" and employee
benefit plans or other arrangements (including, but not limited to, individual
retirement accounts) described under that section (collectively with employee
benefit plans subject to ERISA, "PLANS"); ERISA authorizes the imposition of
civil penalties for prohibited transactions involving Plans not covered under
Section 4975 of the Code. Any Plan fiduciary which proposes to cause a Plan to
acquire the Offered Certificates (directly or indirectly through investment by
an entity or account holding assets of the Plan) are encouraged to consult with
its counsel with respect to the potential consequences under ERISA and the Code
of the Plan's acquisition and ownership of Offered Certificates. See "ERISA
Considerations" in the prospectus.

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

          Investments by Plans or with assets of Plans that are subject to ERISA
must satisfy ERISA's general fiduciary requirements, including the requirement
of investment prudence and diversification and the requirement that a Plan's
investments be made in accordance with the documents governing the Plan. A
fiduciary which decides to invest the assets of a Plan in the Offered
Certificates should consider, among other factors, the extreme sensitivity of
the investments to the rate of principal payments (including prepayments) on the
Mortgage Loans. It is anticipated that the Certificates will constitute "equity
interests" in the issuing entity for the purpose of the Plan Assets Regulation.

          The U.S. Department of Labor has granted to one or more of the
underwriters substantially identical administrative exemptions (collectively,
the "EXEMPTION") from certain of the prohibited transaction rules of ERISA and
the related excise tax provisions of Section 4975 of the Code with respect to
the initial purchase, the holding and the subsequent resale by Plans of
securities, including certificates, issued by entities that hold investment
pools consisting of certain receivables, loans and other obligations and the
servicing, operation and management of these entities, provided that the
conditions and requirements of the Exemption, including the requirement that an
investing Plan be an "accredited investor" as defined in Rule 501(a)(1) of
Regulation D under the Securities Act of 1933, as amended, are met. The
Exemption extends exemptive relief to certificates, including subordinate
certificates, rated in the four highest generic rating categories in certain
designated transactions when the conditions of the Exemption are met.

          The Exemption provides exemptive relief to certain mortgage-backed and
asset-backed securities transactions using a pre-funding account. Mortgage loans
or other secured receivables 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 entity, may be
transferred to the entity within a 90-day or three-month period following the
closing date, instead of being required to be either identified or transferred
on or before the closing date. The relief is available when the pre-funding
arrangements satisfy certain conditions.

          For a general description of the Exemption and the conditions that
must be met for the Exemption to apply, see "ERISA Considerations" in the
prospectus.

          It is expected that the Exemption will apply to the acquisition and
holding of the Offered Certificates (other than the Class A-R Certificates) by
Plans and that all conditions of the Exemption other than those within the
control of the investors will be met. In addition, as of the date hereof, there
is no single borrower that is the obligor on five percent (5%) of the Mortgage
Loans included in the issuing entity by aggregate unamortized principal balance
of the assets of the issuing entity.

          The rating of a Certificate may change. If a class of Certificates no
longer has a rating of at least BBB- or its equivalent from at least one Rating
Agency, Certificates of that class will no longer be eligible for relief under
the Exemption (although a Plan that had purchased the security when it had a
permitted rating would not be required by the Exemption to dispose of it). An
Offered Certificate that satisfies the requirements of the Exemption other than


                                      S-85



the rating requirement may be eligible for purchase by an insurance company
general account that includes plan assets in reliance on Sections I and III of
Prohibited Transaction Class Exemption 95-60.

          THE CLASS A-R CERTIFICATES DO NOT MEET THE REQUIREMENTS OF THE
EXEMPTION OR ANY COMPARABLE INDIVIDUAL ADMINISTRATIVE EXEMPTION GRANTED TO ANY
UNDERWRITER. CONSEQUENTLY, THE CLASS A-R CERTIFICATES MAY BE TRANSFERRED ONLY IF
THE TRUSTEE RECEIVES:

          o    A REPRESENTATION FROM THE TRANSFEREE OF THE CERTIFICATE,
               ACCEPTABLE TO AND IN FORM AND SUBSTANCE SATISFACTORY TO THE
               TRUSTEE, THAT THE TRANSFEREE IS NOT A PLAN, OR A PERSON ACTING ON
               BEHALF OF A PLAN OR USING A PLAN'S ASSETS TO EFFECT THE TRANSFER;
               OR

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

          IF THE REPRESENTATION IS NOT TRUE, OR ANY ATTEMPT TO TRANSFER TO A
PLAN OR A PERSON ACTING ON BEHALF OF A PLAN OR USING THE PLAN'S ASSETS IS
INITIATED WITHOUT THE REQUIRED OPINION OF COUNSEL, THE ATTEMPTED TRANSFER OR
ACQUISITION SHALL BE VOID.

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

          The sale of the Offered Certificates to a Plan is in no respect a
representation by the issuing entity or any underwriter of the Certificates that
this investment meets all relevant legal requirements with respect to
investments by Plans generally or any particular Plan, or that this investment
is appropriate for Plans generally or any particular Plan.

                             METHOD OF DISTRIBUTION

          Subject to the terms and conditions set forth in the Underwriting
Agreement among the Depositor, Countrywide Securities Corporation (an affiliate
of the Depositor, the Sellers and the Master Servicer), Credit Suisse Securities
(USA) LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated (collectively,
the "UNDERWRITERS"), the Depositor has agreed to sell the Offered Certificates
(other than the Class A-R Certificates) (the "UNDERWRITTEN CERTIFICATES") to the
Underwriters, and each Underwriter has severally agreed to purchase from the
Depositor the initial Certificate Principal Balance of each class of
Underwritten Certificates set forth under its name below.


                                      S-86



               COUNTRYWIDE     CREDIT SUISSE         MERRILL LYNCH,
                SECURITIES    SECURITIES (USA)     PIERCE, FENNER &
CLASS          CORPORATION         LLC           SMITH INCORPORATED
-----          ------------   ----------------   ------------------
Class A.....   $283,500,000     $15,750,000          $15,750,000
Class M-1...   $ 24,075,000     $ 1,337,500          $ 1,337,500
Class M-2...   $ 20,250,000     $ 1,125,000          $ 1,125,000
Class M-3...   $ 12,150,000     $   675,000          $   675,000
Class M-4...   $ 11,250,000     $   625,000          $   625,000
Class M-5...   $ 12,250,000     $         0          $         0
Class M-6...   $ 11,750,000     $         0          $         0
Class M-7...   $ 12,250,000     $         0          $         0
Class M-8...   $ 10,750,000     $         0          $         0
Class M-9...   $  9,500,000     $         0          $         0
Class B.....   $  9,750,000     $         0          $         0
               ------------     -----------          -----------
   Total....   $417,475,000     $19,512,500          $19,512,500

          The Depositor has been advised by each Underwriter that it proposes
initially to offer the Underwritten Certificates to certain dealers at the
prices set forth on the cover page less a selling concession not to exceed the
percentage of the Certificate denomination set forth below, and that each
Underwriter may allow, and the dealers may reallow, a reallowance discount not
to exceed the percentage of the Certificate denomination set forth below:

                 SELLING      REALLOWANCE
CLASS          CONCESSION       DISCOUNT
-----          ------------   -----------
Class A.....     0.03125%       0.01563%
Class M-1...     0.08500%       0.04250%
Class M-2...     0.12500%       0.06250%
Class M-3...     0.18000%       0.09000%
Class M-4...     0.37500%       0.18750%
Class M-5...     0.40000%       0.20000%
Class M-6...     0.50000%       0.25000%
Class M-7...     0.60200%       0.30100%
Class M-8...     0.75000%       0.37500%
Class M-9...     1.00000%       0.50000%
Class B.....     1.10000%       0.55000%

          After the initial public offering, the public offering prices, the
concessions and the discounts may be changed.

          The Depositor has been advised by each Underwriter that it intends to
make a market in the Underwritten Certificates purchased by it, but no
Underwriter has any obligation to do so. We cannot assure you that a secondary
market for the Underwritten Certificates (or any particular class thereof) will
develop or, if it does develop, that it will continue or that this market will
provide sufficient liquidity to certificateholders.

          Until the distribution of the Underwritten Certificates is completed,
the rules of the SEC may limit the ability of the Underwriters and certain
selling group members to bid for and purchase the Underwritten Certificates. As
an exception to these rules, the Underwriters are permitted to engage in certain
transactions that stabilize the price of the Underwritten Certificates. The
transactions consist of bids or purchases for the purpose of pegging, fixing or
maintaining the price of the Underwritten Certificates.

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

          Neither the Depositor 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 prices of the


                                      S-87



Underwritten Certificates. In addition, neither the Depositor nor any of the
Underwriters makes any representation that the Underwriters will engage in these
transactions or that the transactions, once commenced, will not be discontinued
without notice.

          The Depositor has agreed to indemnify the Underwriters against, or
make contributions to the Underwriters with respect to, certain liabilities,
including liabilities under the Securities Act of 1933, as amended (the
"SECURITIES ACT").

          The Class A-R Certificates will not be purchased by the Underwriters
but will be transferred to Countrywide Home Loans on the Closing Date as partial
consideration for the sale of the Mortgage Loans to the Depositor. The Class A-R
Certificates may be offered by Countrywide Home Loans (or an affiliate) or the
Depositor from time to time directly or through underwriters or agents (either
of which may include Countrywide Securities Corporation) in one or more
negotiated transactions, or otherwise, at varying prices to be determined at the
time of sale, in one or more separate transactions at prices to be negotiated at
the time of each sale. Any underwriters or agents that participate in the
distribution of the Class A-R Certificates may be deemed to be "underwriters"
within the meaning of the Securities Act and any profit on the sale of the
certificates by them and any discounts, commissions, concessions or other
compensation received by any of them may be deemed to be underwriting discounts
and commissions under the Securities Act.

                                 USE OF PROCEEDS

          It is expected that the proceeds to the Depositor from the sale of the
Underwritten Certificates will be approximately $447,258,060, plus accrued
interest in the case of the Fixed Rate Certificates, before deducting issuance
expenses payable by the Depositor, estimated to be approximately $792,750. The
Depositor will apply the net proceeds of the sale of the Offered Certificates
against the purchase price of the Initial Mortgage Loans on the Closing Date and
to deposit the Pre-Funded Amount, if any, in the Pre-Funding Account.

                                  LEGAL MATTERS

          The validity of the Certificates, including certain federal income tax
consequences with respect thereto, will be passed upon for the Depositor by
Sidley Austin LLP, New York, New York. Certain legal matters will be passed upon
for the Underwriters by McKee Nelson LLP.

                                     RATINGS

          It is a condition of the issuance of the Offered Certificates that
each class of Offered Certificates be assigned ratings by Moody's Investors
Service, Inc. ("MOODY'S"), Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc. ("S&P"), Fitch Ratings ("FITCH") and together with
Moody's and S&P, the "RATING AGENCIES") at least as high as the respective
ratings set forth in the Summary of this prospectus supplement. The Depositor
has requested that S&P, Moody's and Fitch maintain ongoing surveillance of the
ratings they have assigned to the Offered Certificates in accordance with their
respective policies, but we cannot assure you that any of S&P, Moody's or Fitch
will continue its surveillance of the ratings assigned to any of the Offered
Certificates.

          The ratings assigned by Moody's to mortgage pass-through certificates
address the likelihood of the receipt of all distributions on the mortgage loans
by the certificateholders under the agreements pursuant to which the
certificates are issued. Moody's ratings take into consideration the credit
quality of the related mortgage pool, including any credit support providers,
structural and legal aspects associated with the certificates, and the extent to
which the payment stream on the mortgage pool is adequate to make the payments
required by the certificates. The rating assigned by Moody's to the Class A-R
Certificates only addresses the return of its Certificate Principal Balance. The
ratings assigned by Moody's to the Offered Certificates do not address the
likelihood of any payments of Net Rate Carryover.

          The ratings assigned by S&P to mortgage pass-through certificates
address the likelihood of the receipt of all distributions on the mortgage loans
by the related certificateholders under the agreements pursuant to which the
certificates are issued. S&P ratings take into consideration the credit quality
of the related mortgage pool, including


                                      S-88



any credit support providers, structural and legal aspects associated with the
certificates, and the extent to which the payment stream on the mortgage pool is
adequate to make the payments required by the certificates. The rating assigned
by S&P to the Class A-R Certificates only addresses the return of its
Certificate Principal Balance. The ratings assigned by S&P to the Offered
Certificates do not address the likelihood of payments of Net Rate Carryover.

          The ratings assigned by Fitch to mortgage pass-through certificates
address the likelihood of the receipt of all distributions on the mortgage loans
by the related certificateholders under the agreements pursuant to which the
certificates are issued. Fitch ratings take into consideration the credit
quality of the related mortgage pool, including any credit support providers,
structural and legal aspects associated with the certificates, and the extent to
which the payment stream on the mortgage pool is adequate to make the payments
required by the certificates. The rating assigned by Fitch to the Class A-R
Certificates only addresses the return of its Certificate Principal Balance. The
ratings assigned by Fitch to the Offered Certificates do not address the
likelihood of payments of Net Rate Carryover.

          The ratings of the rating agencies listed above do not address the
possibility that, as a result of principal prepayments, certificateholders may
receive a lower than anticipated yield.

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

          The Depositor has not requested a rating of any Offered Certificates
by any rating agency other than Moody's, S&P and Fitch. However, we cannot
assure you as to whether any other rating agency will rate the Offered
Certificates or, if it does, what ratings would be assigned by another rating
agency. The ratings assigned by another rating agency to the Offered
Certificates could be lower than the respective ratings assigned by the Rating
Agencies.


                                      S-89



                             INDEX OF DEFINED TERMS

2001 Act...........................................................         S-84
2003 Act...........................................................         S-84
30/15 Balloon Mortgage Loan........................................         S-26
Acceleration Limitation Interest Amount............................         S-62
Acceleration Tracking Amount.......................................         S-62
Accrual Period.....................................................         S-45
Adjusted Net Mortgage Rate.........................................         S-44
Advance............................................................         S-40
Applied Realized Loss Amount.......................................         S-63
Auction Period.....................................................         S-41
balloon loans......................................................         S-17
beneficial owner...................................................         S-44
Book-Entry Certificates............................................         S-43
Business Day.......................................................         S-44
Certificate Account................................................         S-53
Certificate Owners.................................................         S-43
Certificate Principal Balance......................................         S-44
Certificates.......................................................         S-43
Charged-off Loan Proceeds..........................................         S-44
Charged-off Mortgage Loan..........................................         S-41
Charge-off Date....................................................         S-41
Closing Date.......................................................          S-2
Code...............................................................         S-30
Collateral Value...................................................         S-28
Combined Loan-to-Value Ratio.......................................         S-27
Compensating Interest..............................................         S-40
Countrywide Financial..............................................         S-37
Countrywide Home Loans.............................................   S-26, S-37
Countrywide Servicing..............................................         S-36
CPR................................................................         S-73
Credit Bureau Risk Score...........................................         S-35
Cumulative Loss Trigger Event......................................         S-48
Current Interest...................................................         S-46
Cut-off Date.......................................................         S-28
debt-to-income ratio...............................................         S-33
Definitive Certificate.............................................         S-44
Delay Delivery Mortgage Loans......................................         S-71
Deleted Mortgage Loan..............................................         S-30
Delinquency Trigger Event..........................................         S-48
Depositor..........................................................         S-26
Detailed Description...............................................         S-26
Determination Date.................................................         S-28
disqualified persons...............................................         S-85
Distribution Account...............................................         S-55
Distribution Account Deposit Date..................................         S-55
Distribution Date..................................................         S-45
DTC................................................................         S-43
Due Dates..........................................................         S-40
Due Period.........................................................         S-45
ERISA..............................................................         S-84
Euroclear..........................................................         S-43
Excess Cashflow....................................................         S-61
Excess Overcollateralization Amount................................         S-49
Excess Proceeds....................................................         S-45
Exemption..........................................................         S-85
Expense Fee Rate...................................................         S-46
Extra Principal Distribution Amount................................         S-49
Final Recovery Determination.......................................         S-45
Fitch..............................................................    S-4, S-88
Fixed Rate Certificates............................................         S-43
Full Doc Program...................................................         S-33
Funding Period.....................................................         S-31
Global Securities..................................................          I-1
Initial Cut-off Date...............................................         S-26
Initial Cut-off Date Pool Principal Balance........................         S-26
Initial Cut-off Date Principal Balance..... .......................         S-26
Initial Mortgage Loans.............................................         S-26
Initial Mortgage Pool..............................................         S-26
Initial Target Subordination Percentage............................         S-49
Insurance Proceeds.................................................         S-45
Interest Carry Forward Amount......................................         S-46
Interest Determination Date........................................   S-46, S-63
Interest Funds.....................................................         S-46
Interest Remittance Amount.........................................         S-46
issuing entity.....................................................         S-41
Last Scheduled Distribution Date...................................         S-72
Liquidation Proceeds...............................................         S-45
Master REMIC.......................................................         S-80
Master Servicer....................................................         S-26
Master Servicer Advance Date.......................................         S-40
Master Servicing Fee...............................................         S-39
Modeling Assumptions...............................................         S-74
Moody's............................................................    S-4, S-88
Mortgage File......................................................         S-29
Mortgage Loans.....................................................         S-29
Mortgage Notes.....................................................         S-26
Mortgage Rate......................................................         S-27
Mortgaged Properties...............................................         S-26
Net Mortgage Rate..................................................         S-40
net rate cap.......................................................         S-17
Net Rate Cap.......................................................         S-46
Net Rate Carryover.................................................         S-46
Net Rate Carryover Component.......................................         S-81
NIM Insurer........................................................    S-1, S-70
NIM Insurer Default................................................         S-22
Notional Balance...................................................         S-63
OC Adjusted Measure................................................         S-49
OC Floor...........................................................         S-50
OC Measure.........................................................         S-50
Offered Certificates...............................................         S-43
OID................................................................         S-81
One-Month LIBOR....................................................         S-63
Optional Termination Date..........................................         S-67
Overcollateralization Deficiency Amount............................         S-50
Overcollateralization Reduction Amount.............................         S-50
Overcollateralization Target Amount................................         S-50
Overcollateralized Amount..........................................         S-50
Participants.......................................................         S-44


                                      S-90



parties in interest................................................         S-84
Pass-Through Margin................................................         S-47
Pass-Through Rate..................................................         S-47
Percentage Interest................................................         S-45
Plans..............................................................         S-85
Pooling and Servicing Agreement....................................         S-28
Pre-Funded Amount..................................................         S-31
Pre-Funding Account................................................         S-31
Prepayment Interest Excess.........................................         S-39
Prepayment Interest Shortfall......................................         S-40
Prepayment Model...................................................         S-73
Prepayment Period..................................................         S-28
Principal Distribution Amount......................................         S-51
Principal Remittance Amount........................................         S-51
Private Certificates...............................................         S-43
Purchase Price.....................................................         S-30
Rating Agencies....................................................         S-88
Realized Loss......................................................         S-51
Record Date........................................................         S-45
Regular Certificateholders.........................................         S-81
Regular Certificates...............................................         S-81
REMIC Regular Interest Component...................................         S-81
REO Property.......................................................         S-40
Replacement Mortgage Loan..........................................         S-30
Residual Certificates..............................................   S-61, S-81
Rolling Sixty-Day Delinquency Rate.................................         S-51
S&P................................................................    S-4, S-88
Scheduled Payments.................................................         S-27
SEC................................................................         S-26
Securities Act.....................................................         S-88
Seller.............................................................         S-26
Seller Shortfall Interest Requirement..............................         S-47
Sellers............................................................         S-26
Senior Enhancement Percentage......................................         S-51
Senior Principal Distribution Target Amount........................         S-52
Servicing Advances.................................................         S-54
Servicing Fee Rate.................................................         S-39
Sixty-Day Delinquency Rate.........................................         S-52
Stated Income Program..............................................         S-34
Stated Principal Balance...........................................         S-28
Statistical Calculation Date.......................................         S-26
Statistical Calculation Date Pool Principal Balance................         S-26
Statistical Calculation Pool.......................................         S-26
Statistical Calculation Pool Mortgage Loans........................         S-26
Stepdown Date......................................................         S-52
Stepdown Target Subordination Percentage...........................         S-49
Subordinated Certificates..........................................         S-43
Subordinated Class Principal Distribution Target Amount ...........         S-52
Subsequent Cut-off Date............................................         S-31
Subsequent Mortgage Loans..........................................         S-31
Subsequent Recoveries..............................................         S-45
Subsequent Transfer Date...........................................         S-31
Tax Counsel........................................................         S-80
Trigger Event......................................................         S-53
Trust..............................................................         S-41
Trust Fund.........................................................         S-41
Trustee............................................................         S-26
Trustee Fee........................................................         S-57
Trustee Fee Rate...................................................   S-48, S-58
U.S. Person........................................................          I-4
underlying REMIC...................................................         S-80
underlying REMIC Regular Interests.................................         S-81
Underwriters.......................................................         S-86
Underwritten Certificates..........................................         S-86
Unpaid Realized Loss Amount........................................         S-53
Voting Rights......................................................         S-66


                                      S-91



                                                                         ANNEX A

                        THE STATISTICAL CALCULATION POOL

                                  LOAN PROGRAMS



                                                                                        WEIGHTED                   WEIGHTED
                                                                AVERAGE     WEIGHTED    AVERAGE     WEIGHTED       AVERAGE
                    NUMBER OF      AGGREGATE        % OF       PRINCIPAL     AVERAGE   REMAINING     AVERAGE       ORIGINAL
                   STATISTICAL     PRINCIPAL    STATISTICAL     BALANCE      CURRENT    TERM TO      CREDIT        COMBINED
                     MORTGAGE       BALANCE       MORTGAGE    OUTSTANDING   MORTGAGE    MATURITY     BUREAU     LOAN-TO-VALUE
LOAN PROGRAM          LOANS       OUTSTANDING      LOANS          ($)       RATE (%)    (MONTHS)   RISK SCORE     RATIO (%)
----------------   -----------   ------------   -----------   -----------   --------   ---------   ----------   -------------

10 Year Term....          24     $    628,606       0.12%        26,192      11.521      117.62        615           71.0
15 Year Term....         366       12,610,905       2.51         34,456      11.772      174.53        621           83.5
20 Year Term....         839       29,893,257       5.94         35,630      11.617      235.82        617           88.5
30 Year Term....          16          835,343       0.17         52,209      11.292      351.45        634           98.7
30/15 Balloon...      10,314      459,162,332      91.26         44,518      11.618      176.51        637           97.6
                      ------     ------------     ------
   Total........      11,559     $503,130,444     100.00%
                      ======     ============     ======


                      ORIGINAL TERMS TO STATED MATURITY(1)



                                                                                              WEIGHTED                   WEIGHTED
                                                                     AVERAGE      WEIGHTED    AVERAGE     WEIGHTED       AVERAGE
                         NUMBER OF      AGGREGATE        % OF       PRINCIPAL     AVERAGE    REMAINING     AVERAGE       ORIGINAL
                        STATISTICAL     PRINCIPAL    STATISTICAL     BALANCE      CURRENT     TERM TO      CREDIT        COMBINED
ORIGINAL TERM             MORTGAGE       BALANCE       MORTGAGE    OUTSTANDING    MORTGAGE    MATURITY     BUREAU     LOAN-TO-VALUE
TO MATURITY (MONTHS)       LOANS       OUTSTANDING      LOANS          ($)        RATE (%)    (MONTHS)   RISK SCORE     RATIO (%)
---------------------   -----------   ------------   -----------   -----------   ---------   ---------   ----------   -------------

120..................          24     $    628,606       0.12%        26,192       11.521      117.62        615           71.0
180..................      10,680      471,773,237      93.77         44,174       11.623      176.45        636           97.2
240..................         839       29,893,257       5.94         35,630       11.617      235.82        617           88.5
360..................          16          835,343       0.17         52,209       11.292      351.45        634           98.7
                           ------     ------------     ------
   Total............       11,559     $503,130,444     100.00%
                           ======     ============     ======


----------
(1)  As of the Statistical Calculation Date, the weighted average original term
     to stated maturity of the Statistical Mortgage Loans was approximately 184
     months.


                                       A-1



                   CURRENT MORTGAGE LOAN PRINCIPAL BALANCES(1)



                                                                                                                           WEIGHTED
                                                                                                    WEIGHTED   WEIGHTED    AVERAGE
                                                                            AVERAGE     WEIGHTED    AVERAGE     AVERAGE    ORIGINAL
RANGE OF                        NUMBER OF      AGGREGATE        % OF       PRINCIPAL    AVERAGE    REMAINING    CREDIT     COMBINED
CURRENT MORTGAGE               STATISTICAL     PRINCIPAL    STATISTICAL     BALANCE     CURRENT     TERM TO     BUREAU     LOAN-TO-
LOAN PRINCIPAL                   MORTGAGE       BALANCE       MORTGAGE    OUTSTANDING   MORTGAGE    MATURITY     RISK       VALUE
BALANCES ($)                      LOANS       OUTSTANDING      LOANS          ($)       RATE (%)    (MONTHS)     SCORE    RATIO (%)
----------------------------   -----------   ------------   -----------   -----------   --------   ---------   --------   ---------

$0.01 - $25,000.00..........       2,707     $ 54,723,894      10.88%        20,216      11.796      182.21       617       95.5
$25,000.01 - $50,000.00.....       5,438      190,746,678      37.91         35,077      11.732      181.13       628       96.7
$50,000.01 - $75,000.00.....       2,122      128,462,716      25.53         60,539      11.635      179.87       640       96.8
$75,000.01 - $100,000.00....         844       72,870,036      14.48         86,339      11.395      179.36       645       95.7
$100,000.01 - $150,000.00...         399       47,222,716       9.39        118,353      11.372      177.24       653       99.1
$150,000.01 - $200,000.00...          41        6,864,067       1.36        167,416      11.308      176.32       655       95.6
$200,000.01 - $250,000.00...           3          667,052       0.13        222,351      11.349      173.94       642       98.1
$250,000.01 - $300,000.00...           4        1,074,759       0.21        268,690      10.401      170.97       618       90.2
$450,000.01 - $500,000.00...           1          498,526       0.10        498,526      11.000      172.00       599       77.4
                                  ------     ------------     ------
   Total....................      11,559     $503,130,444     100.00%
                                  ======     ============     ======


----------
(1)  As of the Statistical Calculation Date, the average current mortgage loan
     principal balance of the Statistical Mortgage Loans was approximately
     $43,527.


                                       A-2



                  STATE DISTRIBUTION OF MORTGAGED PROPERTIES(1)



                                                                                       WEIGHTED                 WEIGHTED
                                                                 AVERAGE    WEIGHTED   AVERAGE    WEIGHTED      AVERAGE
                         NUMBER OF    AGGREGATE       % OF      PRINCIPAL    AVERAGE  REMAINING    AVERAGE      ORIGINAL
                        STATISTICAL   PRINCIPAL   STATISTICAL    BALANCE     CURRENT   TERM TO     CREDIT       COMBINED
                         MORTGAGE      BALANCE      MORTGAGE   OUTSTANDING  MORTGAGE   MATURITY    BUREAU    LOAN-TO-VALUE
STATE                      LOANS     OUTSTANDING     LOANS         ($)      RATE (%)   (MONTHS)  RISK SCORE    RATIO (%)
----------------------  -----------  -----------  -----------  -----------  --------  ---------  ----------  -------------

Alabama...............        172    $ 4,825,559      0.96%       28,056     12.168     179.95       618          97.4
Alaska................         26      1,095,230      0.22        42,124     12.620     178.00       605          99.0
Arizona...............        570     25,252,149      5.02        44,302     11.757     179.79       636          93.3
Arkansas..............          3         92,883      0.02        30,961     10.923     177.70       599         100.0
California............      1,473    110,192,841     21.90        74,808     11.168     177.45       650          95.7
Colorado..............        294     11,507,937      2.29        39,143     11.852     178.21       626          98.5
Connecticut...........        147      6,248,239      1.24        42,505     11.426     185.84       628          93.1
Delaware..............         24        802,330      0.16        33,430     12.375     178.41       608          96.1
District of Columbia..         12        670,587      0.13        55,882     11.553     183.96       636          91.2
Florida...............      1,287     58,525,594     11.63        45,474     11.871     181.11       642          96.8
Georgia...............        574     19,801,114      3.94        34,497     12.219     177.47       623          99.4
Hawaii................         37      2,909,007      0.58        78,622     11.424     176.05       657          96.6
Idaho.................        103      3,392,704      0.67        32,939     11.925     185.35       628          94.7
Illinois..............        595     25,175,573      5.00        42,312     11.821     181.28       633          98.1
Indiana...............        177      4,590,781      0.91        25,937     12.256     194.66       610          99.2
Iowa..................         59      1,820,582      0.36        30,857     12.567     178.49       618          98.6
Kansas................         94      2,593,158      0.52        27,587     12.508     183.00       617          97.6
Kentucky..............        114      3,073,165      0.61        26,958     12.291     178.20       615          98.2
Louisiana.............         79      2,280,323      0.45        28,865     12.661     180.79       616          98.5
Maine.................         34      1,173,080      0.23        34,502     11.936     191.28       623          95.9
Maryland..............        224     11,482,315      2.28        51,260     11.834     181.94       636          94.2
Massachusetts.........        219     11,945,046      2.37        54,544     11.218     184.31       629          91.8
Michigan..............        424     12,417,715      2.47        29,287     11.974     185.71       624          98.4
Minnesota.............        161      6,464,637      1.28        40,153     11.796     179.26       638          98.2
Mississippi...........         65      1,887,251      0.38        29,035     12.120     178.76       623          98.6
Missouri..............        215      6,021,716      1.20        28,008     12.377     180.52       617          98.2
Montana...............         45      1,628,910      0.32        36,198     12.296     180.95       627          95.1
Nebraska..............         27        737,400      0.15        27,311     11.985     176.14       621         100.0
Nevada................        304     16,841,758      3.35        55,401     11.710     178.17       643          98.0
New Hampshire.........         70      3,007,590      0.60        42,966     11.597     178.13       622          95.9
New Jersey............        175      8,873,924      1.76        50,708     12.321     182.55       634          93.3
New Mexico............         57      1,804,585      0.36        31,659     12.105     181.30       621          97.6
New York..............        251     15,881,468      3.16        63,273     11.603     180.50       642          95.8
North Carolina........        265      8,317,880      1.65        31,388     12.232     180.05       618          99.1
North Dakota..........         12        306,020      0.06        25,502     12.376     178.40       638         100.0
Ohio..................        283      7,603,331      1.51        26,867     11.932     178.47       621          98.6
Oklahoma..............        108      2,755,586      0.55        25,515     12.475     181.33       612          98.0
Oregon................        169      7,261,046      1.44        42,965     11.671     177.58       633          93.6
Pennsylvania..........        206      6,308,597      1.25        30,624     12.574     183.23       627          96.7
Rhode Island..........         31      1,659,763      0.33        53,541     12.024     183.68       623          91.5
South Carolina........         85      2,736,378      0.54        32,193     12.007     222.57       618          96.7
South Dakota..........         14        315,245      0.06        22,517     12.240     177.48       628         100.0
Tennessee.............        234      6,890,741      1.37        29,448     10.423     175.95       620          99.1
Texas.................        987     27,452,007      5.46        27,814      9.875     179.64       618          99.9
Utah..................        150      5,547,990      1.10        36,987     11.945     179.18       634          97.8
Vermont...............          6        144,056      0.03        24,009     13.408     185.18       597          90.7
Virginia..............        277     13,955,190      2.77        50,380     12.066     183.85       639          96.1
Washington............        444     21,122,558      4.20        47,573     11.912     178.25       631          97.0
West Virginia.........         28        803,111      0.16        28,683     12.689     181.78       614          98.2
Wisconsin.............        116      3,880,127      0.77        33,449     12.016     181.87       629          96.6
Wyoming...............         33      1,053,671      0.21        31,929     11.860     179.03       622          98.3
                           ------    ------------   ------
   Total..............     11,559    $503,130,444   100.00%
                           ======    ============   ======


----------
(1)  As of the Statistical Calculation Date, no more than approximately 0.383%
     of the Statistical Mortgage Loans was secured by mortgaged properties
     located in any one postal zip code area.


                                       A-3



                    ORIGINAL COMBINED LOAN-TO-VALUE RATIOS(1)



                                                                                        WEIGHTED                 WEIGHTED
                                                                  AVERAGE    WEIGHTED   AVERAGE    WEIGHTED      AVERAGE
                         NUMBER OF     AGGREGATE      % OF       PRINCIPAL    AVERAGE  REMAINING    AVERAGE      ORIGINAL
RANGE OF ORIGINAL       STATISTICAL    PRINCIPAL   STATISTICAL    BALANCE     CURRENT   TERM TO     CREDIT       COMBINED
COMBINED LOAN-TO-VALUE   MORTGAGE       BALANCE      MORTGAGE   OUTSTANDING  MORTGAGE   MATURITY    BUREAU    LOAN-TO-VALUE
RATIOS (%)                 LOANS      OUTSTANDING     LOANS        ($)       RATE (%)   (MONTHS)  RISK SCORE    RATIO (%)
----------------------  -----------  ------------  -----------  -----------  --------  ---------  ----------  -------------

0.01-50.00............         89    $  3,795,358       0.75%      42,644     11.217     186.84       610          42.6
50.01 - 55.00.........         53       2,125,804       0.42       40,110     11.505     183.01       607          52.6
55.01 - 60.00.........         64       2,946,843       0.59       46,044     11.194     187.71       608          58.0
60.01 - 65.00.........         91       3,620,067       0.72       39,781     11.342     190.28       610          62.9
65.01 - 70.00.........        131       4,968,349       0.99       37,926     11.489     192.83       606          67.8
70.01 - 75.00.........        156       6,353,645       1.26       40,728     11.590     186.33       606          73.3
75.01 - 80.00.........        275      11,767,056       2.34       42,789     11.669     191.66       605          78.3
80.01 - 85.00.........        294      12,516,674       2.49       42,574     11.518     188.20       611          83.5
85.01 - 90.00.........        491      20,616,330       4.10       41,988     11.401     188.63       626          89.1
90.01 - 95.00.........        296      12,977,599       2.58       43,843     11.185     178.12       630          94.6
95.01 - 100.00........      9,619     421,442,720      83.76       43,814     11.659     178.84       639          99.9
                           ------    ------------     ------
   Total..............     11,559    $503,130,444     100.00%
                           ======    ============     ======


----------
(1)  As of the Statistical Calculation Date, the weighted average original
     Combined Loan-to-Value Ratio of the Statistical Mortgage Loans was
     approximately 96.63%.

                            CURRENT MORTGAGE RATES(1)



                                                                                        WEIGHTED                 WEIGHTED
                                                                  AVERAGE    WEIGHTED   AVERAGE    WEIGHTED      AVERAGE
                         NUMBER OF     AGGREGATE      % OF       PRINCIPAL    AVERAGE  REMAINING    AVERAGE      ORIGINAL
                        STATISTICAL    PRINCIPAL   STATISTICAL    BALANCE     CURRENT   TERM TO     CREDIT       COMBINED
RANGE OF CURRENT         MORTGAGE       BALANCE      MORTGAGE   OUTSTANDING  MORTGAGE   MATURITY    BUREAU    LOAN-TO-VALUE
MORTGAGE RATES (%)         LOANS      OUTSTANDING     LOANS         ($)      RATE (%)   (MONTHS)  RISK SCORE    RATIO (%)
----------------------  -----------  ------------  -----------  -----------  --------  ---------  ----------  -------------

5.501 - 6.000.........          2    $     44,948       0.01%      22,474      5.792     174.66       573           91.6
6.001 - 6.500.........          1          51,731       0.01       51,731      6.500     227.00       606          100.0
6.501 - 7.000.........          5         355,139       0.07       71,028      6.970     186.71       629           79.5
7.001 - 7.500.........          8         469,753       0.09       58,719      7.451     172.68       656           86.8
7.501 - 8.000.........          6         379,807       0.08       63,301      7.940     170.55       634           73.5
8.001 - 8.500.........         57       2,762,409       0.55       48,463      8.377     182.15       646           93.5
8.501 - 9.000.........        136       6,339,471       1.26       46,614      8.886     175.74       636           93.3
9.001 - 9.500.........        192       9,053,175       1.80       47,152      9.340     180.50       648           95.4
9.501 - 10.000........      1,353      49,188,709       9.78       36,355      9.871     178.80       634           96.9
10.001 - 10.500.......        582      31,449,969       6.25       54,038     10.359     178.83       659           95.5
10.501 - 11.000.......      1,009      51,661,021      10.27       51,200     10.859     179.21       649           95.5
11.001 - 11.500.......      1,406      71,335,498      14.18       50,736     11.327     178.93       652           97.2
11.501 - 12.000.......      1,981      90,407,218      17.97       45,637     11.815     180.88       636           96.4
12.001 - 12.500.......      1,644      71,421,157      14.20       43,444     12.297     180.58       628           97.8
12.501 - 13.000.......      1,942      74,510,583      14.81       38,368     12.794     181.21       615           97.8
13.001 - 13.500.......        699      25,009,859       4.97       35,779     13.271     182.23       612           95.7
13.501 - 14.000.......        353      12,471,534       2.48       35,330     13.746     182.44       613           95.5
Greater than 14.000...        183       6,218,465       1.24       33,981     14.500     185.39       610           96.6
                           ------    ------------     ------
   Total..............     11,559    $503,130,444     100.00%
                           ======    ============     ======


----------
(1)  As of the Statistical Calculation Date, the weighted average current
     mortgage rate of the Statistical Mortgage Loans was approximately 11.622%
     per annum. As of the Statistical Calculation Date, the weighted average
     current mortgage rate of the Statistical Mortgage Loans net of the Master
     Servicing Fees and the Trustee Fee was approximately 11.113% per annum.


                                       A-4



                          TYPES OF MORTGAGED PROPERTIES



                                                                                                                     WEIGHTED
                                                                                              WEIGHTED               AVERAGE
                                                                       AVERAGE     WEIGHTED   AVERAGE    WEIGHTED    ORIGINAL
                              NUMBER OF     AGGREGATE       % OF      PRINCIPAL    AVERAGE   REMAINING   AVERAGE     COMBINED
                             STATISTICAL    PRINCIPAL   STATISTICAL    BALANCE     CURRENT    TERM TO     CREDIT     LOAN-TO-
                               MORTGAGE      BALANCE      MORTGAGE   OUTSTANDING   MORTGAGE   MATURITY    BUREAU      VALUE
PROPERTY TYPE                   LOANS      OUTSTANDING     LOANS         ($)       RATE (%)   (MONTHS)  RISK SCORE  RATIO (%)
---------------------------  -----------  ------------  -----------  -----------  ---------  ---------  ----------  ---------

Single Family Residence....     8,150     $342,208,618     68.02%       41,989      11.664     180.63      634         96.2
Planned Unit Development.       2,136      101,643,268     20.20        47,586      11.447     179.97      632         97.2
Low-rise Condominium.....         982       41,855,868      8.32        42,623      11.736     178.78      644         98.0
Two Family Home..........         220       13,865,714      2.76        63,026      11.557     176.22      646         99.5
High-rise Condominium....          51        2,588,970      0.51        50,764      11.795     177.81      655         99.3
Three Family Home........          11          627,855      0.12        57,078      10.668     176.28      644         93.3
Manufactured Home(1).....           8          296,173      0.06        37,022      10.589     171.27      673         99.3
Four Family Home.........           1           43,978      0.01        43,978      10.650     173.00      728         95.0
                               ------     ------------    ------
   Total............           11,559     $503,130,444    100.00%
                               ======     ============    ======


----------
(1) Treated as real property.

                            PURPOSE OF MORTGAGE LOANS



                                                                                                                     WEIGHTED
                                                                                              WEIGHTED               AVERAGE
                                                                       AVERAGE     WEIGHTED   AVERAGE    WEIGHTED    ORIGINAL
                              NUMBER OF     AGGREGATE       % OF      PRINCIPAL    AVERAGE   REMAINING   AVERAGE     COMBINED
                             STATISTICAL    PRINCIPAL   STATISTICAL    BALANCE     CURRENT    TERM TO     CREDIT     LOAN-TO-
                               MORTGAGE      BALANCE      MORTGAGE   OUTSTANDING   MORTGAGE   MATURITY    BUREAU      VALUE
LOAN PURPOSE                    LOANS      OUTSTANDING     LOANS         ($)       RATE (%)   (MONTHS)  RISK SCORE  RATIO (%)
---------------------------  -----------  ------------  -----------  -----------  ---------  ---------  ----------  ---------

Purchase...............         8,329     $366,208,726     72.79%       43,968      11.669     178.18      640         99.7
Refinance (cash-out)...         2,576      108,164,633     21.50        41,989      11.493     187.38      621         87.7
Refinance (rate/term)..           654       28,757,084      5.72        43,971      11.505     178.86      625         90.7
                               ------     ------------    ------
   Total...............        11,559     $503,130,444    100.00%
                               ======     ============    ======


                               OCCUPANCY TYPES(1)



                                                                                                                     WEIGHTED
                                                                                              WEIGHTED               AVERAGE
                                                                       AVERAGE     WEIGHTED   AVERAGE    WEIGHTED    ORIGINAL
                              NUMBER OF     AGGREGATE       % OF      PRINCIPAL    AVERAGE   REMAINING   AVERAGE     COMBINED
                             STATISTICAL    PRINCIPAL   STATISTICAL    BALANCE     CURRENT    TERM TO     CREDIT     LOAN-TO-
                               MORTGAGE      BALANCE      MORTGAGE   OUTSTANDING   MORTGAGE  MATURITY     BUREAU      VALUE
OCCUPANCY TYPE                  LOANS      OUTSTANDING     LOANS         ($)       RATE (%)   (MONTHS)  RISK SCORE  RATIO (%)
---------------------------  -----------  ------------  -----------  -----------  ---------  ---------  ----------  ---------

Owner Occupied.......          11,503     $500,760,854     99.53%       43,533      11.625     180.23      635         96.6
Secondary Residence..              31        1,337,153      0.27        43,134      11.026     175.05      666         97.6
Investment Property..              25        1,032,437      0.21        41,297      10.803     171.90      679         95.3
                               ------     ------------    ------
   Total...............        11,559     $503,130,444    100.00%
                               ======     ============    ======


-----------
(1)  Based upon representations of the related borrowers at the time of
     origination.


                                       A-5



                         REMAINING TERMS TO MATURITY(1)


                                                                                                                     WEIGHTED
                                                                                              WEIGHTED               AVERAGE
                                                                       AVERAGE     WEIGHTED   AVERAGE    WEIGHTED    ORIGINAL
                              NUMBER OF     AGGREGATE       % OF      PRINCIPAL    AVERAGE   REMAINING   AVERAGE     COMBINED
RANGE OF                     STATISTICAL    PRINCIPAL   STATISTICAL    BALANCE     CURRENT    TERM TO     CREDIT     LOAN-TO-
REMAINING TERMS                MORTGAGE      BALANCE      MORTGAGE   OUTSTANDING   MORTGAGE  MATURITY     BUREAU      VALUE
TO MATURITY (MONTHS)            LOANS      OUTSTANDING     LOANS         ($)       RATE (%)   (MONTHS)  RISK SCORE  RATIO (%)
---------------------------  -----------  ------------  -----------  -----------  ---------  ---------  ----------  ---------

1 - 120..............              44     $  1,004,242      0.20%       22,824      11.947     111.46      608         74.0
121 - 180............          10,660      471,397,601     93.69        44,221      11.622     176.51      636         97.2
181 - 300............             839       29,893,257      5.94        35,630      11.617     235.82      617         88.5
301 - 360............              16          835,343      0.17        52,209      11.292     351.45      634         98.7
                               ------     ------------    ------
   Total...............        11,559     $503,130,444    100.00%
                               ======     ============    ======


----------
(1)  As of the Statistical Calculation Date, the weighted average remaining term
     to maturity of the Statistical Mortgage Loans was approximately 180 months.

                             DOCUMENTATION PROGRAMS



                                                                                                                     WEIGHTED
                                                                                              WEIGHTED               AVERAGE
                                                                       AVERAGE     WEIGHTED   AVERAGE    WEIGHTED    ORIGINAL
                              NUMBER OF     AGGREGATE       % OF      PRINCIPAL    AVERAGE   REMAINING   AVERAGE     COMBINED
                             STATISTICAL    PRINCIPAL   STATISTICAL    BALANCE     CURRENT    TERM TO     CREDIT     LOAN-TO-
                               MORTGAGE      BALANCE      MORTGAGE   OUTSTANDING   MORTGAGE  MATURITY     BUREAU      VALUE
DOCUMENTATION PROGRAM           LOANS      OUTSTANDING     LOANS         ($)       RATE (%)   (MONTHS)  RISK SCORE  RATIO (%)
---------------------------  -----------  ------------  -----------  -----------  ---------  ---------  ----------  ---------

Full ................           8,140     $326,452,193     64.88%       40,105      11.525     181.47      620         95.0
Stated Income........           3,419      176,678,250     35.12        51,675      11.800     177.85      663         99.6
                               ------     ------------    ------
   Total...............        11,559     $503,130,444    100.00%
                               ======     ============    ======


                          CREDIT BUREAU RISK SCORES(1)



                                                                                                                     WEIGHTED
                                                                                              WEIGHTED               AVERAGE
                                                                       AVERAGE     WEIGHTED   AVERAGE    WEIGHTED    ORIGINAL
                              NUMBER OF     AGGREGATE       % OF      PRINCIPAL    AVERAGE   REMAINING   AVERAGE     COMBINED
RANGE OF                     STATISTICAL    PRINCIPAL   STATISTICAL    BALANCE     CURRENT    TERM TO     CREDIT     LOAN-TO-
CREDIT BUREAU RISK             MORTGAGE      BALANCE      MORTGAGE   OUTSTANDING   MORTGAGE  MATURITY     BUREAU      VALUE
SCORES                          LOANS      OUTSTANDING     LOANS         ($)       RATE (%)   (MONTHS)  RISK SCORE  RATIO (%)
---------------------------  -----------  ------------  -----------  -----------  ---------  ---------  ----------  ---------

801 - 820.............              5     $    174,990      0.03%       34,998      10.489     175.82      806         97.0
781 - 800.............             17          923,776      0.18        54,340      10.870     175.63      788        100.0
761 - 780.............             56        3,897,110      0.77        69,591      10.694     178.36      771         99.9
741 - 760.............             90        4,964,148      0.99        55,157      10.853     176.40      749         99.6
721 - 740.............            205       11,578,063      2.30        56,478      11.030     176.73      729         99.7
701 - 720.............            303       16,678,381      3.31        55,044      11.096     177.80      710         99.4
681 - 700.............            636       34,691,480      6.90        54,546      11.023     178.66      689         98.5
661 - 680.............          1,069       52,208,058     10.38        48,838      11.274     178.29      670         98.4
641 - 660.............          1,634       78,981,908     15.70        48,337      11.511     179.33      650         97.8
621 - 640.............          2,251      100,848,317     20.04        44,802      11.816     180.29      630         97.2
601 - 620.............          2,038       80,879,191     16.08        39,686      11.761     182.71      610         95.3
581 - 600.............          2,406       85,986,424     17.09        35,738      11.997     180.96      591         95.6
561 - 580.............            614       22,828,372      4.54        37,180      12.054     182.99      572         87.4
541 - 560.............            138        5,207,150      1.03        37,733      11.479     178.35      552         92.5
521 - 540.............             69        2,351,733      0.47        34,083      11.302     181.03      532         98.2
501 - 520.............             23          796,551      0.16        34,633      11.888     177.05      514         96.9
Less than 501.........              5          134,791      0.03        26,958      10.751     183.73      488        100.0
                               ------     ------------    ------
   Total..............         11,559     $503,130,444    100.00%
                               ======     ============    ======


----------
(1)  As of the Statistical Calculation Date, the weighted average Credit Bureau
     Risk Score of the mortgagors related to the Statistical Mortgage Loans was
     approximately 635.


                                       A-6



                                     GRADES



                                                                                                                     WEIGHTED
                                                                                              WEIGHTED               AVERAGE
                                                                       AVERAGE     WEIGHTED   AVERAGE    WEIGHTED    ORIGINAL
                              NUMBER OF     AGGREGATE       % OF      PRINCIPAL    AVERAGE   REMAINING   AVERAGE     COMBINED
                             STATISTICAL    PRINCIPAL   STATISTICAL    BALANCE     CURRENT    TERM TO     CREDIT     LOAN-TO-
                               MORTGAGE      BALANCE      MORTGAGE   OUTSTANDING   MORTGAGE  MATURITY     BUREAU      VALUE
GRADE                           LOANS      OUTSTANDING     LOANS         ($)       RATE (%)   (MONTHS)  RISK SCORE  RATIO (%)
---------------------------  -----------  ------------  -----------  -----------  ---------  ---------  ----------  ---------

A................              10,346     $456,134,281     90.66%       44,088      11.611     180.04      637         97.1
A-...............                 202        8,880,320      1.77        43,962      11.507     182.01      611         85.8
B................                 389       15,671,161      3.11        40,286      11.686     182.08      619         89.3
C................                 354       13,581,186      2.70        38,365      11.664     182.49      616         93.7
C-...............                 265        8,718,054      1.73        32,898      12.096     179.66      614         99.9
D................                   3          145,441      0.03        48,480      11.328     177.45      653        100.0
                               ------     ------------    ------
   Total.........              11,559     $503,130,444    100.00%
                               ======     ============    ======


                            PREPAYMENT CHARGE PERIODS



                                                                                                                     WEIGHTED
                                                                                              WEIGHTED               AVERAGE
                                                                       AVERAGE     WEIGHTED   AVERAGE    WEIGHTED    ORIGINAL
                              NUMBER OF     AGGREGATE       % OF      PRINCIPAL    AVERAGE   REMAINING   AVERAGE     COMBINED
PREPAYMENT                   STATISTICAL    PRINCIPAL   STATISTICAL    BALANCE     CURRENT    TERM TO     CREDIT     LOAN-TO-
CHARGE PERIOD                  MORTGAGE      BALANCE      MORTGAGE   OUTSTANDING   MORTGAGE  MATURITY     BUREAU      VALUE
(MONTHS)                        LOANS      OUTSTANDING     LOANS         ($)       RATE (%)   (MONTHS)  RISK SCORE  RATIO (%)
---------------------------  -----------  ------------  -----------  -----------  ---------  ---------  ----------  ---------

0................               6,252     $251,678,975     50.02%       40,256      11.726     180.89      629         96.7
12...............                 126        8,369,576      1.66        66,425      12.068     176.91      654         98.1
13...............                   1           62,578      0.01        62,578      11.000     179.00      688        100.0
24...............               2,940      143,956,216     28.61        48,965      11.690     178.93      645         99.0
30...............                   1           30,571      0.01        30,571      11.575     177.00      646        100.0
36...............               1,743       76,677,626     15.24        43,992      11.291     179.89      636         95.0
42...............                   1           24,894      0.00        24,894       9.875     351.00      596        100.0
60...............                 495       22,330,007      4.44        45,111      10.979     182.62      619         85.4
                               ------     ------------    ------
   Total.........              11,559     $503,130,444    100.00%
                               ======     ============    ======



                                       A-7



                                                                         ANNEX B

                           PREPAYMENT CHARGE SCHEDULE

          The table below indicates the type of prepayment charge applicable to
the related Statistical Calculation Pool Mortgage Loans, the number of years
after origination during which each type of prepayment charge applies and the
number and aggregate Stated Principal Balance of the Statistical Calculation
Mortgage Loans with each type of prepayment charge.



                                                                      NUMBER OF
                                                                     STATISTICAL
                                                                  CALCULATION POOL    AGGREGATE STATED
PREPAYMENT CHARGE TYPE                                             MORTGAGE LOANS    PRINCIPAL BALANCE
------------------------------------------------------------------------------------------------------

1% of 80% of the prepaid principal balance
   2 years                                                                 13          $   410,590.09
   3 years                                                                  7          $   145,420.33
1% of the prepaid principal balance
   1 year                                                                   4          $   116,606.39
   2 years                                                                234          $ 6,754,171.09
   2.5 years                                                                1          $    30,570.87
   3 years                                                                423          $12,071,755.51
   5 years                                                                  2          $    47,269.66
2% of 80% of the prepaid principal balance
   1 year                                                                   2          $   186,622.28
   2 years                                                                  2          $   101,409.81
   3 years                                                                  3          $    86,536.99
2% and 1% of the prepaid principal balance for the first and
   second years after origination, respectively
   2 years                                                                  5          $   219,980.49
2% of the prepaid principal balance
   1 year                                                                  19          $ 1,321,979.02
   2 years                                                                250          $ 7,977,292.17
   3 years                                                                127          $ 4,222,132.86
   3.5 years                                                                1          $    24,894.33
   5 years                                                                 30          $   872,617.14
2 months interest on 66% of the prepaid principal balance
   2 years                                                                  5          $   335,753.65
   3 years                                                                  3          $   135,678.93
2 months interest on 80% of the prepaid principal balance
   2 years                                                                  1          $    50,985.41
   3 years                                                                  1          $    40,678.29
3%, 2% and 1% of the prepaid principal balance for the first,
   second and third years after origination, respectively
   3 years                                                                  1          $    24,595.08
3% of the prepaid principal balance
   1 year                                                                   2          $    69,064.20
   2 years                                                                  4          $   134,994.70
   3 years                                                                  6          $   231,790.30
3 months interest on 100% of the prepaid principal balance
   2 years                                                                  6          $   369,537.07



                                      B-1





                                                                      NUMBER OF
                                                                     STATISTICAL
                                                                  CALCULATION POOL    AGGREGATE STATED
PREPAYMENT CHARGE TYPE                                             MORTGAGE LOANS    PRINCIPAL BALANCE
------------------------------------------------------------------------------------------------------

   3 years                                                                 13         $    793,136.68
3 months interest on 80% of the prepaid principal balance
   3 years                                                                  1         $     32,699.71
5% of 80% of the prepaid principal balance
   2 years                                                                  2         $     83,492.97
   3 years                                                                  4         $    147,528.05
5%, 1%, 1%, 1% and 1% of the prepaid principal balance for the
   first, second, third, fourth and fifth years after origination,
   respectively
   2 years                                                                  1         $     82,978.76
5%, 4%, 3%, 2% and 1% of the prepaid principal balance for the
   first, second, third, fourth and fifth years after origination,
   respectively
   2 years                                                                 26         $    801,149.55
   3 years                                                                 12         $    304,222.01
   5 years                                                                  6         $    162,391.71
5% of the prepaid principal balance
   1 years                                                                  6         $    253,911.82
   2 years                                                                 91         $  4,036,502.72
   3 years                                                                 74         $  3,033,868.97
6% of the prepaid principal balance
   1 year                                                                   1         $     50,445.41
   3 years                                                                  2         $    108,165.13
6 months interest on 80% of the prepaid principal balance
   1 years                                                                 92         $  6,370,947.20
   13 months                                                                1         $     62,577.68
   2 years                                                              2,300         $122,597,377.54
   3 years                                                              1,066         $ 55,299,416.97
   5 years                                                                457         $ 21,247,728.51
No prepayment charge                                                    6,252         $251,678,975.49
TOTAL                                                                  11,559         $503,130,443.54



                                      B-2



                                                                         ANNEX I

                      GLOBAL CLEARANCE, SETTLEMENT AND TAX
                            DOCUMENTATION PROCEDURES

          Except in certain limited circumstances, the globally offered CWABS,
Inc. Asset-Backed Certificates, Series 2006-SPS2, (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, Clearstream, Luxembourg or
Euroclear. The Global Securities will be tradable 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 holding Global Securities
through Clearstream, Luxembourg and Euroclear will be conducted in the ordinary
way in accordance with their normal rules and operating procedures and in
accordance with conventional Eurobond practice (i.e., seven calendar day
settlement).

          Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations and prior mortgage pass-through certificate
issues.

          Secondary cross-market trading between Clearstream, Luxembourg or
Euroclear and DTC Participants holding Certificates will be effected on a
delivery-against-payment basis through the respective Depositaries of
Clearstream, Luxembourg and Euroclear (in such capacity) and as DTC
Participants.

          Non-U.S. holders (as described below) of Global Securities will be
subject to U.S. withholding taxes unless the holders meet certain requirements
and deliver appropriate U.S. tax documents to the securities clearing
organizations or their participants.

INITIAL SETTLEMENT

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

          Investors electing to hold their Global Securities through DTC will
follow the settlement practices applicable to prior mortgage pass-through
certificate issues. Investor securities custody accounts will be credited with
their holdings against payment in same-day funds on the settlement date.

          Investors electing to hold their Global Securities through
Clearstream, Luxembourg 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
pass-through certificate issues in same-day funds.


                                      I-1



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

          Trading between DTC Seller and Clearstream, Luxembourg or Euroclear
Purchaser. When Global Securities are to be transferred from the account of a
DTC Participant to the account of a Clearstream, Luxembourg Participant or a
Euroclear Participant, the purchaser will send instructions to Clearstream,
Luxembourg or Euroclear through a Clearstream, Luxembourg Participant or
Euroclear Participant at least one Business Day prior to settlement.
Clearstream, Luxembourg or Euroclear will instruct the respective 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 a
360-day year and the actual number of days in the related accrual period or a
year consisting of twelve 30-day months, as applicable. 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
respective Depositary of the DTC Participant's account against delivery of the
Global Securities. After settlement has been completed, the Global Securities
will be credited to the respective clearing system and by the clearing system,
in accordance with its usual procedures, to the Clearstream, Luxembourg
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 Clearstream, Luxembourg or Euroclear cash debt will be valued instead as of
the actual settlement date.

          Clearstream, Luxembourg Participants and Euroclear Participants will
need to make available to the respective clearing systems the funds necessary to
process same-day funds settlement. The most direct means of doing so is to
preposition funds for settlement, either from cash on hand or existing lines of
credit, as they would for any settlement occurring within Clearstream,
Luxembourg or Euroclear. Under this approach, they may take on credit exposure
to Clearstream, Luxembourg or Euroclear until the Global Securities are credited
to their accounts one day later.

          As an alternative, if Clearstream, Luxembourg or Euroclear has
extended a line of credit to them, Clearstream, Luxembourg Participants or
Euroclear Participants can elect not to preposition funds and allow that credit
line to be drawn upon the finance settlement. Under this procedure, Clearstream,
Luxembourg 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
this result will depend on each Clearstream, Luxembourg 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 sending Global Securities
to the respective European Depositary for the benefit of Clearstream, Luxembourg
Participants or Euroclear Participants. The sale proceeds will be available to
the DTC seller on the settlement date. Thus, to the DTC Participants a
cross-market transaction will settle no differently than a trade between two DTC
Participants.

          Trading between Clearstream, Luxembourg or Euroclear Seller and DTC
Purchaser. Due to time zone differences in their favor, Clearstream, Luxembourg
Participants and Euroclear Participants may employ their customary procedures
for transactions in which Global Securities are to be transferred by the
respective clearing system, through the respective Depositary, to a DTC
Participant. The seller will send instructions to Clearstream, Luxembourg or
Euroclear through a Clearstream, Luxembourg Participant or Euroclear Participant
at least one Business Day prior to settlement. In these cases Clearstream,
Luxembourg or Euroclear will instruct the respective Depositary, as appropriate,
to deliver 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 a 360-day year and either the actual number of days in the related
accrual period or a year consisting of twelve 30-day months, as applicable. 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


                                      I-2



will then be reflected in the account of the Clearstream, Luxembourg Participant
or Euroclear Participant the following day, and receipt of the cash proceeds in
the Clearstream, Luxembourg Participant's or Euroclear Participant's account
would be back-valued to the value date (which would be the preceding day, when
settlement occurred in New York). Should the Clearstream, Luxembourg 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 Clearstream,
Luxembourg Participant's or Euroclear Participant's account would instead be
valued as of the actual settlement date.

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

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

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

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

CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS

          A beneficial owner of Global Securities holding securities through
Clearstream, Luxembourg 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 (i) 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 (ii) the beneficial owner takes one of
the following steps to obtain an exemption or reduced tax rate:

          Exemption for non-U.S. Persons or Reduced Rate for non-U.S. Persons
Resident in Treaty Countries (Form W-8BEN). In general, beneficial owners of
Global Securities that are non-U.S. Persons can obtain a complete exemption from
the withholding tax by filing a signed Form W-8BEN Certificate of Foreign Status
of Beneficial Owners for United States Tax Withholding. Non-U.S. Persons that
are Certificate Owners residing in a country that has a tax treaty with the
United States also can obtain an exemption or reduced tax rate (depending on the
treaty terms) by filing Form W-8BEN (Certificate of Foreign Status of Beneficial
Owners for United States Tax Withholding). If the information shown on Form
W-8BEN changes, a new Form W-8BEN must be filed within 30 days of the change.
More complex rules apply if Global Securities are held through a non-U.S.
intermediary (which includes an agent, nominee, custodian, or other person who
holds a Global Security for the account of another) or a non-U.S. flow-through
entity (which includes a partnership, trust, and certain fiscally transparent
entities).

          Exemption for non-U.S. Persons with Effectively Connected Income (Form
W-8ECI). In general, 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 W-8ECI (Certificate of Foreign Person's
Claim for Exemption from Withholding On Income Effectively Connected with the
Conduct of a Trade or Business in the United States). More complex rules apply
where Global Securities are held through a Non-U.S. intermediary or Non-U.S.
flow through entity.


                                      I-3



          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 (Payer's Request
for Taxpayer Identification Number and Certification).

          U.S. Federal Income Tax Reporting Procedure. The Certificate Owner of
a Global Security, files by submitting the appropriate form to the person
through whom it holds (the clearing agency, in the case of persons holding
directly on the books of the clearing agency). Generally, a Form W-8BEN and a
Form W-8ECI will remain in effect for a period starting on the date the form is
signed and ending on the last day of the third succeeding calendar year unless a
change in circumstances makes any information of the form incorrect. In
addition, a Form W-8BEN furnished with a U.S. taxpayer identification number
will remain in effect until a change in circumstances makes any information of
the form incorrect, provided that the withholding agent reports on Form 1042 at
least one payment annually to the beneficial owner who provided the form.

          The term "U.S. PERSON" means:

               (1) a citizen or resident of the United States,

               (2) a corporation or partnership (including an entity treated as
          a corporation or partnership for U.S. federal income tax purposes)
          organized in or under the laws of the United States, any State thereof
          or the District of Columbia,

               (3) an estate the income of which is includible in gross income
          for United States tax purposes, regardless of its source,

               (4) 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. 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 tax advisors for specific tax advice
          concerning their holding and disposing of the Global Securities, or

               (5) certain eligible trusts that elect to be taxed as U.S.
          persons.


                                      I-4



                                                                       EXHIBIT A

                             STATIC POOL INFORMATION

                                 [SEE ATTACHED]


                                      EA-1




                             CHARACTERISTICS REPORT

ORIGINATIONS DURING ORIGINATION YEAR

                             2005                2004               2003
                      -------------------------------------------------------
Loan Amount           $2,565,281,845.73   $1,796,816,701.40   $225,845,012.36
Loan Count                       55,918              41,586             5,264
Average Loan Amount   $       45,875.78   $       43,207.25   $     42,903.69

RANGE OF NOTE RATES



                                 2005                                  2004                              2003
                  ----------------------------------   -----------------------------------   ----------------------------
                                                                                                               % OF LOANS
                      PRINCIPAL       % OF LOANS (BY                        % OF LOANS (BY      PRINCIPAL          (BY
                      BALANCE AT         PRINCIPAL     PRINCIPAL BALANCE        PRINCIPAL       BALANCE AT      PRINCIPAL
                     ORIGINATION          BALANCE)       AT ORIGINATION         BALANCE)       ORIGINATION      BALANCE)
                  -------------------------------------------------------------------------------------------------------

Other             $      792,007.00         0.03%      $     3,319,253.00         0.18%      $    193,301.00       0.09%
6.001 - 6.500     $    1,287,455.30         0.05%      $     3,816,781.00         0.21%      $          0.00       0.00%
6.501 - 7.000     $    2,312,845.00         0.09%      $     9,172,849.01         0.51%      $     90,970.00       0.04%
7.001 - 7.500     $    8,422,744.80         0.33%      $     9,881,535.95         0.55%      $    568,000.00       0.25%
7.501 - 8.000     $   17,566,320.40         0.68%      $    21,069,218.11         1.17%      $  1,027,623.00       0.46%
8.001 - 8.500     $   38,406,777.58         1.50%      $    22,986,172.53         1.28%      $  1,263,216.00       0.56%
8.501 - 9.000     $   89,358,224.66         3.48%      $    80,835,019.20         4.50%      $  6,294,613.00       2.79%
9.001 - 9.500     $  124,812,977.45         4.87%      $    98,621,656.78         5.49%      $  6,705,311.08       2.97%
9.501- 10.000     $  465,868,466.52        18.16%      $   355,234,356.60        19.77%      $ 17,428,856.00       7.72%
10.001 - 10.500   $  364,591,970.70        14.21%      $   267,889,807.22        14.91%      $ 10,057,680.00       4.45%
10.501 - 11.000   $  526,153,391.11        20.51%      $   486,491,295.63        27.08%      $140,372,895.48      62.15%
11.001 - 11.500   $  419,788,174.79        16.36%      $   235,276,398.03        13.09%      $ 13,457,784.80       5.96%
11.501 - 12.000   $  321,167,994.12        12.52%      $   144,480,796.17         8.04%      $ 16,637,106.29       7.37%
12.001 - 12.500   $  111,345,158.16         4.34%      $    31,483,856.65         1.75%      $  4,747,194.71       2.10%
12.501 - 13.000   $   51,202,472.01         2.00%      $    14,962,208.36         0.83%      $  3,385,284.00       1.50%
>= 13.001         $   22,204,866.13         0.87%      $    11,295,497.16         0.63%      $  3,615,177.00       1.60%
Total             $2,565,281,845.73       100.00%      $ 1,796,816,701.40       100.00%      $225,845,012.36     100.00%


RANGE OF LOAN AMOUNTS



                                         2005                                 2004                              2003
                          ----------------------------------   ----------------------------------   ----------------------------
                                                                                                                      % OF LOANS
                              PRINCIPAL       % OF LOANS (BY                       % OF LOANS (BY      PRINCIPAL          (BY
                              BALANCE AT         PRINCIPAL     PRINCIPAL BALANCE      PRINCIPAL        BALANCE AT      PRINCIPAL
                             ORIGINATION         BALANCE)        AT ORIGINATION       BALANCE)        ORIGINATION      BALANCE)
                          ------------------------------------------------------------------------------------------------------

    0.01 - 5,000.00       $        4,200.00         0.00%      $        4,500.00         0.00%      $          0.00       0.00%
5,000.01 - 10,000.00      $       90,442.30         0.00%      $      224,290.00         0.01%      $     64,200.00       0.03%
10,000.01 - 15,000.00     $   12,648,840.50         0.49%      $   15,317,398.73         0.85%      $  1,930,912.00       0.85%
15,000.01 - 20,000.00     $   75,497,570.24         2.94%      $   59,445,943.48         3.31%      $  7,473,934.95       3.31%
20,000.01 - 25,000.00     $  138,923,225.71         5.42%      $  104,782,736.63         5.83%      $ 12,507,539.01       5.54%
25,000.01 - 30,000.00     $  207,589,329.10         8.09%      $  149,417,665.10         8.32%      $ 18,217,576.50       8.07%
30,000.01 - 40,000.00     $  402,221,670.16        15.68%      $  303,658,523.01        16.90%      $ 37,607,925.18      16.65%
40,000.01 - 50,000.00     $  325,638,211.00        12.69%      $  262,540,213.09        14.61%      $ 35,227,950.78      15.60%
50,000.01 - 60,000.00     $  296,778,861.48        11.57%      $  239,141,820.41        13.31%      $ 34,118,152.84      15.11%
60,000.01 - 80,000.00     $  496,441,343.03        19.35%      $  364,421,506.44        20.28%      $ 48,288,699.81      21.38%
80,000.01 - 100,000.00    $  337,678,220.07        13.16%      $  219,201,459.11        12.20%      $ 24,319,363.89      10.77%
100,000.01 - 150,000.00   $  238,243,838.08         9.29%      $   76,641,170.40         4.27%      $  5,886,757.40       2.61%
> 150,000.00              $   33,526,094.06         1.31%      $    2,019,475.00         0.11%      $    202,000.00       0.09%
Total                     $2,565,281,845.73       100.00%      $1,796,816,701.40       100.00%      $225,845,012.36     100.00%



                                      EA-2



                       CHARACTERISTICS REPORT (CONTINUED)

RANGE OF CREDIT BUREAU RISK SCORES



                                         2005                                 2004                              2003
                          ----------------------------------   ----------------------------------   ----------------------------
                                                                                                                         % OF
                                                                                                                         LOANS
                              PRINCIPAL       % OF LOANS (BY       PRINCIPAL       % OF LOANS (BY      PRINCIPAL         (BY
                              BALANCE AT         PRINCIPAL         BALANCE AT         PRINCIPAL        BALANCE AT      PRINCIPAL
                             ORIGINATION         BALANCE)         ORIGINATION         BALANCE)        ORIGINATION      BALANCE)
                          ------------------------------------------------------------------------------------------------------

300 - 499                 $      716,969.60         0.03%      $    1,732,204.00         0.10%      $     78,300.00       0.03%
500 - 539                 $   18,156,238.34         0.71%      $    4,947,771.40         0.28%      $     93,650.00       0.04%
540 - 579                 $  143,891,211.25         5.61%      $   35,778,870.64         1.99%      $  2,872,657.00       1.27%
580 - 619                 $  675,784,618.98        26.34%      $  404,343,687.88        22.50%      $ 37,614,236.21      16.65%
620 - 659                 $  881,798,038.96        34.37%      $  618,174,873.07        34.40%      $ 81,009,922.97      35.87%
660 - 699                 $  566,873,131.49        22.10%      $  481,085,739.35        26.77%      $ 66,921,290.58      29.63%
700 - 739                 $  193,162,055.21         7.53%      $  178,370,102.98         9.93%      $ 25,147,159.80      11.13%
>= 740                    $   84,525,459.00         3.29%      $   72,286,452.08         4.02%      $ 12,070,995.80       5.34%
Unknown                   $      374,122.90         0.01%      $       97,000.00         0.01%      $     36,800.00       0.02%
Total                     $2,565,281,845.73       100.00%      $1,796,816,701.40       100.00%      $225,845,012.36     100.00%

Weighted Average FICO                   642                                  652                                659


RANGE OF CLTVS



                                         2005                                 2004                              2003
                          ----------------------------------   ----------------------------------   ----------------------------
                                                                                                                         % OF
                                                                                                                         LOANS
                               PRINCIPAL      % OF LOANS (BY       PRINCIPAL       % OF LOANS (BY      PRINCIPAL          (BY
                              BALANCE AT         PRINCIPAL         BALANCE AT         PRINCIPAL        BALANCE AT      PRINCIPAL
                             ORIGINATION          BALANCE)        ORIGINATION         BALANCE)        ORIGINATION       BALANCE)
                          ------------------------------------------------------------------------------------------------------

0.001 -50.000             $   19,406,410.30         0.76%      $    8,081,532.60         0.45%      $  2,282,108.80       1.01%
50.001 -60.000            $   12,311,587.20         0.48%      $    4,102,628.49         0.23%      $    783,851.00       0.35%
60.001 -70.000            $   26,530,271.35         1.03%      $    8,999,452.20         0.50%      $  2,019,194.00       0.89%
70.001 -80.000            $   55,829,649.04         2.18%      $   22,894,195.99         1.27%      $  5,340,985.89       2.36%
80.001 - 90.000           $  118,392,344.44         4.62%      $   55,152,062.76         3.07%      $ 11,624,251.79       5.15%
90.001 - 100.000          $2,329,886,667.74        90.82%      $1,694,582,012.57        94.31%      $202,471,592.07      89.65%
100.001 - 103.000         $    1,995,735.66         0.08%      $    2,151,007.79         0.12%      $    938,563.81       0.42%
103.001 - 125.000         $      850,180.00         0.03%      $      782,309.00         0.04%      $    349,465.00       0.15%
Unknown                   $       79,000.00         0.00%      $       71,500.00         0.00%      $     35,000.00       0.02%
Total                     $2,565,281,845.73       100.00%      $1,796,816,701.40       100.00%      $225,845,012.36     100.00%

Weighted Average CLTV               97.44                                  98.35                              97.32


DOCUMENTATION TYPE



                                         2005                                 2004                              2003
                          ----------------------------------   ----------------------------------   ----------------------------
                                                                                                                         % OF
                                                                                                                        LOANS
                              PRINCIPAL       % OF LOANS (BY        PRINCIPAL      % OF LOANS (BY      PRINCIPAL          (BY
                              BALANCE AT         PRINCIPAL         BALANCE AT         PRINCIPAL        BALANCE AT      PRINCIPAL
                             ORIGINATION         BALANCE)         ORIGINATION         BALANCE)        ORIGINATION       BALANCE)
                          ------------------------------------------------------------------------------------------------------

Full                      $1,579,472,119.62        61.57%      $  999,992,951.93        55.65%      $134,478,207.55      59.54%
Unknown                   $      202,316.00         0.01%      $      237,400.00         0.01%      $     18,900.00       0.01%
Simple                                 0.00         0.00%      $       22,500.00         0.00%      $    470,548.00       0.21%
Stated                    $  981,976,004.41        38.28%      $  796,563,849.47        44.33%      $ 90,877,356.81      40.24%
Stated Income/Stated
   Assets                 $    3,631,405.70         0.14%      $            0.00         0.00%      $          0.00       0.00%
Total                     $2,565,281,845.73       100.00%      $1,796,816,701.40       100.00%      $225,845,012.36     100.00%



                                      EA-3



                       CHARACTERISTICS REPORT (CONTINUED)

PURPOSE



                                       2005                                   2004                              2003
                      --------------------------------------   ----------------------------------   ---------------------------
                                                                                                                         % OF
                                                                                   % OF LOANS (BY      PRINCIPAL      LOANS (BY
                      PRINCIPAL BALANCE     % OF LOANS (BY     PRINCIPAL BALANCE      PRINCIPAL        BALANCE AT     PRINCIPAL
                        AT ORIGINATION    PRINCIPAL BALANCE)     AT ORIGINATION       BALANCE)        ORIGINATION      BALANCE)
                      -----------------   ------------------   -----------------   --------------   ---------------   ---------

Purchase              $1,859,801,561.17          72.50%        $1,358,676,838.40        75.62%      $188,852,233.88     83.62%
Cashout Refinance     $  578,254,987.23          22.54%        $  353,977,188.95        19.70%      $ 31,883,990.79     14.12%
Rate/Term Refinance   $  127,225,297.33           4.96%        $   84,162,674.05         4.68%      $  5,108,787.69      2.26%
Total                 $2,565,281,845.73         100.00%        $1,796,816,701.40       100.00%      $225,845,012.36    100.00%


OCCUPANCY



                                       2005                                   2004                              2003
                      --------------------------------------   ----------------------------------   ---------------------------
                                                                                                                         % OF
                                                                                   % OF LOANS (BY      PRINCIPAL      LOANS (BY
                      PRINCIPAL BALANCE     % OF LOANS (BY     PRINCIPAL BALANCE      PRINCIPAL        BALANCE AT     PRINCIPAL
                        AT ORIGINATION    PRINCIPAL BALANCE)     AT ORIGINATION       BALANCE)        ORIGINATION      BALANCE)
                      -----------------   ------------------   -----------------   --------------   ---------------   ---------

Owner Occupied        $2,556,763,645.76          99.67%        $1,796,148,639.40        99.96%      $224,917,332.36     99.59%
Non-Owner Occupied    $    4,772,737.32           0.19%        $      475,571.00         0.03%      $    841,750.00      0.37%
2nd/Vacation          $    3,745,462.65           0.15%        $      192,491.00         0.01%      $     85,930.00      0.04%
Total                 $2,565,281,845.73         100.00%        $1,796,816,701.40       100.00%      $225,845,012.36    100.00%


PROPERTY TYPE



                                       2005                                   2004                              2003
                      --------------------------------------   ----------------------------------   ---------------------------
                                                                                                                         % OF
                                                                                   % OF LOANS (BY      PRINCIPAL      LOANS (BY
                      PRINCIPAL BALANCE     % OF LOANS (BY     PRINCIPAL BALANCE      PRINCIPAL        BALANCE AT     PRINCIPAL
                        AT ORIGINATION    PRINCIPAL BALANCE)     AT ORIGINATION       BALANCE)        ORIGINATION      BALANCE)
                      -----------------   ------------------   -----------------   --------------   ---------------   ---------

Single Family         $1,724,621,035.47          67.23%        $1,292,592,624.91        71.94%      $173,667,622.26     76.90%
Manufactured Home     $      491,343.00           0.02%        $       25,000.00         0.00%      $     25,005.00      0.01%
Lo-rise Condo         $  216,661,709.10           8.45%        $  149,838,760.65         8.34%      $ 17,460,358.00      7.73%
Hi-rise Condo         $   13,059,865.50           0.51%        $    2,916,085.00         0.16%      $    228,080.00      0.10%
2 Units               $   75,617,717.90           2.95%        $   21,923,430.00         1.22%      $    545,080.00      0.24%
Hotel Condo           $      139,370.00           0.01%        $            0.00         0.00%      $     16,320.00      0.01%
3 Units               $    3,210,825.00           0.13%        $       46,000.00         0.00%      $    383,300.00      0.17%
4 Units               $      829,945.00           0.03%        $       58,500.00         0.00%      $    144,150.00      0.06%
5+ Units              $            0.00           0.00%        $       34,400.00         0.00%
Planned Unit          $  530,602,694.76          20.68%        $  329,381,900.84        18.33%      $ 33,375,097.10     14.78%
Development
Co-operative          $       47,340.00           0.00%        $            0.00         0.00%      $          0.00      0.00%
Total                 $2,565,281,845.73         100.00%        $1,796,816,701.40       100.00%      $225,845,012.36    100.00%



                                      EA-4



                   PERFORMANCE REPORT - ORIGINATION YEAR 2003



                                             1 PAYMENT                1 PAYMENT
DISTRIBUTION      ACTUAL                        DELQ      1 PAYMENT      DELQ
   MONTH       POOL ASSETS    ACTUAL UPB    # OF ACCTS    DELQ BAL      BAL %
------------   -----------   ------------   ----------   ----------   ---------

 05/31/2006         776      $ 24,682,642       20       $  514,411     2.08%
 04/30/2006         834      $ 26,641,114       23       $  749,073     2.81%
 03/31/2006         881      $ 28,351,984       26       $  750,983     2.65%
 02/28/2006         941      $ 30,926,621       38       $1,264,095     4.09%
 01/31/2006       1,001      $ 33,513,167       41       $1,242,279     3.71%
 12/31/2005       1,074      $ 36,239,708       41       $1,323,414     3.65%
 11/30/2005       1,222      $ 41,644,198       56       $1,936,252     4.65%
 10/31/2005       1,354      $ 46,715,126       58       $1,856,574     3.97%
 09/30/2005       1,459      $ 50,847,748       42       $1,577,298     3.10%
 08/31/2005       1,583      $ 55,871,438       53       $1,827,116     3.27%
 07/31/2005       1,742      $ 62,329,012       52       $1,869,962     3.00%
 06/30/2005       1,857      $ 66,772,920       65       $2,354,919     3.53%
 05/31/2005       2,022      $ 73,464,911       59       $2,059,388     2.80%
 04/30/2005       2,170      $ 79,603,327       52       $1,752,065     2.20%
 03/31/2005       2,342      $ 87,629,055       64       $2,400,985     2.74%
 02/28/2005       2,548      $ 96,434,275       67       $2,526,003     2.62%
 01/31/2005       2,734      $104,777,436       65       $2,544,230     2.43%
 12/31/2004       2,931      $113,911,885       62       $2,353,455     2.07%
 11/30/2004       3,206      $126,088,016       83       $3,435,130     2.72%
 10/31/2004       3,469      $138,981,627       69       $2,688,136     1.93%
 09/30/2004       3,741      $152,122,027       72       $2,734,298     1.80%
 08/31/2004       3,969      $163,356,808       68       $2,345,699     1.44%
 07/31/2004       4,182      $173,911,872       61       $2,472,951     1.42%
 06/30/2004       4,382      $183,053,379       50       $2,121,184     1.16%
 05/31/2004       4,566      $192,026,172       59       $2,402,681     1.25%
 04/30/2004       4,709      $198,974,150       33       $1,384,878     0.70%
 03/31/2004       4,845      $205,852,322       38       $1,535,283     0.75%
 02/29/2004       4,969      $211,844,894       42       $1,950,847     0.92%
 01/31/2004       5,034      $214,992,496       41       $1,519,914     0.71%


               2 PAYMENT    2 PAYMENT                3 PAYMENT                3 PAYMENT
DISTRIBUTION   DELQ # OF      DELQ       2 PAYMENT   DELQ # OF    3 PAYMENT      DELQ
   MONTH         ACCTS         BAL      DELQ BAL %     ACCTS      DELQ BAL      BAL %
------------   ---------   ----------   ----------   ---------   ----------   ---------

 05/31/2006        15      $  488,805      1.98%          9      $  246,699     1.00%
 04/30/2006        14      $  375,750      1.41%          7      $  240,114     0.90%
 03/31/2006        11      $  352,071      1.24%         13      $  357,662     1.26%
 02/28/2006        19      $  611,533      1.98%         10      $  253,660     0.82%
 01/31/2006        19      $  687,990      2.05%         15      $  528,086     1.58%
 12/31/2005        26      $  916,791      2.53%         20      $  585,501     1.62%
 11/30/2005        33      $  985,955      2.37%         18      $  650,378     1.56%
 10/31/2005        22      $  823,284      1.76%         22      $  643,093     1.38%
 09/30/2005        31      $  921,984      1.81%         14      $  509,778     1.00%
 08/31/2005        30      $1,036,564      1.86%         22      $  911,419     1.63%
 07/31/2005        36      $1,245,044      2.00%         22      $  693,159     1.11%
 06/30/2005        26      $  734,216      1.10%         28      $  953,538     1.43%
 05/31/2005        33      $1,042,084      1.42%         28      $1,111,319     1.51%
 04/30/2005        35      $1,175,745      1.48%         16      $  662,414     0.83%
 03/31/2005        27      $1,056,470      1.21%         18      $  870,227     0.99%
 02/28/2005        32      $1,278,380      1.33%         20      $  941,687     0.98%
 01/31/2005        31      $1,258,988      1.20%         30      $1,427,550     1.36%
 12/31/2004        39      $1,765,548      1.55%         29      $  963,133     0.85%
 11/30/2004        39      $1,473,787      1.17%         28      $1,100,513     0.87%
 10/31/2004        38      $1,397,009      1.01%         22      $  812,271     0.58%
 09/30/2004        31      $  977,695      0.64%         20      $  751,255     0.49%
 08/31/2004        29      $1,001,168      0.61%         19      $  843,559     0.52%
 07/31/2004        28      $1,106,392      0.64%         25      $  996,507     0.57%
 06/30/2004        32      $1,248,462      0.68%         18      $  669,269     0.37%
 05/31/2004        22      $  827,911      0.43%         15      $  535,489     0.28%
 04/30/2004        22      $  985,702      0.50%         15      $  745,719     0.37%
 03/31/2004        18      $  868,200      0.42%         11      $  521,239     0.25%
 02/29/2004        17      $  766,087      0.36%          7      $  320,879     0.15%
 01/31/2004         9      $  475,814      0.22%          5      $  372,761     0.17%



                                      EA-5



             PERFORMANCE REPORT - ORIGINATION YEAR 2003 (CONTINUED)



               4 +                                                                                              # OF
             PAYMENT               4+                                                                           ACCTS
               DELQ  4+ PAYMENT PAYMENT PRE-FCL           PRE-FCL DELQ              DELQ                        PAID
DISTRIBUTION  # OF      DELQ      DELQ    # OF   PRE-FCL   DELQ   TOTAL DELQ TOTAL TOTAL   REO                 OFF IN CUMULATIVE
    MONTH      ACCTS     BAL     BAL %   ACCTS     BAL     BAL %  COUNT    UPB      BAL % COUNT  REO UPB REO %  MONTH  NET LOSS
------------ ------- ---------- ------- ------- -------- -------- ----- ---------- ------ ----- -------- ----- ------ -----------


05/31/2006      83   $2,831,118  11.47%     5   $133,460   0.54%   132  $4,214,493 17.07%    9  $278,464 1.13%    51  -$6,182,817
04/30/2006      92   $3,054,981  11.47%     5   $138,738   0.52%   141  $4,558,656 17.11%   10  $302,090 1.13%    43  -$5,898,156
03/31/2006      96   $3,172,255  11.19%     2   $106,909   0.38%   148  $4,739,880 16.72%   11  $348,807 1.23%    56  -$5,674,951
02/28/2006      99   $3,417,607  11.05%     0   $      0   0.00%   166  $5,546,895 17.94%   13  $451,694 1.46%    54  -$5,387,778
01/31/2006     100   $3,288,836   9.81%     2   $ 67,626   0.20%   177  $5,814,817 17.35%   15  $592,203 1.77%    66  -$5,135,656
12/31/2005      99   $3,345,416   9.23%     2   $ 69,021   0.19%   188  $6,240,143 17.22%   16  $626,326 1.73%    84  -$4,935,828
11/30/2005      99   $3,351,983   8.05%     4   $187,880   0.45%   210  $7,112,448 17.08%   15  $593,864 1.43%   122  -$4,685,019
10/31/2005      97   $3,444,301   7.37%     2   $122,111   0.26%   201  $6,889,363 14.75%   18  $720,375 1.54%    95  -$4,302,489
09/30/2005      98   $3,564,029   7.01%     4   $204,912   0.40%   189  $6,778,001 13.33%   17  $723,503 1.42%   112  -$2,452,681
08/31/2005     101   $3,691,214   6.61%     4   $173,408   0.31%   210  $7,639,721 13.67%   15  $620,268 1.11%   144  -$2,256,665
07/31/2005     110   $4,235,744   6.80%     4   $173,408   0.28%   224  $8,217,317 13.18%    9  $371,213 0.60%   113  -$2,078,784
06/30/2005      95   $3,884,173   5.82%     5   $166,389   0.25%   219  $8,093,235 12.12%   10  $394,923 0.59%   149  -$1,997,103
05/31/2005      96   $3,859,003   5.25%     3   $ 60,851   0.08%   219  $8,132,645 11.07%   10  $374,712 0.51%   141  -$1,812,661
04/30/2005      98   $3,909,948   4.91%     5   $116,101   0.15%   206  $7,616,273  9.57%   11  $435,410 0.55%   170  -$1,662,684
03/31/2005      92   $3,615,539   4.13%     7   $222,031   0.25%   208  $8,165,252  9.32%   12  $459,202 0.52%   195  -$1,657,442
02/28/2005      96   $3,668,871   3.80%     9   $302,576   0.31%   224  $8,717,517  9.04%   10  $417,879 0.43%   181  -$1,560,800
01/31/2005      85   $3,088,040   2.95%     8   $280,290   0.27%   219  $8,599,098  8.21%   10  $426,297 0.41%   191  -$1,374,091
12/31/2004      75   $2,913,890   2.56%     6   $194,584   0.17%   211  $8,190,610  7.19%    9  $385,304 0.34%   268  -$1,342,734
11/30/2004      65   $2,557,448   2.03%     4   $141,372   0.11%   219  $8,708,250  6.91%    4  $201,554 0.16%   257  -$1,331,090
10/31/2004      60   $5,577,559   1.85%     2   $ 79,359   0.06%   191  $7,554,334  5.44%    2  $122,298 0.09%   262  -$1,178,786
09/30/2004      60   $2,647,155   1.74%     4   $167,392   0.11%   187  $7,277,795  4.78%    1  $ 28,445 0.02%   221    -$870,383
08/31/2004      49   $2,189,537   1.34%     8   $362,685   0.22%   173  $6,742,648  4.13%    2  $105,442 0.06%   206    -$848,485
07/31/2004      39   $1,867,884   1.07%     4   $160,361   0.09%   157  $6,604,095  3.80%    2  $105,442 0.06%   193    -$690,259
06/30/2004      31   $1,552,633   0.85%     5   $197,700   0.11%   136  $5,789,248  3.16%    1  $ 76,997 0.04%   179    -$537,094
05/31/2004      27   $1,440,927   0.75%    10   $416,445   0.22%   133  $5,623,453  2.93%    1  $ 76,997 0.04%   134    -$477,573
04/30/2004      25   $1,235,303   0.62%     8   $289,088   0.15%   103  $4,640,690  2.33%    0  $      0 0.00%   130    -$206,394
03/31/2004      26   $1,357,193   0.66%     4   $123,840   0.06%    97  $4,405,755  2.14%    0  $      0 0.00%   112     -$89,894
02/29/2004      22   $1,201,512   0.57%     2   $ 60,352   0.03%    90  $4,299,677  2.03%    0  $      0 0.00%    64     -$71,396
01/31/2004      22   $1,063,314   0.50%     0   $      0   0.00%    77  $3,451,803  1.61%    0  $      0 0.00%    50           $0


TOTAL ORIGINATIONS                    AGGREGATE
DURING ORIGINATION                   ORIGINATION
    YEAR 2003        # OF ASSETS       BALANCE
------------------   -----------   ---------------
                        5,264      $225,845,012.36

Note: All percentages are based upon aggregate balances (i.e. "Actual UPB") as
of the end of the related month.


                                      EA-6



                   PERFORMANCE REPORT - ORIGINATION YEAR 2004



                                         1                              2                              3
                                      PAYMENT       1          1     PAYMENT                  2     PAYMENT       3          3
              ACTUAL                    DELQ     PAYMENT    PAYMENT    DELQ                PAYMENT    DELQ     PAYMENT    PAYMENT
DISTRIBUTION   POOL       ACTUAL        # OF      DELQ        DELQ     # OF    2 PAYMENT     DELQ     # OF       DELQ       DELQ
    MONTH     ASSETS       UPB         ACCTS       BAL       BAL %    ACCTS     DELQ BAL    BAL %    ACCTS        BAL      BAL %
------------  ------  --------------  -------  -----------  -------  -------  -----------  -------  -------  -----------  -------

 05/31/2006    7,623  $  288,605,512    272    $10,407,475   3.61%     173    $ 6,062,233   2.10%      94    $ 3,571,173   1.24%
 04/30/2006    8,163  $  311,220,469    307    $11,372,346   3.65%     146    $ 5,500,374   1.77%      94    $ 3,495,342   1.12%
 03/31/2006    8,526  $  327,928,560    251    $ 9,487,221   2.89%     155    $ 5,818,646   1.77%     123    $ 4,834,497   1.47%
 02/28/2006    8,963  $  347,943,777    299    $12,012,132   3.45%     193    $ 7,166,211   2.06%     150    $ 5,534,453   1.59%
 01/31/2006    9,371  $  366,708,749    359    $13,009,203   3.55%     188    $ 7,025,935   1.92%     159    $ 6,172,639   1.68%
 12/31/2005    9,839  $  389,188,937    372    $13,435,309   3.45%     222    $ 8,487,149   2.18%     176    $ 6,821,440   1.75%
 11/30/2005   25,695  $1,016,640,414    796    $29,571,505   2.91%     503    $18,136,231   1.78%     300    $10,943,804   1.08%
 10/31/2005   27,166  $1,084,407,628    812    $28,761,291   2.65%     400    $15,026,200   1.39%     288    $11,442,904   1.06%
 09/30/2005   28,756  $1,158,322,923    680    $25,241,560   2.18%     387    $14,992,432   1.29%     240    $ 9,321,781   0.80%
 08/31/2005   30,351  $1,233,932,894    665    $25,782,356   2.09%     345    $13,199,116   1.07%     229    $ 9,508,301   0.77%
 07/31/2005   32,140  $1,318,202,798    677    $25,680,122   1.95%     343    $14,468,783   1.10%     232    $ 9,439,488   0.72%
 06/30/2005   33,591  $1,387,048,146    615    $24,660,379   1.78%     337    $13,761,106   0.99%     189    $ 7,446,463   0.54%
 05/31/2005   35,092  $1,459,021,597    592    $23,892,936   1.64%     275    $11,252,592   0.77%     184    $ 7,949,018   0.54%
 04/30/2005   36,330  $1,518,870,426    525    $21,395,308   1.41%     235    $ 9,967,293   0.66%     158    $ 6,386,545   0.42%
 03/31/2005   37,385  $1,572,444,597    466    $18,860,984   1.20%     213    $ 8,585,511   0.55%     140    $ 5,747,757   0.37%
 02/28/2005   38,409  $1,623,901,201    442    $17,643,435   1.09%     216    $ 9,182,596   0.57%     150    $ 5,803,372   0.36%
 01/31/2005   39,058  $1,657,695,674    427    $18,178,942   1.10%     217    $ 8,326,217   0.50%     138    $ 5,973,350   0.36%



                                      EA-7



             PERFORMANCE REPORT - ORIGINATION YEAR 2004 (CONTINUED)



                 4 +
               PAYMENT                   4+        PRE-                   PRE-
                 DELQ     4+ PAYMENT   PAYMENT     FCL                    FCL     DELQ
DISTRIBUTION     # OF        DELQ        DELQ      # OF      PRE-FCL      DELQ   TOTAL
    MONTH       ACCTS        BAL        BAL %     ACCTS        BAL       BAL %   COUNT
------------   -------   -----------   -------   -------   ----------   ------   -----

 05/31/2006      555     $21,088,396     7.31%      31     $1,525,164     0.53%  1,125
 04/30/2006      591     $22,614,188     7.27%      47     $2,199,126     0.71%  1,185
 03/31/2006      601     $23,234,829     7.09%      31     $1,340,092     0.41%  1,161
 02/28/2006      621     $24,570,744     7.06%      13     $  709,148     0.20%  1,276
 01/31/2006      633     $24,183,903     6.59%      18     $  860,018     0.23%  1,357
 12/31/2005      599     $23,654,627     6.08%      13     $  646,328     0.17%  1,382
 11/30/2005      867     $33,819,530     3.33%      20     $1,094,808     0.11%  2,486
 10/31/2005      766     $29,860,190     2.75%      17     $  974,131     0.09%  2,283
 09/30/2005      671     $26,705,231     2.31%      18     $1,058,771     0.09%  1,996
 08/31/2005      599     $24,110,061     1.95%      11     $  631,732     0.05%  1,849
 07/31/2005      501     $20,358,071     1.54%      14     $  668,512     0.05%  1,767
 06/30/2005      439     $18,591,030     1.34%      13     $  591,224     0.04%  1,593
 05/31/2005      375     $15,722,851     1.08%       7     $  306,365     0.02%  1,433
 04/30/2005      310     $13,035,632     0.86%      10     $  462,881     0.03%  1,238
 03/31/2005      279     $11,815,915     0.75%      11     $  530,263     0.03%  1,109
 02/28/2005      211     $ 8,983,844     0.55%      18     $  843,315     0.05%  1,037
 01/31/2005      137     $ 5,470,294     0.33%      13     $  561,967     0.03%    932


                                                                  # OF
                                                                  ACCTS
                   DELQ       DELQ                                 PAID
DISTRIBUTION      TOTAL      TOTAL    REO                         OFF IN   CUMULATIVE NET
    MONTH          UPB       BAL %   COUNT     REO UPB    REO %    MONTH        LOSS
------------   -----------   -----   -----   ----------   -----   ------   --------------

 05/31/2006    $42,654,441   14.78%   48     $1,879,434   0.65%      331    -$13,573,170
 04/30/2006    $45,181,376   14.52%   52     $1,941,616   0.62%      315    -$10,835,246
 03/31/2006    $44,715,285   13.64%   70     $2,828,150   0.86%      387     -$9,176,438
 02/28/2006    $49,992,688   14.37%   70     $2,802,918   0.81%      348     -$8,294,529
 01/31/2006    $51,251,698   13.98%   67     $2,773,118   0.76%      417     -$7,414,351
 12/31/2005    $53,044,853   13.63%   63     $2,579,492   0.66%      504     -$6,356,747
 11/30/2005    $93,565,878    9.20%   58     $2,385,045   0.23%    1,409     -$6,065,448
 10/31/2005    $86,064,716    7.94%   60     $2,217,342   0.20%    1,524     -$5,701,808
 09/30/2005    $77,319,775    6.68%   63     $2,379,201   0.21%    1,525     -$4,507,494
 08/31/2005    $73,231,566    5.93%   51     $2,065,356   0.17%    1,710     -$3,591,414
 07/31/2005    $70,614,976    5.36%   46     $1,769,133   0.13%    1,397     -$2,865,584
 06/30/2005    $65,050,202    4.69%   35     $1,348,745   0.10%    1,448     -$2,438,804
 05/31/2005    $59,123,762    4.05%   28     $  992,372   0.07%    1,194     -$1,832,094
 04/30/2005    $51,247,659    3.37%   26     $  963,997   0.06%    1,012     -$1,514,211
 03/31/2005    $45,540,430    2.90%   24     $  944,085   0.06%      984     -$1,169,519
 02/28/2005    $42,456,562    2.61%   19     $  697,789   0.04%      628     -$1,046,824
 01/31/2005    $38,510,770    2.32%   12     $  503,619   0.03%      461       -$778,279


TOTAL ORIGINATIONS                     AGGREGATE
DURING ORIGINATION                    ORIGINATION
     YEAR 2004       # OF ASSETS        BALANCE
------------------   -----------   -----------------
                        41,586     $1,796,816,701.40

Note: All percentages are based upon aggregate balances (i.e. "Actual UPB") as
of the end of the related month.


                                      EA-8



                   PERFORMANCE REPORT - ORIGINATION YEAR 2005



                                            1                                   2
                                         PAYMENT       1            1      PAYMENT
               ACTUAL                      DELQ     PAYMENT      PAYMENT     DELQ
DISTRIBUTION    POOL        ACTUAL         # OF       DELQ         DELQ      # OF
    MONTH      ASSETS         UPB         ACCTS       BAL          BAL %     ACCTS
------------   ------   --------------   -------   -----------   -------   -------

 05/31/2006    18,950   $  833,912,890     573     $25,476,296     3.06%     340
 04/30/2006    21,761   $  961,922,829     616     $25,957,408     2.70%     348
 03/31/2006    35,638   $1,623,760,034     676     $30,789,761     1.90%     364
 02/28/2006    36,289   $1,658,580,523     659     $30,684,150     1.85%     337
 01/31/2006    36,774   $1,686,352,850     638     $28,248,487     1.68%     300


                                          3
                    2           2      PAYMENT        3           3
                 PAYMENT     PAYMENT     DELQ      PAYMENT     PAYMENT
DISTRIBUTION       DELQ        DELQ      # OF        DELQ        DELQ
    MONTH          BAL         BAL %     ACCTS       BAL        BAL %
------------   -----------   -------   -------   -----------   -------

 05/31/2006    $14,496,506     1.74%     247     $11,536,196    1.38%
 04/30/2006    $16,384,928     1.70%     239     $11,239,502    1.17%
 03/31/2006    $17,505,977     1.08%     227     $11,007,138    0.68%
 02/28/2006    $15,947,611     0.96%     218     $10,073,530    0.61%
 01/31/2006    $14,099,399     0.84%     216     $ 9,682,976    0.57%


             PERFORMANCE REPORT - ORIGINATION YEAR 2005 (CONTINUED)



                 4 +
               PAYMENT        4+          4+
                 DELQ      PAYMENT     PAYMENT   PRE-FCL                PRE-FCL    DELQ
DISTRIBUTION     # OF        DELQ        DELQ     # OF       PRE-FCL      DELQ    TOTAL
    MONTH       ACCTS        BAL        BAL %     ACCTS        BAL        BAL %   COUNT
------------   -------   -----------   -------   -------   ----------   -------   -----

05/31/2006       683     $32,619,458     3.91%      29     $1,554,858     0.19%   1,872
04/30/2006       610     $28,912,219     3.01%      32     $1,692,946     0.18%   1,845
03/31/2006       534     $24,557,375     1.51%      22     $1,278,938     0.08%   1,823
02/28/2006       457     $20,573,883     1.24%      11     $  716,130     0.04%   1,682
01/31/2006       361     $15,937,428     0.95%      11     $  769,149     0.05%   1,526


                                                                   # OF
                                                                   ACCTS
                   DELQ       DELQ                                 PAID
DISTRIBUTION      TOTAL      TOTAL    REO        REO              OFF IN    CUMULATIVE
    MONTH          UPB       BAL %   COUNT       UPB      REO %    MONTH     NET LOSS
------------   -----------   -----   -----   ----------   -----   ------   -----------

05/31/2006     $85,683,314   10.27%    19    $  684,035    0.08%    455    -$5,394,281
04/30/2006     $84,187,003    8.75%    19    $  655,053    0.07%    401    -$2,671,294
03/31/2006     $85,139,189    5.24%    23    $1,139,342    0.07%    608    -$  938,435
02/28/2006     $77,995,304    4.70%    18    $  998,610    0.06%    457    -$  424,089
01/31/2006     $68,737,439    4.08%    18    $1,007,830    0.06%    342    -$  209,788


TOTAL ORIGINATIONS                     AGGREGATE
DURING ORIGINATION                    ORIGINATION
     YEAR 2005       # OF ASSETS        BALANCE
------------------   -----------   -----------------
                        55,918     $2,565,281,845.73

Note: All percentages are based upon aggregate balances (i.e. "Actual UPB") as
of the end of the related month.


                                      EA-9



PERFORMANCE REPORT DEFINITIONS

Actual UPB
     Unpaid principal balance ("UPB") as of the month-end for all active
accounts

1 Payment Delq # of Accts
     Number of accounts delinquent more than 29 and less than 60 days, for the
     respective month, not including foreclosure or Real Estate Owned ("REO")

1 Payment Delq Bal
     UPB for accounts delinquent more than 29 and less than 60 days, for the
     respective month, not including foreclosure or REO

1 Payment Delq Bal %
     Percentage of accounts delinquent more than 29 and less than 60 days in
     relationship to the Actual UPB, for the respective month, not including
     foreclosure or REO

2 Payment Delq # of Accts
     Number of accounts delinquent more than 59 and less than 90 days, for the
     respective month, not including foreclosure or REO

2 Payment Delq Bal
     UPB for accounts delinquent more than 59 and less than 90 days, for the
     respective month, not including foreclosure or REO

2 Payment Delq Bal %
     Percentage of accounts delinquent more than 59 and less than 90 days in
     relationship to the Actual UPB, for the respective month, not including
     foreclosure or REO

3 Payment Delq # of Accts
     Number of accounts delinquent more than 89 and less than 120 days, for the
     respective month, not including foreclosure or REO

3 Payment Delq Bal
     UPB for accounts delinquent more than 89 and less than 120 days, for the
     respective month, not including foreclosure or REO

3 Payment Delq Bal %
     Percentage of accounts delinquent more than 89 and less than 120 days in
     relationship to the Actual UPB, for the respective month, not including
     foreclosure or REO


                                      EA-10



4 Payment Delq # of Accts
     Number of accounts delinquent more than 119 days, for the respective month,
     not including foreclosure or REO

4 Payment Delq Bal
     UPB for accounts delinquent more than 119 days, for the respective month,
     not including foreclosure or REO

4 Payment Delq Bal %
     Percentage of accounts delinquent more than 119 days in relationship to the
     Actual UPB, for the respective month, not including foreclosure or REO

Pre-FCL # of Accts
     Number of loans in the pre-foreclosure process, not including foreclosure
     or REO

Pre-FCL Bal
     UPB for loans in the pre-foreclosure process, not including foreclosure or
     REO

Pre-FCL Delq Bal %
     Percentage of accounts in the foreclosure process in relationship to the
     Actual UPB, for the respective month, not including foreclosure or REO

Delq Total Count
     Combined total number of all delinquent accounts 30 days delinquent through
     pre-foreclosure, for the respective month, not including foreclosure or REO

Delq Total UPB
     Total UPB for all delinquent accounts 30 days delinquent through
     pre-foreclosure, for the respective month, not including foreclosure or REO

Delq Total Bal %
     Percentage of all delinquent accounts 30 days delinquent through
     pre-foreclosure relative to the Actual UPB, for the respective month, not
     including foreclosure or REO

REO Count
     Number of Accounts in the REO and post-foreclosure process, for the
     respective month

REO UPB
     UPB for accounts in the REO and post-foreclosure process, for the
     respective month

REO %
     Percentage of accounts in the REO and post-foreclosure process relative to
     the Actual UPB, for the respective month


                                      EA-11



# of Accts Paid Off in Month
     Number of accounts that paid-off in the respective month (does not include
     accounts that were sold to unaffiliated parties or charged-off by
     Countrywide)

Cumulative Net Loss
     The cumulative sum for all losses for all realized losses for all accounts
     from deal inception after taking into account mortgage insurance proceeds,
     up to the respective month

NOTE: The delinquency calculation methods used are:

     Office of Thrift Supervision (OTS)

     1 Payment Delq includes loans that are 30-59 Days Delinquent.

     2 Payment Delq includes loans that are 60-89 Days Delinquent.

     3 Payment Delq includes loans that are 90-119 Days Delinquent.

     4+ Payment Delq includes loans that are more than 119 Days Delinquent.


                                      EA-12


PROSPECTUS

                                   CWABS, INC.
                                    DEPOSITOR

                             ASSET BACKED SECURITIES
                              (ISSUABLE IN SERIES)

--------------------------------------------------------------------------------
PLEASE CAREFULLY CONSIDER OUR DISCUSSION OF SOME OF THE RISKS OF INVESTING IN
THE SECURITIES UNDER "RISK FACTORS" BEGINNING ON PAGE 2.

The securities will represent obligations of the related trust fund only and
will not represent an interest in or obligation of CWABS, Inc., any seller,
servicer, or any of their affiliates.
--------------------------------------------------------------------------------

THE TRUSTS

Each trust will be established to hold assets in its trust fund transferred to
it by CWABS, Inc. The assets in each trust fund will be specified in the
prospectus supplement for the particular trust and will generally consist of:

o    first or subordinate lien mortgage loans secured by one- to four-family
     residential properties;

o    mortgage loans secured by first and/or subordinate liens on small
     multifamily residential properties, such as rental apartment buildings or
     projects containing five to fifty residential units;

o    closed-end and/or revolving home equity loans, secured in whole or in part
     by first and/or subordinate liens on one- to four-family residential
     properties;

o    home improvement loans, secured by first or subordinate liens on one- to
     four-family residential properties or by personal property security
     interests, and home improvement sales contracts, secured by personal
     property security interests;

o    collections arising from one or more types of the loans described above
     which are not used to make payments on securities issued by a trust fund,
     including excess servicing fees and prepayment charges;

o    mortgage pass-through securities issued or guaranteed by Ginnie Mae, Fannie
     Mae, or Freddie Mac; or

o    mortgage-backed securities evidencing an interest in, or secured by, loans
     of the type that would otherwise be eligible to be loans included in a
     trust fund and issued by entities other than Ginnie Mae, Fannie Mae or
     Freddie Mac.

THE SECURITIES

CWABS, Inc. will sell either certificates or notes pursuant to a prospectus
supplement. The securities will be grouped into one or more series, each having
its own distinct designation. Each series will be issued in one or more classes
and each class will evidence beneficial ownership of (in the case of
certificates) or a right to receive payments supported by (in the case of notes)
a specified portion of future payments on the assets in the trust fund that the
series relates to. A prospectus supplement for a series will specify all of the
terms of the series and of each of the classes in the series.

CREDIT ENHANCEMENT

If the securities have any type of credit enhancement, the prospectus supplement
for the related series will describe the credit enhancement. The types of credit
enhancement are generally described in this prospectus.

OFFERS OF SECURITIES

The securities may be offered through several different methods, including
offerings through underwriters.

                                   ----------

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

August 28, 2006




                                TABLE OF CONTENTS

Important Notice About Information in This Prospectus and Each
   Accompanying Prospectus Supplement.....................................     1
Risk Factors..............................................................     2
   Limited Source Of Payments -- No Recourse To Sellers, Depositor Or
      Servicer............................................................     2
   Credit Enhancement May Not Be Sufficient To Protect You From Losses....     3
   Nature Of Mortgages....................................................     3
   Your Risk Of Loss May Be Higher Than You Expect If Your Securities Are
      Backed By Multifamily Loans.........................................     8
   Impact Of World Events.................................................     9
   Your Risk Of Loss May Be Higher Than You Expect If Your Securities Are
      Backed By Partially Unsecured Home Equity Loans.....................    10
   You Could Be Adversely Affected By Violations Of Environmental Laws....    10
   Ratings Of The Securities Do Not Assure Their Payment..................    10
   Book-Entry Registration................................................    11
   Secondary Market For The Securities May Not Exist......................    11
   Bankruptcy Or Insolvency May Affect The Timing And Amount Of
      Distributions On The Securities.....................................    12
   The Principal Amount Of Securities May Exceed The Market Value Of The
      Trust Fund Assets...................................................    13
The Trust Fund............................................................    14
   General................................................................    14
   The Loans..............................................................    15
   Agency Securities......................................................    19
   Non-Agency Mortgage-Backed Securities..................................    23
   Substitution of Trust Fund Assets......................................    25
   Available Information..................................................    25
   Incorporation of Certain Documents by Reference; Reports Filed with
      the SEC.............................................................    26
   Reports to Securityholders.............................................    27
Use of Proceeds...........................................................    27
The Depositor.............................................................    27
Loan Program..............................................................    27
   Underwriting Standards.................................................    27
   Qualifications of Sellers..............................................    29
   Representations by Sellers; Repurchases................................    29
Static Pool Data..........................................................    30
Description of the Securities.............................................    31
   General................................................................    31
   Distributions on Securities............................................    33
   Advances...............................................................    34
   Reports to Securityholders.............................................    35
   Categories of Classes of Securities....................................    36
   Indices Applicable to Floating Rate and Inverse Floating Rate Classes..    39
   Book-Entry Registration of Securities..................................    42
Credit Enhancement........................................................    46
   General................................................................    46
   Subordination..........................................................    47
   Letter of Credit.......................................................    48
   Insurance Policies, Surety Bonds and Guaranties........................    48
   Overcollateralization and Excess Cash Flow.............................    48
   Reserve Accounts.......................................................    48
   Pool Insurance Policies................................................    49
   Financial Instruments..................................................    50
   Cross Support..........................................................    51
Yield, Maturity and Prepayment Considerations.............................    51
   Prepayments on Loans...................................................    51
   Prepayment Effect on Interest..........................................    52
   Delays in Realization on Property; Expenses of Realization.............    53
   Optional Purchase......................................................    53
   Prepayment Standards or Models.........................................    54
   Yield..................................................................    54
The Agreements............................................................    54
   Assignment of the Trust Fund Assets....................................    54
   Payments On Loans; Deposits to Security Account........................    56
   Pre-Funding Account....................................................    59
   Investments in Amounts Held in Accounts................................    59
   Sub-Servicing by Sellers...............................................    61
   Collection Procedures..................................................    61
   Hazard Insurance.......................................................    62
   Application of Liquidation Proceeds....................................    64
   Realization Upon Defaulted Loans.......................................    64
   Servicing and Other Compensation and Payment of Expenses...............    66
   Evidence as to Compliance..............................................    67
   Certain Matters Regarding the Master Servicer and the Depositor........    67
   Events of Default; Rights Upon Event of Default........................    68
   Amendment..............................................................    71
   Termination; Optional Termination......................................    72
   The Trustee............................................................    73
Certain Legal Aspects of the Loans........................................    73
   General................................................................    73
   Foreclosure............................................................    74
   Environmental Risks....................................................    76
   Rights of Redemption...................................................    77


                                        i



   Anti-Deficiency Legislation and Other Limitations On Lenders...........    78
   Due-On-Sale Clauses....................................................    78
   Enforceability of Prepayment and Late Payment Fees.....................    79
   Applicability of Usury Laws............................................    79
   Home Improvement Finance...............................................    79
   Servicemembers Civil Relief Act........................................    81
   Junior Mortgages and Rights of Senior Mortgagees.......................    81
   Other Loan Provisions and Lender Requirements..........................    81
   Priority of Additional Advances........................................    82
   The Title I Program....................................................    82
   Consumer Protection Laws...............................................    85
Material Federal Income Tax Consequences..................................    86
   General................................................................    86
   Taxation of Debt Securities............................................    87
   Taxation of the REMIC and Its Holders..................................    91
   REMIC Expenses; Single Class REMICs....................................    91
   Taxation of the REMIC..................................................    92
   Taxation of Holders of Residual Interests..............................    93
   Administrative Matters.................................................    96
   Tax Status as a Grantor Trust..........................................    97
   Sale or Exchange.......................................................    99
   Miscellaneous Tax Aspects..............................................    99
   New Reporting Regulations..............................................   100
   Tax Treatment of Foreign Investors.....................................   100
   Tax Characterization of the Trust Fund as a Partnership................   101
   Tax Consequences to Holders of the Notes...............................   101
   Tax Consequences to Holders of the Certificates........................   103
Other Tax Considerations..................................................   107
ERISA Considerations......................................................   107
Legal Investment..........................................................   111
Method of Distribution....................................................   112
Legal Matters.............................................................   113
Financial Information.....................................................   113
Rating....................................................................   113
Index to Defined Terms....................................................   115


                                       ii



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

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

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

o    the accompanying prospectus supplement for a particular series, which
     describes the specific terms of the securities of that series.

     The prospectus supplement will contain information about a particular
series that supplements the information contained in this prospectus, and you
should rely on that supplementary information in the prospectus supplement.

     You should rely only on the information 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.

                                   ----------

     If you require additional information, the mailing address of our principal
executive offices is CWABS, Inc., 4500 Park Granada, Calabasas, California 91302
and the telephone number is (818) 225-3000. For other means of acquiring
additional information about us or a series of securities, see "The Trust Fund
-- Available Information" and "-- Incorporation of Certain Documents by
Reference; Reports Filed with the SEC" beginning on page 25.


                                        1



                                  RISK FACTORS

         You should carefully consider the following information since it
identifies significant risks associated with an investment in the securities.

LIMITED SOURCE OF PAYMENTS --    The applicable prospectus supplement may
NO RECOURSE TO SELLERS,          provide that securities will be payable from
DEPOSITOR OR SERVICER            other trust funds in addition to their
                                 associated trust fund, but if it does not, they
                                 will be payable solely from their associated
                                 trust fund. If the trust fund does not have
                                 sufficient assets to distribute the full amount
                                 due to you as a securityholder, your yield will
                                 be impaired, and perhaps even the return of
                                 your principal may be impaired, without your
                                 having recourse to anyone else. Furthermore, at
                                 the times specified in the applicable
                                 prospectus supplement, certain assets of the
                                 trust fund may be released and paid out to
                                 other people, such as the depositor, a
                                 servicer, a credit enhancement provider, or any
                                 other person entitled to payments from the
                                 trust fund. Those assets will no longer be
                                 available to make payments to you. Those
                                 payments are generally made after other
                                 specified payments that may be set forth in the
                                 applicable prospectus supplement have been
                                 made.

                                 You will not have any recourse against the
                                 depositor or any servicer if you do not receive
                                 a required distribution on the securities. Nor
                                 will you have recourse against the assets of
                                 the trust fund of any other series of
                                 securities.

                                 The securities will not represent an interest
                                 in the depositor, any servicer, any seller to
                                 the depositor, or anyone else except the trust
                                 fund. The only obligation of the depositor to a
                                 trust fund comes from certain representations
                                 and warranties made by it about assets
                                 transferred to the trust fund. If these
                                 representations and warranties turn out to be
                                 untrue, the depositor may be required to
                                 repurchase some of the transferred assets.
                                 CWABS, Inc., which is the depositor, does not
                                 have significant assets and is unlikely to have
                                 significant assets in the future. So if the
                                 depositor were required to repurchase a loan
                                 because of a breach of a representation, its
                                 only sources of funds for the repurchase would
                                 be:

                                 o    funds obtained from enforcing a
                                      corresponding obligation of a seller or
                                      originator of the loan, or

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

                                 The only obligations of the master servicer to
                                 a trust fund (other than its master servicing
                                 obligations) comes from certain representations
                                 and warranties made by it in connection with
                                 its loan servicing activities. If these
                                 representations and warranties turn out to be
                                 untrue, the master servicer may be required to
                                 repurchase or substitute for some of the loans.
                                 However, the master servicer may not have the
                                 financial ability to make the required
                                 repurchase or substitution.

                                 The only obligations to a trust fund of a
                                 seller of loans to the depositor comes from
                                 certain representations and warranties made by
                                 it in connection with its sale of the loans and
                                 certain document delivery requirements. If
                                 these representations and warranties turn out
                                 to be untrue, or the seller fails to deliver
                                 required documents, it may be


                                        2



                                 required to repurchase or substitute for some
                                 of the loans. However, the seller may not have
                                 the financial ability to make the required
                                 repurchase or substitution.

CREDIT ENHANCEMENT MAY NOT BE    Credit enhancement is intended to reduce the
SUFFICIENT TO PROTECT YOU FROM   effect of loan losses. But credit enhancements
LOSSES                           may benefit only some classes of a series of
                                 securities and the amount of any credit
                                 enhancement will be limited as described in the
                                 related prospectus supplement. Furthermore, the
                                 amount of a credit enhancement may decline over
                                 time pursuant to a schedule or formula or
                                 otherwise, and could be depleted from payments
                                 or for other reasons before the securities
                                 covered by the credit enhancement are paid in
                                 full. In addition, a credit enhancement may not
                                 cover all potential sources of loss. For
                                 example, a credit enhancement may or may not
                                 cover fraud or negligence by a loan originator
                                 or other parties. Also, all or a portion of the
                                 credit enhancement may be reduced, substituted
                                 for, or even eliminated so long as the rating
                                 agencies rating the securities indicate that
                                 the change in credit enhancement would not
                                 cause them to change adversely their rating of
                                 the securities. Consequently, securityholders
                                 may suffer losses even though a credit
                                 enhancement exists and its provider does not
                                 default.

NATURE OF MORTGAGES              The mortgages and deeds of trust securing the
     Junior Status of Liens      home equity loans and home improvement loans
     Securing Home Equity        will be primarily junior liens subordinate to
     Loans and Home              the rights of the mortgagee under the related
     Improvement Loans Could     senior mortgage(s) or deed(s) of trust.
     Adversely Affect You        Accordingly, the proceeds from any liquidation,
                                 insurance or condemnation proceeds will be
                                 available to satisfy the outstanding balance of
                                 the junior lien only to the extent that the
                                 claims of the related senior mortgagees have
                                 been satisfied in full, including any related
                                 foreclosure costs. In addition, if a junior
                                 mortgagee forecloses on the property securing a
                                 junior mortgage, it forecloses subject to any
                                 senior mortgage and must take one of the
                                 following steps to protect its interest in the
                                 property:

                                 o    pay the senior mortgage in full at or
                                      prior to the foreclosure sale, or

                                 o    assume the payments on the senior mortgage
                                      in the event the mortgagor is in default
                                      under the senior mortgage.

                                 The trust fund may effectively be prevented
                                 from foreclosing on the related property since
                                 it will have no funds to satisfy any senior
                                 mortgages or make payments due to any senior
                                 mortgagees.

                                 Some states have imposed legal limits on the
                                 remedies of a secured lender in the event that
                                 the proceeds of any sale under a deed of trust
                                 or other foreclosure proceedings are
                                 insufficient to pay amounts owed to that
                                 secured lender. In some states, including
                                 California, if a lender simultaneously
                                 originates a loan secured by a senior lien on a
                                 particular property and a loan secured by a
                                 junior lien on the same property, that lender
                                 as the holder of the junior lien may be
                                 precluded from obtaining a deficiency judgment
                                 with respect to the excess of:

                                 o    the aggregate amount owed under both the
                                      senior and junior loans over


                                        3



                                 o    the proceeds of any sale under a deed of
                                      trust or other foreclosure proceedings.

                                 See "Certain Legal Aspects of the Loans --
                                 Anti-Deficiency Legislation; Bankruptcy Laws;
                                 Tax Liens."

Cooperative Loans May            Cooperative loans are evidenced by promissory
Experience Relatively Higher     notes secured by security interests in shares
Losses                           issued by private corporations that are
                                 entitled to be treated as housing cooperatives
                                 under the Internal Revenue Code and in the
                                 related proprietary leases or occupancy
                                 agreements granting exclusive rights to occupy
                                 specific dwelling units in the corporations'
                                 buildings.

                                 If there is a blanket mortgage (or mortgages)
                                 on the cooperative apartment building and/or
                                 underlying land, as is generally the case, the
                                 cooperative, as property borrower, is
                                 responsible for meeting these mortgage or
                                 rental obligations. If the cooperative is
                                 unable to meet the payment obligations arising
                                 under a blanket mortgage, the mortgagee holding
                                 a blanket mortgage could foreclose on that
                                 mortgage and terminate all subordinate
                                 proprietary leases and occupancy agreements. A
                                 foreclosure by the holder of a blanket mortgage
                                 could eliminate or significantly diminish the
                                 value of any collateral held by the lender who
                                 financed an individual tenant-stockholder of
                                 cooperative shares or, in the case of the
                                 mortgage loans, the collateral securing the
                                 cooperative loans.

                                 If there is an underlying lease of the land, as
                                 is the case in some instances, the cooperative
                                 is responsible for meeting the related rental
                                 obligations. If the cooperative is unable to
                                 meet its obligations arising under its land
                                 lease, the holder of the land lease could
                                 terminate the land lease and all subordinate
                                 proprietary leases and occupancy agreements.
                                 The termination of the land lease by its holder
                                 could eliminate or significantly diminish the
                                 value of any collateral held by the lender who
                                 financed an individual tenant-stockholder of
                                 the cooperative shares or, in the case of the
                                 mortgage loans, the collateral securing the
                                 cooperative loans. A land lease also has an
                                 expiration date and the inability of the
                                 cooperative to extend its term or, in the
                                 alternative, to purchase the land could lead to
                                 termination of the cooperative's interest in
                                 the property and termination of all proprietary
                                 leases and occupancy agreements which could
                                 eliminate or significantly diminish the value
                                 of the related collateral.

                                 In addition, if the corporation issuing the
                                 shares related to the cooperative loans fails
                                 to qualify as a cooperative housing corporation
                                 under the Internal Revenue Code, the value of
                                 the collateral securing the cooperative loan
                                 could be significantly impaired because the
                                 tenant-stockholders would not be permitted to
                                 deduct its proportionate share of certain
                                 interest expenses and real estate taxes of the
                                 corporation.

                                 The cooperative shares and proprietary lease or
                                 occupancy agreement pledged to the lender are,
                                 in almost all cases, subject to restrictions on
                                 transfer, including obtaining the consent of
                                 the cooperative housing corporation prior to
                                 the transfer, which may impair the value of the
                                 collateral after a default by the borrower due
                                 to an inability to find a transferee acceptable
                                 to the related housing corporation.


                                        4



Home Improvement Loans Secured   A borrower's obligations under a home
by Personal Property May         improvement loan may be secured by the personal
Experience Relatively Higher     property which was purchased with the proceeds
Losses                           of the home improvement loan. The liquidation
                                 value of the related personal property is
                                 likely to be significantly less than the
                                 original purchase price of that property. In
                                 the event that the borrower on a home
                                 improvement loan defaults while a significant
                                 portion of the loan is outstanding, it is
                                 likely that the amount recovered from the sale
                                 of the related personal property will be
                                 insufficient to pay the related liquidation
                                 expenses and satisfy the remaining unpaid
                                 balance of the related loan. In that case, one
                                 or more classes of securities will suffer a
                                 loss. See "Certain Legal Aspects of the Loans
                                 -- Home Improvement Finance" for a description
                                 of certain legal issues related to home
                                 improvement loans.

Declines in Property Values      The value of the properties underlying the
May Adversely Affect You         loans held in the trust fund may decline over
                                 time. Among the factors that could adversely
                                 affect the value of the properties are:

                                 o    an overall decline in the residential real
                                      estate market in the areas in which they
                                      are located,

                                 o    a decline in their general condition from
                                      the failure of borrowers to maintain their
                                      property adequately, and

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

                                 In the case of home equity loans, declining
                                 property values could diminish or extinguish
                                 the value of a junior mortgage before reducing
                                 the value of a senior mortgage on the same
                                 property.

                                 If property values decline, the actual rates of
                                 delinquencies, foreclosures, and losses on all
                                 underlying loans could be higher than those
                                 currently experienced in the mortgage lending
                                 industry in general. These losses, to the
                                 extent not otherwise covered by a credit
                                 enhancement, will be borne by the holder of one
                                 or more classes of securities.

Delays in Liquidation May        Even if the properties underlying the loans
Adversely Affect You             held in the trust fund provide adequate
                                 security for the loans, substantial delays
                                 could occur before defaulted loans are
                                 liquidated and their proceeds are forwarded to
                                 investors. Property foreclosure actions are
                                 regulated by state statutes and rules and are
                                 subject to many of the delays and expenses of
                                 other lawsuits if defenses or counterclaims are
                                 made, sometimes requiring several years to
                                 complete. Furthermore, an action to obtain a
                                 deficiency judgment is regulated by statutes
                                 and rules, and the amount or availability of a
                                 deficiency judgment may be limited by law. In
                                 the event of a default by a borrower, these
                                 restrictions may impede the ability of the
                                 servicer to foreclose on or to sell the
                                 mortgaged property or to obtain a deficiency
                                 judgment, to obtain sufficient proceeds to
                                 repay the loan in full.

                                 In addition, the servicer will be entitled to
                                 deduct from liquidation proceeds all expenses
                                 reasonably incurred in attempting to recover on
                                 the defaulted loan, including legal and
                                 appraisal fees and costs, real estate taxes,
                                 and property maintenance and preservation
                                 expenses.


                                        5



                                 In the event that:

                                      o    the mortgaged properties fail to
                                           provide adequate security for the
                                           related loans,

                                      o    if applicable to a series as
                                           specified in the related prospectus
                                           supplement, excess cashflow (if any)
                                           and overcollateralization (if any) is
                                           insufficient to cover these
                                           shortfalls,

                                      o    if applicable to a series as
                                           specified in the related prospectus
                                           supplement, the subordination of
                                           certain classes are insufficient to
                                           cover these shortfalls, and

                                      o    with respect to the securities with
                                           the benefit of an insurance policy as
                                           specified in the related prospectus
                                           supplement, the credit enhancement
                                           provider fails to make the required
                                           payments under the related insurance
                                           policies,

                                 you could lose all or a portion of the money
                                 you paid for the securities and could also have
                                 a lower yield than anticipated at the time you
                                 purchased the securities.

Disproportionate Effect of       Liquidation expenses of defaulted loans
Liquidation Expenses May         generally do not vary directly with the
Adversely Affect You             outstanding principal balance of the loan at
                                 the time of default. Therefore, if a servicer
                                 takes the same steps for a defaulted loan
                                 having a small remaining principal balance as
                                 it does for a defaulted loan having a large
                                 remaining principal balance, the amount
                                 realized after expenses is smaller as a
                                 percentage of the outstanding principal balance
                                 of the small loan than it is for the defaulted
                                 loan having a large remaining principal
                                 balance.

Consumer Protection Laws May     Federal, state and local laws extensively
Adversely Affect You             regulate various aspects of brokering,
                                 originating, servicing and collecting loans
                                 secured by consumers' dwellings. Among other
                                 things, these laws may regulate interest rates
                                 and other charges, require disclosures, impose
                                 financial privacy requirements, mandate
                                 specific business practices, and prohibit
                                 unfair and deceptive trade practices. In
                                 addition, licensing requirements may be imposed
                                 on persons that broker, originate, service or
                                 collect loans secured by consumers' dwellings.

                                 Additional requirements may be imposed under
                                 federal, state or local laws on so-called "high
                                 cost mortgage loans," which typically are
                                 defined as loans secured by a consumer's
                                 dwelling that have interest rates or
                                 origination costs in excess of prescribed
                                 levels. These laws may limit certain loan
                                 terms, such as prepayment charges, or the
                                 ability of a creditor to refinance a loan
                                 unless it is in the borrower's interest. In
                                 addition, certain of these laws may allow
                                 claims against loan brokers or originators,
                                 including claims based on fraud or
                                 misrepresentations, to be asserted against
                                 persons acquiring the loans, such as the trust
                                 fund.


                                        6



                                 The federal laws that may apply to loans held
                                 in the trust fund include the following:

                                 o    the Truth in Lending Act and its
                                      regulations, which (among other things)
                                      require disclosures to borrowers regarding
                                      the terms of loans and provide consumers
                                      who pledged their principal dwelling as
                                      collateral in a non-purchase money
                                      transaction with a right of rescission
                                      that generally extends for three days
                                      after proper disclosures are given;

                                 o    the Home Ownership and Equity Protection
                                      Act and its regulations, which (among
                                      other things) imposes additional
                                      disclosure requirements and limitations on
                                      loan terms with respect to non-purchase
                                      money, installment loans secured by the
                                      consumer's principal dwelling that have
                                      interest rates or origination costs in
                                      excess of prescribed levels;

                                 o    the Home Equity Loan Consumer Protection
                                      Act and its regulations, which (among
                                      other things) limit changes that may be
                                      made to open-end loans secured by the
                                      consumer's dwelling, and restricts the
                                      ability to accelerate balances or suspend
                                      credit privileges on these loans;

                                 o    the Real Estate Settlement Procedures Act
                                      and its regulations, which (among other
                                      things) prohibit the payment of referral
                                      fees for real estate settlement services
                                      (including mortgage lending and brokerage
                                      services) and regulate escrow accounts for
                                      taxes and insurance and billing inquiries
                                      made by borrowers;

                                 o    the Equal Credit Opportunity Act and its
                                      regulations, which (among other things)
                                      generally prohibit discrimination in any
                                      aspect of a credit transaction on certain
                                      enumerated basis, such as age, race,
                                      color, sex, religion, marital status,
                                      national origin or receipt of public
                                      assistance;

                                 o    the Federal Trade Commission's Rule on
                                      Preservation of Consumer Claims and
                                      Defenses, which generally provides that
                                      the rights of an assignee of a conditional
                                      sales contract (or of certain lenders
                                      making purchase money loans) to enforce a
                                      consumer credit obligation are subject to
                                      the claims and defenses that the consumer
                                      could assert against the seller of goods
                                      or services financed in the credit
                                      transaction; and

                                 o    the Fair Credit Reporting Act, which
                                      (among other things) regulates the use of
                                      consumer reports obtained from consumer
                                      reporting agencies and the reporting of
                                      payment histories to consumer reporting
                                      agencies.

                                 The penalties for violating these federal,
                                 state, or local laws vary depending on the
                                 applicable law and the particular facts of the
                                 situation. However, private plaintiffs
                                 typically may assert claims for actual damages
                                 and, in some cases, also may recover civil
                                 money penalties or exercise a right to rescind
                                 the loan. Violations of certain laws may limit
                                 the ability to collect all or part of the
                                 principal or interest on a loan and,


                                        7



                                 in some cases, borrowers even may be entitled
                                 to a refund of amounts previously paid.
                                 Federal, state and local administrative or law
                                 enforcement agencies also may be entitled to
                                 bring legal actions, including actions for
                                 civil money penalties or restitution, for
                                 violations of certain of these laws.

                                 Depending on the particular alleged misconduct,
                                 it is possible that claims may be asserted
                                 against various participants in secondary
                                 market transactions, including assignees that
                                 hold the loans, such as the trust fund. Losses
                                 on loans from the application of these federal,
                                 state and local laws that are not otherwise
                                 covered by one or more forms of credit
                                 enhancement will be borne by the holders of one
                                 or more classes of securities. Additionally,
                                 the trust may experience losses arising from
                                 lawsuits related to alleged violations of these
                                 laws, which, if not covered by one or more
                                 forms of credit enhancement or the related
                                 seller, will be borne by the holders of one or
                                 more classes of securities.

Losses on Balloon Payment        Some of the mortgage loans held in the trust
Mortgages Are Borne by You       fund may not be fully amortizing over their
                                 terms to maturity and, thus, will require
                                 substantial principal payments (that is,
                                 balloon payments) at their stated maturity.
                                 Loans with balloon payments involve a greater
                                 degree of risk than fully amortizing loans
                                 because typically the borrower must be able to
                                 refinance the loan or sell the property to make
                                 the balloon payment at maturity. The ability of
                                 a borrower to do this will depend on factors
                                 such as mortgage rates at the time of sale or
                                 refinancing, the borrower's equity in the
                                 property, the relative strength of the local
                                 housing market, the financial condition of the
                                 borrower, and tax laws. Losses on these loans
                                 that are not otherwise covered by a credit
                                 enhancement will be borne by the holders of one
                                 or more classes of securities.

YOUR RISK OF LOSS MAY BE         Multifamily lending may expose the lender to a
HIGHER THAN YOU EXPECT IF YOUR   greater risk of loss than single family
SECURITIES ARE BACKED BY         residential lending. Owners of multifamily
MULTIFAMILY LOANS                residential properties rely on monthly lease
                                 payments from tenants to

                                 o    pay for maintenance and other operating
                                      expenses of those properties,

                                 o    fund capital improvements, and

                                 o    service any mortgage loan and any other
                                      debt that may be secured by those
                                      properties.

                                 Various factors, many of which are beyond the
                                 control of the owner or operator of a
                                 multifamily property, may affect the economic
                                 viability of that property.

                                 Changes in payment patterns by tenants may
                                 result from a variety of social, legal and
                                 economic factors. Economic factors include the
                                 rate of inflation, unemployment levels and
                                 relative rates offered for various types of
                                 housing. Shifts in economic factors may trigger
                                 changes in payment patterns including increased
                                 risks of defaults by tenants and higher vacancy
                                 rates. Adverse economic conditions, either
                                 local or national, may limit the amount of rent
                                 that can be charged and may result in a
                                 reduction in timely lease payments or a
                                 reduction in occupancy levels. Occupancy and
                                 rent levels may also be affected by
                                 construction


                                        8



                                 of additional housing units, competition and
                                 local politics, including rent stabilization or
                                 rent control laws and policies. In addition,
                                 the level of mortgage interest rates may
                                 encourage tenants to purchase single family
                                 housing. We are unable to determine and have no
                                 basis to predict whether, or to what extent,
                                 economic, legal or social factors will affect
                                 future rental or payment patterns.

                                 The location and construction quality of a
                                 particular building may affect the occupancy
                                 level as well as the rents that may be charged
                                 for individual units. The characteristics of a
                                 neighborhood may change over time or in
                                 relation to newer developments. The effects of
                                 poor construction quality will increase over
                                 time in the form of increased maintenance and
                                 capital improvements. Even good construction
                                 will deteriorate over time if adequate
                                 maintenance is not performed in a timely
                                 fashion.

IMPACT OF WORLD EVENTS           The economic impact of the United States'
                                 military operations in Iraq and other parts of
                                 the world, as well as the possibility of any
                                 terrorist attacks domestically or abroad, is
                                 uncertain, but could have a material effect on
                                 general economic conditions, consumer
                                 confidence, and market liquidity. We can give
                                 no assurance as to the effect of these events
                                 on consumer confidence and the performance of
                                 the loans held by trust fund. Any adverse
                                 impact resulting from these events would be
                                 borne by the holders of one or more classes of
                                 the securities.

                                 United States military operations also increase
                                 the likelihood of shortfalls under the
                                 Servicemembers Civil Relief Act or similar
                                 state laws (referred to as the "Relief Act" ).
                                 The Relief Act provides relief to borrowers who
                                 enter active military service and to borrowers
                                 in reserve status who are called to active duty
                                 after the origination of their loan. The Relief
                                 Act provides generally that these borrowers may
                                 not be charged interest on a loan in excess of
                                 6% per annum during the period of the
                                 borrower's active duty. These shortfalls are
                                 not required to be paid by the borrower at any
                                 future time and will not be advanced by the
                                 servicer, unless otherwise specified in the
                                 related prospectus supplement. To the extent
                                 these shortfalls reduce the amount of interest
                                 paid to the holders of securities with the
                                 benefit of an insurance policy, unless
                                 otherwise specified in the related prospectus
                                 supplement, they will not be covered by the
                                 related insurance policy. In addition, the
                                 Relief Act imposes limitations that would
                                 impair the ability of the servicer to foreclose
                                 on an affected loan during the borrower's
                                 period of active duty status, and, under some
                                 circumstances, during an additional period
                                 thereafter.

                                 In addition, pursuant to the laws of various
                                 states, under certain circumstances, payments
                                 on mortgage loans by residents in such states
                                 who are called into active duty with the
                                 National Guard or the reserves will be
                                 deferred. These state laws may also limit the
                                 ability of the servicer to foreclose on the
                                 related mortgaged property. This could result
                                 in delays or reductions in payment and
                                 increased losses on the mortgage loans which
                                 would be borne by the securityholders.


                                        9



YOUR RISK OF LOSS MAY BE         The trust fund may also include home equity
HIGHER THAN YOU EXPECT IF YOUR   loans that were originated with loan-to-value
SECURITIES ARE BACKED BY         ratios or combined loan-to-value ratios in
PARTIALLY UNSECURED HOME         excess of the value of the related mortgaged
EQUITY LOANS                     property. Under these circumstances, the trust
                                 fund could be treated as a general unsecured
                                 creditor as to any unsecured portion of any
                                 related loan. In the event of a default under a
                                 loan that is unsecured in part, the trust fund
                                 will have recourse only against the borrower's
                                 assets generally for the unsecured portion of
                                 the loan, along with all other general
                                 unsecured creditors of the borrower.

YOU COULD BE ADVERSELY           Federal, state, and local laws and regulations
AFFECTED BY VIOLATIONS OF        impose a wide range of requirements on
ENVIRONMENTAL LAWS               activities that may affect the environment,
                                 health, and safety. In certain circumstances,
                                 these laws and regulations impose obligations
                                 on "owners" or "operators" of residential
                                 properties such as those that secure the loans
                                 held in the trust fund. Failure to comply with
                                 these laws and regulations can result in fines
                                 and penalties that could be assessed against
                                 the trust if it were to be considered an
                                 "owner" or "operator" of the related property.
                                 A property "owner" or "operator" can also be
                                 held liable for the cost of investigating and
                                 remediating contamination, regardless of fault,
                                 and for personal injury or property damage
                                 arising from exposure to contaminants.

                                 In some states, a lien on the property due to
                                 contamination has priority over the lien of an
                                 existing mortgage. Also, a mortgage lender may
                                 be held liable as an "owner" or "operator" for
                                 costs associated with the release of hazardous
                                 substances from a site, or petroleum from an
                                 underground storage tank under certain
                                 circumstances. If the trust were to be
                                 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.

RATINGS OF THE SECURITIES DO     Any class of securities issued under this
NOT ASSURE THEIR PAYMENT         prospectus and the accompanying prospectus
                                 supplement will be rated in one of the rating
                                 categories which signifies investment grade by
                                 at least one nationally recognized rating
                                 agency. A rating is based on the adequacy of
                                 the value of the trust assets and any credit
                                 enhancement for that class, and reflects the
                                 rating agency's assessment of how likely it is
                                 that holders of the class of securities will
                                 receive the payments to which they are
                                 entitled. A rating does not constitute an
                                 assessment of how likely it is that principal
                                 prepayments on the underlying loans will be
                                 made, the degree to which the rate of
                                 prepayments might differ from that originally
                                 anticipated, or the likelihood that the
                                 securities will be redeemed early. A rating is
                                 not a recommendation to purchase, hold, or sell
                                 securities because it does not address the
                                 market price of the securities or the
                                 suitability of the securities for any
                                 particular investor.

                                 A rating may not remain in effect for any given
                                 period of time and the rating agency could
                                 lower or withdraw the rating entirely in the
                                 future. For example, the rating agency could
                                 lower or withdraw its rating due to:

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

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


                                       10



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

                                 The amount, type, and nature of credit
                                 enhancement established for a class of
                                 securities will be determined on the basis of
                                 criteria established by each rating agency
                                 rating classes of the securities. These
                                 criteria are sometimes based upon an actuarial
                                 analysis of the behavior of similar loans in a
                                 larger group. That analysis is often the basis
                                 upon which each rating agency determines the
                                 amount of credit enhancement required for a
                                 class. The historical data supporting any
                                 actuarial analysis may not accurately reflect
                                 future experience, and the data derived from a
                                 large pool of similar loans may not accurately
                                 predict the delinquency, foreclosure, or loss
                                 experience of any particular pool of mortgage
                                 loans. Mortgaged properties may not retain
                                 their values. If residential real estate
                                 markets experience an overall decline in
                                 property values such that the outstanding
                                 principal balances of the loans held in a
                                 particular trust fund and any secondary
                                 financing on the related mortgaged properties
                                 become equal to or greater than the value of
                                 the mortgaged properties, the rates of
                                 delinquencies, foreclosures, and losses could
                                 be higher than those now generally experienced
                                 in the mortgage lending industry. In addition,
                                 adverse economic conditions may affect timely
                                 payment by mortgagors on their loans whether or
                                 not the conditions affect real property values
                                 and, accordingly, the rates of delinquencies,
                                 foreclosures, and losses in any trust fund.
                                 Losses from this that are not covered by a
                                 credit enhancement will be borne, at least in
                                 part, by the holders of one or more classes of
                                 securities.

BOOK-ENTRY REGISTRATION          Securities issued in book-entry form may have
   Limit on Liquidity            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           Transactions in book-entry securities can be
   Transfer or Pledge            effected only through The Depository Trust
                                 Company, its participating organizations, its
                                 indirect participants, and certain banks.
                                 Therefore, 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 The Depository Trust Company for it
                                 to credit the accounts of its participants. In
                                 turn, these participants will then credit the
                                 distributions to your account either directly
                                 or indirectly through indirect participants.

SECONDARY MARKET FOR THE         The related prospectus supplement for each
SECURITIES MAY NOT EXIST         series will specify the classes in which the
                                 underwriter intends to make a secondary market,
                                 but no underwriter will have any obligation to
                                 do so. We can give no assurance that a
                                 secondary market for the securities will
                                 develop or, if it develops, that it will
                                 continue. Consequently, you may not be able to
                                 sell your securities readily or at prices that
                                 will enable you to realize your desired yield.
                                 The market values of the securities are likely
                                 to fluctuate. Fluctuations may be significant
                                 and could result in significant losses to you.

                                 The secondary markets for asset backed
                                 securities have experienced periods of
                                 illiquidity and can be expected to do so in the
                                 future. Illiquidity can have a severely adverse
                                 effect on the prices of securities that are


                                       11



                                 especially sensitive to prepayment, credit or
                                 interest rate risk, or that have been
                                 structured to meet the investment requirements
                                 of limited categories of investors.

BANKRUPTCY OR INSOLVENCY         Each seller and the depositor will take steps
MAY AFFECT THE TIMING AND        to structure the transfer of the loans held in
AMOUNT OF DISTRIBUTIONS ON       the trust fund by the seller to the depositor
THE SECURITIES                   as a sale. The depositor and the trust fund
                                 will take steps to structure the transfer of
                                 the loans from the depositor to the trust fund
                                 as a sale. If these characterizations are
                                 correct, then if the seller were to become
                                 bankrupt, the loans would not be part of the
                                 seller's bankruptcy estate and would not be
                                 available to the seller's creditors. On the
                                 other hand, if the seller becomes bankrupt, its
                                 bankruptcy trustee or one of its creditors may
                                 attempt to recharacterize the sale of the loans
                                 as a borrowing by the seller, secured by a
                                 pledge of the loans. Presenting this position
                                 to a bankruptcy court could prevent timely
                                 payments on the securities and even reduce the
                                 payments on the securities. Additionally, if
                                 that argument is successful, the bankruptcy
                                 trustee could elect to sell the loans and pay
                                 down the securities early. Thus, you could lose
                                 the right to future payments of interest, and
                                 might suffer reinvestment losses in a lower
                                 interest rate environment.

                                 Similarly, if the characterizations of the
                                 transfers as sales are correct, then if the
                                 depositor were to become bankrupt, the loans
                                 would not be part of the depositor's bankruptcy
                                 estate and would not be available to the
                                 depositor's creditors. On the other hand, if
                                 the depositor becomes bankrupt, its bankruptcy
                                 trustee or one of its creditors may attempt to
                                 recharacterize the sale of the loans as a
                                 borrowing by the depositor, secured by a pledge
                                 of the loans. Presenting this position to a
                                 bankruptcy court could prevent timely payments
                                 on the securities and even reduce the payments
                                 on the securities.

                                 If the master servicer becomes bankrupt, the
                                 bankruptcy trustee may have the power to
                                 prevent the appointment of a successor master
                                 servicer. Any related delays in servicing could
                                 result in increased delinquencies or losses on
                                 the loans. The period during which cash
                                 collections may be commingled with the master
                                 servicer's own funds before each distribution
                                 date for securities will be specified in the
                                 applicable prospectus supplement. If the master
                                 servicer becomes bankrupt and cash collections
                                 have been commingled with the master servicer's
                                 own funds, the trust fund will likely not have
                                 a perfected interest in those collections. In
                                 this case the trust might be an unsecured
                                 creditor of the master servicer as to the
                                 commingled funds and could recover only its
                                 share as a general creditor, which might be
                                 nothing. Collections that are not commingled
                                 but still in an account of the master servicer
                                 might also be included in the bankruptcy estate
                                 of the master servicer even though the trust
                                 may have a perfected security interest in them.
                                 Their inclusion in the bankruptcy estate of the
                                 master servicer may result in delays in payment
                                 and failure to pay amounts due on the
                                 securities.

                                 Federal and state statutory provisions
                                 affording protection or relief to distressed
                                 borrowers may affect the ability of the secured
                                 mortgage lender to realize upon its security in
                                 other situations as well. For example, in a
                                 proceeding under the federal Bankruptcy Code, a
                                 lender may not foreclose on a mortgaged
                                 property without the permission of the
                                 bankruptcy court. And in certain instances a
                                 bankruptcy court may allow a borrower to reduce
                                 the monthly payments, change the rate of
                                 interest,


                                       12



                                 and alter the mortgage loan repayment schedule
                                 for under-collateralized mortgage loans. The
                                 effect of these types of proceedings can be to
                                 cause delays in receiving payments on the loans
                                 underlying securities and even to reduce the
                                 aggregate amount of payments on the loans
                                 underlying securities.

THE PRINCIPAL AMOUNT OF          The market value of the assets relating to a
SECURITIES MAY EXCEED THE        series of securities at any time may be less
MARKET VALUE OF THE TRUST        than the principal amount of the securities of
FUND ASSETS                      that series then outstanding, plus accrued
                                 interest. In the case of a series of notes,
                                 after an event of default and a sale of the
                                 assets relating to a series of securities, the
                                 trustee, the master servicer, the credit
                                 enhancer, if any, and any other service
                                 provider specified in the related prospectus
                                 supplement generally will be entitled to
                                 receive the proceeds of that sale to the extent
                                 of unpaid fees and other amounts owing to them
                                 under the related transaction document prior to
                                 distributions to securityholders. Upon any sale
                                 of the assets in connection with an event of
                                 default, the proceeds may be insufficient to
                                 pay in full the principal of and interest on
                                 the securities of the related series.

                                 Certain capitalized terms are used in this
                                 prospectus to assist you in understanding the
                                 terms of the securities. The capitalized terms
                                 used in this prospectus are defined on the
                                 pages indicated under the caption "Index to
                                 Defined Terms" beginning on page 115.


                                       13



                                 THE TRUST FUND

GENERAL

     The securities of each series will represent interests in the assets of the
related trust fund, and the notes of each series will be secured by the pledge
of the assets of the related trust fund. The trust fund for each series will be
held by the trustee for the benefit of the related securityholders. Each trust
fund will consist of the trust fund assets (the "Trust Fund Assets") consisting
of:

o    a pool comprised of loans as specified in the related prospectus
     supplement, together with payments relating to those loans as specified in
     the related prospectus supplement;

o    a pool comprised of collections arising from one or more types of loans
     that would otherwise be eligible to be loans included in a trust fund;

o    mortgage pass-through securities (the "Agency Securities") issued or
     guaranteed by Ginnie Mae, Fannie Mae or Freddie Mac; or

o    other mortgage pass-through certificates or collateralized mortgage
     obligations (the "Non-Agency Mortgage-Backed Securities") evidencing an
     interest in, or secured by, loans of the type that would otherwise be
     eligible to be loans included in a trust fund.

     The pool will be created on the first day of the month of the issuance of
the related series of securities or on another date specified in the related
prospectus supplement. The securities will be entitled to payment from the
assets of the related trust fund or funds or other assets pledged for the
benefit of the securityholders, as specified in the related prospectus
supplement and will not be entitled to payments in respect of the assets of any
other trust fund established by the depositor.*

     The Trust Fund Assets will be acquired by the depositor, either directly or
through affiliates, from originators or sellers which may be affiliates of the
depositor (the "Sellers"), and conveyed without recourse by the depositor to the
related trust fund. Loans acquired by the depositor will have been originated in
accordance with the underwriting criteria specified below under "Loan Program --
Underwriting Standards" or as otherwise described in the related prospectus
supplement. See "Loan Program -- Underwriting Standards."

     The depositor will cause the Trust Fund Assets to be assigned to the
trustee named in the related prospectus supplement for the benefit of the
holders of the securities of the related series. The master servicer named in
the related prospectus supplement will service the Trust Fund Assets, either
directly or through other servicing institutions called sub-servicers, pursuant
to a Pooling and Servicing Agreement (each, a "Pooling and Servicing Agreement")
among the depositor, the master servicer and the trustee with respect to a
series consisting of certificates, or a sale and servicing agreement (each, a
"Sale and Servicing Agreement") between the trustee and the master servicer with
respect to a series consisting of certificates and notes, and will receive a fee
for these services. The Pooling and Servicing Agreements and Sale and Servicing
Agreements are also referred to as "Master Servicing Agreements") in this
prospectus. See "Loan Program" and "The Agreements." With respect to loans
serviced by the master servicer through a sub-servicer, the master servicer will
remain liable for its servicing obligations under the related Agreement as if
the master servicer alone were servicing those loans.

----------
*    Whenever the terms pool, certificates, notes and securities are used in
     this prospectus, those terms will be considered to apply, unless the
     context indicates otherwise, to one specific pool and the securities of one
     series including the certificates representing undivided interests in,
     and/or notes secured by the assets of, a single trust fund consisting
     primarily of the loans in that pool. Similarly, the term "Pass- Through
     Rate" will refer to the pass-through rate borne by the certificates and the
     term interest rate will refer to the interest rate borne by the notes of
     one specific series, as applicable, and the term trust fund will refer to
     one specific trust fund.


                                       14



     If so specified in the related prospectus supplement, a trust fund relating
to a series of securities may be a business trust, statutory trust or common law
trust formed under the laws of the state specified in the related prospectus
supplement pursuant to a trust agreement (each, a "Trust Agreement") between the
depositor and the trustee of the trust fund.

     As used herein, "Agreement" means, with respect to a series consisting of
certificates, the Pooling and Servicing Agreement, and with respect to a series
consisting of certificates and notes, the Trust Agreement, the Indenture and the
Sale and Servicing Agreement, as the context requires.

     With respect to each trust fund, prior to the initial offering of the
related series of securities, the trust fund will have no assets or liabilities.
No trust fund is expected to engage in any activities other than acquiring,
managing and holding the related Trust Fund Assets and other assets contemplated
herein and specified in the related prospectus supplement and the proceeds
thereof, issuing securities and making payments and distributions thereon and
certain related activities. No trust fund is expected to have any source of
capital other than its assets and any related credit enhancement.

     The applicable prospectus supplement may provide for additional obligations
of the depositor, but if it does not, the only obligations of the depositor with
respect to a series of securities will be to obtain certain representations and
warranties from the sellers and to assign to the trustee for that series of
securities the depositor's rights with respect to the representations and
warranties. See "The Agreements -- Assignment of the Trust Fund Assets." The
obligations of the master servicer with respect to the loans will consist
principally of its contractual servicing obligations under the related Agreement
(including its obligation to enforce the obligations of the sub-servicers or
sellers, or both, as more fully described herein under "Loan Program --
Representations by Sellers; Repurchases" and "The Agreements -- Sub-Servicing By
Sellers" and "-- Assignment of the Trust Fund Assets") and its obligation, if
any, to make certain cash advances in the event of delinquencies in payments on
or with respect to the loans in the amounts described herein under "Description
of the Securities -- Advances." The obligations of the master servicer to make
advances may be subject to limitations, to the extent provided herein and in the
related prospectus supplement.

     The following is a brief description of the assets expected to be included
in the trust funds. If specific information regarding the Trust Fund Assets is
not known at the time the related series of securities initially is offered,
more general information of the nature described below will be provided in the
related prospectus supplement, and specific information will be set forth in a
report on Form 8-K to be filed with the Securities and Exchange Commission (the
"SEC") after the initial issuance of the related securities (the "Detailed
Description"). A copy of the Agreement with respect to each series of securities
will be filed on Form 8-K after the initial issuance of the related securities
and will be available for inspection at the corporate trust office of the
trustee specified in the related prospectus supplement. A schedule of the loans
relating to the series will be attached to the Agreement delivered to the
trustee upon delivery of the securities.

THE LOANS

     General. Loans will consist of single family loans, multifamily loans, home
equity loans or home improvement loan contracts. For purposes hereof, "home
equity loans" includes "closed-end loans" and "revolving credit line loans." If
so specified, the loans may include cooperative apartment loans ("cooperative
loans") secured by security interests in shares issued by private, non-profit,
cooperative housing corporations ("cooperatives") and in the related proprietary
leases or occupancy agreements granting exclusive rights to occupy specific
dwelling units in the cooperatives' buildings. As more fully described in the
related prospectus supplement, the loans may be "conventional" loans or loans
that are insured or guaranteed by a governmental agency such as the Federal
Housing Administration (the "FHA") or the Department of Veterans' Affairs (the
"VA").

     The applicable prospectus supplement may specify the day on which monthly
payments on the loans in a pool will be due, but if it does not, all of the
mortgage loans in a pool will have monthly payments due on the first day of each
month. The payment terms of the loans to be included in a trust fund will be
described in the related prospectus supplement and may include any of the
following features or combination thereof or other features described in the
related prospectus supplement:


                                       15



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

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

o    Monthly payments of principal and interest may be fixed for the life of the
     loan, may increase over a specified period of time or may change from
     period to period. The terms of a loan may include limits on periodic
     increases or decreases in the amount of monthly payments and may include
     maximum or minimum amounts of monthly payments.

o    The loans generally may be prepaid at any time. Prepayments of principal
     may be subject to a prepayment fee, which may be fixed for the life of the
     loan or may decline over time, and may be prohibited for the life of the
     loan or for certain periods, which are called lockout periods. Certain
     loans may permit prepayments after expiration of the applicable lockout
     period and may require the payment of a prepayment fee in connection with
     any subsequent prepayment. Other loans may permit prepayments without
     payment of a fee unless the prepayment occurs during specified time
     periods. The loans may include "due-on-sale" clauses that permit the
     mortgagee to demand payment of the entire loan in connection with the sale
     or certain transfers of the related mortgaged property. Other loans may be
     assumable by persons meeting the then applicable underwriting standards of
     the seller.

     A trust fund may contain buydown loans that include provisions whereby a
third party partially subsidizes the monthly payments of the obligors on the
loans during the early years of the loans, the difference to be made up from a
buydown fund contributed by the third party at the time of origination of the
loan. A buydown fund will be in an amount equal either to the discounted value
or full aggregate amount of future payment subsidies. Thereafter, buydown funds
are applied to the applicable loan upon receipt by the master servicer of the
mortgagor's portion of the monthly payment on the loan. The master servicer
administers the buydown fund to ensure that the monthly allocation from the
buydown fund combined with the monthly payment received from the mortgagor
equals the scheduled monthly payment on the applicable loan. The underlying
assumption of buydown plans is that the income of the mortgagor will increase
during the buydown period as a result of normal increases in compensation and
inflation, so that the mortgagor will be able to meet the full mortgage payments
at the end of the buydown period. To the extent that this assumption as to
increased income is not fulfilled, the possibility of defaults on buydown loans
is increased. The related prospectus supplement will contain information with
respect to any buydown loan concerning limitations on the interest rate paid by
the mortgagor initially, on annual increases in the interest rate and on the
length of the buydown period.

     The real property which secures repayment of the loans is referred to as
the mortgaged properties. The loans will be secured by mortgages or deeds of
trust or other similar security instruments creating a lien on a mortgaged
property. In the case of home equity loans, those liens generally will be
subordinated to one or more senior liens on the related mortgaged properties as
described in the related prospectus supplement. In addition to being secured by
mortgages on real estate the home improvement loan contracts may also be secured
by purchase money security interests in the home improvements financed thereby.
If so specified in the related prospectus supplement, the home equity loans may
include loans (primarily for home improvement or debt consolidation


                                       16



purposes) that are in amounts in excess of the value of the related mortgaged
properties at the time of origination. The mortgaged properties and the home
improvements are collectively referred to herein as the "Properties." The
Properties may be located in any one of the fifty states, the District of
Columbia, Guam, Puerto Rico or any other territory of the United States.

     Loans with certain Loan-to-Value Ratios and/or certain principal balances
may be covered wholly or partially by primary mortgage guaranty insurance
policies (each, a "Primary Mortgage Insurance Policy"). The existence, extent
and duration of any coverage will be described in the applicable prospectus
supplement.

     The aggregate principal balance of loans secured by Properties that are
owner-occupied will be disclosed in the related prospectus supplement. The
applicable prospectus supplement may provide for the basis for representations
relating to Single Family Properties, but if it does not, the sole basis for a
representation that a given percentage of the loans is secured by Single Family
Properties that are owner-occupied will be either (i) the making of a
representation by the borrower at origination of the loan either that the
underlying 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 Property as a primary
residence or (ii) a finding that the address of the underlying Property is the
borrower's mailing address.

     Single Family Loans. The mortgaged properties relating to single family
loans will consist of detached or semi-detached one- to four-family dwelling
units, townhouses, rowhouses, individual condominium units, individual units in
planned unit developments, manufactured housing that is permanently affixed and
treated as real property under local law, and certain other dwelling units
("Single Family Properties"). Single Family Properties may include vacation and
second homes, investment properties and leasehold interests. In the case of
leasehold interests, the applicable prospectus supplement may provide for the
leasehold term, but if it does not, the term of the leasehold will exceed the
scheduled maturity of the loan by at least five years.

     Multifamily Loans. Mortgaged properties which secure multifamily loans may
include small multifamily residential properties such as rental apartment
buildings or projects containing five to fifty residential units, including
mid-rise and garden apartments. Certain of the multifamily loans may be secured
by apartment buildings owned by cooperatives. In those cases, the cooperative
owns all the apartment units in the building and all common areas. The
cooperative is owned by tenant-stockholders who, through ownership of stock,
shares or membership certificates in the corporation, receive proprietary leases
or occupancy agreements which confer exclusive rights to occupy specific
apartments or units. Generally, a tenant-stockholder of a cooperative must make
a monthly payment to the cooperative representing the tenant-stockholder's pro
rata share of the cooperative's payments for its mortgage loan, real property
taxes, maintenance expenses and other capital or ordinary expenses. Those
payments are in addition to any payments of principal and interest the
tenant-stockholder must make on any loans to the tenant-stockholder secured by
its shares in the cooperative. The cooperative will be directly responsible for
building management and, in most cases, payment of real estate taxes and hazard
and liability insurance. A cooperative's ability to meet debt service
obligations on a multifamily loan, as well as all other operating expenses, will
be dependent in large part on the receipt of maintenance payments from the
tenant-stockholders, as well as any rental income from units the cooperative
might control. Unanticipated expenditures may in some cases have to be paid by
special assessments on the tenant-stockholders. No more than 5% of the aggregate
Trust Fund Assets for any series, as constituted at the time of the applicable
cut-off date (measured by principal balance), will be comprised of multifamily
loans.

     Home Equity Loans. The mortgaged properties relating to home equity loans
will consist of Single Family Properties. 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 outstanding principal balance
of the loan. 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 cut-off date. The full
amount of a closed-end loan is advanced at the inception of the loan and
generally is repayable in equal (or substantially equal) installments of an
amount to fully amortize the loan at its stated maturity. Except to the extent
provided in the related prospectus supplement, the original terms to stated
maturity of closed-end loans will not exceed 360 months. Under certain
circumstances, under either a revolving credit line loan or a closed-end loan, a
borrower may choose an interest only payment


                                       17



option and is obligated to pay only the amount of interest which accrues on the
loan during the billing cycle. 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.

     Home Improvement Loan Contracts. The Trust Fund Assets for a series of
securities may consist, in whole or in part, of home improvement loan contracts
originated by a home improvement contractor, a thrift or a commercial mortgage
banker in the ordinary course of business. The home improvements securing the
home improvement loan contracts may include, but are not limited to, replacement
windows, house siding, new roofs, swimming pools, satellite dishes, kitchen and
bathroom remodeling goods and solar heating panels. The home improvement loan
contracts will be secured by mortgages on Single Family Properties which are
generally subordinate to other mortgages on the same Property. In general, the
home improvement loan 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. The
initial Loan-to-Value Ratio of a home improvement loan contract is computed in
the manner described in the related prospectus supplement.

     Additional Information. Each prospectus supplement will contain
information, as of the date of the prospectus supplement and to the extent then
specifically known to the depositor, with respect to the loans contained in the
related pool, including

o    the aggregate outstanding principal balance and the average outstanding
     principal balance of the loans as of the first day of the month of issuance
     of the related series of certificates or another date specified in the
     related prospectus supplement called a cut-off date,

o    the type of property securing the loans (e.g., single-family residences,
     individual units in condominium apartment buildings or in buildings owned
     by cooperatives, small multifamily properties, other real property or home
     improvements),

o    the original terms to maturity of the loans,

o    the ranges of the principal balances of the loans,

o    the earliest origination date and latest maturity date of any of the loans,

o    the ranges of the Loan-to-Value Ratios or Combined Loan-to-Value Ratios, as
     applicable, of the loans at origination,

o    the Loan Rates or annual percentage rates ("APR") or range of Loan Rates or
     APR's borne by the loans, and

o    the geographical distribution of the loans.

     If specific information respecting the loans is not known to the depositor
at the time the related securities are initially offered, more general
information of the nature described above will be provided in the detailed
description of Trust Fund Assets.

     The "Loan-to-Value Ratio" of a loan at any given time is the fraction,
expressed as a percentage, the numerator of which is the original principal
balance of the related loan and the denominator of which is the Collateral Value
of the related Property. The "Combined Loan-to-Value Ratio" of a loan at any
given time is the ratio, expressed as a percentage, of (i) the sum of (a) the
original principal balance of the loan (or, in the case of a revolving credit
line loan, the maximum amount thereof available) and (b) the outstanding
principal balance at the date of origination of the loan of any senior mortgage
loan(s) or, in the case of any open-ended senior mortgage loan, the maximum
available line of credit with respect to the mortgage loan, regardless of any
lesser amount actually outstanding at the date of origination of the loan, to
(ii) the Collateral Value of the related Property. The


                                       18



"Collateral Value" of the Property, other than with respect to certain loans the
proceeds of which were used to refinance an existing mortgage loan (each, a
"Refinance Loan"), will be calculated as described in the prospectus supplement,
but if there is no description in the prospectus supplement, it is the lesser of
(a) the appraised value determined in an appraisal obtained by the originator at
origination of the loan and (b) the sales price for the Property. In the case of
Refinance Loans, the "Collateral Value" of the related Property will be
calculated as described in the prospectus supplement, but if there is no
description in the prospectus supplement, it is generally the appraised value
thereof determined in an appraisal obtained at the time of refinancing.

     We can give no assurance that values of the Properties have remained or
will remain at their levels on the dates of origination of the related loans. If
the residential real estate market should experience an overall decline in
property values such that the outstanding principal balances of the loans, and
any secondary financing on the Properties, in a particular pool become equal to
or greater than the value of the Properties, the actual rates of delinquencies,
foreclosures and losses could be higher than those now generally experienced in
the mortgage lending industry. In addition, adverse economic conditions and
other factors (which may or may not affect real property values) may affect the
timely payment by borrowers of scheduled payments of principal and interest on
the loans and, accordingly, the actual rates of delinquencies, foreclosures and
losses with respect to any pool. To the extent that the losses are not covered
by subordination provisions or alternative arrangements, the losses will be
borne, at least in part, by the holders of the securities of the related series.

AGENCY SECURITIES

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

     Section 306(g) of the National Housing Act of 1934 provides that "the full
faith and credit of the United States is pledged to the payment of all amounts
which may be required to be paid under any guaranty under this subsection." In
order to meet its obligations under that guaranty, Ginnie Mae may, under Section
306(d) of the National Housing Act of 1934, borrow from the United States
Treasury in an unlimited amount which is at any time sufficient to enable Ginnie
Mae to perform its obligations under its guarantee.

     Ginnie Mae Certificates. Each Ginnie Mae certificate held in a trust fund
will be a "fully modified pass-through" mortgage backed certificate issued and
serviced by a Ginnie Mae issuer approved by Ginnie Mae or by Fannie Mae as a
seller-servicer of FHA loans or VA loans. The Ginnie Mae certificates may be
issued under either the Ginnie Mae I program or the Ginnie Mae II program. The
mortgage loans underlying the Ginnie Mae certificates will consist of FHA loans
or VA loans. Each mortgage loan is secured by a one-to four-family or
multifamily residential property. Ginnie Mae will approve the issuance of each
Ginnie Mae certificate in accordance with a guaranty agreement between Ginnie
Mae and the Ginnie Mae issuer. Pursuant to its guaranty agreement, a Ginnie Mae
issuer will be required to advance its own funds in order to make timely
payments of all amounts due on each Ginnie Mae certificate if the payments
received by the Ginnie Mae issuer on the FHA loans or VA loans underlying each
Ginnie Mae certificate are less than the amounts due on each Ginnie Mae
certificate.

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


                                       19



payments of any prepayments of principal on the FHA loans or VA loans underlying
the Ginnie Mae certificate and liquidation proceeds upon a foreclosure or other
disposition of the FHA loans or VA loans.

     If a Ginnie Mae issuer is unable to make the payments on a Ginnie Mae
certificate as it becomes due, it must promptly notify Ginnie Mae and request
Ginnie Mae to make the payment. Upon notification and request, Ginnie Mae will
make the payments directly to the registered holder of the Ginnie Mae
certificate. If no payment is made by a Ginnie Mae issuer and the Ginnie Mae
issuer fails to notify and request Ginnie Mae to make the payment, the holder of
the Ginnie Mae certificate will have recourse only against Ginnie Mae to obtain
the payment. The trustee or its nominee, as registered holder of the Ginnie Mae
certificates held in a trust fund, will have the right to proceed directly
against Ginnie Mae under the terms of the guaranty agreements relating to the
Ginnie Mae certificates for any amounts that are not paid when due.

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

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

     Regular monthly installment payments on each Ginnie Mae certificate held in
a trust fund will be comprised of interest due as specified on the Ginnie Mae
certificate plus the scheduled principal payments on the FHA loans or VA loans
underlying the Ginnie Mae certificate due on the first day of the month in which
the scheduled monthly installments on the Ginnie Mae certificate are due. The
regular monthly installments on each Ginnie Mae certificate are required to be
paid to the trustee as registered holder by the 15th day of each month in the
case of a Ginnie Mae I certificate and are required to be mailed to the trustee
by the 20th day of each month in the case of a Ginnie Mae II certificate. Any
principal prepayments on any FHA loans or VA loans underlying a Ginnie Mae
certificate held in a trust fund or any other early recovery of principal on the
loans will be passed through to the trustee as the registered holder of the
Ginnie Mae certificate.

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

     The Ginnie Mae certificates included in a trust fund, and the related
underlying mortgage loans, may have characteristics and terms different from
those described above. Any different characteristics and terms will be described
in the related prospectus supplement.

     Federal Home Loan Mortgage Corporation. Freddie Mac is a corporate
instrumentality of the United States created pursuant to Title III of the
Emergency Home Finance Act of 1970, as amended. The common stock of Freddie Mac
is owned by the Federal Home Loan Banks and its preferred stock is owned by
stockholders of the Federal Home Loan Banks. Freddie Mac was established
primarily to increase the availability of mortgage credit to


                                       20



finance urgently needed housing. It seeks to provide an enhanced degree of
liquidity for residential mortgage investments primarily by assisting in the
development of secondary markets for conventional mortgages. The principal
activity of Freddie Mac currently consists of the purchase of first lien
conventional mortgage loans or participation interests in mortgage loans and the
sale of the mortgage loans or participations so purchased in the form of
mortgage securities, primarily mortgage participation certificates issued and
either guaranteed as to timely payment of interest or guaranteed as to timely
payment of interest and ultimate payment of principal by Freddie Mac. Freddie
Mac is confined to purchasing, so far as practicable, mortgage loans that it
deems to be of such quality, type and class as to meet generally the purchase
standards imposed by private institutional mortgage investors.

     Freddie Mac Certificates. Each Freddie Mac certificate represents an
undivided interest in a pool of mortgage loans that may consist of first lien
conventional loans, FHA loans or VA loans. Freddie Mac certificates are sold
under the terms of a Mortgage Participation Certificate Agreement. A Freddie Mac
certificate may be issued under either Freddie Mac's Cash Program or Guarantor
Program.

     Mortgage loans underlying the Freddie Mac certificates held by a trust fund
will consist of mortgage loans with original terms to maturity of between 10 and
40 years. Each mortgage loan must meet the applicable standards set forth in the
Emergency Home Finance Act of 1970. A Freddie Mac certificate group may include
whole loans, participation interests in whole loans and undivided interests in
whole loans and participations comprising another Freddie Mac certificate group.
Under the Guarantor Program, a Freddie Mac certificate group may include only
whole loans or participation interests in whole loans.

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

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

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


                                       21



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

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

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

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

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

     Fannie Mae Certificates. These are guaranteed mortgage pass-through
certificates issued and guaranteed as to timely payment of principal and
interest by Fannie Mae representing fractional undivided interests in a pool of
mortgage loans formed by Fannie Mae. Each mortgage loan must meet the applicable
standards of the Fannie Mae purchase program. Mortgage loans comprising a pool
are either provided by Fannie Mae from its own portfolio or purchased pursuant
to the criteria of the Fannie Mae purchase program.

     Mortgage loans underlying Fannie Mae certificates held by a trust fund will
consist of conventional mortgage loans, FHA loans or VA loans. Original
maturities of substantially all of the conventional, level payment mortgage
loans underlying a Fannie Mae certificate are expected to be between either 8 to
15 years or 20 to 40 years. The original maturities of substantially all of the
fixed rate, level payment FHA loans or VA loans are expected to be 30 years.
Mortgage loans underlying a Fannie Mae certificate may have annual interest
rates that vary by as much as two percentage points from each other. The rate of
interest payable on a Fannie Mae certificate is equal to the lowest interest
rate of any mortgage loan in the related pool, less a specified minimum annual
percentage representing servicing compensation and Fannie Mae's guaranty fee.
Under a regular servicing option, the annual interest rates on the mortgage
loans underlying a Fannie Mae certificate will be between 50 basis points and
250 basis points greater than is its annual pass through rate. Under this option
the mortgagee or each other


                                       22



servicer assumes the entire risk of foreclosure losses. Under a special
servicing option, the annual interest rates on the mortgage loans underlying a
Fannie Mae certificate will generally be between 55 basis points and 255 basis
points greater than the annual Fannie Mae certificate pass-through rate. Under
this option Fannie Mae assumes the entire risk for foreclosure losses. If
specified in the related prospectus supplement, Fannie Mae certificates may be
backed by adjustable rate mortgages.

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

     Except for Fannie Mae certificates backed by pools containing graduated
payment mortgage loans or mortgage loans secured by multifamily projects, Fannie
Mae certificates evidencing interests in pools of mortgage loans formed on or
after May 1, 1985 are available in book-entry form only. Distributions of
principal and interest on each Fannie Mae certificate will be made by Fannie Mae
on the 25th day of each month to the persons in whose name the Fannie Mae
certificate is entered in the books of the Federal Reserve Banks or registered
on the Fannie Mae certificate register as of the close of business on the last
day of the preceding month. Distributions on Fannie Mae certificates issued in
book-entry form will be made by wire. Distributions on fully registered Fannie
Mae certificates will be made by check.

     The Fannie Mae certificates included in a trust fund, and the related
underlying mortgage loans, may have characteristics and terms different from
those described above. Any different characteristics and terms will be described
in the related prospectus supplement.

     Stripped Mortgage-Backed Securities. Agency Securities may consist of one
or more stripped mortgage-backed securities, each as described in this
prospectus and in the related prospectus supplement. Each Agency Security will
represent an undivided interest in all or part of either the principal
distributions (but not the interest distributions) or the interest distributions
(but not the principal distributions), or in some specified portion of the
principal and interest distributions (but not all the distributions) on certain
Freddie Mac, Fannie Mae or Ginnie Mae certificates. The underlying securities
will be held under a trust agreement by Freddie Mac, Fannie Mae or Ginnie Mae,
each as trustee, or by another trustee named in the related prospectus
supplement. The applicable prospectus supplement may specify that Freddie Mac,
Fannie Mae or Ginnie Mae will not guarantee each stripped Agency Security to the
same extent it guarantees the underlying securities backing the stripped Agency
Security, but if it does not, then Freddie Mac, Fannie Mae or Ginnie Mae will
guarantee each stripped Agency Security to the same extent it guarantees the
underlying securities backing the stripped Agency Security.

     Other Agency Securities. If specified in the related prospectus supplement,
a trust fund may include other mortgage pass-through certificates issued or
guaranteed by Ginnie Mae, Fannie Mae or Freddie Mac. The characteristics of
those mortgage pass-through certificates will be described in the prospectus
supplement. If so specified, a combination of different types of Agency
Securities may be held in a trust fund.

NON-AGENCY MORTGAGE-BACKED SECURITIES

     Non-Agency Mortgage-Backed Securities may consist of mortgage pass-through
certificates or participation certificates evidencing an undivided interest in a
pool of mortgage loans or collateralized mortgage obligations secured by
mortgage loans. Non-Agency Mortgage-Backed Securities may include stripped
mortgage-backed securities representing an undivided interest in all or a part
of either the principal distributions (but not the interest distributions) or
the interest distributions (but not the principal distributions) or in some
specified portion of


                                       23



the principal and interest distributions (but not all the distributions) on
certain mortgage loans. Non-Agency Mortgage-Backed Securities will have been
issued pursuant to a pooling and servicing agreement, an indenture or similar
agreement. The applicable prospectus supplement may provide that the
seller/servicer of the underlying mortgage loans will not have entered into a
pooling and servicing agreement with a private trustee, but if it does not, the
seller/servicer of the underlying mortgage loans will have entered into the
pooling and servicing agreement with a private trustee. The private trustee or
its agent, or a custodian, will possess the mortgage loans underlying the
Non-Agency Mortgage-Backed Security. Mortgage loans underlying a Non-Agency
Mortgage-Backed Security will be serviced by a private servicer directly or by
one or more subservicers who may be subject to the supervision of the private
servicer.

     The issuer of the Non-Agency Mortgage-Backed Securities will be a financial
institution or other entity engaged generally in the business of mortgage
lending, a public agency or instrumentality of a state, local or federal
government, or a limited purpose corporation organized for the purpose of, among
other things, establishing trusts and acquiring and selling housing loans to the
trusts and selling beneficial interests in the trusts. If so specified in the
related prospectus supplement, the issuer of Non-Agency Mortgage-Backed
Securities may be an affiliate of the depositor. The obligations of the issuer
of Non-Agency Mortgage-Backed Securities will generally be limited to certain
representations and warranties with respect to the assets conveyed by it to the
related trust fund. The issuer of Non-Agency Mortgage-Backed Securities will not
have guaranteed any of the assets conveyed to the related trust fund or any of
the Non-Agency Mortgage-Backed Securities issued under the pooling and servicing
agreement. Additionally, although the mortgage loans underlying the Non-Agency
Mortgage-Backed Securities may be guaranteed by an agency or instrumentality of
the United States, the Non-Agency Mortgage-Backed Securities themselves will not
be so guaranteed.

     Distributions of principal and interest will be made on the Non-Agency
Mortgage-Backed Securities on the dates specified in the related prospectus
supplement. The Non-Agency Mortgage-Backed Securities may be entitled to receive
nominal or no principal distributions or nominal or no interest distributions.
Principal and interest distributions will be made on the Non-Agency
Mortgage-Backed Securities by the private trustee or the private servicer. The
issuer of Non-Agency Mortgage-Backed Securities or the private servicer may have
the right to repurchase assets underlying the Non-Agency Mortgage-Backed
Securities after a certain date or under other circumstances specified in the
related prospectus supplement.

     The mortgage loans underlying the Non-Agency Mortgage-Backed Securities may
consist of fixed rate, level payment, fully amortizing loans or graduated
payment mortgage loans, buydown loans, adjustable rate mortgage loans or loans
having balloon or other special payment features. The mortgage loans may be
secured by first and/or subordinate liens on single family residential
properties (or by an assignment of the proprietary lease or occupancy agreement
relating to a specific dwelling within a cooperative and the related shares
issued by the cooperative) or small multifamily residential properties, such as
rental apartment buildings or projects containing five to fifty residential
units, or by closed-end and/or revolving home equity loans, secured in whole or
in part by first and/or subordinate liens on one- to four-family residential
properties.

     The prospectus supplement for a series for which the trust fund includes
Non-Agency Mortgage-Backed Securities will specify

o    the aggregate approximate principal amount and type of the Non-Agency
     Mortgage-Backed Securities to be included in the trust fund;

o    certain characteristics of the mortgage loans that comprise the underlying
     assets for the Non-Agency Mortgage-Backed Securities including

     o    the payment features of the mortgage loans,

     o    the approximate aggregate principal balance, if known, of underlying
          mortgage loans insured or guaranteed by a governmental entity,

     o    the servicing fee or range of servicing fees with respect to the
          mortgage loans and


                                       24



     o    the minimum and maximum stated maturities of the underlying mortgage
          loans at origination;

o    the maximum original term-to-stated maturity of the Non-Agency
     Mortgage-Backed Securities;

o    the weighted average term-to stated maturity of the Non-Agency
     Mortgage-Backed Securities;

o    the pass-through or certificate rate of the Non-Agency Mortgage-Backed
     Securities;

o    the weighted average pass-through or certificate rate of the Non-Agency
     Mortgage-Backed Securities;

o    the issuer of Non-Agency Mortgage-Backed Securities, the private servicer
     (if other than the issuer of Non-Agency Mortgage-Backed Securities) and the
     private trustee for the Non-Agency Mortgage-Backed Securities;

o    certain characteristics of credit support, if any, such as reserve funds,
     insurance policies, surety bonds, letters of credit or guaranties relating
     to the mortgage loans underlying the Non-Agency Mortgage-Backed Securities
     or to the Non-Agency Mortgage-Backed Securities themselves;

o    the terms on which the underlying mortgage loans for the Non-Agency
     Mortgage-Backed Securities may, or are required to, be purchased before
     their stated maturity or the stated maturity of the Non-Agency
     Mortgage-Backed Securities;

o    the terms on which mortgage loans may be substituted for those originally
     underlying the Non-Agency Mortgage-Backed Securities; and

o    as appropriate, shall indicate whether the information required to be
     presented with respect to the Non-Agency Mortgage-Backed Securities as a
     "significant obligor" is either incorporated by reference, provided
     directly by the issuer or provided by reference to the Exchange Act filings
     of another entity.

     Non-Agency Mortgage-Backed Securities included in the trust fund for a
series of certificates that were issued by an issuer of Non-Agency
Mortgage-Backed Securities that is not affiliated with the depositor must be
acquired in bona fide secondary market transactions or either have been
previously registered under the Securities Act of 1933 or have been held for at
least the holding period required to be eligible for sale under Rule 144(k)
under the Securities Act of 1933.

SUBSTITUTION OF TRUST FUND ASSETS

     Substitution of Trust Fund Assets will be permitted in the event of
breaches of representations and warranties with respect to any original Trust
Fund Asset or in the event the documentation with respect to any Trust Fund
Asset is determined by the trustee to be incomplete. The period during which the
substitution will be permitted generally will be indicated in the related
prospectus supplement. The related prospectus supplement will describe any other
conditions upon which Trust Fund Assets may be substituted for Trust Fund Assets
initially included in the Trust Fund.

AVAILABLE INFORMATION

     The depositor has filed with the SEC a Registration Statement under the
Securities Act of 1933, as amended (the "Securities Act"), covering 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 in this prospectus
and in the prospectus supplement, but do not contain all of the information in
the Registration Statement pursuant to the rules and regulations of the SEC. For
further information, reference is made to the Registration Statement and its
exhibits. The Registration Statement and exhibits can be inspected and copied at
prescribed rates at the public reference facilities maintained by the SEC at its
Public


                                       25



Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. The SEC maintains an Internet website that contains reports,
information statements and other information regarding the registrants that file
electronically with the SEC, including the depositor. The address of that
Internet website is http://www.sec.gov. The depositor's SEC Securities Act file
number is 333-135846.

     This prospectus and any applicable prospectus supplement do not constitute
an offer to sell or a solicitation of an offer to buy any securities other than
the securities offered by this prospectus and the prospectus supplement nor an
offer of the securities to any person in any state or other jurisdiction in
which the offer would be unlawful.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE; REPORTS FILED WITH THE SEC

     All documents filed for the trust fund referred to in the accompanying
prospectus supplement after the date of this prospectus and before the end of
the related offering with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are
incorporated by reference in this prospectus and are a part of this prospectus
from the date of their filing. Any statement contained in a document
incorporated by reference in this prospectus is modified or superseded for all
purposes of this prospectus to the extent that a statement contained in this
prospectus (or in the accompanying prospectus supplement) or in any other
subsequently filed document that also is incorporated by reference differs from
that statement. Any statement so modified or superseded shall not, except as so
modified or superseded, constitute a part of this prospectus.

     The depositor or master servicer on behalf of the trust fund of the related
series will file the reports required under the Securities Act and under Section
13(a), 13(c), 14 or 15(d) of the Exchange Act. These reports include (but are
not limited to):

o    Reports on Form 8-K (Current Report), following the issuance of the series
     of securities of the related trust fund, including as Exhibits to the Form
     8-K (1) the agreements or other documents specified in the related
     prospectus supplement, if applicable, (2) the Detailed Description, if
     applicable, regarding the related Trust Fund Assets and (3) the opinions
     related to the tax consequences and the legality of the series being issued
     required to be filed under applicable securities laws;

o    Reports on Form 8-K (Current Report), following the occurrence of events
     specified in Form 8-K requiring disclosure, which are required to be filed
     within the time-frame specified in Form 8-K related to the type of event;

o    Reports on Form 10-D (Asset-Backed Issuer Distribution Report), containing
     the distribution and pool performance information required on Form 10-D,
     which are required to be filed 15 days following the distribution date
     specified in the related prospectus supplement; and

o    Report on Form 10-K (Annual Report), containing the items specified in Form
     10-K with respect to a fiscal year and filing or furnishing, as
     appropriate, the required exhibits.

     Neither the depositor nor the master servicer intends to file with the SEC
any reports required under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
with respect to a trust fund following completion of the reporting period
required by Rule 15d-1 or Regulation 15D under the Securities Exchange Act of
1934. Unless specifically stated in the report, the reports and any information
included in the report will neither be examined nor reported on by an
independent public accountant. Each trust fund formed by the depositor will have
a separate file number assigned by the SEC, which is generally not available
until filing of the final prospectus supplement related to the series. Reports
filed with respect to a trust fund with the SEC after the final prospectus
supplement is filed will be available under trust fund's specific number, which
will be a series number assigned to the SEC Securities Act file number of the
depositor.

     The trustee on behalf of any trust fund will provide without charge to each
person to whom this prospectus is delivered, on the person's written request, a
copy of any or all of the documents referred to above that have been


                                       26



or may be incorporated by reference in this prospectus (not including exhibits
to the information that is incorporated by reference unless the exhibits are
specifically incorporated by reference into the information that this prospectus
incorporates) and any reports filed with the SEC. Requests should be directed to
the corporate trust office of the trustee specified in the accompanying
prospectus supplement.

REPORTS TO SECURITYHOLDERS

     The distribution and pool performance reports filed on Form 10-D will be
forwarded to each securityholder as specified in the related prospectus
supplement. See "Description of the Securities -- Reports to Securityholders."
All other reports filed with the SEC concerning the trust fund will be forwarded
to securityholders free of charge upon written request to the trustee on behalf
of any trust fund, but will not be made available through an Internet website of
the depositor, the master servicer or any other party as these reports and
exhibits can be inspected and copied at prescribed rates at the public reference
facilities maintained by the SEC and can also be viewed electronically at the
Internet website of the SEC shown above under "-- Available Information."

                                 USE OF PROCEEDS

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

                                  THE DEPOSITOR

     CWABS, Inc., a Delaware corporation (the "depositor"), was incorporated in
August 1996 for the limited purpose of acquiring, owning and transferring Trust
Fund Assets and selling interests in them or bonds secured by them. The
depositor is a limited purpose finance subsidiary of Countrywide Financial
Corporation, a Delaware corporation. The depositor maintains its principal
office at 4500 Park Granada, Calabasas, California 91302. Its telephone number
is (818) 225-3000.

     The depositor's obligations after issuance of the securities include
delivery of the Trust Fund Assets and certain related documents and instruments,
repurchasing Trust Fund Assets in the event of certain breaches of
representations or warranties made by the depositor, providing tax-related
information to the Trustee and maintaining the trustee's first priority
perfected security interest in the Trust Fund Assets.

     Neither the depositor nor any of the depositor's affiliates will insure or
guarantee distributions on the securities of any series.

                                  LOAN PROGRAM

     The loans will have been purchased by the depositor, either directly or
through affiliates, from sellers. The applicable prospectus supplement may
provide for the underwriting criteria used in originating the loans, but if it
does not, the loans so acquired by the depositor will have been originated in
accordance with the underwriting criteria specified below under "Underwriting
Standards."

UNDERWRITING STANDARDS

     The applicable prospectus supplement may provide for the seller's
representations and warranties relating to the loans, but if it does not, each
seller will represent and warrant that all loans originated and/or sold by it to
the depositor or one of its affiliates will have been underwritten in accordance
with standards consistent with those utilized by mortgage lenders generally
during the period of origination for similar types of loans. As to any loan
insured by the FHA or partially guaranteed by the VA, the seller will represent
that it has complied with underwriting policies of the FHA or the VA, as the
case may be.


                                       27



     Underwriting standards are applied by or on behalf of a lender to evaluate
the borrower's credit standing and repayment ability, and the value and adequacy
of the related Property as collateral. In general, a prospective borrower
applying for a loan is required to fill out a detailed application designed to
provide to the underwriting officer pertinent credit information, including the
principal balance and payment history with respect to any senior mortgage, if
any. The applicable prospectus supplement may specify whether that credit
information will be verified by the seller, but if it does not, the credit
information supplied by the borrower will be verified by the related seller. As
part of the description of the borrower's financial condition, the borrower
generally is required to provide a current list of assets and liabilities and a
statement of income and expenses, as well as an authorization to apply for a
credit report which summarizes the borrower's credit history with local
merchants and lenders and any record of bankruptcy. In most cases, an employment
verification is obtained from an independent source (typically the borrower's
employer) which verification reports, among other things, the length of
employment with that organization and the borrower's current salary. If a
prospective borrower is self-employed, the borrower may be required to submit
copies of signed tax returns. The borrower may also be required to authorize
verification of deposits at financial institutions where the borrower has demand
or savings accounts.

     In determining the adequacy of the property to be used as collateral, an
appraisal will generally be made of each property considered for financing.
Except as described in the prospectus supplement, an appraiser is generally
required to inspect the property, issue a report on its condition and, if
applicable, verify construction, if new, has been completed. The appraisal is
generally based on the market value of comparable homes, the estimated rental
income (if considered applicable by the appraiser) and the cost of replacing the
home. The value of the property being financed, as indicated by the appraisal,
must be such that it currently supports, and is anticipated to support in the
future, the outstanding loan balance.

     The maximum loan amount will vary depending upon a borrower's credit grade
and loan program but will not generally exceed $1,000,000. Variations in maximum
loan amount limits will be permitted based on compensating factors. Compensating
factors may generally include, to the extent specified in the related prospectus
supplement, low loan-to-value ratio, low debt-to-income ratio, stable
employment, favorable credit history and the nature of the underlying first
mortgage loan, if applicable.

     Each seller's underwriting standards will generally permit loans with
loan-to-value ratios at origination of up to 100% depending on the loan program,
type and use of the property, creditworthiness of the borrower and
debt-to-income ratio. If so specified in the related prospectus supplement, a
seller's underwriting criteria may permit loans with loan-to-value ratios at
origination in excess of 100%, such as for debt consolidation or home
improvement purposes. Loan-to-value ratios may not be evaluated in the case of
Title I loans.

     After obtaining all applicable employment, credit and property information,
the related seller will use a debt-to-income ratio to assist in determining
whether the prospective borrower has sufficient monthly income available to
support the payments of principal and interest on the mortgage loan in addition
to other monthly credit obligations. The "debt-to-income ratio" is the ratio of
the borrower's total monthly payments to the borrower's gross monthly income.
The maximum monthly debt-to-income ratio will vary depending upon a borrower's
credit grade and loan program but will not generally exceed 55%. Variations in
the monthly debt-to-income ratio limit will be permitted based on compensating
factors to the extent specified in the related prospectus supplement.

     In the case of a loan secured by a leasehold interest in real property, the
title to which is held by a third party lessor, the applicable prospectus
supplement may provide for the related representations and warranties of the
seller, but if it does not, the related seller will represent and warrant, among
other things, that the remaining term of the lease and any sublease is at least
five years longer than the remaining term on the loan.

     Certain of the types of loans that may be included in a trust fund are
recently developed and may involve additional uncertainties not present in
traditional types of loans. For example, certain of those loans may provide for
escalating or variable payments by the borrower. These types of loans are
underwritten on the basis of a judgment that the borrowers have the ability to
make the monthly payments required initially. In some instances, a borrower's
income may not be sufficient to permit continued loan payments as the payments
increase. These types of loans may also be underwritten primarily upon the basis
of Loan-to-Value Ratios or other favorable credit factors.


                                       28



QUALIFICATIONS OF SELLERS

     Each seller must be an institution experienced in originating and servicing
loans of the type contained in the related pool and must maintain satisfactory
facilities to originate and service (either directly or through qualified
subservicers) those loans. If a seller does not meet the foregoing
qualifications, the related originator must satisfy those qualifications.

REPRESENTATIONS BY SELLERS; REPURCHASES

     Each seller will have made representations and warranties in respect of the
loans sold by the seller and evidenced by all, or a part, of a series of
securities. The representations and warranties may include, among other things:

o    that a lender's policy of title insurance (or in the case of Properties
     located in areas where those policies are generally not available, an
     attorney's certificate of title) or a commitment to issue the policy was
     effective on the date of origination of each loan, other than cooperative
     loans and certain home equity loans, and that each policy (or certificate
     of title as applicable) remained in effect on the applicable cut-off date;

o    that the seller had good title to each loan and each loan was subject to no
     valid offsets, defenses or counterclaims except to the extent that any
     buydown agreement may forgive certain indebtedness of a borrower;

o    that each loan is secured by a valid lien on, or a perfected security
     interest with respect to, the Property (subject only to permissible liens
     disclosed, if applicable, title insurance exceptions, if applicable, and
     certain other exceptions described in the Agreement) and that, to the
     seller's knowledge, the Property was free of material damage;

o    that there were no delinquent tax or assessment liens against the Property;

o    that no payment of a principal and interest on a loan was delinquent more
     than the number of days specified in the related prospectus supplement; and

o    that each loan at the time it was originated and on the date of transfer by
     the seller to the depositor complied in all material respects with all
     applicable local, state and federal laws.

If so specified in the related prospectus supplement, the representations and
warranties of a seller in respect of a loan will be made not as of the cut-off
date but as of the date on which the seller sold the loan to the depositor or
one of its affiliates. Under those circumstances, a substantial period of time
may have elapsed between the sale date and the date of initial issuance of the
series of securities evidencing an interest in the loan. Since the
representations and warranties of a seller do not address events that may occur
following the sale of a loan by the seller, its repurchase obligation described
below will not arise if the relevant event that would otherwise have given rise
to the repurchase obligation with respect to a loan occurs after the date of
sale of the loan by the seller to the depositor or its affiliates. However, the
depositor will not include any loan in the trust fund for any series of
securities if anything has come to the depositor's attention that would cause it
to believe that the representations and warranties of a seller will not be
accurate and complete in all material respects in respect of the loan as of the
date of initial issuance of the related series of securities. If the master
servicer is also a seller of loans with respect to a particular series of
securities, those representations will be in addition to the representations and
warranties made by the master servicer in its capacity as a master servicer.

     The master servicer or the trustee, if the master servicer is the seller,
will promptly notify the relevant seller of any breach of any representation or
warranty made by it in respect of a loan which materially and adversely affects
the interests of the securityholders in the loan. If the seller cannot cure the
breach within 90 days following notice from the master servicer or the trustee,
as the case may be, the applicable prospectus supplement may provide for the
seller's obligations under those circumstances, but if it does not, then the
seller will be obligated either


                                       29



o    to repurchase the loan from the trust fund at a price (the "Purchase
     Price") equal to 100% of the unpaid principal balance of the loan as of the
     date of the repurchase plus accrued interest on the loan to the first day
     of the month following the month of repurchase at the Loan Rate (less any
     Advances or amount payable as related servicing compensation if the seller
     is the master servicer) or

o    substitute for the loan a replacement loan that satisfies the criteria
     specified in the related prospectus supplement.

If a REMIC election is to be made with respect to a trust fund, the applicable
prospectus supplement may provide for the obligations of the master servicer or
residual certificateholder, but if it does not, the master servicer or a holder
of the related residual certificate generally will be obligated to pay any
prohibited transaction tax which may arise in connection with any repurchase or
substitution and the trustee must have received a satisfactory opinion of
counsel that the repurchase or 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. The master servicer may be entitled to reimbursement for that
payment from the assets of the related trust fund or from any holder of the
related residual certificate. See "Description of the Securities -- General."
Except in those cases in which the master servicer is the seller, the master
servicer will be required under the applicable Agreement to enforce this
obligation for the benefit of the trustee and the holders of the securities,
following the practices it would employ in its good faith business judgment were
it the owner of the loan. This repurchase or substitution obligation will
constitute the sole remedy available to holders of securities or the trustee for
a breach of representation by a seller.

     Neither the depositor nor the master servicer (unless the master servicer
is the seller) will be obligated to purchase or substitute a loan if a seller
defaults on its obligation to do so, and we can give no assurance that sellers
will carry out their respective repurchase or substitution obligations with
respect to loans. However, to the extent that a breach of a representation and
warranty of a seller may also constitute a breach of a representation made by
the master servicer, the master servicer may have a repurchase or substitution
obligation as described below under "The Agreements -- Assignment of Trust Fund
Assets."

                                STATIC POOL DATA

     If specified in the related prospectus supplement, static pool data with
respect to the delinquency, cumulative loss and prepayment data for Countrywide
Home Loans, Inc. ("Countrywide Home Loans") or any other person specified in the
related prospectus supplement will be made available through an Internet
website. The prospectus supplement related to each series for which the static
pool data is provided through an Internet website will contain the Internet
website address to obtain this information. Except as stated below, the static
pool data provided through any Internet website will be deemed part of this
prospectus and the registration statement of which this prospectus is a part
from the date of the related prospectus supplement.

     Notwithstanding the foregoing, the following information shall not be
deemed part of the prospectus or the registration statement of which this
prospectus is a part:

o    with respect to information regarding prior securitized pools of
     Countrywide Home Loans (or the applicable person specified in the related
     prospectus supplement) that do not include the currently offered pool,
     information regarding prior securitized pools that were established before
     January 1, 2006; and

o    with respect to information regarding the pool described in the related
     prospectus supplement, information about the pool for periods before
     January 1, 2006.

     Static pool data may also be provided in the related prospectus supplement
or may be provided in the form of a CD-ROM accompanying the related prospectus
supplement. The related prospectus supplement will specify how the static pool
data will be presented.


                                       30



                          DESCRIPTION OF THE SECURITIES

     Each series of certificates will be issued pursuant to separate Pooling and
Servicing Agreements. A form of Pooling and Servicing Agreement has been filed
as an exhibit to the Registration Statement of which this prospectus forms a
part. Each Pooling and Servicing Agreement will be dated as of the related
cut-off date, will be among the depositor, the master servicer and the trustee
for the benefit of the holders of the securities of the related series. Each
series of notes will be issued pursuant to an indenture (the "Indenture")
between the related trust fund and the entity named in the related prospectus
supplement as trustee with respect to the related series, and the related loans
will be serviced by the master servicer pursuant to a Sale and Servicing
Agreement. Each Indenture will be dated as of the cut-off date and the Trust
Fund Assets will be pledged to the related trustee for the benefit of the
holders of the securities of the related series.

     A form of Indenture and Sale and Servicing Agreement has been filed as an
exhibit to the Registration Statement of which this prospectus forms a part. A
series of securities may consist of both notes and certificates. The provisions
of each Agreement will vary depending upon the nature of the securities to be
issued thereunder and the nature of the related trust fund. The following are
descriptions of the material provisions which may appear in each Agreement. The
descriptions are subject to, and are qualified in their entirety by reference
to, all of the provisions of the Agreement for each series of securities and the
applicable prospectus supplement. The depositor will provide a copy of the
Agreement (without exhibits) relating to any series without charge upon written
request of a holder of record of a security of that series addressed to CWABS,
Inc., 4500 Park Granada, Calabasas, California 91302, Attention: Secretary.

GENERAL

     The securities of each series will be issued in book-entry or fully
registered form, in the authorized denominations specified in the related
prospectus supplement, will, in the case of certificates, evidence specified
beneficial ownership interests in, and in the case of notes, be secured by, the
assets of the related trust fund created pursuant to the related Agreement and
will not be entitled to payments in respect of the assets included in any other
trust fund established by the depositor. The applicable prospectus supplement
may provide for guarantees or insurance obtained from a governmental entity or
other person, but if it does not, the Trust Fund Assets will not be guaranteed
or insured by any governmental entity or other person. Each trust fund will
consist of, to the extent provided in the related Agreement,

o    the Trust Fund Assets, as from time to time are subject to the related
     Agreement (exclusive of any amounts specified in the related prospectus
     supplement ("Retained Interest")), including all payments of interest and
     principal received with respect to the loans after the cut-off date (to the
     extent not applied in computing the principal balance of the loans as of
     the cut-off date (the "Cut-off Date Principal Balance"));

o    the assets required to be deposited in the related Security Account from
     time to time;

o    property which secured a loan and which is acquired on behalf of the
     securityholders by foreclosure or deed in lieu of foreclosure; and

o    any insurance policies or other forms of credit enhancement required to be
     maintained pursuant to the related Agreement.

If so specified in the related prospectus supplement, a trust fund may also
include one or more of the following: reinvestment income on payments received
on the Trust Fund Assets, a reserve fund, a mortgage pool insurance policy, a
special hazard insurance policy, a bankruptcy bond, one or more letters of
credit, a surety bond, guaranties or similar instruments.

     Each series of securities will be issued in one or more classes. Each class
of certificates of a series will evidence beneficial ownership of a specified
percentage (which may be 0%) or portion of future interest payments and a
specified percentage (which may be 0%) or portion of future principal payments
on, and each class of notes of


                                       31



a series will be secured by, the related Trust Fund Assets. A series of
securities may include one or more classes that are senior in right to payment
to one or more other classes of securities of that series. Certain series or
classes of securities may be covered by insurance policies, surety bonds or
other forms of credit enhancement, in each case as described under "Credit
Enhancement" herein and in the related prospectus supplement. One or more
classes of securities of a series may be entitled to receive distributions of
principal, interest or any combination thereof. Distributions on one or more
classes of a series of securities may be made prior to one or more other
classes, after the occurrence of specified events, in accordance with a schedule
or formula or on the basis of collections from designated portions of the
related Trust Fund Assets, in each case as specified in the related prospectus
supplement. The timing and amounts of the distributions may vary among classes
or over time as specified in the related prospectus supplement.

     Distributions of principal and interest (or, where applicable, of principal
only or interest only) on the related securities will be made by the trustee on
each distribution date (i.e., monthly, quarterly, semi-annually or at the other
intervals and on the dates as are specified in the related prospectus
supplement) in proportion to the percentages specified in the related prospectus
supplement. Distributions will be made to the persons in whose names the
securities are registered at the close of business on the dates specified in the
related prospectus supplement (each, a "Record Date"). Distributions will be
made in the manner specified in the related prospectus supplement to the persons
entitled thereto at the address appearing in the register maintained for holders
of securities (the "Security Register"); provided, however, that the final
distribution in retirement of the securities will be made only upon presentation
and surrender of the securities at the office or agency of the trustee or other
person specified in the notice to securityholders of the final distribution.

     The securities will be freely transferable and exchangeable at the
Corporate Trust Office of the trustee as set forth in the related prospectus
supplement. No service charge will be made for any registration of exchange or
transfer of securities of any series, but the trustee may require payment of a
sum sufficient to cover any related tax or other governmental charge.

     Certain Issues Related to the Suitability of Investments in the Securities
for Holders. Under current law the purchase and holding by or on behalf of any
employee benefit plan or other retirement arrangement subject to provisions of
the Employee Retirement Income Security Act of 1974, as amended, or the Code of
certain classes of certificates may result in "prohibited transactions" within
the meaning of ERISA and the Code. See "ERISA Considerations." Retirement
arrangements subject to these provisions include individual retirement accounts
and annuities, Keogh plans and collective investment funds in which the plans,
accounts or arrangements are invested. The applicable prospectus supplement may
specify other conditions under which transfers of this type would be permitted,
but if it does not, transfer of the certificates will not be registered unless
the transferee represents that it is not, and is not purchasing on behalf of, a
plan, account or other retirement arrangement or provides an opinion of counsel
satisfactory to the trustee and the depositor that the purchase of the
certificates by or on behalf of a plan, account or other retirement arrangement
is permissible under applicable law and will not subject the trustee, the master
servicer or the depositor to any obligation or liability in addition to those
undertaken in the pooling and servicing agreement.

     As to each series, an election may be made to treat the related trust fund
or designated portions thereof as one or more "real estate mortgage investment
conduits" ("REMICs") as defined in the Code. The related prospectus supplement
will specify whether one or more REMIC elections are to be made. Alternatively,
the Agreement for a series may provide that one or more REMIC elections may be
made at the discretion of the depositor or the master servicer and may only be
made if certain conditions are satisfied. The terms and provisions applicable to
the making of a REMIC election for each related series, if applicable, will be
set forth in the related prospectus supplement. If one or more REMIC elections
are made with respect to a series, one of the classes will be designated as
evidencing the sole class of "residual interests" in the related REMIC, as
defined in the Code. All other classes of securities in the series will
constitute "regular interests" in the related REMIC or REMICs, as applicable, as
defined in the Code. As to each series with respect to which one or more REMIC
elections are to be made, the master servicer or a holder of the related
residual certificate will be obligated to take all actions required in order to
comply with applicable laws and regulations and will be obligated to pay any
prohibited transaction taxes. Unless otherwise provided in the related
prospectus supplement, the master servicer will be entitled to reimbursement if
it makes any prohibited transaction tax payment from the assets of the trust
fund or from any holder of the related residual certificate. Unless otherwise
specified in the related prospectus supplement, if the amounts distributable to
related residual


                                       32



certificates are insufficient to cover the amount of any prohibited transaction
taxes, the amount necessary to reimburse the master servicer may be deducted
from the amounts otherwise payable to the other classes of certificates of the
series.

DISTRIBUTIONS ON SECURITIES

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

     Distributions allocable to principal and interest on the securities will be
made by the trustee out of, and only to the extent of, funds in the related
Security Account, including any funds transferred from any reserve fund or the
pre-funding account. As between securities of different classes and as between
distributions of principal (and, if applicable, between distributions of
Principal Prepayments, as defined below, and scheduled payments of principal)
and interest, distributions made on any distribution date will be applied as
specified in the related prospectus supplement. The prospectus supplement will
also describe the method for allocating distributions among securities of a
particular class, but if the prospectus supplement does not, distributions to
any class of securities will be made pro rata to all securityholders of that
class.

     Available Funds. All distributions on the securities of each series on each
distribution date will be made from the Available Funds described below, in
accordance with the terms described in the related prospectus supplement and
specified in the Agreement. The applicable prospectus supplement may define
Available Funds with references to different accounts or different amounts, but
if it does not, "Available Funds" for each distribution date will generally
equal the amount on deposit in the related Security Account on that distribution
date (net of related fees and expenses payable by the related trust fund) other
than amounts to be held therein for distribution on future distribution dates.

     Distributions of Interest. Interest will accrue on the aggregate principal
balance of the securities (or, in the case of securities entitled only to
distributions allocable to interest, the aggregate notional amount) of each
class of securities (the "Class Security Balance") entitled to interest from the
date, at the Pass-Through Rate or interest rate, as applicable (which in either
case may be a fixed rate or rate adjustable as specified in the related
prospectus supplement), and for the periods specified in the related prospectus
supplement. To the extent funds are available therefor, interest accrued during
each specified period on each class of securities entitled to interest (other
than a class of securities that provides for interest that accrues, but is not
currently payable) will be distributable on the distribution dates specified in
the related prospectus supplement until the aggregate Class Security Balance of
the securities of that class has been distributed in full or, in the case of
securities entitled only to distributions allocable to interest, until the
aggregate notional amount of those securities is reduced to zero or for the
period of time designated in the related prospectus supplement. The original
Class Security Balance of each security will equal the aggregate distributions
allocable to principal to which the security is entitled. The applicable
prospectus supplement may specify some other basis for these distributions, but
if it does not, distributions allocable to interest on each security that is not
entitled to distributions allocable to principal will be calculated based on the
notional amount of the security. The notional amount of a security will not
evidence an interest in or entitlement to distributions allocable to principal
but will be used solely for convenience in expressing the calculation of
interest and for certain other purposes.

     Interest payable on the securities of a series on a distribution date will
include all interest accrued during the period specified in the related
prospectus supplement. In the event interest accrues over a period ending two or
more days prior to a distribution date, the effective yield to securityholders
will be reduced from the yield that would otherwise be obtainable if interest
payable on the security were to accrue through the day immediately preceding
that distribution date, and the effective yield (at par) to securityholders will
be less than the indicated coupon rate.

     With respect to any class of accrual securities, if specified in the
related prospectus supplement, any interest that has accrued but is not paid on
a given distribution date will be added to the aggregate Class Security Balance
of that class of securities on that distribution date. The applicable prospectus
supplement may specify some


                                       33



other basis for these distributions, but if it does not, distributions of
interest on any class of accrual securities will commence only after the
occurrence of the events specified in the related prospectus supplement. Prior
to that time, in the aggregate Class Security Balance of the class of accrual
securities will increase on each distribution date by the amount of interest
that accrued during the preceding interest accrual period but that was not
required to be distributed to the class on that distribution date. Thereafter
the class of accrual securities accrue interest on its outstanding Class
Security Balance as so adjusted.

     Distributions of Principal. The related prospectus supplement will specify
the method by which the amount of principal to be distributed on the securities
on each distribution date will be calculated and the manner in which the amount
will be allocated among the classes of securities entitled to distributions of
principal. The aggregate Class Security Balance of any class of securities
entitled to distributions of principal generally will be the aggregate original
Class Security Balance of the class of securities specified in the prospectus
supplement,

o    reduced by all distributions reported to the holders of the class of
     securities as allocable to principal;

o    in the case of accrual securities, in general, increased by all interest
     accrued but not then distributable on the accrual securities;

o    in the case of adjustable rate securities, subject to the effect of
     negative amortization, if applicable; and

o    if specified in the related prospectus supplement, reduced by the amount of
     any losses allocated to the Class Security Balance of the class of
     securities.

     If so provided in the related prospectus supplement, one or more classes of
securities will be entitled to receive all or a disproportionate percentage of
the payments of principal which are received from borrowers in advance of their
scheduled due dates and are not accompanied by amounts representing scheduled
interest due after the month in which the payment is made ("Principal
Prepayments") in the percentages and under the circumstances or for the periods
specified in the prospectus supplement. The effect of this allocation of
Principal Prepayments to the class or classes of securities will be to
accelerate the amortization of those securities while increasing the interests
evidenced by one or more other classes of securities in the trust fund.
Increasing the interests of the other classes of securities relative to that of
certain securities is intended to preserve the availability of the subordination
provided by the securities for which the interests have been increased. See
"Credit Enhancement -- Subordination."

     Unscheduled Distributions. If specified in the related prospectus
supplement, the securities will be subject to receipt of distributions before
the next scheduled distribution date under the circumstances and in the manner
described below and in the prospectus supplement. If applicable, the trustee
will be required to make unscheduled distributions on the day and in the amount
specified in the related prospectus supplement if, due to substantial payments
of principal (including Principal Prepayments) on the Trust Fund Assets, the
trustee or the master servicer determines that the funds available or
anticipated to be available from the Security Account and, if applicable, any
reserve fund, may be insufficient to make required distributions on the
securities on that distribution date. The applicable prospectus supplement may
provide for limits on the amount of an unscheduled distribution, but if it does
not, the amount of any unscheduled distribution that is allocable to principal
will not exceed the amount that would otherwise have been required to be
distributed as principal on the securities on the next distribution date. The
applicable prospectus supplement may specify whether the unscheduled
distribution will include interest, but if it does not, the unscheduled
distributions will include interest at the applicable Pass-Through Rate (if any)
or interest rate (if any) on the amount of the unscheduled distribution
allocable to principal for the period and to the date specified in the
prospectus supplement.

ADVANCES

     To the extent provided in the related prospectus supplement, the master
servicer will be required to advance on or before each distribution date (from
its own funds, funds advanced by sub-servicers or funds held in the Security
Account for future distributions to the holders of securities of the related
series), an amount equal to the aggregate of payments of interest and/or
principal that were delinquent on the related Determination Date (as the term is
defined in the related prospectus supplement) and were not advanced by any
sub-servicer, subject to the


                                       34



master servicer's determination that the advances may be recoverable out of late
payments by borrowers, Liquidation Proceeds, Insurance Proceeds or otherwise. In
the case of cooperative loans, the master servicer also may be required to
advance any unpaid maintenance fees and other charges under the related
proprietary leases as specified in the related prospectus supplement.

     In making advances, the master servicer will endeavor to maintain a regular
flow of scheduled interest and principal payments to holders of the securities,
rather than to guarantee or insure against losses. If advances are made by the
master servicer from cash being held for future distribution to securityholders,
the master servicer will replace those funds on or before any future
distribution date to the extent that funds in the applicable Security Account on
the future distribution date would be less than the amount required to be
available for distributions to securityholders on that distribution date. Any
master servicer funds advanced will be reimbursable to the master servicer out
of recoveries on the specific loans with respect to which the advances were made
(e.g., late payments made by the related borrower, any related Insurance
Proceeds, Liquidation Proceeds or proceeds of any loan purchased by the
depositor, a sub-servicer or a seller pursuant to the related Agreement).
Advances by the master servicer (and any advances by a sub-servicer) also will
be reimbursable to the master servicer (or sub-servicer) from cash otherwise
distributable to securityholders (including the holders of Senior securities) to
the extent that the master servicer determines that the advance or advances
previously made are not ultimately recoverable as described above. To the extent
provided in the related prospectus supplement, the master servicer also will be
obligated to make advances, to the extent recoverable out of Insurance Proceeds,
Liquidation Proceeds or otherwise, in respect of certain taxes and insurance
premiums not paid by borrowers on a timely basis. Funds so advanced are
reimbursable to the master servicer to the extent permitted by the related
Agreement. The obligations of the master servicer to make advances may be
supported by a cash advance reserve fund, a surety bond or other arrangement of
the type described herein under "Credit Enhancement," in each case as described
in the related prospectus supplement.

     In the event the master servicer or a sub-servicer fails to make a required
advance, the applicable prospectus supplement may specify whether another party
will have advancing obligations, but if it does not, the trustee will be
obligated to make the advance in its capacity as successor servicer. If the
trustee makes an advance, it will be entitled to be reimbursed for the advance
to the same extent and degree as the master servicer or a sub-servicer is
entitled to be reimbursed for advances. See "Description of the Securities --
Distributions on Securities."

REPORTS TO SECURITYHOLDERS

     Prior to or concurrently with each distribution on a distribution date the
master servicer or the trustee will furnish to each securityholder of record of
the related series a statement setting forth, to the extent applicable to the
related series of securities, among other things:

o    the amount of the distribution allocable to principal, separately
     identifying the aggregate amount of any Principal Prepayments and if so
     specified in the related prospectus supplement, any applicable prepayment
     charges included therein;

o    the amount of the distribution allocable to interest;

o    the amount of any advance;

o    the aggregate amount (a) otherwise allocable to the holders of Subordinate
     Securities on the distribution date, and (b) withdrawn from the reserve
     fund or the pre-funding account, if any, that is included in the amounts
     distributed to the Senior Securityholders;

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

o    the percentage of principal payments on the loans (excluding prepayments),
     if any, which each class of the related securities will be entitled to
     receive on the following distribution date;


                                       35



o    the percentage of Principal Prepayments on the loans, if any, which each
     class of the related securities will be entitled to receive on the
     following distribution date;

o    the related amount of the servicing compensation retained or withdrawn from
     the Security Account by the master servicer, and the amount of additional
     servicing compensation received by the master servicer attributable to
     penalties, fees, excess Liquidation Proceeds and other similar charges and
     items;

o    the number and aggregate principal balances of loans (A) delinquent
     (exclusive of loans in foreclosure) 1 to 30 days, 31 to 60 days, 61 to 90
     days and 91 or more days and (B) in foreclosure and delinquent 1 to 30
     days, 31 to 60 days, 61 to 90 days and 91 or more days, as of the close of
     business on the last day of the calendar month preceding the distribution
     date;

o    the book value of any real estate acquired through foreclosure or grant of
     a deed in lieu of foreclosure;

o    the Pass-Through Rate or interest rate, as applicable, if adjusted from the
     date of the last statement, of each class of the related series expected to
     be applicable to the next distribution to the class;

o    if applicable, the amount remaining in any reserve fund or the pre-funding
     account at the close of business on the distribution date;

o    the Pass-Through Rate or interest rate, as applicable, as of the day prior
     to the immediately preceding distribution date; and

o    any amounts remaining under letters of credit, pool policies or other forms
     of credit enhancement.

     Where applicable, any amount set forth above may be expressed as a dollar
amount per single security of the relevant class having the percentage interest
specified in the related prospectus supplement. The report to securityholders
for any series of securities may include additional or other information of a
similar nature to that specified above.

     In addition, within a reasonable period of time after the end of each
calendar year, the master servicer or the trustee will mail to each
securityholder of record at any time during the related calendar year a report
(a) as to the aggregate of amounts reported pursuant to the first two items
above for the related calendar year or, in the event the person was a
securityholder of record during a portion of that calendar year, for the
applicable portion of the year and (b) other customary information as may be
deemed necessary or desirable for securityholders to prepare their tax returns.

CATEGORIES OF CLASSES OF SECURITIES

     The securities of any series may be comprised of one or more classes. These
classes, in general, fall into different categories. The following chart
identifies and generally defines certain of the more typical categories. The
prospectus supplement for a series of securities may identify the classes which
comprise the related series by reference to the following categories.


                                       36



     CATEGORIES OF CLASSES                         DEFINITIONS
------------------------------   -----------------------------------------------
                                                 PRINCIPAL TYPES

Accretion Directed............   A class that receives principal payments from
                                 the accreted interest from specified Accrual
                                 classes. An accretion directed class also may
                                 receive principal payments from principal paid
                                 on the underlying Trust Fund Assets for the
                                 related series.

Companion Class...............   A class that receives principal payments on any
                                 distribution date only if scheduled payments
                                 have been made on specified planned principal
                                 classes, targeted principal classes or
                                 scheduled principal classes.

Component Securities..........   A class consisting of "components." The
                                 components of a class of component securities
                                 may have different principal and/or interest
                                 payment characteristics but together constitute
                                 a single class. Each component of a class of
                                 component securities may be identified as
                                 falling into one or more of the categories in
                                 this chart.

Non-Accelerated Senior or
   NAS........................   A class that, for the period of time specified
                                 in the related prospectus supplement, generally
                                 will not receive (in other words, is locked out
                                 of) (1) principal prepayments on the underlying
                                 Trust Fund Assets that are allocated
                                 disproportionately to the senior securities
                                 because of the shifting interest structure of
                                 the securities in the trust and/or (2)
                                 scheduled principal payments on the underlying
                                 Trust Fund Assets, as specified in the related
                                 prospectus supplement. During the lock-out
                                 period, the portion of the principal
                                 distributions on the underlying Trust Fund
                                 Assets that the NAS class is locked out of will
                                 be distributed to the other classes of senior
                                 securities.

Notional Amount Securities....   A class having no principal balance and bearing
                                 interest on the related notional amount. The
                                 notional amount is used for purposes of the
                                 determination of interest distributions.

Planned Principal Class or
   PACs.......................   A class that is designed to receive principal
                                 payments using a predetermined principal
                                 balance schedule derived by assuming two
                                 constant prepayment rates for the underlying
                                 Trust Fund Assets. These two rates are the
                                 endpoints for the "structuring range" for the
                                 planned principal class. The planned principal
                                 classes in any series of certificates may be
                                 subdivided into different categories (e.g.,
                                 primary planned principal classes, secondary
                                 planned principal classes and so forth) having
                                 different effective structuring ranges and
                                 different principal payment priorities. The
                                 structuring range for the secondary planned
                                 principal class of a series of certificates
                                 will be narrower than that for the primary
                                 planned principal class of the series.

Scheduled Principal Class.....   A class that is designed to receive principal
                                 payments using a predetermined principal
                                 balance schedule but is not designated as a
                                 Planned Principal Class or Targeted Principal
                                 Class. In many cases, the schedule is derived
                                 by assuming two constant prepayment rates for
                                 the underlying Trust Fund Assets. These two
                                 rates are the endpoints for the "structuring
                                 range" for the scheduled principal class.


                                       37



     CATEGORIES OF CLASSES                         DEFINITIONS
------------------------------   -----------------------------------------------
Sequential Pay................   Classes that receive principal payments in a
                                 prescribed sequence, that do not have
                                 predetermined principal balance schedules and
                                 that under all circumstances receive payments
                                 of principal continuously from the first
                                 distribution date on which they receive
                                 principal until they are retired. A single
                                 class that receives principal payments before
                                 or after all other classes in the same series
                                 of securities may be identified as a sequential
                                 pay class.

Strip.........................   A class that receives a constant proportion, or
                                 "strip," of the principal payments on the
                                 underlying Trust Fund Assets.

Super Senior..................   A class that will not bear its proportionate
                                 share of realized losses (other than excess
                                 losses) as its share is directed to another
                                 class, referred to as the "support class" until
                                 the class principal balance of the support
                                 class is reduced to zero.

Support Class.................   A class that absorbs the realized losses other
                                 than excess losses that would otherwise be
                                 allocated to a Super Senior Class (or would not
                                 otherwise be allocated to the Senior Class)
                                 after the related Classes of subordinate
                                 securities are no longer outstanding.

Targeted Principal Class or
   TACs.......................   A class that is designed to receive principal
                                 payments using a predetermined principal
                                 balance schedule derived by assuming a single
                                 constant prepayment rate for the underlying
                                 Trust Fund Assets.

                                                  INTEREST TYPES

Fixed Rate....................   A class with an interest rate that is fixed
                                 throughout the life of the class.

Floating Rate or Adjustable
   Rate ......................   A class with an interest rate that resets
                                 periodically based upon a designated index and
                                 that varies directly with changes in the index.

Inverse Floating Rate.........   A class with an interest rate that resets
                                 periodically based upon a designated index and
                                 that varies inversely with changes in the
                                 index.

Variable Rate.................   A class with an interest rate that resets
                                 periodically and is calculated by reference to
                                 the rate or rates of interest applicable to
                                 specified assets or instruments (e.g., the Loan
                                 Rates borne by the underlying loans).

Interest Only.................   A class that receives some or all of the
                                 interest payments made on the underlying Trust
                                 Fund Assets and little or no principal.
                                 Interest Only classes have either a nominal
                                 principal balance or a notional amount. A
                                 nominal principal balance represents actual
                                 principal that will be paid on the class. It is
                                 referred to as nominal since it is extremely
                                 small compared to other classes. A notional
                                 amount is the amount used as a reference to
                                 calculate the amount of interest due on an
                                 Interest Only class that is not entitled to any
                                 distributions in respect of principal.

Principal Only................   A class that does not bear interest and is
                                 entitled to receive only distributions in
                                 respect of principal.


                                       38



     CATEGORIES OF CLASSES                         DEFINITIONS
------------------------------   -----------------------------------------------
Partial Accrual...............   A class that accretes a portion of the amount
                                 of accrued interest thereon, which amount will
                                 be added to the principal balance of the class
                                 on each applicable distribution date, with the
                                 remainder of the accrued interest to be
                                 distributed currently as interest on the
                                 Partial Accrual class. This accretion may
                                 continue until a specified event has occurred
                                 or until the Partial Accrual class is retired.

Accrual.......................   A class that accretes the amount of accrued
                                 interest otherwise distributable on the Accrual
                                 class, which amount will be added as principal
                                 to the principal balance of the Accrual class
                                 on each applicable distribution date. This
                                 accretion may continue until some specified
                                 event has occurred or until the Accrual class
                                 is retired.

Callable......................   A class that is redeemable or terminable when
                                 25% or more of the original principal balance
                                 of the mortgage loans held in the trust fund is
                                 outstanding.

     Other types of securities that may be issued include classes that are
entitled to receive only designated portions of the collections on the Trust
Fund Assets (i.e. prepayment charges) or excess cashflow from all or designated
portions of the Trust Fund Assets (sometimes referred to as "residual classes").

INDICES APPLICABLE TO FLOATING RATE AND INVERSE FLOATING RATE CLASSES

LIBOR

     The applicable prospectus supplement may specify some other basis for
determining LIBOR, but if it does not, on the LIBOR determination date (as
defined in the related prospectus supplement) for each class of certificates of
a series for which the applicable interest rate is determined by reference to an
index denominated as LIBOR, the person designated in the related Pooling and
Servicing Agreement as the calculation agent will determine LIBOR in accordance
with one of the two methods described below (which method will be specified in
the related prospectus supplement):

LIBO Method

     Unless otherwise specified in the related prospectus supplement, if using
this method to calculate LIBOR, the calculation agent will determine LIBOR on
the basis of the rate for U.S. dollar deposits for the period specified in the
prospectus supplement that appears on Telerate Screen Page 3750 as of 11:00 a.m.
(London time) on the interest determination date (as defined in the related
prospectus supplement). If the rate does not appear on the Telerate Screen Page
3750 (or any page that may replace the page on that service, or if this service
is no longer offered, another service for displaying LIBOR or comparable rates
as may be reasonably selected by the calculation agent), LIBOR for the
applicable accrual period will be the Reference Bank Rate.

     "Reference Bank Rate" with respect to any accrual period, means

     (a) the arithmetic mean (rounded upwards, if necessary, to the nearest
whole multiple of 0.03125%) of the offered rates for United States dollar
deposits for one month that are quoted by the reference banks as of 11:00 a.m.,
New York City time, on the related interest determination date to prime banks in
the London interbank market, provided that at least two reference banks provide
the rate; and

     (b) If fewer than two offered rates appear, the Reference Bank Rate will be
the arithmetic mean (rounded upwards, if necessary, to the nearest whole
multiple of 0.03125%) of the rates quoted by one or more major banks in New York
City, selected by the calculation agent, as of 11:00 a.m., New York City time,
on the related interest determination date for loans in U.S. dollars to leading
European banks.


                                       39



     Each reference bank will be a leading bank engaged in transactions in
Eurodollar deposits in the international Eurocurrency market; will not control,
be controlled by, or be under common control with the depositor, Countrywide
Home Loans or the master servicer; and will have an established place of
business in London. If a reference bank should be unwilling or unable to act as
a reference bank or if appointment of a reference bank is terminated, another
leading bank meeting the criteria specified above will be appointed.

     If these quotations cannot be obtained by the calculation agent and no
Reference Bank Rate is available, LIBOR will be LIBOR applicable to the
preceding interest accrual period.

BBA Method

     If using this method of determining LIBOR, the calculation agent will
determine LIBOR on the basis of the British Bankers' Association "Interest
Settlement Rate" for one-month deposits in United States dollars as found on
Telerate page 3750 as of 11:00 a.m. London time on each LIBOR determination
date. Interest Settlement Rates currently are based on rates quoted by eight
British Bankers' Association designated banks as being, in the view of the
banks, the offered rate at which deposits are being quoted to prime banks in the
London interbank market. The Interest Settlement Rates are calculated by
eliminating the two highest rates and the two lowest rates, averaging the four
remaining rates, carrying the result (expressed as a percentage) out to six
decimal places, and rounding to five decimal places.

     If on any LIBOR determination date, the calculation agent is unable to
calculate LIBOR in accordance with the method set forth in the immediately
preceding paragraph, LIBOR for the next interest accrual period shall be
calculated in accordance with the LIBOR method described under "LIBO Method."

     The establishment of LIBOR on each LIBOR determination date by the
calculation agent and its calculation of the rate of interest for the applicable
classes for the related interest accrual period shall (in the absence of
manifest error) be final and binding.

COFI

     The Eleventh District Cost of Funds Index is designed to represent the
monthly weighted average cost of funds for savings institutions in Arizona,
California and Nevada that are member institutions of the Eleventh Federal Home
Loan Bank District (the "Eleventh District"). The Eleventh District Cost of
Funds Index for a particular month reflects the interest costs paid on all types
of funds held by Eleventh District member institutions and is calculated by
dividing the cost of funds by the average of the total amount of those funds
outstanding at the end of that month and of the prior month and annualizing and
adjusting the result to reflect the actual number of days in the particular
month. If necessary, before these calculations are made, the component figures
are adjusted by the Federal Home Loan Bank of San Francisco ("FHLBSF") to
neutralize the effect of events such as member institutions leaving the Eleventh
District or acquiring institutions outside the Eleventh District. The Eleventh
District Cost of Funds Index is weighted to reflect the relative amount of each
type of funds held at the end of the relevant month. The major components of
funds of Eleventh District member institutions are: savings deposits, time
deposits, FHLBSF advances, repurchase agreements and all other borrowings.
Because the component funds represent a variety of maturities whose costs may
react in different ways to changing conditions, the Eleventh District Cost of
Funds Index does not necessarily reflect current market rates.

     A number of factors affect the performance of the Eleventh District Cost of
Funds Index, which may cause it to move in a manner different from indices tied
to specific interest rates, such as United States Treasury bills or LIBOR.
Because the liabilities upon which the Eleventh District Cost of Funds Index is
based were issued at various times under various market conditions and with
various maturities, the Eleventh District Cost of Funds Index may not
necessarily reflect the prevailing market interest rates on new liabilities of
similar maturities. Moreover, as stated above, the Eleventh District Cost of
Funds Index is designed to represent the average cost of funds for Eleventh
District savings institutions for the month prior to the month in which it is
due to be published. Additionally, the Eleventh District Cost of Funds Index may
not necessarily move in the same direction as market interest rates at all
times, since as longer term deposits or borrowings mature and are renewed at
prevailing market interest rates, the Eleventh District Cost of Funds Index is
influenced by the differential between the prior and the new rates on those
deposits or borrowings. In addition, movements of the Eleventh District Cost of
Funds Index, as


                                       40



compared to other indices tied to specific interest rates, may be affected by
changes instituted by the FHLBSF in the method used to calculate the Eleventh
District Cost of Funds Index.

     The FHLBSF publishes the Eleventh District Cost of Funds Index in its
monthly Information Bulletin. Any individual may request regular receipt by mail
of Information Bulletins by writing the Federal Home Loan Bank of San Francisco,
P.O. Box 7948, 600 California Street, San Francisco, California 94120, or by
calling (415) 616-1000. The Eleventh District Cost of Funds Index may also be
obtained by calling the FHLBSF at (415) 616-2600.

     The FHLBSF has stated in its Information Bulletin that the Eleventh
District Cost of Funds Index for a month "will be announced on or near the last
working day" of the following month and also has stated that it "cannot
guarantee the announcement" of the index on an exact date. So long as the
Eleventh District Cost of Funds Index for a month is announced on or before the
tenth day of the second following month, the interest rate for each class of
securities of a series as to which the applicable interest rate is determined by
reference to an index denominated as COFI (each, a class of "COFI securities")
for the Interest Accrual Period commencing in the second following month will be
based on the Eleventh District Cost of Funds Index for the second preceding
month. If publication is delayed beyond the tenth day, the interest rate will be
based on the Eleventh District Cost of Funds Index for the third preceding
month.

     The applicable prospectus supplement may specify some other basis for
determining COFI, but if it does not, then if on the tenth day of the month in
which any interest accrual period commences for a class of COFI securities the
most recently published Eleventh District Cost of Funds Index relates to a month
before the third preceding month, the index for the current interest accrual
period and for each succeeding interest accrual period will, except as described
in the next to last sentence of this paragraph, be based on the National Monthly
Median Cost of Funds Ratio to SAIF-Insured Institutions (the "National Cost of
Funds Index") published by the Office of Thrift Supervision (the "OTS") for the
third preceding month (or the fourth preceding month if the National Cost of
Funds Index for the third preceding month has not been published on the tenth
day of an interest accrual period). Information on the National Cost of Funds
Index may be obtained by writing the OTS at 1700 G Street, N.W., Washington,
D.C. 20552 or calling (202) 906-6677, and the current National Cost of Funds
Index may be obtained by calling (202) 906-6988. If on the tenth day of the
month in which an interest accrual period commences the most recently published
National Cost of Funds Index relates to a month before the fourth preceding
month, the applicable index for the interest accrual period and each succeeding
interest accrual period will be based on LIBOR, as determined by the calculation
agent in accordance with the Agreement relating to the series of certificates. A
change of index from the Eleventh District Cost of Funds Index to an alternative
index will result in a change in the index level and could increase its
volatility, particularly if LIBOR is the alternative index.

     The establishment of COFI by the calculation agent and its calculation of
the rates of interest for the applicable classes for the related interest
accrual period shall (in the absence of manifest error) be final and binding.

Treasury Index

     The applicable prospectus supplement may specify some other basis for
determining and defining the Treasury index, but if it does not, on the Treasury
index determination date for each class of securities of a series for which the
applicable interest rate is determined by reference to an index denominated as a
Treasury index, the calculation agent will ascertain the Treasury index for
Treasury securities of the maturity and for the period (or, if applicable, date)
specified in the related prospectus supplement. The Treasury index for any
period means the average of the yield for each business day during the specified
period (and for any date means the yield for the date), expressed as a per annum
percentage rate, on U.S. Treasury securities adjusted to the "constant maturity"
specified in the prospectus supplement or if no "constant maturity" is so
specified, U.S. Treasury securities trading on the secondary market having the
maturity specified in the prospectus supplement, in each case as published by
the Federal Reserve Board in its Statistical Release No. H.15 (519). Statistical
Release No. H.15 (519) is published on Monday or Tuesday of each week and may be
obtained by writing or calling the Publications Department at the Board of
Governors of the Federal Reserve System, 21st and C Streets, Washington, D.C.
20551 (202) 452-3244. If the calculation agent has not yet received Statistical
Release No. H.15 (519) for a week, then it will use the Statistical Release from
the preceding week.


                                       41



     Yields on U.S. Treasury securities at "constant maturity" are derived from
the U.S. Treasury's daily yield curve. This curve, which relates the yield on a
security to its time to maturity, is based on the closing market bid yields on
actively traded Treasury securities in the over-the-counter market. These market
yields are calculated from composites of quotations reported by five leading
U.S. Government securities dealers to the Federal Reserve Bank of New York. This
method provides a yield for a given maturity even if no security with that exact
maturity is outstanding. In the event that the Treasury Index is no longer
published, a new index based upon comparable data and methodology will be
designated in accordance with the Agreement relating to the particular series of
securities. The Calculation Agent's determination of the Treasury Index, and its
calculation of the rates of interest for the applicable classes for the related
Interest Accrual Period shall (in the absence of manifest error) be final and
binding.

Prime Rate

     The applicable prospectus supplement may specify the party responsible for
determining the Prime Rate, but if it does not, on the Prime Rate Determination
Date (as the term is defined in the related prospectus supplement) for each
class of securities of a series as to which the applicable interest rate is
determined by reference to an index denominated as the Prime Rate, the
calculation agent will ascertain the Prime Rate for the related interest accrual
period. The applicable prospectus supplement may provide for the means of
determining the Prime Rate, but if it does not, the Prime Rate for an interest
accrual period will be the "Prime Rate" as published in the "Money Rates"
section of The Wall Street Journal (or if not so published, the "Prime Rate" as
published in a newspaper of general circulation selected by the calculation
agent in its sole discretion) on the related Prime Rate Determination Date. If a
prime rate range is given, then the average of that range will be used. In the
event that the Prime Rate is no longer published, a new index based upon
comparable data and methodology will be designated in accordance with the
Agreement relating to the particular series of securities. The calculation
agent's determination of the Prime Rate and its calculation of the rates of
interest for the related interest accrual period shall (in the absence of
manifest error) be final and binding.

BOOK-ENTRY REGISTRATION OF SECURITIES

     As described in the related prospectus supplement, if not issued in fully
registered certificated form, each class of securities will be registered as
book-entry certificates (the "Book-Entry Securities"). Persons acquiring
beneficial ownership interests in the Book-Entry Securities ("Security Owners")
may elect to hold their Book-Entry Securities through the Depository Trust
Company ("DTC") in the United States, or Clearstream, Luxembourg or the
Euroclear System ("Euroclear"), in Europe, if they are participants of those
systems, or indirectly through organizations which are participants in those
systems. Each class of the Book-Entry Securities will be issued in one or more
certificates which equal the aggregate principal balance of the applicable class
of the Book-Entry Securities and will initially be registered in the name of
Cede & Co., the nominee of DTC. Clearstream, Luxembourg and Euroclear will hold
omnibus positions on behalf of their participants through customers' securities
accounts in Clearstream, Luxembourg 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. Citibank, NA
will act as depositary for Clearstream, Luxembourg and JPMorgan Chase will act
as depositary for Euroclear (in those capacities, individually the "Relevant
Depositary" and collectively the "European Depositaries"). Unless otherwise
described in the related prospectus supplement, beneficial interests in the
Book-Entry Securities may be held in minimum denominations representing
Certificate Principal Balances of $20,000 and integral multiples of $1,000 in
excess thereof, except that one investor of each class of Book-Entry Securities
may hold a beneficial interest therein that is not an integral multiple of
$1,000. Except as described below, no person acquiring a beneficial ownership
interest in a Book-Entry Security (each, a "beneficial owner") will be entitled
to receive a physical certificate representing the person's beneficial ownership
interest in the Book-Entry Security (a "Definitive Security"). Unless and until
Definitive Securities are issued, it is anticipated that the only
securityholders of the Book-Entry Securities will be Cede & Co., as nominee of
DTC. Security Owners will not be Certificateholders as that term is used in the
applicable Agreement. Security Owners are only permitted to exercise their
rights indirectly through the participating organizations that utilize the
services of DTC, including securities brokers and dealers, banks and trust
companies and clearing corporations and certain other organizations
("Participants") and DTC.

     The beneficial owner's ownership of a Book-Entry Security will be recorded
on the records of the brokerage firm, bank, thrift institution or other
financial intermediary (each, a "Financial Intermediary") that maintains the
beneficial owner's account for that purpose. In turn, the Financial
Intermediary's ownership of the


                                       42



Book-Entry Security will be recorded on the records of DTC (or of a
participating firm that acts as agent for the Financial Intermediary, whose
interest will in turn be recorded on the records of DTC, if the beneficial
owner's Financial Intermediary is not a DTC Participant and on the records of
Clearstream, Luxembourg or Euroclear, as appropriate).

     Security Owners will receive all distributions of principal of, and
interest on, the Book-Entry Securities from the trustee through DTC and DTC
Participants. While the Book-Entry Securities are outstanding (except under the
circumstances described below), under the rules, regulations and procedures
creating and affecting DTC and its operations (the "Rules"), DTC is required to
make book-entry transfers among Participants on whose behalf it acts with
respect to the Book-Entry Securities and is required to receive and transmit
distributions of principal of, and interest on, the Book-Entry Securities.
Participants and organizations which have indirect access to the DTC system,
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly ("Indirect Participants"), with whom Security Owners have accounts
with respect to the Book-Entry Securities are similarly required to make
book-entry transfers and receive and transmit the distributions on behalf of
their respective Security Owners. Accordingly, although Security Owners will not
possess certificates, the Rules provide a mechanism by which Security Owners
will receive distributions and will be able to transfer their interest.

     Security Owners will not receive or be entitled to receive certificates
representing their respective interests in the Book-Entry Securities, except
under the limited circumstances described below. Unless and until Definitive
Securities are issued, Security Owners who are not Participants may transfer
ownership of the Book-Entry Securities only through Participants and Indirect
Participants by instructing the Participants and Indirect Participants to
transfer Book-Entry Securities, by book-entry transfer, through DTC for the
account of the purchasers of the Book-Entry Securities, which account is
maintained with their respective Participants. Under the Rules and in accordance
with DTC's normal procedures, transfers of ownership of Book-Entry Securities
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 Security Owners.

     Because of time zone differences, credits of securities received in
Clearstream, Luxembourg or Euroclear as a result of a transaction with a
Participant will be made during, subsequent securities settlement processing and
dated the business day following, the DTC settlement date. These credits or any
transactions in the securities received in Clearstream, Luxembourg or Euroclear
as a result of a transaction with a Participant, settled during the processing
will be reported to the relevant Euroclear or Clearstream, Luxembourg
Participants on that following business day. Cash received in Clearstream,
Luxembourg or Euroclear, as a result of sales of securities by or through a
Clearstream, Luxembourg Participant or Euroclear Participant to a DTC
Participant, will be received with value on the DTC settlement date but will be
available in the relevant Clearstream, Luxembourg or Euroclear cash account only
as of the business day following settlement in DTC.

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

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


                                       43



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

     Clearstream Banking, societe anonyme, 67 Bd Grande-Duchesse Charlotte,
L-2967 Luxembourg ("Clearstream, Luxembourg"), was incorporated in 1970 as
"Clearstream, Luxembourg S.A." a company with limited liability under Luxembourg
law (a societe anonyme). Clearstream, Luxembourg S.A. subsequently changed its
name to Cedelbank. On January 10, 2000, Cedelbank's parent company, Clearstream,
Luxembourg International, societe anonyme ("CI") merged its clearing, settlement
and custody business with that of Deutsche Borse Clearing AG ("DBC"). The merger
involved the transfer by CI of substantially all of its assets and liabilities
(including its shares in CB) to a new Luxembourg company, New Clearstream,
Luxembourg International, societe anonyme ("New CI"), which is 50% owned by CI
and 50% owned by DBC's parent company Deutsche Borse AG. The shareholders of
these two entities are banks, securities dealers and financial institutions.
Clearstream, Luxembourg International currently has 92 shareholders, including
U.S. financial institutions or their subsidiaries. No single entity may own more
than 5 percent of Clearstream, Luxembourg International's stock.

     Further to the merger, the Board of Directors of New CI decided to re-name
the companies in the group in order to give them a cohesive brand name. The new
brand name that was chosen is "Clearstream" effective as of January 14, 2000.
New CI has been renamed "Clearstream International, societe anonyme." On January
18, 2000, Cedelbank was renamed "Clearstream Banking, societe anonyme" and
Clearstream, Luxembourg Global Services was renamed "Clearstream Services,
societe anonyme."

     On January 17, 2000, DBC was renamed "Clearstream Banking AG." This means
that there are now two entities in the corporate group headed by Clearstream
International which share the name "Clearstream Banking," the entity previously
named "Cedelbank" and the entity previously named "Deutsche Borse Clearing AG."

     Clearstream, Luxembourg holds securities for its customers and facilitates
the clearance and settlement of securities transactions between Clearstream,
Luxembourg customers through electronic book-entry changes in accounts of
Clearstream, Luxembourg customers, thereby eliminating the need for physical
movement of certificates. Transactions may be settled by Clearstream, Luxembourg
in any of 36 currencies, including United States Dollars. Clearstream,
Luxembourg provides to its customers, among other things, services for
safekeeping, administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. Clearstream, Luxembourg also
deals with domestic securities markets in over 30 countries through established
depository and custodial relationships. Clearstream, Luxembourg is registered as
a bank in Luxembourg and is subject to regulation by the Commission de
Surveillance du Secteur Financier, "CSSF," which supervises Luxembourg banks.
Clearstream, Luxembourg's customers are world-wide financial institutions
including underwriters, securities brokers and dealers, banks, trust companies
and clearing corporations. Clearstream, Luxembourg's U.S. customers are limited
to securities brokers and dealers, and banks. Currently, Clearstream, Luxembourg
has approximately 2,000 customers located in over 80 countries, including all
major European countries, Canada, and the United States. Indirect access to
Clearstream, Luxembourg is available to other institutions that clear through or
maintain a custodial relationship with an account holder of Clearstream,
Luxembourg. Clearstream, Luxembourg has established an electronic bridge with
Euroclear Bank S.A./ N.V. as the Operator of the Euroclear System (the
"Euroclear Operator") in Brussels to facilitate settlement of trades between
Clearstream, Luxembourg and the Euroclear Operator.

     Euroclear was created in 1968 to hold securities for participants of
Euroclear ("Euroclear Participants") and to clear and settle transactions
between Euroclear Participants through simultaneous electronic book-entry
delivery against payment, thereby eliminating the need for physical movement of
certificates and any risk from lack of simultaneous transfers of securities and
cash. Transactions may now be settled in any of 32 currencies, including United
States dollars. Euroclear includes various other services, including securities
lending and borrowing and interfaces with domestic markets in several countries
generally similar to the arrangements for cross-market transfers with DTC
described above. Euroclear is operated by the Brussels, Belgium office of the
Euroclear Operator, under contract with Euroclear Clearance Systems S.C., a
Belgian cooperative corporation (the "Cooperative"). All operations are
conducted by the Euroclear Operator, and all Euroclear securities clearance


                                       44



accounts and Euroclear cash accounts are accounts with the Euroclear Operator,
not the Cooperative. The Cooperative establishes policy for Euroclear on behalf
of Euroclear Participants. Euroclear Participants include banks (including
central banks), securities brokers and dealers and other professional financial
intermediaries. Indirect access to Euroclear is also available to other firms
that clear through or maintain a custodial relationship with a Euroclear
Participant, either directly or indirectly.

     The Euroclear Operator has a banking license from the Belgian Banking and
Finance Commission. This license authorizes the Euroclear Operator to carry out
banking activities on a global basis.

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

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

     Under a book-entry format, beneficial owners of the Book-Entry Securities
may experience some delay in their receipt of payments, since the payments will
be forwarded by the trustee to Cede & Co. Distributions with respect to
Book-Entry Securities held through Clearstream, Luxembourg or Euroclear will be
credited to the cash accounts of Clearstream, Luxembourg Participants or
Euroclear Participants in accordance with the relevant system's rules and
procedures, to the extent received by the Relevant Depositary. These
distributions will be subject to tax reporting in accordance with relevant
United States tax laws and regulations. See "Material Federal Income Tax
Consequences -- Tax Treatment of Foreign Investors" and "-- Tax Consequences to
Holders of the Notes -- Backup Withholding" herein. Because DTC can only act on
behalf of Financial Intermediaries, the ability of a beneficial owner to pledge
Book-Entry Securities to persons or entities that do not participate in the
depository system, or otherwise take actions in respect of Book-Entry
Securities, may be limited due to the lack of physical certificates for the
Book-Entry Securities. In addition, issuance of the Book-Entry Securities in
book-entry form may reduce the liquidity of the securities in the secondary
market since certain potential investors may be unwilling to purchase securities
for which they cannot obtain physical certificates.

     Monthly and annual reports on the Trust provided to Cede & Co., as nominee
of DTC, may be made available to beneficial owners upon request, in accordance
with the rules, regulations and procedures creating and affecting DTC or the
Depositary, and to the Financial Intermediaries to whose DTC accounts the
Book-Entry Securities of the beneficial owners are credited.

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


                                       45



     Definitive Securities will be issued to beneficial owners of the Book-Entry
Securities, or their nominees, rather than to DTC, only if (a) DTC or the
depositor advises the trustee in writing that DTC is no longer willing,
qualified or able to discharge properly its responsibilities as nominee and
depositary with respect to the Book-Entry Securities and the depositor or the
trustee is unable to locate a qualified successor or (b) after the occurrence of
an Event of Default, beneficial owners having not less than 51% of the voting
rights evidenced by the Book-Entry Securities advise the trustee and DTC through
the Financial Intermediaries and the DTC participants in writing that the
continuation of a book-entry system through DTC (or a successor thereto) is no
longer in the best interests of beneficial owners of that class.

     Upon the occurrence of any of the events described in the immediately
preceding paragraph, the trustee will be required to notify all beneficial
owners of the occurrence of the event and the availability through DTC of
Definitive Securities. Upon surrender by DTC of the global certificate or
certificates representing the Book-Entry Securities and instructions for
re-registration, the trustee will issue Definitive Securities, and thereafter
the trustee will recognize the holders of the Definitive Securities as
securityholders under the applicable Agreement.

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

     None of the master servicer, the depositor or the trustee will have any
responsibility for any aspect of the records relating to or payments made on
account of beneficial ownership interests of the Book-Entry Securities held by
Cede & Co., as nominee of DTC, or for maintaining, supervising or reviewing any
records relating to the beneficial ownership interests.

                               CREDIT ENHANCEMENT

GENERAL

     Credit enhancement may be provided with respect to one or more classes of a
series of securities or with respect to the related Trust Fund Assets. Credit
enhancement may be in the form of:

          o    the subordination of one or more classes of the securities of the
               series,

          o    letter of credit,

          o    a limited financial guaranty policy issued by an entity named in
               the related prospectus supplement,

          o    surety bond,

          o    bankruptcy bond,

          o    special hazard insurance policy,

          o    guaranteed investment contract,

          o    overcollateralization,

          o    one or more reserve funds,

          o    a mortgage pool insurance policy,

          o    FHA Insurance,


                                       46



          o    a VA Guarantee,

          o    cross-collateralization feature, or

          o    any combination of the foregoing.

     The applicable prospectus supplement may provide for credit enhancement
which covers all the classes of securities, but if it does not, credit
enhancement will not provide protection against all risks of loss and will not
guarantee repayment of the entire principal balance of the securities and
interest thereon. If losses occur which exceed the amount covered by credit
enhancement or which are not covered by the credit enhancement, securityholders
will bear their allocable share of any deficiencies.

SUBORDINATION

     If so specified in the related prospectus supplement, protection afforded
to holders of one or more classes of securities of a series by means of the
subordination feature may be accomplished by the preferential right of holders
of one or more other classes of the series (the "Senior Securities") to
distributions in respect of scheduled principal, Principal Prepayments, interest
or any combination thereof that otherwise would have been payable to holders of
subordinate securities (the "Subordinate Securities") under the circumstances
and to the extent specified in the related prospectus supplement. Protection may
also be afforded to the holders of Senior Securities of a series by: (i)
reducing the principal or notional balance (if applicable) of the related
subordinate securities; (ii) a combination of the immediately preceding sentence
and clause (i) above; or (iii) as otherwise described in the related prospectus
supplement. If so specified in the related prospectus supplement, delays in
receipt of scheduled payments on the loans and losses on defaulted loans may be
borne first by the various classes of subordinate securities and thereafter by
the various classes of Senior Securities, in each case under the circumstances
and subject to the limitations specified in the related prospectus supplement.
The aggregate distributions in respect of delinquent payments on the loans over
the lives of the securities or at any time, the aggregate losses in respect of
defaulted loans which must be borne by the Subordinate Securities by virtue of
subordination and the amount of the distributions otherwise distributable to the
holders of Subordinate Securities that will be distributable to Senior
Securityholders on any distribution date may be limited as specified in the
related prospectus supplement. If aggregate distributions in respect of
delinquent payments on the loans or aggregate losses in respect of the loans
were to exceed an amount specified in the related prospectus supplement, holders
of Senior Securities would experience losses on the securities.

     In addition to or in lieu of the foregoing, if so specified in the related
prospectus supplement, all or any portion of distributions otherwise payable to
holders of Subordinate Securities on any distribution date may instead be
deposited into one or more reserve funds established with the trustee or
distributed to holders of Senior Securities. The deposits to a reserve fund may
be made on each distribution date, for specified periods or until the balance in
the reserve fund has reached a specified amount and, following payments from the
reserve fund to holders of Senior Securities or otherwise, thereafter to the
extent necessary to restore the balance in the reserve fund to required levels,
in each case as specified in the related prospectus supplement. Amounts on
deposit in the reserve fund may be released to the holders of certain classes of
securities at the times and under the circumstances specified in the related
prospectus supplement.

     If specified in the related prospectus supplement, various classes of
Senior Securities and Subordinate Securities may themselves be subordinate in
their right to receive certain distributions to other classes of Senior and
Subordinate Securities, respectively, through preferential rights of those
classes of securities to distributions in respect to the other classes of Senior
Securities and Subordinate Securities, a cross-collateralization mechanism or
otherwise.

     As between classes of Senior Securities and as between classes of
Subordinate Securities, distributions may be allocated among those classes (i)
in the order of their scheduled final distribution dates, (ii) in accordance
with a schedule or formula, (iii) in relation to the occurrence of events, or
(iv) otherwise, in each case as specified in the related prospectus supplement.
As between classes of Subordinate Securities, payments to holders of Senior


                                       47



Securities on account of delinquencies or losses and payments to any reserve
fund will be allocated as specified in the related prospectus supplement.

LETTER OF CREDIT

     The letter of credit, if any, with respect to a series of securities will
be issued by the bank or financial institution specified in the related
prospectus supplement (the "L/C Bank"). Under the letter of credit, the L/C Bank
will be obligated to honor drawings thereunder in an aggregate fixed dollar
amount, net of unreimbursed payments thereunder, equal to the percentage
specified in the related prospectus supplement of the aggregate principal
balance of the loans on the related cut-off date or of one or more classes of
securities (the "L/C Percentage"). If so specified in the related prospectus
supplement, the letter of credit may permit drawings in the event of losses not
covered by insurance policies or other credit support, such as losses arising
from damage not covered by standard hazard insurance policies, losses resulting
from the bankruptcy of a borrower and the application of certain provisions of
the federal Bankruptcy Code, or losses resulting from denial of insurance
coverage due to misrepresentations in connection with the origination of a loan.
The amount available under the letter of credit will, in all cases, be reduced
to the extent of the unreimbursed payments thereunder. The obligations of the
L/C Bank under the letter of credit for each series of securities will expire at
the earlier of the date specified in the related prospectus supplement or the
termination of the trust fund. See "The Agreements -- Termination: Optional
Termination." A copy of the letter of credit for a series, if any, will be filed
with the SEC as an exhibit to a Current Report on Form 8-K after the issuance of
the securities of the related series.

INSURANCE POLICIES, SURETY BONDS AND GUARANTIES

     If so provided in the prospectus supplement for a series of securities,
deficiencies in amounts otherwise payable on the securities or certain classes
thereof will be covered by insurance policies and/or surety bonds provided by
one or more insurance companies or sureties. These instruments may cover, with
respect to one or more classes of securities of the related series, timely
distributions of interest and/or full distributions of principal on the basis of
a schedule of principal distributions set forth in or determined in the manner
specified in the related prospectus supplement. In addition, if specified in the
related prospectus supplement, a trust fund may also include bankruptcy bonds,
special hazard insurance policies, other insurance or guaranties for the purpose
of (i) maintaining timely payments or providing additional protection against
losses on the assets included in the trust fund, (ii) paying administrative
expenses or (iii) establishing a minimum reinvestment rate on the payments made
in respect of the assets or principal payment rate on the assets. If specified
in the related prospectus supplement, the trust fund may include a guaranteed
investment contact pursuant to which the trust fund is entitled to receive
specified payments for a period of time. These arrangements may include
agreements under which securityholders are entitled to receive amounts deposited
in various accounts held by the trustee upon the terms specified in the related
prospectus supplement. If applicable, a copy of any instrument for a series will
be filed with the SEC as an exhibit to a Current Report on Form 8-K after the
issuance of the securities of the related series.

OVERCOLLATERALIZATION AND EXCESS CASH FLOW

     If so provided in the prospectus supplement for a series of securities, the
aggregate principal balance of the underlying Trust Fund Assets as of the
cut-off date may exceed the principal balance of the securities being issued,
thereby resulting in overcollateralization. In addition, if so provided in the
prospectus supplement, a portion of the interest payment on each loan may be
applied as an additional distribution in respect of principal to reduce the
principal balance of a certain class or classes of securities and, thus,
accelerate the rate of payment of principal on that class or classes of
securities. Reducing the principal balance of the securities without a
corresponding reduction in the principal balance of the underlying Trust Fund
Assets will result in overcollateralization or increase the level of
overcollateralization. Additionally, some of the excess cash flow may be applied
to make distributions to holders of securities to which losses have been
allocated up to the amount of the losses that were allocated.

RESERVE ACCOUNTS

     If specified in the related prospectus supplement, credit support with
respect to a series of securities will be provided by the establishment and
maintenance with the trustee for the series of securities, in trust, of one or
more


                                       48



reserve funds for the series. The related prospectus supplement will
specify whether or not any reserve fund will be included in the trust fund for
the related series.

     The reserve fund for a series will be funded (i) by the deposit therein of
cash, United States Treasury securities, instruments evidencing ownership of
principal or interest payments thereon, letters of credit, demand notes,
certificates of deposit or a combination thereof in the aggregate amount
specified in the related prospectus supplement, (ii) by the deposit therein from
time to time of certain amounts, as specified in the related prospectus
supplement to which the holders of Subordinate Securities, if any, would
otherwise be entitled or (iii) or as otherwise may be specified in the related
prospectus supplement.

     Any amounts on deposit in the reserve fund and the proceeds of any other
instrument upon maturity will be held in cash or will be invested in Permitted
Investments. Any amounts so deposited and payments on instruments so deposited
will be available for withdrawal from the reserve fund for distribution to the
holders of securities of the related series for the purposes, in the manner and
at the times specified in the related prospectus supplement.

POOL INSURANCE POLICIES

     If specified in the related prospectus supplement, a separate pool
insurance policy ("Pool Insurance Policy") will be obtained for the pool and
issued by the insurer (the "Pool Insurer") named in the related prospectus
supplement. Each Pool Insurance Policy will, subject to the limitations
described below, cover loss by reason of default in payment on loans in the pool
in an amount equal to a percentage specified in the related prospectus
supplement of the aggregate principal balance of the loans on the cut-off date
which are not covered as to their entire outstanding principal balances by
Primary Mortgage Insurance Policies. As more fully described below, the master
servicer will present claims thereunder to the Pool Insurer on behalf of itself,
the trustee and the holders of the securities of the related series. The Pool
Insurance Policies, however, are not blanket policies against loss, since claims
thereunder may only be made respecting particular defaulted loans and only upon
satisfaction of certain conditions precedent described below. The applicable
prospectus supplement may provide for the extent of coverage provided by the
related Pool Insurance Policy, but if it does not, the Pool Insurance Policies
will not cover losses due to a failure to pay or denial of a claim under a
Primary Mortgage Insurance Policy.

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

     The applicable prospectus supplement may provide for a Pool Insurance
Policy covering losses resulting from defaults, but if it does not, the Pool
Insurance Policy will not insure (and many Primary Mortgage Insurance Policies
do not insure) against loss sustained by reason of a default arising from, among
other things,


                                       49



o    fraud or negligence in the origination or servicing of a loan, including
     misrepresentation by the borrower, the originator or persons involved in
     the origination thereof, or

o    failure to construct a Property in accordance with plans and
     specifications.

A failure of coverage attributable to one of the foregoing events might result
in a breach of the related seller's representations described above, and, might
give rise to an obligation on the part of the related seller to repurchase the
defaulted loan if the breach cannot be cured by the related seller. No Pool
Insurance Policy will cover (and many Primary Mortgage Insurance Policies do not
cover) a claim in respect of a defaulted loan occurring when the servicer of the
loan, at the time of default or thereafter, was not approved by the applicable
insurer.

     The applicable prospectus supplement may provide for a Pool Insurance
Policy featuring a fixed amount of coverage over the life of the policy, but if
it does not, the original amount of coverage under each Pool Insurance Policy
will be reduced over the life of the related securities by the aggregate dollar
amount of claims paid less the aggregate of the net amounts realized by the Pool
Insurer upon disposition of all foreclosed properties. The applicable prospectus
supplement may provide for the exclusion of specified expenses from the coverage
of the Pool Insurance Policy, but if it does not, the amount of claims paid will
include certain expenses incurred by the master servicer as well as accrued
interest on delinquent loans to the date of payment of the claim. Accordingly,
if aggregate net claims paid under any Pool Insurance Policy reach the original
policy limit, coverage under that Pool Insurance Policy will be exhausted and
any further losses will be borne by the related securityholders.

     Additionally, if specified in the related prospectus supplement, the master
servicer will maintain or cause to be maintained, as the case may be, in full
force and effect, a Primary Mortgage Insurance Policy with regard to each loan
for which coverage is required and loans designated in the related prospectus
supplement as insured by the FHA will be insured by the FHA as authorized under
the United States Housing Act of 1937, as amended. See "The Agreements -
Realization Upon Defaulted Loans" for a discussion of these types of insurance.

     In general, the master servicer will require the mortgagor or obligor on
each loan to maintain a hazard insurance policy providing for no less than the
coverage of the standard form of fire insurance policy with extended coverage
customary for the type of Property in the state in which the Property is
located. See "The Agreements - Hazard Insurance" for a description of the
coverage with respect to these policies.

FINANCIAL INSTRUMENTS

     If specified in the related prospectus supplement, the trust fund may
include one or more interest rate or currency swap arrangements or similar
financial instruments that are used to alter the payment characteristics of the
mortgage loans or the securities issued by the trust fund and whose primary
purpose is not to provide credit enhancement related to the assets in the trust
fund or the securities issued by the trust fund. The primary purpose of a
currency swap arrangement will be to convert payments to be made on the mortgage
loans or the securities issued by the trust fund from one currency into another
currency, and the primary purpose of an interest rate swap arrangement or other
financial instrument will be one or more of the following:

o    convert the payments on some or all of the mortgage loans from fixed to
     floating payments, or from floating to fixed, or from floating based on a
     particular interest rate index to floating based on another interest rate
     index;

o    provide payments in the event that any interest rate index related to the
     mortgage loans or the securities issued by the trust rises above or falls
     below specified levels; or

o    provide protection against interest rate changes.

     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. If applicable, a copy of any instrument for a series will be


                                       50



filed with the SEC as an exhibit to a Current Report on Form 8-K to be filed
with the SEC after the issuance of the securities of the related series.

CROSS SUPPORT

     If specified in the related prospectus supplement, the beneficial ownership
of separate groups of assets included in a trust fund may be evidenced by
separate classes of the related series of securities. Similarly, if specified in
the related prospectus supplement, certain classes of notes may be supported by
cash flow and related assets of separate group of assets from other classes of
notes. In that case, credit support may be provided by a cross support feature
that requires that distributions be made on securities evidencing a beneficial
ownership interest in, or notes supported by, other asset groups within the same
trust fund. The related prospectus supplement for a series that includes a cross
support feature will describe the manner and conditions for applying the cross
support feature.

     If specified in the related prospectus supplement, the coverage provided by
one or more forms of credit support may apply concurrently to two or more
related groups of assets included in a trust fund. If applicable, the related
prospectus supplement will identify the groups of assets in the trust fund to
which the credit support relates and the manner of determining the amount of the
coverage provided by it and of the application of the coverage to the identified
groups of assets included in the trust fund.

                  YIELD, MATURITY AND PREPAYMENT CONSIDERATIONS

     The yields to maturity and weighted average lives of the securities will be
affected primarily by the amount and timing of principal payments received on or
in respect of the Trust Fund Assets included in the related trust fund. The
original terms to maturity of the loans in a given pool will vary depending upon
the type of loans included therein. Each prospectus supplement will contain
information with respect to the type and maturities of the loans in the related
pool. The related prospectus supplement will specify the circumstances, if any,
under which the related loans will be subject to prepayment charges. The
prepayment experience on the loans in a pool will affect the weighted average
life of the related series of securities.

PREPAYMENTS ON LOANS

     The rate of prepayment on the loans cannot be predicted. Home equity loans
and home improvement loan contracts 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 the loans.
Generally, home equity loans and home improvement loan contracts are not viewed
by borrowers as permanent financing. Accordingly, the 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 lower than, or similar to,
those of traditional fully-amortizing first mortgage loans.

     The prepayment experience of the related trust fund consisting of a pool of
a pool of home equity mortgage loans or home improvement loan contracts may be
affected by a wide variety of factors, including:

o    general economic conditions,

o    prevailing interest rate levels,

o    the availability of alternative financing,

o    homeowner mobility,

o    the amounts of, and interest rates on, the underlying senior mortgage
     loans, and


                                       51



o    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 loans may experience a higher rate of prepayment than
traditional fixed-rate 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
loans. The enforcement of a "due-on-sale" provision (as described below) will
have the same effect as a prepayment of the related loan. See "Certain Legal
Aspects of the Loans -- Due-on-Sale Clauses."

     Collections on revolving credit line loans may vary because, among other
things, borrowers may (i) make payments during any month as low 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 and the fees and charges for that month or (ii) make payments as
high as the entire outstanding principal balance plus accrued interest and the
fees and charges thereon. It is possible that borrowers may fail to make the
required periodic payments. In addition, collections on the loans may vary due
to seasonal purchasing and the payment habits of borrowers.

     Generally, all conventional loans will contain due-on-sale provisions
permitting the mortgagee to accelerate the maturity of the loan upon sale or
certain transfers by the borrower of the related Property. Loans insured by the
FHA, and single family loans partially guaranteed by the VA, are assumable with
the consent of the FHA and the VA, respectively. Thus, the rate of prepayments
on the loans may be lower than that of conventional loans bearing comparable
interest rates. The master servicer generally will enforce any due-on-sale or
due-on-encumbrance clause, to the extent it has knowledge of the conveyance or
further encumbrance or the proposed conveyance or proposed further encumbrance
of the Property and reasonably believes that it is entitled to do so under
applicable law; provided, however, that the master servicer will not take any
enforcement action that would impair or threaten to impair any recovery under
any related insurance policy. See "The Agreements -- Collection Procedures" and
"Certain Legal Aspects of the Loans" for a description of certain provisions of
each Agreement and certain legal developments that may affect the prepayment
experience on the loans.

     The rate of prepayments with respect to conventional mortgage loans has
fluctuated significantly in recent years. In general, with respect to fixed rate
loans, if prevailing rates fall significantly below the Loan Rates borne by the
loans, the loans are more likely to be subject to higher prepayment rates than
if prevailing interest rates remain at or above the Loan Rates. Conversely, if
prevailing interest rates rise appreciably above the Loan Rates borne by the
fixed rate loans, the loans are more likely to experience a lower prepayment
rate than if prevailing rates remain at or below the Loan Rates. However, we can
give no assurance that either will occur. As is the case with fixed rate loans,
adjustable rate loans may be subject to a greater rate of principal prepayments
in a declining interest rate environment. For example, if prevailing interest
rates fall significantly, adjustable rate loans could be subject to higher
prepayment rates than if prevailing interest rates remain constant because the
availability of fixed rate loans at lower interest rates may encourage
mortgagors to refinance their adjustable rate loans to a lower fixed interest
rate. Prepayments on the hybrid loans (loans which are fixed for a period and
then convert to adjustable rate loans) may differ as they approach their
respective initial adjustment dates, particularly those that require payments of
interest only prior to their initial adjustment date. However, we can give no
assurance that will occur. The actual rate of principal prepayments on the
mortgage loans is influenced by a variety of economic, tax, geographic,
demographic, social, legal and other factors and has fluctuated considerably in
recent years. In addition, the rate of principal prepayments may differ among
pools of mortgage loans at any time because of specific factors relating to the
mortgage loans in the particular pool, including, among other things, the age of
the mortgage loans, the geographic locations of the properties securing the
loans, the extent of the mortgagor's equity in the properties, and changes in
the mortgagors' housing needs, job transfers and employment status.

PREPAYMENT EFFECT ON INTEREST

     When a full prepayment is made on a loan, the borrower is charged interest
on the principal amount of the loan so prepaid only for the number of days in
the month actually elapsed up to the date of the prepayment, rather than for a
full month. The effect of prepayments in full will be to reduce the amount of
interest passed through or


                                       52



paid in the following month to holders of securities because interest on the
principal amount of any loan so prepaid will generally be paid only to the date
of prepayment. Partial prepayments in a given month may be applied to the
outstanding principal balances of the loans so prepaid on the first day of the
month of receipt or the month following receipt. In the latter case, partial
prepayments will not reduce the amount of interest passed through or paid in
that month. The applicable prospectus supplement may specify when prepayments
are passed through to securityholders, but if it does not, neither full nor
partial prepayments will be passed through or paid until the month following
receipt.

     If the rate at which interest is passed through or paid to the holders of
securities of a series is calculated on a loan-by-loan basis, disproportionate
principal prepayments among loans with different Loan Rates will affect the
yield on the securities. In most cases, the effective yield to securityholders
will be lower than the yield otherwise produced by the applicable Pass-Through
Rate or interest rate and purchase price, because while interest will generally
accrue on each loan from the first day of the month, the distribution of
interest will not be made earlier than the month following the month of accrual.

DELAYS IN REALIZATION ON PROPERTY; EXPENSES OF REALIZATION

     Even assuming that the Properties provide adequate security for the loans,
substantial delays could be encountered in connection with the liquidation of
defaulted loans and corresponding delays in the receipt of related proceeds by
securityholders could occur. An action to foreclose on a Property securing a
loan is regulated by state statutes and rules and is subject to many of the
delays and expenses of other lawsuits if defenses or counterclaims are
interposed, sometimes requiring several years to complete. Furthermore, in some
states an action to obtain a deficiency judgment is not permitted following a
nonjudicial sale of a property. In the event of a default by a borrower, these
restrictions among other things, may impede the ability of the master servicer
to foreclose on or sell the Property or to obtain liquidation proceeds
sufficient to repay all amounts due on the related loan. In addition, the master
servicer will be entitled to deduct from related liquidation proceeds all
expenses reasonably incurred in attempting to recover amounts due on defaulted
loans and not yet repaid, including payments to senior lienholders, legal fees
and costs of legal action, real estate taxes and maintenance and preservation
expenses.

     Liquidation expenses with respect to defaulted mortgage loans generally do
not vary directly with the outstanding principal balance of the loan at the time
of default. Therefore, assuming that a servicer took the same steps in realizing
upon a defaulted mortgage loan having a small remaining principal balance as it
would in the case of a defaulted mortgage loan having a large remaining
principal balance, the amount realized after expenses of liquidation would be
smaller as a percentage of the remaining principal balance of the small mortgage
loan than would be the case with the other defaulted mortgage loan having a
large remaining principal balance.

     Applicable state laws generally regulate interest rates and other charges,
require certain disclosures, and require licensing of certain originators and
servicers of loans. In addition, most have other laws, public policy and general
principles of equity relating to the protection of consumers, unfair and
deceptive practices and practices which may apply to the origination, servicing
and collection of the loans. Depending on the provisions of the applicable law
and the specific facts and circumstances involved, violations of these laws,
policies and principles may limit the ability of the master servicer to collect
all or part of the principal of or interest on the loans, may entitle the
borrower to a refund of amounts previously paid and, in addition, could subject
the master servicer to damages and administrative sanctions.

OPTIONAL PURCHASE

     Under certain circumstances, the master servicer, the holders of the
residual interests in a REMIC or another person specified in the related
prospectus supplement may have the option to purchase the assets of a trust fund
thereby effecting earlier retirement of the related series of securities. See
"The Agreements -- Termination; Optional Termination".

     The relative contribution of the various factors affecting prepayment may
vary from time to time. We can give no assurance as to the rate of payment of
principal of the Trust Fund Assets at any time or over the lives of the
securities.


                                       53



PREPAYMENT STANDARDS OR MODELS

     Prepayments on loans 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, used and may contain tables setting forth
the projected weighted average life of each class of securities of that series
and the percentage of the original principal amount of each class of securities
of that series that would be outstanding on specified distribution dates for
that series based on the assumptions stated in the prospectus supplement,
including assumptions that prepayments on the loans or underlying loans, 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.

     We can give no assurance that prepayment of the loans or underlying loans,
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 is influenced by a variety
of economic, demographic, geographic, legal, tax, social and other factors.

YIELD

     The yield to an investor who purchases securities in the secondary market
at a price other than par will vary from the anticipated yield if the rate of
prepayment on the loans is actually different than the rate anticipated by the
investor at the time the securities were purchased.

     The prospectus supplement relating to a series of securities will discuss
in greater detail the effect of the rate and timing of principal payments
(including prepayments), delinquencies and losses on the yield, weighted average
lives and maturities of the securities.

                                 THE AGREEMENTS

     Set forth below is a description of the material provisions of each
Agreement which are not described elsewhere in this prospectus. The description
is subject to, and qualified in its entirety by reference to, the provisions of
each Agreement. Where particular provisions or terms used in the Agreements are
referred to, those provisions or terms are as specified in the Agreements.

ASSIGNMENT OF THE TRUST FUND ASSETS

     Assignment of the Loans. At the time of issuance of the securities of a
series, the depositor will cause the loans comprising the related trust fund to
be assigned to the trustee (or trust, in the case of a series with both notes
and certificates), without recourse, together with all principal and interest
received by or on behalf of the depositor on or with respect to the loans after
the cut-off date, other than principal and interest due on or before the cut-off
date and other than any Retained Interest specified in the related prospectus
supplement. In the case of a series with both notes and certificates, the trust
will pledge these assets to the trustee for the benefit of the holders of the
notes. The trustee (or trust, in the case of a series with both notes and
certificates) will, concurrently with the assignment, deliver the related
securities to the depositor in exchange for the loans. Each loan will be
identified in a schedule appearing as an exhibit to the related Pooling and
Servicing Agreement or Sale and Servicing Agreement, as applicable. The schedule
will include information as to the outstanding principal balance of each loan
after application of payments due on or before the cut-off date, as well as
information regarding the Loan Rate or APR, the maturity of the loan, the
Loan-to-Value Ratios or Combined Loan-to-Value Ratios, as applicable, at
origination and certain other information.

     In addition, the depositor will also deliver or cause to be delivered to
the trustee (or to the custodian) for each single family loan, multifamily loan
or home equity loan,

o    the mortgage note or contract endorsed without recourse in blank or to the
     order of the trustee, except that the depositor may deliver or cause to be
     delivered a lost note affidavit together with a copy of the original note
     in lieu of any original mortgage note that has been lost,


                                       54



o    the mortgage, deed of trust or similar instrument (a "Mortgage") with
     evidence of recording indicated thereon (except for any Mortgage not
     returned from the public recording office, in which case the depositor will
     deliver or cause to be delivered a copy of the Mortgage together with a
     certificate that the original of the Mortgage was delivered to the
     recording office),

o    an assignment of the Mortgage to the trustee, which assignment will be in
     recordable form in the case of a Mortgage assignment, and

o    any other security documents, including those relating to any senior
     interests in the Property, as may be specified in the related prospectus
     supplement or the related Pooling and Servicing Agreement or Sale and
     Servicing Agreement.

The applicable prospectus supplement may provide other arrangements for assuring
the priority of assignments, but if it does not, the seller, the depositor or
the trustee, as specified in the related Pooling and Servicing Agreement or Sale
and Servicing Agreement, will promptly cause the assignments of the related
loans to be recorded in the appropriate public office for real property records,
except in states in which, in the opinion of counsel acceptable to the trustee,
the recording is not required to protect the trustee's or the
certificateholder's interest.

     With respect to any loans that are cooperative loans, the depositor will
cause to be delivered to the trustee the related original cooperative shares
endorsed without recourse in blank or to the order of the trustee, the original
security agreement, the proprietary lease or occupancy agreement, the
recognition agreement, the relevant financing statements and any other document
specified in the related prospectus supplement. The depositor will cause to be
filed in the appropriate office an assignment and a financing statement
evidencing the trustee's security interest in each cooperative loan.

     The applicable prospectus supplement may provide for the depositor's
delivery obligations in connection with home improvement loan contracts, but if
it does not, the depositor will as to each home improvement loan contract,
deliver or cause to be delivered to the trustee the original home improvement
loan contract and copies of documents and instruments related to each home
improvement contract and the security interest in the Property securing the home
improvement loan contract. In general, it is expected that the home improvement
loan contracts will not be stamped or otherwise marked to reflect their
assignment to the trustee. Therefore, if, through negligence, fraud or
otherwise, a subsequent purchaser were able to take physical possession of the
home improvement loan contracts without notice of the assignment by the
depositor, the interest of securityholders in the home improvement loan
contracts could be defeated. See "Certain Legal Aspects of the Loans -- The Home
Improvement Loan Contracts."

     The trustee (or the custodian) will review the loan documents within the
time period specified in the related prospectus supplement after receipt
thereof, and the trustee will hold the documents in trust for the benefit of the
related securityholders. Generally, if the document is found to be missing or
defective in any material respect, the trustee (or the custodian) will notify
the master servicer, the depositor, and the related seller. If the seller cannot
cure the omission or defect within the time period specified in the related
prospectus supplement after receipt of the notice, the seller will be obligated
to either purchase the related loan from the trust fund at the Purchase Price or
if so specified in the related prospectus supplement, remove the loan from the
trust fund and substitute in its place one or more other loans that meet certain
requirements set forth therein. We can give no assurance that a seller will
fulfill this purchase or substitution obligation. Although the master servicer
may be obligated to enforce the obligation to purchase the related loan to the
extent described above under "Loan Program -- Representations by Sellers;
Repurchases," neither the master servicer nor the depositor will be obligated to
purchase or replace the loan if the seller defaults on its obligation, unless
the breach also constitutes a breach of the representations or warranties of the
master servicer or the depositor, as the case may be. The applicable prospectus
supplement may provide other remedies, but if it does not, this obligation to
cure, purchase or substitute constitutes the sole remedy available to the
securityholders or the trustee for omission of, or a material defect in, a
constituent document.

     The trustee may be authorized to appoint a custodian pursuant to a
custodial agreement to maintain possession of and, if applicable, to review the
documents relating to the loans as agent of the trustee.


                                       55



     Notwithstanding the foregoing provisions, with respect to a trust fund for
which one or more REMIC elections are to be made, no purchase or substitution of
a loan will be made if the purchase or substitution would result in a prohibited
transaction tax under the Code.

     Although the depositor has expressed in the Agreement its intent to treat
the conveyance of the loans as a sale, the depositor will also grant to the
trustee (or trust, in the case of a series with both notes and certificates) a
security interest in the loans. This security interest is intended to protect
the interests of the securityholders if a bankruptcy court were to characterize
the depositor's transfer of the loans as a borrowing by the depositor secured by
a pledge of the loans as described under "Risk Factors - Bankruptcy Or
Insolvency May Affect The Timing And Amount Of Distributions On The Securities".
In the event that a bankruptcy court did characterize the transaction as a
borrowing by the depositor, that borrowing would be secured by the loans in
which the depositor granted a security interest to the trustee (or trust, in the
case of a series with both notes and certificates). The depositor has agreed to
take those actions that are necessary to maintain the security interest granted
to the trustee as a first priority, perfected security interest in the loans,
including the filing of Uniform Commercial Code financing statements, if
necessary.

     Assignment of Agency Securities. The depositor will cause the Agency
Securities to be registered in the name of the trustee or its nominee, and the
trustee concurrently will execute, countersign and deliver the certificates.
Each Agency Security will be identified in a schedule appearing as an exhibit to
the pooling and servicing agreement, which will specify as to each Agency
Security the original principal amount and outstanding principal balance as of
the cut-off date, the annual pass-through rate and the maturity date.

     Assignment of Non-Agency Mortgage-Backed Securities. The depositor will
cause the Non-Agency Mortgage-Backed Securities to be registered in the name of
the trustee. The trustee (or the custodian) will have possession of any
certificated Non-Agency Mortgage-Backed Securities. Generally, the trustee will
not be in possession of or be assignee of record of any underlying assets for a
Non-Agency Mortgage-Backed Security. See "The Trust Fund - Non-Agency
Mortgage-Backed Securities." Each Non-Agency Mortgage-Backed Security will be
identified in a schedule appearing as an exhibit to the related pooling and
servicing agreement which will specify the original principal amount,
outstanding principal balance as of the cut-off date, annual pass-through rate
or interest rate and maturity date and other specified pertinent information for
each Non-Agency Mortgage-Backed Security conveyed to the trustee.

PAYMENTS ON LOANS; DEPOSITS TO SECURITY ACCOUNT

     The master servicer will establish and maintain or cause to be established
and maintained with respect to the related trust fund a separate account or
accounts for the collection of payments on the related Trust Fund Assets in the
trust fund (the "Security Account"). The applicable prospectus supplement may
provide for other requirements for the Security Account, but if it does not, the
Security Account must be either:

o    an account or accounts maintained with a federal or state chartered
     depository institution or trust company the short-term unsecured debt
     obligations of which (or, in the case of a depository institution or trust
     company that is the principal subsidiary of a holding company, the debt
     obligations of such holding company) have the highest short-term ratings of
     Moody's or Fitch and one of the two highest short-term ratings of S&P, if
     S&P is a Rating Agency, at the time any amounts are held on deposit
     therein;

o    an account or accounts in a depository institution or trust company the
     deposits in which are insured by the FDIC (to the limits established by the
     FDIC), and the uninsured deposits in which are otherwise secured such that,
     as evidenced by an opinion of counsel, the securityholders have a claim
     with respect to the funds in the security account or a perfected first
     priority security interest against any collateral securing the funds that
     is superior to the claims of any other depositors or general creditors of
     the depository institution with which the Security Account is maintained;

o    a trust account or accounts maintained with the corporate trust department
     of a federal or state chartered depository institution or trust company
     having capital and surplus of not less than $50,000,000, acting in its
     fiduciary capacity; or


                                       56



o    an account or accounts otherwise acceptable to each Rating Agency.

     The collateral eligible to secure amounts in the Security Account is
limited to Permitted Investments. A Security Account may be maintained as an
interest bearing account or the funds held therein may be invested pending each
succeeding distribution date in Permitted Investments. To the extent provided in
the related prospectus supplement, the master servicer or its designee will be
entitled to direct the investment of the funds held in the Security Account and
to receive any interest or other income earned on funds in the Security Account
as additional compensation, and will be obligated to deposit in the Security
Account the amount of any loss immediately as realized. The Security Account may
be maintained with the master servicer or with a depository institution that is
an affiliate of the master servicer, provided it meets the standards set forth
above.

     The master servicer will deposit or cause to be deposited in the Security
Account for each trust fund, to the extent applicable and unless otherwise
specified in the related Pooling and Servicing Agreement or Sale and Servicing
Agreement, and the related prospectus supplement, the following payments and
collections received or advances made by or on behalf of it subsequent to the
cut-off date (other than payments due on or before the cut-off date and
exclusive of any amounts representing any Retained Interest):

o    all payments on account of principal, including Principal Prepayments and,
     if specified in the related prospectus supplement, any applicable
     prepayment charges, on the loans;

o    all payments on account of interest on the loans, net of applicable
     servicing compensation;

o    all proceeds (net of unreimbursed payments of property taxes, insurance
     premiums and similar items ("Insured Expenses") incurred, and unreimbursed
     advances made, by the master servicer, if any) of the hazard insurance
     policies and any Primary Mortgage Insurance Policies, to the extent the
     proceeds are not applied to the restoration of the property or released to
     the mortgagor in accordance with the master servicer's normal servicing
     procedures (collectively, "Insurance Proceeds") and all other cash amounts
     (net of unreimbursed expenses incurred in connection with liquidation or
     foreclosure ("Liquidation Expenses") and unreimbursed advances made, by the
     master servicer, if any) received and retained in connection with the
     liquidation of defaulted loans, by foreclosure or otherwise, together with
     any net proceeds received on a monthly basis with respect to any properties
     acquired on behalf of the securityholders by foreclosure or deed in lieu of
     foreclosure ("Liquidation Proceeds") and any Subsequent Recoveries;

o    all proceeds of any loan or property in respect thereof purchased by the
     master servicer, the depositor or any seller as described under "Loan
     Program -- Representations by Sellers; Repurchases" or "-- Assignment of
     Trust Fund Assets" above and all proceeds of any loan purchased as
     described under "-- Termination; Optional Termination" below;

o    all payments required to be deposited in the Security Account with respect
     to any deductible clause in any blanket insurance policy described under
     "-- Hazard Insurance" below;

o    any amount required to be deposited by the master servicer in connection
     with losses realized on investments for the benefit of the master servicer
     of funds held in the Security Account and, to the extent specified in the
     related prospectus supplement, any advances required to be made by the
     master servicer and any payments required to be made by the master servicer
     in connection with prepayment interest shortfalls; and

o    all other amounts required to be deposited in the Security Account pursuant
     to the Agreement.

     Unless otherwise specified in the related prospectus supplement the master
servicer will make these deposits within two business days of receipt of the
amounts.


                                       57



     Unless otherwise specified in the related prospectus supplement, the master
servicer (or the depositor, as applicable) may from time to time direct the
institution that maintains the Security Account to withdraw funds from the
Security Account for the following purposes:

o    to pay to the master servicer the master servicing fees (subject to
     reduction) described in the related prospectus supplement, and, as
     additional servicing compensation, earnings on or investment income with
     respect to funds in the amounts in the Security Account credited thereto,
     as well as any other additional servicing compensation specified in the
     related prospectus supplement;

o    to reimburse the master servicer and the trustee for advances, which right
     of reimbursement with respect to any loan is limited to amounts received
     that represent late recoveries of payments of principal and/or interest on
     the loan (or Insurance Proceeds or Liquidation Proceeds with respect
     thereto) with respect to which the advance was made;

o    to reimburse the master servicer and the trustee for any advances
     previously made which the master servicer has determined to be
     nonrecoverable;

o    to reimburse the master servicer from Insurance Proceeds for expenses
     incurred by the master servicer and covered by the related insurance
     policies;

o    to reimburse the master servicer for unpaid master servicing fees and
     unreimbursed out-of-pocket costs and expenses incurred by the master
     servicer in the performance of its servicing obligations, which right of
     reimbursement is limited to amounts received representing late recoveries
     of the payments for which the advances were made;

o    to pay to the master servicer, the depositor or the applicable seller, with
     respect to each loan or property acquired in respect thereof that has been
     purchased by the master servicer or seller pursuant to the related
     Agreement, all amounts received after the purchase and not taken into
     account in determining the purchase price of the repurchased loan;

o    to reimburse the master servicer, the depositor or other party specified in
     the related prospectus supplement for expenses incurred and reimbursable
     pursuant to the Agreement;

o    to pay any lender-paid primary mortgage insurance premium;

o    to withdraw any amount deposited in the Security Account and not required
     to be deposited therein; and

o    to clear and terminate the Security Account upon termination of the
     Agreement.

     In addition, the Agreement will generally provide that, on or prior to the
business day immediately preceding each distribution date, the master servicer
shall withdraw from the Security Account the amount of Available Funds and the
trustee fee for the distribution date, to the extent on deposit, for deposit in
an account maintained by the trustee for the related series of securities.

     Unless otherwise specified in the related prospectus supplement, aside from
the annual compliance review and servicing criteria assessment and accompanying
accountants' attestation, there is no independent verification of the
transaction accounts or the transaction activity. The master servicer is
required to provide an annual certification to the effect that the master
servicer has fulfilled its obligations under the related Pooling and Servicing
Agreement or Sale and Servicing Agreement throughout the preceding year, as well
as an annual assessment and an accompanying accountants' attestation as to its
compliance with applicable servicing criteria. See " - Evidence as to
Compliance."


                                       58



PRE-FUNDING ACCOUNT

     If so provided in the related prospectus supplement, the trustee will
establish and maintain an account (the "Pre-Funding Account"), in the name of
the related trustee on behalf of the related securityholders, into which the
seller or the depositor will deposit cash in an amount specified in the
prospectus supplement (the "Pre-Funded Amount") on the related closing date. The
Pre-Funding Account will be maintained with the trustee for the related series
of securities or with another eligible institution, and is designed solely to
hold funds to be applied during the period from the closing date to a date not
more than a year after the closing date (the "Funding Period") to pay to the
depositor the purchase price for loans purchased during the Funding Period (the
"Subsequent Loans"). Monies on deposit in the Pre-Funding Account will not be
available to cover losses on or in respect of the related loans. The Pre-Funded
Amount will not exceed 50% of the initial aggregate principal amount of the
certificates and notes of the related series. The Pre-Funded Amount will be used
by the related trustee to purchase Subsequent Loans from the depositor from time
to time during the Funding Period. The Funding Period, if any, for a trust fund
will begin on the related closing date and will end on the date specified in the
related prospectus supplement, which in no event will be later than the date
that is one year after the related closing date. Monies on deposit in the
Pre-Funding Account may be invested in Permitted Investments under the
circumstances and in the manner described in the related prospectus supplement.
Unless otherwise specified in the related prospectus supplement, earnings on
investment of funds in the Pre-Funding Account will be deposited into the
related Security Account or the other trust account as is specified in the
related prospectus supplement and losses will be charged against the funds on
deposit in the Pre-Funding Account. Any amounts remaining in the Pre-Funding
Account at the end of the Funding Period will be distributed in the manner and
priority specified in the related prospectus supplement.

     In addition, if so provided in the related prospectus supplement, on the
related closing date the depositor or the seller will deposit in an account (the
"Capitalized Interest Account") cash in the amount necessary to cover shortfalls
in interest on the related series of securities that may arise as a result of
utilization of the Pre-Funding Account as described above, or with respect to
the related distributions dates, Countrywide Home Loans may deposit the amount
of these shortfalls specified in the related prospectus supplement in to the
related Security Account. The Capitalized Interest Account shall be maintained
with the trustee for the related series of securities and is designed solely to
cover the above-mentioned interest shortfalls. Neither the monies on deposit in
the Capitalized Interest Account nor any amounts paid by Countrywide Home Loans
will be available to cover losses on or in respect of the related loans. To the
extent that the entire amount on deposit in the Capitalized Interest Account has
not been applied to cover shortfalls in interest on the related series of
securities by the end of the Funding Period, any amounts remaining in the
Capitalized Interest Account will be paid to the depositor.

INVESTMENTS IN AMOUNTS HELD IN ACCOUNTS

     Unless otherwise specified in the related prospectus supplement, funds held
in a Security Account, any Pre-Funding Account, any Capitalized Interest
Account, any reserve fund or any other accounts that are part of the Trust Fund
Assets, may be invested in "Permitted Investments" which may include one or more
of the following:

          (i) obligations of the United States or any agency thereof, provided
     the obligations are backed by the full faith and credit of the United
     States;

          (ii) general obligations of or obligations guaranteed by any state of
     the United States or the District of Columbia receiving the highest
     long-term debt rating of each Rating Agency rating the related series of
     securities, or a lower rating that each Rating Agency has confirmed in
     writing is sufficient for the ratings originally assigned to the securities
     by each Rating Agency;

          (iii) commercial paper issued by Countrywide Home Loans or any of its
     affiliates; provided that the commercial paper is rated no lower than the
     rating specified in the related prospectus supplement;

          (iv) commercial or finance company paper which is then receiving the
     highest commercial or finance company paper rating of each Rating Agency,
     or such lower rating as each Rating Agency has confirmed in writing is
     sufficient for the ratings originally assigned to the related securities by
     each Rating Agency;


                                       59



          (v) certificates of deposit, demand or time deposits, or bankers'
     acceptances issued by any depository institution or trust company
     incorporated under the laws of the United States or of any state thereof
     and subject to supervision and examination by federal and/or state banking
     authorities, provided that the commercial paper and/or long term unsecured
     debt obligations of the depository institution or trust company (or in the
     case of the principal depository institution in a holding company system,
     the commercial paper or long-term unsecured debt obligations of the holding
     company, but only if Moody's Investors Service, Inc. ("Moody's") is not a
     Rating Agency) are then rated one of the two highest long-term and the
     highest short-term ratings of each Rating Agency for the securities, or
     such lower ratings as each Rating Agency has confirmed in writing is
     sufficient for the ratings originally assigned to the related securities by
     any Rating Agency;

          (vi) demand or time deposits or certificates of deposit issued by any
     bank or trust company or savings institution to the extent that the
     deposits are fully insured by the FDIC;

          (vii) guaranteed reinvestment agreements issued by any bank, insurance
     company or other corporation containing, at the time of the issuance of the
     agreements, the terms and conditions as each Rating Agency has confirmed in
     writing is sufficient for the ratings originally assigned to the related
     securities by any Rating Agency;

          (viii) repurchase obligations with respect to any security described
     in clauses (i) and (ii) above, in either case entered into with a
     depository institution or trust company (acting as principal) described in
     clause (v) above;

          (ix) securities (other than stripped bonds, stripped coupons or
     instruments sold at a purchase price in excess of 115% of the face amount
     thereof) bearing interest or sold at a discount issued by any corporation
     incorporated under the laws of the United States or any state thereof
     which, at the time of the investment, have one of the two highest ratings
     of each Rating Agency (except if the Rating Agency is Moody's, the rating
     shall be the highest commercial paper rating of Moody's for any of those
     securities), or such lower rating as each Rating Agency has confirmed in
     writing is sufficient for the ratings originally assigned to the related
     securities by any Rating Agency, as evidenced by a signed writing delivered
     by each Rating Agency;

          (x) interests in any money market fund which at the date of
     acquisition of the interests in the fund and throughout the time the
     interests are held in the fund has the highest applicable rating by each
     Rating Agency or such lower rating as each Rating Agency has confirmed in
     writing is sufficient for the ratings originally assigned to the related
     securities by each Rating Agency;

          (xi) short term investment funds sponsored by any trust company or
     national banking association incorporated under the laws of the United
     States or any state thereof which on the date of acquisition has been rated
     by each Rating Agency in their respective highest applicable rating
     category or a lower rating that each Rating Agency has confirmed in writing
     is sufficient for the ratings originally assigned to those securities by
     each Rating Agency; and

          (xii) other investments that have a specified stated maturity and
     bearing interest or sold at a discount acceptable to each Rating Agency as
     will not result in the downgrading or withdrawal of the rating then
     assigned to the related securities by any Rating Agency, as evidenced by a
     signed writing delivered by each Rating Agency; provided that none of those
     investments shall be a Permitted Investment if the investments evidences
     the right to receive interest only payments with respect to the obligations
     underlying the investment; and provided, further, that no investment
     specified in clause (x) or clause (xi) above shall be a Permitted
     Investment for any pre-funding account or any related Capitalized Interest
     Account.

If a letter of credit is deposited with the trustee, that letter of credit will
be irrevocable and will name the trustee, in its capacity as trustee for the
holders of the securities, as beneficiary and will be issued by an entity
acceptable to each Rating Agency that rates the securities of the related
series. Additional information with respect to the instruments deposited in the
accounts will be set forth in the related prospectus supplement.


                                       60



Unless otherwise specified in the related prospectus supplement, the Permitted
Investments will be held in the name of the trustee for the benefit of the
securityholders and may not mature later than:

o    in the case of a Security Account, the second business day next preceding
     the date on which funds must be transferred to the trustee in each month
     (except that if the Permitted Investment is an obligation of the
     institution that maintains the Security Account, then the Permitted
     Investment may not mature later than the business day next preceding that
     date) and may not be sold or disposed of prior to its maturity; and

o    in the case of the any other account, the business day immediately
     preceding the first distribution date that follows the date of the
     investment (except that if the Permitted Investment is an obligation of the
     institution that maintains the account, then the Permitted Investment may
     mature not later than the related distribution date) and may not be sold or
     disposed of prior to its maturity.

SUB-SERVICING BY SELLERS

     Each seller of a loan or any other servicing entity may act as the
sub-servicer for the loan pursuant to a sub-servicing agreement, which will not
contain any terms inconsistent with the related Agreement. Notwithstanding any
subservicing arrangement, unless otherwise provided in the related prospectus
supplement, the master servicer will remain liable for its servicing duties and
obligations under the related Agreement as if the master servicer alone were
servicing the loans.

COLLECTION PROCEDURES

     The master servicer, directly or through one or more sub-servicers, will
make reasonable efforts to collect all payments called for under the loans and
will, consistent with each Agreement and any mortgage insurance policy required
to be maintained under the related Agreement, follow collection procedures that
are customary with respect to loans that are comparable to the loans. Consistent
with the above, the master servicer may, in its discretion, waive any assumption
fee, late payment or other charge in connection with a loan and to the extent
not inconsistent with the coverage of the loan by any mortgage insurance policy
required to be maintained under the related Agreement, if applicable, arrange
with a borrower a schedule for the liquidation of delinquencies running for no
more than 270 days after the applicable due date for each payment. To the extent
the master servicer is obligated to make or cause to be made advances, the
obligation will remain during any period of that arrangement.

     The applicable prospectus supplement may provide for other alternatives
regarding due-on-sale clause, but if it does not, in any case in which property
securing a loan has been, or is about to be, conveyed by the mortgagor or
obligor, the master servicer will, to the extent it has knowledge of the
conveyance or proposed conveyance, exercise or cause to be exercised its rights
to accelerate the maturity of the loan under any due-on-sale clause applicable
thereto, but only if the exercise of the rights is permitted by applicable law
and will not impair or threaten to impair any recovery under any mortgage
insurance policy required to be maintained under the related Agreement. If these
conditions are not met or if the master servicer reasonably believes it is
unable under applicable law to enforce the due-on-sale clause or if coverage
under any required mortgage insurance policy would be adversely affected, the
master servicer will enter into or cause to be entered into an assumption and
modification agreement with the person to whom the property has been or is about
to be conveyed, pursuant to which the person becomes liable for repayment of the
loan and, to the extent permitted by applicable law, the mortgagor remains
liable thereon. Any fee collected by or on behalf of the master servicer for
entering into an assumption agreement will be retained by or on behalf of the
master servicer as additional servicing compensation. See "Certain Legal Aspects
of the Loans -- Due-on-Sale Clauses". In connection with any assumption, the
terms of the related loan may not be changed.

     With respect to cooperative loans, any prospective purchaser will generally
have to obtain the approval of the board of directors of the relevant
cooperative before purchasing the shares and acquiring rights under the related
proprietary lease or occupancy agreement. See "Certain Legal Aspects of the
Loans". This approval is usually based on the purchaser's income and net worth
and numerous other factors. Although the cooperative's approval is unlikely to
be unreasonably withheld or delayed, the necessity of acquiring approval could
limit the number of


                                       61



potential purchasers for those shares and otherwise limit the trust fund's
ability to sell and realize the value of those shares.

     In general a "tenant-stockholder" (as defined in Code Section 216(b)(2)) of
a corporation that qualifies as a "cooperative housing corporation" within the
meaning of Code Section 216(b)(1) is allowed a deduction for amounts paid or
accrued within his taxable year to the corporation representing his
proportionate share of certain interest expenses and certain real estate taxes
allowable as a deduction under Code Section 216(a) to the corporation under Code
Sections 163 and 164. In order for a corporation to qualify under Code Section
216(b)(1) for its taxable year in which those items are allowable as a deduction
to the corporation, that Section requires, among other things, that at least 80%
of the gross income of the corporation be derived from its tenant-stockholders
(as defined in Code Section 216(b)(2)). By virtue of this requirement, the
status of a corporation for purposes of Code Section 216(b)(1) must be
determined on a year-to-year basis. Consequently, we can give no assurance that
cooperatives relating to the cooperative loans will qualify under that Section
for any particular year. In the event that a cooperative fails to qualify for
one or more years, the value of the collateral securing any related cooperative
loans could be significantly impaired because no deduction would be allowable to
tenant-stockholders under Code Section 216(a) with respect to those years. In
view of the significance of the tax benefits accorded tenant-stockholders of a
corporation that qualifies under Code Section 216(b)(1), the likelihood that a
failure to qualify would be permitted to continue over a period of years appears
remote.

HAZARD INSURANCE

     In general, the master servicer will require the mortgagor or obligor on
each loan to maintain a hazard insurance policy providing for coverage in an
amount that is at least equal to the lesser of:

o    the maximum insurable value of the improvements securing the loan; or

o    the greater of:

          (1) the outstanding principal balance of the loan; and

          (2) an amount such that the proceeds of the policy shall be sufficient
     to prevent the mortgagor and/or the mortgagee from becoming a co-insurer.

All amounts collected by the master servicer under any hazard policy (except for
amounts to be applied to the restoration or repair of the Property or released
to the mortgagor or obligor in accordance with the master servicer's normal
servicing procedures) will be deposited in the related Security Account. In the
event that the master servicer maintains a blanket policy insuring against
hazard losses on all the loans comprising part of a trust fund, it will
conclusively be deemed to have satisfied its obligation relating to the
maintenance of hazard insurance. The blanket policy may contain a deductible
clause, in which case the master servicer will be required to deposit from its
own funds into the related Security Account the amounts which would have been
deposited therein but for that clause.

     In general, the standard form of fire and extended coverage policy covers
physical damage to or destruction of the improvements securing a loan by fire,
lightning, explosion, smoke, windstorm and hail, riot, strike and civil
commotion, subject to the conditions and exclusions particularized in each
policy. Although the policies relating to the loans may have been underwritten
by different insurers under different state laws in accordance with different
applicable forms and therefore may not contain identical terms and conditions,
the basic terms thereof are dictated by respective state laws, and most policies
typically do not cover any physical damage resulting from the following: war,
revolution, governmental actions, floods and other water-related causes, earth
movement (including earthquakes, landslides and mud flows), nuclear reactions,
wet or dry rot, vermin, rodents, insects or domestic animals, theft and, in
certain cases, vandalism and hurricanes. The foregoing list is merely indicative
of certain kinds of uninsured risks and is not intended to be all inclusive. If
the Property securing a loan is located in a federally designated special flood
area at the time of origination, the master servicer will require the mortgagor
or obligor to obtain and maintain flood insurance.


                                       62



     The hazard insurance policies covering properties securing the loans
typically contain a clause which in effect requires the insured at all time to
carry insurance of a specified percentage (generally 80% to 90%) of the full
replacement value of the insured property in order to recover the full amount of
any partial loss. If the insured's coverage falls below this specified
percentage, then the insurer's liability in the event of partial loss will not
exceed the larger of

o    the actual cash value (generally defined as replacement cost at the time
     and place of loss, less physical depreciation) of the improvements damaged
     or destroyed and

o    the proportion of the loss as the amount of insurance carried bears to the
     specified percentage of the full replacement cost of the improvements.

Since the amount of hazard insurance the master servicer may cause to be
maintained on the improvements securing the loans declines as the principal
balances owing thereon decrease, and since improved real estate generally has
appreciated in value over time in the past, the effect of this requirement in
the event of partial loss may be that hazard insurance proceeds will be
insufficient to restore fully the damaged property. If specified in the related
prospectus supplement, a special hazard insurance policy will be obtained to
insure against certain of the uninsured risks described above. See "Credit
Enhancement".

     The master servicer will not require that a standard hazard or flood
insurance policy be maintained on the cooperative dwelling relating to any
cooperative loan. Generally, the cooperative itself is responsible for
maintenance of hazard insurance for the property owned by the cooperative and
the tenant-stockholders of that cooperative do not maintain individual hazard
insurance policies. To the extent, however, that a cooperative and the related
borrower on a cooperative loan do not maintain that insurance or do not maintain
adequate coverage or any insurance proceeds are not applied to the restoration
of damaged property, any damage to the borrower's cooperative dwelling or the
cooperative's building could significantly reduce the value of the collateral
securing the cooperative loan to the extent not covered by other credit support.

     If the Property securing a defaulted loan is damaged and proceeds, if any,
from the related hazard insurance policy are insufficient to restore the damaged
Property, the master servicer is not required to expend its own funds to restore
the damaged Property unless it determines (i) that the restoration will increase
the proceeds to securityholders on liquidation of the loan after reimbursement
of the master servicer for its expenses and (ii) that the expenses will be
recoverable by it from related Insurance Proceeds, Liquidation Proceeds or
Subsequent Recoveries.

     If recovery on a defaulted loan under any related Insurance Policy is not
available for the reasons set forth in the preceding paragraph, or if the
defaulted loan is not covered by an Insurance Policy, the master servicer will
be obligated to follow or cause to be followed those normal practices and
procedures as it deems necessary or advisable to realize upon the defaulted
loan. If the proceeds of any liquidation of the Property securing the defaulted
loan are less than the principal balance of the loan plus interest accrued
thereon that is payable to securityholders, the trust fund will realize a loss
in the amount of the difference plus the aggregate of expenses incurred by the
master servicer in connection with the proceedings and which are reimbursable
under the Agreement. In the unlikely event that those proceedings result in a
total recovery which is, after reimbursement to the master servicer of its
expenses, in excess of the principal balance of the loan plus interest accrued
thereon that is payable to securityholders, the master servicer will be entitled
to withdraw or retain from the Security Account amounts representing its normal
servicing compensation with respect to the loan and amounts representing the
balance of the excess, exclusive of any amount required by law to be forwarded
to the related borrower, as additional servicing compensation.

     If the master servicer or its designee recovers Insurance Proceeds which,
when added to any related Liquidation Proceeds and after deduction of certain
expenses reimbursable to the master servicer, exceed the principal balance of
the loan plus interest accrued thereon that is payable to securityholders, the
master servicer will be entitled to withdraw or retain from the Security Account
amounts representing its normal servicing compensation with respect to the loan.
In the event that the master servicer has expended its own funds to restore the
damaged Property and the funds have not been reimbursed under the related hazard
insurance policy, it will be entitled to withdraw from the Security Account out
of related Liquidation Proceeds or Insurance Proceeds an amount equal to the
expenses incurred by it, in which event the trust fund may realize a loss up to
the amount so charged. Since


                                       63



Insurance Proceeds cannot exceed deficiency claims and certain expenses incurred
by the master servicer, that payment or recovery will not result in a recovery
to the trust fund which exceeds the principal balance of the defaulted loan
together with accrued interest thereon. See "Credit Enhancement".

APPLICATION OF LIQUIDATION PROCEEDS

     The proceeds from any liquidation of a loan will be applied in the
following order of priority:

     o    to reimburse the master servicer for any unreimbursed expenses
          incurred by it to restore the related Property and any unreimbursed
          servicing compensation payable to the master servicer with respect to
          the loan;

     o    to reimburse the master servicer and trustee for any unreimbursed
          advances with respect to the loan;

     o    to accrued and unpaid interest (to the extent no advance has been made
          for that amount or the advance has been reimbursed) on the loan; and

     o    as a recovery of principal of the loan.

Unless otherwise specified in the related prospectus supplement, excess proceeds
from the liquidation of a loan will be retained by the master servicer as
additional servicing compensation.

     If specified in the related prospectus supplement, if, after final
liquidation of a mortgage loan, the master servicer receives a recovery
specifically related to that mortgage loan, the recovery (net of any
reimbursable expenses) will be distributed to the securityholders in the manner
specified in the related prospectus supplement. In addition, the principal
balance of each class of securities to which realized losses have been
allocated, will be increased, sequentially in the order of payment priority, to
the extent that such subsequent recoveries are distributed as principal to any
class of securities. However, the principal balance of the class of securities
will not be increased by more than the amount of realized losses previously
applied to reduce the principal balance of each the class of securities. Holders
of securities whose class principal balance is increased in this manner will not
be entitled to interest on the increased balance for any interest accrual period
preceding the Distribution Date on which the increase occurs.

REALIZATION UPON DEFAULTED LOANS

     Primary Mortgage Insurance Policies. If so specified in the related
prospectus supplement, the master servicer will maintain or cause to be
maintained, as the case may be, in full force and effect, a Primary Mortgage
Insurance Policy with regard to each loan for which the coverage is required.
Primary Mortgage Insurance Policies reimburse certain losses sustained by reason
of defaults in payments by borrowers. The master servicer will not cancel or
refuse to renew any Primary Mortgage Insurance Policy in effect at the time of
the initial issuance of a series of securities that is required to be kept in
force under the applicable Agreement unless the replacement Primary Mortgage
Insurance Policy for the cancelled or nonrenewed policy is maintained with an
insurer whose claims-paying ability is sufficient to maintain the current rating
of the classes of securities of the series that have been rated.

     Although the terms of primary mortgage insurance vary, the amount of a
claim for benefits under a Primary Mortgage Insurance Policy covering a loan
will consist of the insured percentage of the unpaid principal amount of the
covered loan and accrued and unpaid interest on it and reimbursement of certain
expenses, less all rents or other payments collected or received by the insured
(other than the proceeds of hazard insurance) that are derived from or in any
way related to the Property, hazard insurance proceeds in excess of the amount
required to restore the Property and which have not been applied to the payment
of the mortgage loan, amounts expended but not approved by the issuer of the
related Primary Mortgage Insurance Policy, claim payments previously made by the
primary insurer and unpaid premiums.


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     Primary Mortgage Insurance Policies reimburse certain losses sustained from
defaults in payments by borrowers. Primary Mortgage Insurance Policies will not
insure against, and exclude from coverage, a loss sustained from a default
arising from or involving certain matters, including fraud or negligence in
origination or servicing of the loans, including misrepresentation by the
originator, mortgagor, obligor or other persons involved in the origination of
the loan; failure to construct the Property subject to the mortgage loan in
accordance with specified plans; physical damage to the Property; and the
related sub-servicer not being approved as a servicer by the primary insurer.

     As conditions precedent to the filing of or payment of a claim under a
Primary Mortgage Insurance Policy covering a loan, the insured will generally be
required to

o    advance or discharge all hazard insurance policy premiums and as necessary
     and approved in advance by the primary insurer, real estate property taxes,
     all expenses required to maintain the related Property in at least as good
     a condition as existed at the effective date of the Primary Mortgage
     Insurance Policy, ordinary wear and tear excepted, Property sales expenses,
     any specified outstanding liens on the Property and foreclosure costs,
     including court costs and reasonable attorneys' fees;

o    upon any physical loss or damage to the Property, have the Property
     restored and repaired to at least as good a condition as existed at the
     effective date of the Primary Mortgage Insurance Policy, ordinary wear and
     tear excepted; and

o    tender to the primary insurer good and merchantable title to and possession
     of the Property.

     The master servicer, on behalf of itself, the trustee and the
certificateholders, will present claims to the insurer under each primary
mortgage insurance policy, and will take any reasonable steps consistent with
its practices regarding comparable mortgage loans and necessary to receive
payment or to permit recovery under the policy with respect to defaulted
mortgage loans.

     FHA Insurance; VA Guaranties. Loans designated in the related prospectus
supplement as insured by the FHA will be insured by the FHA as authorized under
the United States Housing Act of 1937, as amended. In addition to the Title I
Program of the FHA, see "Certain Legal Aspects of the Loans -- Title I Program",
certain loans will be insured under various FHA programs including the standard
FHA 203 (b) program to finance the acquisition of one- to four-family housing
units and the FHA 245 graduated payment mortgage program. These programs
generally limit the principal amount and interest rates of the mortgage loans
insured. Loans insured by 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 of origination of the
loan.

     The insurance premiums for loans insured by the FHA are collected by
lenders approved by the HUD or by the master servicer or any sub-servicers and
are paid to the FHA. The regulations governing FHA single-family mortgage
insurance programs provide that insurance benefits are payable either upon
foreclosure (or other acquisition of possession) and conveyance of the mortgaged
premises to HUD or upon assignment of the defaulted loan to HUD. With respect to
a defaulted FHA-insured loan, the master servicer or any sub-servicer is limited
in its ability to initiate foreclosure proceedings. When it is determined,
either by the master servicer or any sub-servicer or HUD, that default was
caused by circumstances beyond the mortgagor's control, the master servicer or
any sub-servicer is expected to make an effort to avoid foreclosure by entering,
if feasible, into one of a number of available forms of forbearance plans with
the mortgagor. These plans may involve the reduction or suspension of regular
loan payments for a specified period, with the payments to be made up on or
before the maturity date of the loan, or the recasting of payments due under the
loan up to or beyond the maturity date. In addition, when a default caused by
circumstances beyond the mortgagor's control is accompanied by certain other
criteria, HUD may provide relief by making payments to the master servicer or
any sub-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 master servicer or any sub-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
mortgagor before the master servicer or any sub-servicer may initiate
foreclosure proceedings.


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     HUD has the option, in most cases, to pay insurance claims in cash or in
debentures issued by HUD. Currently, claims are being paid in cash, and claims
have not been paid in debentures since 1965. HUD debentures issued in
satisfaction of FHA insurance claims bear interest at the applicable HUD
debentures interest rate. The master servicer of any sub-servicer of each
FHA-insured mortgage loan will be obligated to purchase the debenture issued in
satisfaction of the 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
master servicer or sub-servicer for certain costs and expenses and to deduct
certain amounts received or retained by the master servicer or sub-servicer
after default. When entitlement to insurance benefits results from foreclosure
(or other acquisition of possession) and conveyance to HUD, the master servicer
or sub-servicer is compensated for no more than two-thirds of its foreclosure
costs, and is compensated for accrued and unpaid interest 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 mortgage loan, bears interest from a date 30 days after the
mortgagor'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 (a "VA Guaranty"). 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 guaranty of mortgage loans of up
to 30 years' duration. However, no loan guaranteed by the VA will have an
original principal amount greater than five times the partial VA guaranty for
the loan. 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 may be reduced or increased pro rata with any
reduction or increase in the amount of indebtedness, but in no event will the
amount payable on the guaranty exceed the amount of the original guaranty. The
VA, at its option and without regard to the guaranty, may make full payment to a
mortgage holder of unsatisfied indebtedness on a loan upon its assignment to the
VA.

     With respect to a defaulted VA guaranteed loan, the master servicer or
sub-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 guaranty is submitted after liquidation of the
mortgaged property.

     The amount payable under the guaranty will be the percentage of the
VA-insured loan originally guaranteed applied to 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 the amounts have not been recovered through liquidation of the
mortgaged property.

SERVICING AND OTHER COMPENSATION AND PAYMENT OF EXPENSES

     The principal servicing compensation to be paid to the master servicer in
respect of its master servicing activities for each series of securities will be
equal to the percentage per annum described in the related prospectus supplement
(which may vary under certain circumstances) of the outstanding principal
balance of each loan, and that compensation will be retained by it from
collections of interest on the loan in the related trust fund (the "Master
Servicing Fee"). As compensation for its servicing duties, a sub-servicer or, if
there is no sub-servicer, the master servicer will be entitled to a monthly
servicing fee as described in the related prospectus supplement. In addition,
generally, the master servicer or sub-servicer will retain all prepayment
charges, assumption fees and late payment


                                       66



charges, to the extent collected from borrowers, and any benefit that may accrue
as a result of the investment of funds in the applicable Security Account.

     The master servicer will, to the extent permitted in the related Pooling
and Servicing Agreement or Sale and Servicing Agreement, pay or cause to be paid
certain ongoing expenses associated with each trust fund and incurred by it in
connection with its responsibilities under the related Agreement, including,
without limitation, payment of any fee or other amount payable in respect of any
credit enhancement arrangements, payment of the fees and disbursements of the
trustee, unless otherwise specified in the related prospectus supplement, any
custodian appointed by the trustee, the certificate registrar and any paying
agent, and payment of expenses incurred in enforcing the obligations of
sub-servicers and sellers. The master servicer will be entitled to reimbursement
of expenses incurred in enforcing the obligations of sub-servicers and sellers
under certain limited circumstances. In addition, as indicated in the preceding
section, the master servicer will be entitled to reimbursement for certain
expenses incurred by it in connection with any defaulted loan as to which it has
determined that all recoverable Liquidation Proceeds and Insurance Proceeds have
been received and in connection with the restoration of Properties, the right of
reimbursement being before the rights of holders of the securities to receive
any related Liquidation Proceeds (including Insurance Proceeds).

EVIDENCE AS TO COMPLIANCE

     Each Agreement will provide for delivery to the depositor and the trustee,
on or before a specified date in each year, of an annual statement signed by an
authorized officer of the master servicer to the effect that the master servicer
has fulfilled its obligations under the Agreement throughout the preceding year.

     Each Agreement will also provide for delivery to the depositor, the master
servicer and the trustee, on or before a specified date in each year, of an
annual servicing assessment report from each party performing servicing
functions with respect to the related series, including any servicer that
services 5% or more of the Trust Fund Assets. In each assessment report, the
party providing the report must include an assessment of its compliance with the
servicing criteria during the previous fiscal year, and disclose any material
noncompliance with the applicable servicing criteria. The servicing criteria are
divided generally into four categories:

          o    general servicing considerations;

          o    cash collection and administration;

          o    investor remittances and reporting; and

          o    pool asset administration.

     Each servicing assessment report is required to be accompanied by
attestation report provided by a public registered accounting firm. The
attestation report must contain an opinion of the registered public accounting
firm as to whether the related servicing criteria assessment was fairly stated
in all material respects, or a statement that the firm cannot express that
opinion. The attestation examination the must be made in accordance with the
attestation engagement standards issued or adopted by the Public Company
Accounting Oversight Board.

     Copies of the annual servicing compliance statement, the servicing criteria
assessment report and related accountants attestations and the annual
accountants' statement (if any) may be obtained by securityholders of the
related series without charge upon written request to the master servicer at the
address set forth in the related prospectus supplement.

CERTAIN MATTERS REGARDING THE MASTER SERVICER AND THE DEPOSITOR

     The master servicer under each Pooling and Servicing Agreement or Sale and
Servicing Agreement, as applicable, will be named in the related prospectus
supplement. The entity serving as master servicer may have normal business
relationships with the depositor or the depositor's affiliates.


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     Each Agreement will provide that the master servicer may not resign from
its obligations and duties under the Agreement except upon a determination that
its duties thereunder are no longer permissible under applicable law or upon
appointment of a successor servicer acceptable to the trustee and with written
confirmation from each Ratings Agency that such resignation and appointment
would not result in a downgrade or withdrawal of the ratings of any of the
securities. The master servicer may, however, be removed from its obligations
and duties as set forth in the Agreement. No resignation will become effective
until the trustee or a successor servicer has assumed the master servicer's
obligations and duties under the Agreement.

     Each Agreement will further provide that neither the master servicer, the
depositor nor any director, officer, employee, or agent of the master servicer
or the depositor will be under any liability to the trustee, the related trust
fund or securityholders for any action taken or for refraining from the taking
of any action in good faith pursuant to the Agreement, or for errors in
judgment; provided, however, that neither the master servicer, the depositor nor
any person will be protected against any breach of a representation and
warranty, any liability which would otherwise be imposed by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties
thereunder or by reason of reckless disregard of obligations and duties
thereunder. Each Agreement will further provide that the master servicer, the
depositor and any director, officer, employee or agent of the master servicer or
the depositor will be entitled to indemnification by the related trust fund and
will be held harmless against any loss, liability or expense incurred in
connection with any audit, controversy or judicial proceeding relating to a
governmental taxing authority or any legal action relating to the Agreement or
the securities, other than any loss, liability or expense related to any
specific loan or loans (except any loss, liability or expense otherwise
reimbursable pursuant to the Agreement) and any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or gross negligence in the
performance of duties thereunder or by reason of reckless disregard of
obligations and duties thereunder. In addition, each Agreement will provide that
neither the master servicer nor the depositor will be under any obligation to
appear in, prosecute or defend any legal action which is not incidental to its
respective responsibilities under the Agreement and which in its opinion may
involve it in any expense or liability. The master servicer or the depositor
may, however, in its discretion undertake any action which it may deem necessary
or desirable with respect to the Agreement and the rights and duties of the
parties thereto and the interests of the trustee and the securityholders
thereunder. In that event, the legal expenses and costs of the action and any
liability resulting therefrom will be expenses, costs and liabilities of the
trust fund and the master servicer or the depositor, as the case may be, will be
entitled to be reimbursed therefor out of funds otherwise distributable to
securityholders.

     In general, any person into which the master servicer may be merged or
consolidated, or any person resulting from any merger or consolidation to which
the master servicer is a party, or any person succeeding to the business of the
master servicer, will be the successor of the master servicer under each
Agreement, provided that that person is qualified to sell mortgage loans to, and
service mortgage loans on behalf of, Fannie Mae or Freddie Mac.

EVENTS OF DEFAULT; RIGHTS UPON EVENT OF DEFAULT

     Pooling and Servicing Agreement; Sale and Servicing Agreement. The
applicable prospectus supplement may provide for other Events of Default under
any Pooling and Servicing Agreement or Sale and Servicing Agreement, but if it
does not, the Events of Default will consist of

o    any failure by the master servicer to deposit in a Security Account or
     remit to the trustee any payment which continues unremedied for five days
     after the giving of written notice of the failure to the master servicer by
     the trustee or the depositor, or to the master servicer, the depositor and
     the trustee by the holders of securities of that class evidencing not less
     than 25% of the total distributions allocated to the class ("percentage
     interests");

o    any failure by the master servicer to observe or perform in any material
     respect any of its other covenants or agreements in the Agreement which
     continues unremedied for sixty days after the giving of written notice of
     the failure to the master servicer by the trustee or the depositor, or to
     the master servicer, the depositor and the trustee by the holders of
     securities of any class evidencing not less than 25% of the aggregate
     percentage interests constituting that class; and


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o    certain events of insolvency, readjustment of debt, marshalling of assets
     and liabilities or similar proceeding and certain actions by or on behalf
     of the master servicer indicating its insolvency, reorganization or
     inability to pay its obligations.

     If specified in the related prospectus supplement, the Agreement will
permit the trustee to sell the Trust Fund Assets and the other assets of the
trust fund described under "Credit Enhancement" herein in the event that
payments on them are insufficient to make payments required in the Agreement.
The assets of the trust fund will be sold only under the circumstances and in
the manner specified in the related prospectus supplement.

     The applicable prospectus supplement may provide for steps required to be
taken if an Event of Default remains unremedied, but if it does not, so long as
an Event of Default under an Agreement remains unremedied, the trustee may, and
at the direction of holders of securities of any class evidencing not less than
25% of the aggregate percentage interests constituting that class and, under
those circumstances as may be specified in the Agreement, the trustee shall
terminate all of the rights and obligations of the master servicer under the
Agreement relating to the trust fund and in and to the related Trust Fund
Assets, whereupon the trustee will succeed to all of the responsibilities,
duties and liabilities of the master servicer under the Agreement, including, if
specified in the related prospectus supplement, the obligation to make advances,
and will be entitled to similar compensation arrangements. After the master
servicer has received notice of termination, the trustee may execute and
deliver, on behalf of the master servicer, as attorney-in-fact or otherwise, any
and all documents and other instruments, and do or accomplish all other acts or
things necessary or appropriate to effect the termination of the master
servicer, including the transfer and endorsement or assignment of the loans and
related documents. The master servicer has agreed to cooperate with the trustee
in effecting the termination of the master servicer, including the transfer to
the trustee of all cash amounts which shall at the time be credited to the
Security Account, or thereafter be received with respect to the loans. Upon
request of the trustee, the master servicer has also agreed, at its expense, to
deliver to the assuming party all documents and records relating to each
subservicing agreement and the loans then being serviced thereunder and an
accounting of amounts collected held by it and otherwise use its best efforts to
effect the orderly and efficient transfer of the subservicing agreement to the
assuming party. No additional funds have been reserved to pay for any expenses
not paid by the master servicer in connection with a servicing transfer.

     In the event that the trustee is unwilling or unable to act as the
successor to the master servicer, it may appoint, or petition a court of
competent jurisdiction for the appointment of, a mortgage loan servicing
institution with a net worth of at least $15,000,000 to act as successor to the
master servicer under the Agreement. Pending that appointment, the trustee is
obligated to act in that capacity. The trustee and any successor may agree upon
the servicing compensation to be paid, which in no event may be greater than the
compensation payable to the master servicer under the Agreement.

     Unless otherwise provided in the related prospectus supplement, no
securityholder, solely by virtue of the holder's status as a securityholder,
will have any right under any Agreement to institute any proceeding with respect
to the Agreement, unless the holder previously has given to the trustee written
notice of default and unless the holders of securities of any class of that
series evidencing not less than 25% of the aggregate percentage interests
constituting the class 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 that proceeding.

     Indenture. The applicable prospectus supplement may provide for other
Events of Default, but if it does not, the Events of Default under each
Indenture will consist of:

o    a default by the issuer in the payment of any principal of or interest on
     any note of that series which continues unremedied for five days after the
     giving of written notice of the default is given as specified in the
     related prospectus supplement;

o    failure to perform in any material respect any other obligation or observe
     any representation or warranty of the issuer in the Indenture which
     continues for a period of thirty (30) days after notice thereof is given in
     accordance with the procedures described in the related prospectus
     supplement;


                                       69



o    certain events of insolvency with respect to the issuer; or

o    any other Event of Default provided with respect to notes of that series
     including but not limited to certain defaults on the part of the issuer, if
     any, of a credit enhancement instrument supporting the notes.

     Unless otherwise provided in the related prospectus supplement, if an Event
of Default with respect to the notes of any series at the time outstanding
occurs and is continuing, either the trustee or the holders of not less than 51%
of the then aggregate outstanding amount of the notes of that series may declare
the principal amount (or, if the notes of that series have an interest rate of
0%, the portion of the principal amount as may be specified in the terms of that
series, as provided in the related prospectus supplement) of all the notes of
that series to be due and payable immediately. That declaration may, under
certain circumstances, be rescinded and annulled by the holders of not less than
51% of the percentage interests of the notes of the series.

     Unless otherwise provided in the related prospectus supplement, if,
following an Event of Default with respect to any series of notes, the notes of
the series have been declared to be due and payable, the trustee may,
notwithstanding that acceleration, elect to maintain possession of the
collateral securing the notes of the series and to continue to apply
distributions on the collateral as if there had been no declaration of
acceleration if the collateral continues to provide sufficient funds for the
payment of principal of and interest on the notes of the series as they would
have become due if there had not been a declaration. In addition, unless
otherwise specified in the related prospectus supplement, the trustee may not
sell or otherwise liquidate the collateral securing the notes of a series
following an Event of Default, other than a default in the payment of any
principal or interest on any note of the series for five days or more, unless

o    the holders of 100% of the percentage interests of the notes of the series
     consent to the sale,

o    the proceeds of the sale or liquidation are sufficient to pay in full the
     principal of and accrued interest, due and unpaid, on the outstanding notes
     of the series at the date of the sale or

o    the trustee determines that the collateral would not be sufficient on an
     ongoing basis to make all payments on the notes as the payments would have
     become due if the notes had not been declared due and payable, and the
     trustee obtains the consent of the holders of a majority of the percentage
     interests of the notes of the series.

     If specified in the related prospectus supplement, other parties, such as a
credit enhancement provider, may have certain rights with respect to remedies
upon an Event of Default that may limit the rights of the related noteholders.

     In the event that the trustee liquidates the collateral in connection with
an Event of Default involving a default for five days or more in the payment of
principal of or interest on the notes of a series, the Indenture may provide
that the trustee will have a prior lien on the proceeds of that liquidation for
unpaid fees and expenses. As a result, upon the occurrence of that Event of
Default, the amount available for distribution to the noteholders would be less
than would otherwise be the case. However, the trustee may not institute a
proceeding for the enforcement of its lien except in connection with a
proceeding for the enforcement of the lien of the Indenture for the benefit of
the noteholders after the occurrence of that Event of Default.

     In the event the principal of the notes of a series is declared due and
payable, as described above, the holders of the notes issued at a discount from
par may be entitled to receive no more than an amount equal to the unpaid
principal amount thereof less the amount of the discount which is unamortized.

     Subject to the provisions of the Indenture relating to the duties of the
trustee, in case an Event of Default shall occur and be continuing with respect
to a series of notes, the trustee shall be under no obligation to exercise any
of the rights or powers under the Indenture at the request or direction of any
of the holders of notes of the series, unless the holders offered to the trustee
security or indemnity satisfactory to it against the costs, expenses and
liabilities which might be incurred by it in complying with the request or
direction. Subject to the provisions for


                                       70



indemnification and certain limitations contained in the Indenture, the holders
of not less than 51% of the then aggregate outstanding amount of the 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 trustee or exercising
any trust or power conferred on the trustee with respect to the notes of the
series, and the holders of not less than 51% of the then aggregate outstanding
amount of the notes of the series may, in certain cases, waive any default with
respect thereto, 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 the series affected thereby. If provided in the related prospectus
supplement, the priority of payments payable on the notes may change following
an Event of Default.

AMENDMENT

     The applicable prospectus supplement may specify other amendment
provisions, but if it does not, each Agreement may be amended by the parties to
the Agreement, without the consent of any of the securityholders,

          (a) to cure any ambiguity;

          (b) to correct any defective provision in the Agreement or to
     supplement any provision in the Agreement that may be inconsistent with any
     other provision in it;

          (c) to conform the Agreement to the related prospectus supplement or
     the prospectus;

          (d) to modify, alter, amend, add or to rescind any of the terms or
     provisions contained in the Agreement to comply with any rules or
     regulations promulgated by the SEC from time to time; or

          (e) to make any other revisions with respect to matters or questions
     arising under the Agreement which are not inconsistent with the provisions
     in it,

provided that the action will not adversely affect in any material respect the
interests of any securityholder. Any amendment made solely to conform the
Agreement to the final prospectus supplement provided to investors in connection
with the initial offering of the securities by the depositor will be deemed not
to materially and adversely affect the interests of securityholders. In
addition, an amendment will be deemed not to adversely affect in any material
respect the interests of the securityholders if the person requesting the
amendment obtains a letter from each Rating Agency requested to rate the class
or classes of securities of the related series stating that the amendment will
not result in the downgrading or withdrawal of the respective ratings then
assigned to the related securities.

     In addition, to the extent provided in the related Agreement, an Agreement
may be amended without the consent of any of the securityholders, to change the
manner in which the Security Account is maintained, provided that the change
does not adversely affect the then current rating on the class or classes of
securities of the related series that have been rated at the request of the
depositor. Moreover, the related Agreement may be amended to modify, eliminate
or add to any of its provisions to the extent necessary to modify the terms or
provisions related to any lower-tier REMIC, to maintain the qualification of the
related trust fund as a REMIC or to avoid or minimize the risk of imposition of
any tax on the REMIC, if a REMIC election is made with respect to the trust
fund, or to comply with any other requirements of the Code, if the trustee has
received an opinion of counsel to the effect that the action is necessary or
helpful to ensure the proper operation of the master REMIC, maintain the
qualification, avoid or minimize that risk or comply with those requirements, as
applicable.

     The applicable prospectus supplement may specify other amendment
provisions, but if it does not, each Agreement may also be amended by the
parties to the related Agreement with consent of holders of securities of the
related series evidencing not less than 51% of the aggregate percentage
interests of each class affected thereby for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Agreement or of modifying in any manner the rights of the holders of the
related securities; provided, however, that the amendment may not


                                       71



o    reduce in any manner the amount of or delay the timing of, payments
     received on Trust Fund Assets which are required to be distributed on any
     security without the consent of the holder of the related security,

o    adversely affect in any material respect the interests of the holders of
     any class of securities in a manner other than as described in the
     preceding bullet point, without the consent of the holders of securities of
     the class evidencing, as to the class, percentage interests aggregating
     66%, or

o    reduce the aforesaid percentage of securities of any class the holders of
     which are required to consent to the amendment without the consent of the
     holders of all securities of that class covered by the Agreement then
     outstanding.

If a REMIC election is made with respect to a trust fund, the trustee will not
be entitled to consent to an amendment to the related Agreement without having
first received an opinion of counsel to the effect that the amendment will not
cause the related trust fund to fail to qualify as a REMIC. If so described in
the related prospectus supplement, an amendment of an Agreement may require the
consent of persons that are not party to the agreement, such as a credit
enhancement provider.

TERMINATION; OPTIONAL TERMINATION

     Pooling and Servicing Agreement; Sale and Servicing Agreement. The
applicable prospectus supplement may provide for the timing by which the
Agreement terminates, but if it does not, the obligations created by each
Pooling and Servicing Agreement and Sale and Servicing Agreement for each series
of securities will terminate upon the payment to the related securityholders of
all amounts held in the Security Account or by the master servicer and required
to be paid to them pursuant to the related Agreement following the earlier of:

          (i) the final payment of or other liquidation of the last of the Trust
     Fund Assets subject thereto or the disposition of all property acquired
     upon foreclosure of any Trust Fund Assets remaining in the trust fund; and

          (ii)the purchase by the master servicer, the party specified in the
     related prospectus supplement or, if REMIC treatment has been elected and
     if specified in the related prospectus supplement, by the holder of the
     residual interest in the REMIC (see "Material Federal Income Tax
     Consequences" below), from the related trust fund of all of the remaining
     Trust Fund Assets and all property acquired in respect of the Trust Fund
     Assets.

     Any purchase of Trust Fund Assets and property acquired in respect of Trust
Fund Assets evidenced by a series of securities will be made at the option of
the master servicer, or the party specified in the related prospectus
supplement, including the holder of the REMIC residual interest, at a price
specified in the related prospectus supplement. The exercise of this right will
effect early retirement of the securities of that series, but the right of the
master servicer, or the other party or, if applicable, the holder of the REMIC
residual interest, to so purchase is subject to the principal balance of the
related Trust Fund Assets being less than the percentage specified in the
related prospectus supplement of the aggregate principal balance of the Trust
Fund Assets at the cut-off date for the series. The foregoing is subject to the
provision that if a REMIC election is made with respect to a trust fund, any
repurchase pursuant to clause (ii) above will not be made if the repurchase
would result in a "prohibited transaction tax" within the meaning of Section
860F(a)(1) of the Code being imposed on any REMIC.

     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 trustee for cancellation of all the notes of
the related series or, with certain limitations, upon deposit with the trustee
of funds sufficient for the payment in full of all of the notes of the related
series.

     In addition, the Indenture will provide that, if so specified with respect
to the notes of any series, the related trust fund will be discharged from any
and all obligations in respect of the notes of the series (except for certain
obligations relating to temporary notes and exchange of notes, to register the
transfer of or exchange notes of the series, to replace stolen, lost or
mutilated notes of the series, to maintain paying agencies and to hold monies
for


                                       72



payment in trust) upon the deposit with the trustee, in trust, of money and/or
direct obligations of or obligations guaranteed by the United States of America
which through the payment of interest and principal in respect thereof in
accordance with their terms will provide money in an amount sufficient to pay
the principal of and each installment of interest on the notes of the series on
the last 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 of the series. In the event of a defeasance and discharge of notes of a
series as described above, holders of notes of the related series would be able
to look only to that money and/or direct obligations for payment of principal
and interest, if any, on their notes until maturity.

THE TRUSTEE

     The trustee under each Agreement will be named in the applicable prospectus
supplement. The commercial bank or trust company serving as trustee may have
normal banking relationships with the depositor, the master servicer and any of
their respective affiliates.

                       CERTAIN LEGAL ASPECTS OF THE LOANS

     The following discussion contains summaries, which are general in nature,
of certain legal matters relating to the loans. Because those legal aspects are
governed primarily by applicable state law (which laws may differ
substantially), the descriptions do not, except as expressly provided below,
reflect the laws of any particular state, nor encompass the laws of all states
in which the security for the loans is situated. The descriptions are qualified
in their entirety by reference to the applicable federal laws and the
appropriate laws of the states in which loans may be originated.

GENERAL

     The loans for a series may be secured by deeds of trust, mortgages,
security deeds or deeds to secure debt, depending upon the prevailing practice
in the state in which the property subject to the loan is located. Deeds of
trust are used almost exclusively in California instead of mortgages. A mortgage
creates a lien upon the real property encumbered by the mortgage, which lien is
generally not prior to the lien for real estate taxes and assessments. Priority
between mortgages depends on their terms and generally on the order of recording
with a state or county office. There are two parties to a mortgage: the
mortgagor, who is the borrower and owner of the mortgaged property, and the
mortgagee, who is the lender. Under the mortgage instrument, the mortgagor
delivers to the mortgagee a note or bond and the mortgage. Although a deed of
trust is similar to a mortgage, a deed of trust formally has three parties, the
borrower-property owner called the trustor (similar to a mortgagor), a lender
(similar to a mortgagee) called the beneficiary, and a third-party grantee
called the trustee. Under a deed of trust, the borrower grants the property,
irrevocably until the debt is paid, in trust, generally with a power of sale, to
the trustee to secure payment of the obligation. A security deed and a deed to
secure debt are special types of deeds which indicate on their face that they
are granted to secure an underlying debt. By executing a security deed or deed
to secure debt, the grantor conveys title to, as opposed to merely creating a
lien upon, the subject property to the grantee until the underlying debt is
repaid. The trustee's authority under a deed of trust, the mortgagee's authority
under a mortgage and the grantee's authority under a security deed or deed to
secure debt are governed by law and, with respect to some deeds of trust, the
directions of the beneficiary.

     In this prospectus, we generally use the term "mortgage" to generically
describe real-estate security instruments, however, if certain information
relates to a particular security instrument, we will refer to that security
instrument.

     Cooperatives. Certain of the loans may be cooperative loans. The
cooperative owns all the real property that comprises the project, including the
land, separate dwelling units and all common areas. The cooperative is directly
responsible for project management and, in most cases, payment of real estate
taxes and hazard and liability insurance. If there is a blanket mortgage on the
cooperative and/or underlying land, as is generally the case, the cooperative,
as project mortgagor, is also responsible for meeting these mortgage
obligations. A blanket mortgage is ordinarily incurred by the cooperative in
connection with the construction or purchase of the cooperative's apartment
building. The interest of the occupant under proprietary leases or occupancy
agreements to which that cooperative is a party are generally subordinate to the
interest of the holder of the blanket mortgage in that building.


                                       73



If the cooperative is unable to meet the payment obligations arising under its
blanket mortgage, the mortgagee holding the blanket mortgage could foreclose on
that mortgage and terminate all subordinate proprietary leases and occupancy
agreements. In addition, the blanket mortgage on a cooperative may provide
financing in the form of a mortgage that does not fully amortize with a
significant portion of principal being due in one lump sum at final maturity.
The inability of the cooperative to refinance this mortgage and its consequent
inability to make the final payment could lead to foreclosure by the mortgagee
providing the financing. A foreclosure in either event by the holder of the
blanket mortgage could eliminate or significantly diminish the value of any
collateral held by the lender who financed the purchase by an individual
tenant-stockholder of cooperative shares or, in the case of a trust fund
including cooperative loans, the collateral securing the cooperative loans.

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

FORECLOSURE

     Deed of Trust. Foreclosure of a deed of trust is generally accomplished by
a non-judicial sale under a specific provision in the deed of trust which
authorizes the trustee to sell the property at public auction upon any material
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 addition to any notice requirements
contained in a deed of trust, in some states (such as California), the trustee
must record a notice of default and send a copy to the borrower-trustor, to any
person who has recorded a request for a copy of any notice of default and notice
of sale, to any successor in interest to the borrower-trustor, to the
beneficiary of any junior deed of trust and to certain other persons. In some
states (including California), the borrower-trustor has the right to reinstate
the loan at any time following default until shortly before the trustee's sale.
In general, the borrower, or any other person having a junior encumbrance on the
real estate, may, during a statutorily prescribed reinstatement period, cure a
monetary default by paying the entire amount in arrears plus other designated
costs and expenses incurred in enforcing the obligation. Generally, state law
controls the amount of foreclosure expenses and costs, including attorney's
fees, which may be recovered by a lender. After the reinstatement period has
expired without the default having been cured, the borrower or junior lienholder
no longer has the right to reinstate the loan and must pay the loan in full to
prevent the scheduled foreclosure sale. If the deed of trust is not reinstated
within any applicable cure period, a notice of sale must be posted in a public
place and, in most states (including California), published for a specific
period of time in one or more newspapers. In addition, some state laws require
that a copy of the notice of sale be posted on the property and sent to all
parties having an interest of record in the real property. In California, the
entire process from recording a notice of default to a non-judicial sale usually
takes four to five months.

     Mortgages. Foreclosure of a mortgage is generally accomplished by judicial
action. The action is initiated by the service of legal pleadings upon all
parties having an interest in the real property. Delays in completion of the
foreclosure may occasionally result from difficulties in locating necessary
parties. Judicial foreclosure proceedings are often not contested by any of the
parties. When the mortgagee's right to foreclosure is contested, the legal
proceedings necessary to resolve the issue can be time consuming. After the
completion of a judicial foreclosure proceeding, the court generally issues a
judgment of foreclosure and appoints a referee or other court officer to conduct
the sale of the property. In some states, mortgages may also be foreclosed by
advertisement, pursuant to a power of sale provided in the mortgage.


                                       74



     Although foreclosure sales are typically public sales, frequently no third
party purchaser bids in excess of the lender's lien because of the difficulty of
determining the exact status of title to the property, the possible
deterioration of the property during the foreclosure proceedings and a
requirement that the purchaser pay for the property in cash or by cashier's
check. Thus the foreclosing lender often purchases the property from the trustee
or referee for an amount equal to the principal amount outstanding under the
loan, 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 the 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 burden of ownership,
including obtaining hazard insurance and making the repairs at its own expense
as are necessary to render the property suitable for sale. The lender 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.

     Courts have imposed general equitable principles upon foreclosure, which
are generally designed to mitigate the legal consequences to the borrower of the
borrower's defaults under the loan documents. Some courts have been faced with
the issue of whether federal or state constitutional provisions reflecting due
process concerns for fair notice require that borrowers under deeds of trust
receive notice longer than that prescribed by statute. For the most part, these
cases have upheld the notice provisions as being reasonable or have found that
the sale by a trustee under a deed of trust does not involve sufficient state
action to afford constitutional protection to the borrower.

     When the beneficiary under a junior mortgage or deed of trust cures the
default and reinstates or redeems by paying the full amount of the senior
mortgage or deed of trust, the amount paid by the beneficiary so to cure or
redeem becomes a part of the indebtedness secured by the junior mortgage or deed
of trust. See "Junior Mortgages; Rights of Senior Mortgagees" below.

     Cooperative Loans. The cooperative shares owned by the tenant-stockholder
and pledged to the lender are, in almost all cases, subject to restrictions on
transfer as set forth in the cooperative's certificate of incorporation and
bylaws, as well as the proprietary lease or occupancy agreement, and may be
cancelled by the cooperative for failure by the tenant-stockholder to pay rent
or other obligations or charges owed by the tenant-stockholder, including
mechanics' liens against the cooperative apartment building incurred by the
tenant-stockholder. The proprietary lease or occupancy agreement generally
permits the cooperative to terminate the lease or agreement in the event an
obligor fails to make payments or defaults in the performance of covenants
required thereunder. Typically, the lender and the cooperative enter into a
recognition agreement which establishes the rights and obligations of both
parties in the event of a default by the tenant-stockholder on its obligations
under the proprietary lease or occupancy agreement. A default by the
tenant-stockholder under the proprietary lease or occupancy agreement will
usually constitute a default under the security agreement between the lender and
the tenant-stockholder.

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

     Recognition agreements also provide that in the event of a foreclosure on a
cooperative loan, the lender must obtain the approval or consent of the
cooperative as required by the proprietary lease before transferring the
cooperative shares or assigning the proprietary lease. Generally, the lender is
not limited in any rights it may have to dispossess the tenant-stockholders.

     In some states, foreclosure on the cooperative shares is accomplished by a
sale in accordance with the provisions of Article 9 of the Uniform Commercial
Code (the "UCC") and the security agreement relating to those


                                       75



shares. Article 9 of the UCC requires that a sale be conducted in a
"commercially reasonable" manner. Whether a foreclosure sale has been conducted
in a "commercially reasonable" manner will depend on the facts in each case. In
determining commercial reasonableness, a court will look to the notice given the
debtor and the method, manner, time, place and terms of the foreclosure.
Generally, a sale conducted according to the usual practice of banks selling
similar collateral will be considered reasonably conducted.

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

     In the case of foreclosure on a building which was converted from a rental
building to a building owned by a cooperative under a non-eviction plan, some
states require that a purchaser at a foreclosure sale take the property subject
to rent control and rent stabilization laws which apply to certain tenants who
elected to remain in the building but who did not purchase shares in the
cooperative when the building was so converted.

ENVIRONMENTAL RISKS

     Real property pledged as security to a lender may be subject to unforeseen
environmental risks. Environmental remedial costs can be substantial and can
potentially exceed the value of the property. Under the laws of certain states,
contamination of a property may give rise to a lien on the property to assure
the payment of the costs of clean-up. In several states that lien has priority
over the lien of an existing mortgage against the property. In addition, under
the federal Comprehensive Environmental Response, Compensation and Liability Act
of 1980 ("CERCLA"), the EPA may impose a lien on property where EPA has incurred
clean-up costs. However, a CERCLA lien is subordinate to pre-existing, perfected
security interests.

     Under the laws of some states, and under CERCLA, it is conceivable that a
secured lender may be held liable as an "owner" or "operator" for the costs of
addressing releases or threatened releases of hazardous substances at a
Property, even though the environmental damage or threat was caused by a prior
or current owner or operator. CERCLA imposes liability for the costs on any and
all "potentially responsible parties," including "owners" or "operators".
However, CERCLA excludes from the definition of "owner or operator" a secured
creditor who holds indicia of ownership primarily to protect its security
interest (the "secured creditor exemption") but without "participating in the
management" of the property. Thus, if a lender's activities encroach on the
actual management of a contaminated facility or property, the lender may incur
liability as an "owner or operator" under CERCLA. Similarly, if a lender
forecloses and takes title to a contaminated facility or property, the lender
may incur CERCLA liability in various circumstances, including, but not limited
to, when it fails to market the property in a timely fashion.

     Whether actions taken by a lender would constitute participation in the
management of a mortgaged property so as to render the secured creditor
exemption unavailable to a lender, was historically a matter of judicial
interpretation of the statutory language. Court decisions were inconsistent and,
in fact, in 1990, the Court of Appeals for the Eleventh Circuit suggested that
the mere capacity of the lender to influence a borrower's decisions regarding
disposal of hazardous substances was sufficient participation in the management
of a borrower's business to deny the protection of the secured creditor
exemption to the lender. In 1996, Congress enacted the Asset Conservation,
Lender Liability and Deposit Insurance Protection Act ("Asset Conservation
Act"), which provides that, in order to be deemed to have participated in the
management of a mortgaged property, a lender must actually participate in the
operational affairs of the property. The Asset Conservation Act also provides
that participation in the management of the property does not include "merely
having the capacity to influence, or unexercised right to control" operations.
Rather, a lender will lose the protection of the secured creditor exemption only
if it (a) exercises decision making control over the borrower's environmental
compliance and hazardous substance handling and disposal practices at the
property, or (b) exercises control comparable to the manager of the property, so
that the lender has assumed responsibility for (i) "the overall management of
the facility encompassing day-to-day decision


                                       76



making with respect to environmental compliance" or (ii) "over all or
substantially all of the operational functions" of the property other than
environmental compliance.

     If a lender is or becomes liable, it may be able to bring an action for
contribution under CERCLA or other statutory or common laws against any other
"potentially responsible parties," including a previous owner or operator, who
created the environmental hazard, but those persons or entities may be bankrupt
or otherwise judgment proof. The costs associated with environmental cleanup may
be substantial. It is conceivable that the costs arising from the circumstances
set forth above would result in a loss to certificateholders.

     CERCLA does not apply to petroleum products, and the secured creditor
exemption does not govern liability for cleanup costs under state laws or under
federal laws other than CERCLA, including Subtitle I of the federal Resource
Conservation and Recovery Act ("RCRA"), which regulates underground petroleum
storage tanks (except heating oil tanks). The EPA has adopted a lender liability
rule for underground storage tanks under Subtitle I of RCRA. Under that rule, a
holder of a security interest in an underground storage tank or real property
containing an underground storage tank is not considered an operator of the
underground storage tank as long as petroleum is not added to, stored in or
dispensed from the tank. Moreover, under the Asset Conservation Act, the
protections accorded to lenders under CERCLA are also accorded to holders of
security interests in underground petroleum storage tanks or the properties on
which they are located. A lender will lose the protections accorded to secured
creditors under federal law for petroleum underground storage tanks by
"participating in the management" of the tank or tank system if the lender
either: (a) "exercises decision making control over the operational" aspects of
the tank or tank system; or (b) exercises control comparable to a manager of the
property, so that the lender has assumed responsibility for overall management
of the property including day-to-day decision making with regard to all, or
substantially all, operational aspects. It should be noted, however, that
liability for cleanup of petroleum contamination may be governed by state law,
which may not provide for any specific protection for secured creditors.

     While the "owner" or "operator" of contaminated property may face liability
for investigating and cleaning up the property, regardless of fault, it may also
be required to comply with environmental regulatory requirements, such as those
governing asbestos. In addition, the presence of asbestos, mold, lead-based
paint, lead in drinking water, and/or radon at a real property may lead to the
incurrence of costs for remediation, mitigation or the implementation of an
operations and maintenance plan. Furthermore, the presence of asbestos, mold,
lead-based paint, lead in drinking water, radon and/or contamination at a
property may present a risk that third parties will seek recovery from "owners"
or "operators" of that property for personal injury or property damage.
Environmental regulatory requirements for property "owners" or "operators," or
law that is the basis for claims of personal injury or property damage, may not
have exemptions for secured creditors.

     In general, at the time the loans were originated no environmental
assessment, or a very limited environmental assessment, of the Properties was
conducted.

RIGHTS OF REDEMPTION

     In some states, after sale pursuant to a deed of trust or foreclosure of a
mortgage, the borrower and foreclosed junior lienors are given a statutory
period in which to redeem the property from the foreclosure sale. In certain
other states (including California), this right of redemption applies only to
sales following judicial foreclosure, and not to sales pursuant to a
non-judicial power of sale. In most states where the right of redemption is
available, statutory redemption may occur upon payment of the foreclosure
purchase price, accrued interest and taxes. In 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 from the lender subsequent to
foreclosure or sale under a deed of trust. Consequently, the practical effect of
the redemption right is to force the lender to retain the property and pay the
expenses of ownership until the redemption period has run. In some states, there
is no right to redeem property after a trustee's sale under a deed of trust.


                                       77



ANTI-DEFICIENCY LEGISLATION AND OTHER LIMITATIONS ON LENDERS

     Certain states have imposed statutory and judicial restrictions that limit
the remedies of a beneficiary under a deed of trust or a mortgagee under a
mortgage. In some states, including California, statutes and case law limit the
right of the beneficiary or mortgagee to obtain a deficiency judgment against
borrowers financing the purchase of their residence or following sale under a
deed of trust or certain other foreclosure proceedings. A deficiency judgment is
a personal judgment against the borrower equal in most cases to the difference
between the amount due to the lender and the fair market value of the real
property at the time of the foreclosure sale. In certain states, including
California, if a lender simultaneously originates a loan secured by a senior
lien on a particular property and a loan secured by a junior lien on the same
property, that lender as the holder of the junior lien may be precluded from
obtaining a deficiency judgment with respect to the excess of the aggregate
amount owed under both loans over the proceeds of any sale under a deed of trust
or other foreclosure proceedings. As a result of these prohibitions, it is
anticipated that in most instances the master servicer will utilize the
non-judicial foreclosure remedy and will not seek deficiency judgments against
defaulting borrowers.

     Some state 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 that security;
however, in some of these states, the lender, following judgment on that
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. In some states, exceptions to the anti-deficiency
statutes are provided for in certain instances where the value of the lender's
security has been impaired by acts or omissions of the borrower, for example, in
the event of waste of the property. 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.

     Generally, Article 9 of the UCC governs foreclosure on cooperative shares
and the related proprietary lease or occupancy agreement. Some courts have
interpreted section 9-504 of the UCC to prohibit a deficiency award unless the
creditor establishes that the sale of the collateral (which, in the case of a
cooperative loan, would be the shares of the cooperative and the related
proprietary lease or occupancy agreement) was conducted in a commercially
reasonable manner.

     In addition to anti-deficiency and related legislation, numerous other
federal and state statutory provisions, including the federal bankruptcy laws,
and state laws affording relief to debtors, may interfere with or affect the
ability of the secured mortgage lender to realize upon its security. For
example, in a proceeding under the federal Bankruptcy Code, a lender may not
foreclose on a mortgaged property without the permission of the bankruptcy
court. The rehabilitation plan proposed by the debtor may provide, if the
mortgaged property is not the debtor's principal residence and the court
determines that the value of the mortgaged property is less than the principal
balance of the mortgage loan, for the reduction of the secured indebtedness to
the value of the mortgaged property as of the date of the commencement of the
bankruptcy, rendering the lender a general unsecured creditor for the
difference, and also may reduce the monthly payments due under the mortgage
loan, change the rate of interest and alter the mortgage loan repayment
schedule. The effect of any proceedings under the federal Bankruptcy Code,
including but not limited to any automatic stay, could result in delays in
receiving payments on the loans underlying a series of securities and possible
reductions in the aggregate amount of the payments.

     The federal tax laws provide priority to certain tax liens over the lien of
a mortgage or secured party.

DUE-ON-SALE CLAUSES

     Generally, each conventional loan will contain a due-on-sale clause which
will generally provide that if the mortgagor or obligor sells, transfers or
conveys the Property, the loan or contract may be accelerated by the mortgagee
or secured party. Court decisions and legislative actions have placed
substantial restriction on the right of lenders to enforce the clauses in many
states. For instance, the California Supreme Court in August 1978 held


                                       78



that due-on-sale clauses were generally unenforceable. However, the Garn-St
Germain Depository Institutions Act of 1982 (the "Garn-St Germain Act"), subject
to certain exceptions, preempts state constitutional, statutory and case law
prohibiting the enforcement of due-on-sale clauses. 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 the
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 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.

     As to loans secured by an owner-occupied residence, the Garn-St Germain Act
sets forth nine specific instances in which a mortgagee covered by the Act may
not exercise its rights under a due-on-sale clause, notwithstanding the fact
that a transfer of the property may have occurred. The inability to enforce a
due-on-sale clause may result in transfer of the related Property to an
uncreditworthy person, which could increase the likelihood of default or may
result in a mortgage bearing an interest rate below the current market rate
being assumed by a new home buyer, which may affect the average life of the
loans and the number of loans which may extend to maturity.

     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 the 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
charges if the obligation is paid prior to maturity. In certain states, there
are or may be specific limitations upon the late charges which a lender may
collect from a borrower for delinquent payments. Certain states also limit the
amounts that a lender may collect from a borrower as an additional charge if the
loan is prepaid. Under certain state laws, prepayment charges may not be imposed
after a certain period of time following the origination of mortgage loans with
respect to prepayments on loans secured by liens encumbering owner-occupied
residential properties. Since many of the Properties will be owner-occupied, it
is anticipated that prepayment charges may not be imposed with respect to many
of the loans. The absence of that restraint on prepayment, particularly with
respect to fixed rate loans having higher Loan Rates, may increase the
likelihood of refinancing or other early retirement of the loans or contracts.
Late charges and prepayment fees are typically retained by servicers as
additional servicing compensation.

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. The Office of Thrift
Supervision, as successor to the Federal Home Loan Bank Board, is authorized to
issue rules and regulations and to publish interpretations governing
implementation of Title V. The statute authorized the states to reimpose
interest rate limits by adopting, before April 1, 1983, a law or constitutional
provision which expressly rejects an application of the federal law. Fifteen
states adopted 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. Certain states have taken action to reimpose interest rate limits
and/or to limit discount points or other charges.

HOME IMPROVEMENT FINANCE

     General. The trust fund may own home improvement loans ("HI Loans") or home
improvement sales contracts ("HI Contracts"). HI Loans are loans that are made
by lenders to finance the purchase of home


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improvements from third party sellers, and may be secured by real estate or
personal property. HI Contracts involve sales agreements under which sellers of
home improvements extend credit to the purchasers and retain personal property
security interests in the home improvements as collateral for repayment of the
credits.

     Real Estate Collateral. HI Loans secured by real estate generally are
subject to many of the same laws that apply to other types of mortgage loans,
especially laws applicable to home equity or junior lien mortgages. In addition,
some laws may provide particular consumer protections in connection with
mortgage loans that are used to finance home improvements, such as special
disclosures or limits on creditor remedies.

     Sale of Chattel Paper. The credit agreements evidencing HI Loans secured by
personal property and HI Contracts generally are "chattel paper" as defined in
the UCC. 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 chattel paper
to the trustee or a designated custodian or may retain possession of the chattel
paper 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,
among other things, give notice of the trust's ownership of the chattel paper.
In general, the chattel paper will not be stamped or otherwise marked to reflect
assignment of the chattel paper from the depositor to the trustee. Therefore, if
through negligence, fraud or otherwise, a subsequent purchaser were able to take
physical possession of the chattel paper without notice of the assignment, the
trust's interest in the chattel paper could be defeated.

     Perfection of Personal Property Security Interests. The HI Loans secured by
personal property and the HI Contracts generally include a "purchase money
security interest," as defined in the UCC, in the home improvements being
financed. A financing statement generally is not required to be filed to perfect
a purchase money security interest in consumer goods. Purchase money security
interests 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 the collateral. However, to
the extent that the collateral subject to a purchase money security interest
becomes a fixture, in order for the related purchase money security interest to
take priority over a conflicting interest in the fixture, the holder's interest
in the home improvement must generally be perfected by a timely fixture filing.
In general, a security interest does not exist under the UCC in ordinary
building materials incorporated into an improvement on land. A security interest
in lumber, bricks, other types of ordinary building materials or other goods
that are deemed to lose that characterization upon incorporation of the
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 remains personal property and has not become subject to the real
estate law, a creditor with a security interest in the property can repossess
the home improvement by voluntary surrender, by "self-help" repossession that is
"peaceful" (i.e., without breach of the peace) or, in the absence of voluntary
surrender and the ability to repossess without breach of the peace, by judicial
process. The holder of a security interest must give the debtor a number of
days' notice, which generally 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 that sale.

     Under the laws applicable in many states, a creditor is entitled to obtain
a deficiency judgment from a debtor for any deficiency on repossession and
resale of the personal property securing the debtor's loan. However, some states
impose prohibitions or limitations on deficiency judgments, and in many cases
the defaulting borrower would have no assets with which to pay a judgment. Also,
certain other statutory provisions, including federal and state bankruptcy and
insolvency laws and general equitable principles, may limit or delay the ability
of a creditor to repossess and resell personal property collateral or enforce a
deficiency judgment.

     Consumer Claims and Defenses. The Federal Trade Commission's Consumer
Claims and Defenses Rule ("FTC Rule") provides that a seller financing the sale
of consumer goods or services must include in the consumer credit contract a
notice that the purchaser of the contract will take the contract subject to the
claims and defenses that the consumer could assert against the seller. The FTC
Rule also provides that, if a seller of consumer goods or services refers a
purchaser to a lender, or is affiliated with the lender by common control,
contract or business arrangement, the seller may not accept the proceeds of a
purchase money loan made by the lender unless the consumer credit contract
contains a notice that the holder of the contract is subject to the claims and
defenses that


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the consumer could assert against the seller. Thus, holders of HI Contracts and
certain HI Loans may be subject to claims and defenses that could be asserted
against the seller of home improvements. Liability under the FTC Rule generally
is limited to amounts received by the holder of the consumer credit obligation;
however, the consumer may be able to assert the FTC Rule as a defense to a claim
brought by the trustee against the consumer.

SERVICEMEMBERS CIVIL RELIEF ACT

     Generally, under the terms of the Servicemembers Civil Relief Act (the
"Relief Act"), a borrower who enters military service after the origination of
the borrower's loan (including a borrower who is a member of the National Guard
or is in reserve status at the time of the origination of the loan and is later
called to active duty) may not be charged interest above an annual rate of 6%
during the period of the borrower's active duty status, unless a court orders
otherwise upon application of the lender. It is possible that the interest rate
limitation could have an effect, for an indeterminate period of time, on the
ability of the master servicer to collect full amounts of interest on certain of
the loans. Unless otherwise provided in the related prospectus supplement, any
shortfall in interest collections resulting from the application of the Relief
Act could result in losses to securityholders. The Relief Act also imposes
limitations which would impair the ability of the master servicer to foreclose
on an affected loan during the borrower's period of active duty status.
Moreover, the Relief Act permits the extension of a loan's maturity and the re-
adjustment of its payment schedule beyond the completion of military service.
Thus, in the event that the loan goes into default, there may be delays and
losses occasioned by the inability to realize upon the Property in a timely
fashion.

JUNIOR MORTGAGES AND RIGHTS OF SENIOR MORTGAGEES

     To the extent that the loans comprising the trust fund for a series are
secured by mortgages which are junior to other mortgages held by other lenders
or institutional investors, the rights of the trust fund (and therefore the
securityholders), as mortgagee under a junior mortgage, are subordinate to those
of any mortgagee under any senior mortgage. The senior mortgagee has the right
to receive hazard insurance and condemnation proceeds and to cause the property
securing the 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 a default
and bring the senior loan current, in either event adding the amounts expended
to the balance due on the junior loan. In many states, absent a provision in the
mortgage or deed of trust, no notice of default is required to be given to a
junior mortgagee.

OTHER LOAN PROVISIONS AND LENDER REQUIREMENTS

     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 those proceeds and awards to any indebtedness secured
by the mortgage, in the order as the mortgagee may determine. Thus, in the event
improvements on the property are damaged or destroyed by fire or other casualty,
or in the event the property is taken by condemnation, the mortgagee or
beneficiary under 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. Lenders in California may not require a
borrower to provide property insurance for more than the replacement cost of the
improvements, even if the loan balance exceeds this amount. In the event of a
casualty, lenders may be required to make the insurance proceeds available to
the borrower for repair and restoration, rather than applying the proceeds to
outstanding indebtedness.

     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 which appear prior to the
mortgage or deed of trust, to provide and maintain fire insurance on the
property, to maintain and repair the property and not to commit or permit any
waste thereof, and to appear in and defend any action or proceeding purporting
to affect the property or the rights of the mortgagee under the mortgage. Upon a
failure of the mortgagor to perform any of these obligations, the


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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. In some cases lenders require borrowers to make monthly deposits for
estimated real estate taxes and property insurance premiums. Certain states,
including California, impose limitations on both the amount of tax and insurance
impounds that may be collected from a borrower, and upon the application of the
impounded funds.

     Generally lenders begin charging interest from the date the loan is
disbursed. In California, regulations may prohibit mortgage lenders financing
residential purchases from charging interest on loan amounts outstanding for
periods more than one day prior to the recording of the deed to the residence,
even though the loan proceeds have been disbursed into escrow.

PRIORITY OF ADDITIONAL ADVANCES

     The form of credit line trust deed or mortgage generally used by most
institutional lenders which make revolving credit line loans typically contains
a "future advance" clause, which provides, in essence, that additional amounts
advanced to or on behalf of the borrower by the beneficiary or lender are to be
secured by the deed of trust or mortgage. The priority of the lien securing any
advance made under the clause may depend in most states on whether the deed of
trust or mortgage is called and recorded as a credit line deed of trust or
mortgage. If the beneficiary or lender advances additional amounts, the advance
is entitled to receive the same priority as amounts initially advanced under the
trust deed or mortgage, notwithstanding the fact that there may be junior trust
deeds or mortgages and other liens which intervene between the date of recording
of the trust deed or mortgage and the date of the future advance, and
notwithstanding that the beneficiary or lender had actual knowledge of the
intervening junior trust deeds or mortgages and other liens at the time of the
advance. In most states, the trust deed or mortgage lien securing mortgage loans
of the type which includes home equity credit lines applies retroactively to the
date of the original recording of the trust deed or mortgage, provided that the
total amount of advances under the home equity credit line does not exceed the
maximum specified principal amount of the recorded trust deed or mortgage,
except as to advances made after receipt by the lender of a written notice of
lien from a judgment lien creditor of the trustor. In California priority will
be lost with respect to advances made under subsequently recorded deeds of trust
or mortgages, if the prior credit line lender has knowledge of the advances
unless the advances under the secured credit line are determined to be
"obligatory" rather than "discretionary."

THE TITLE I PROGRAM

     General. Certain of the loans contained in a trust fund may be loans
insured under the FHA Title I Credit Insurance program created pursuant to
Sections 1 and 2(a) of the National Housing Act of 1934 (the "Title I Program").
Under the Title I Program, the FHA is authorized and empowered to insure
qualified lending institutions against losses on eligible loans. The Title I
Program operates as a coinsurance program in which the FHA insures up to 90% of
certain losses incurred on an individual insured loan, including the unpaid
principal balance of the loan, but only to the extent of the insurance coverage
available in the lender's FHA insurance coverage reserve account. The owner of
the loan bears the uninsured loss on each loan.

     The types of loans which are eligible for insurance by the FHA under the
Title I Program include property improvement loans ("Property Improvement Loans"
or "Title I Loans"). A Property Improvement Loan or Title I Loan means a loan
made to finance actions or items that substantially protect or improve the basic
livability or utility of a property and includes single family improvement
loans.

     There are two basic methods of lending or originating those loans which
include a "direct loan" or a "dealer loan". With respect to a direct loan, the
borrower makes application directly to a lender without any assistance from a
dealer, which application may be filled out by the borrower or by a person
acting at the direction of the borrower who does not have a financial interest
in the loan transaction, and the lender may disburse the loan proceeds solely to
the borrower or jointly to the borrower and other parties to the transaction.
With respect to a dealer loan, the dealer, who has a direct or indirect
financial interest in the loan transaction, assists the borrower in preparing
the loan application or otherwise assists the borrower in obtaining the loan
from lender and the lender may distribute proceeds solely to the dealer or the
borrower or jointly to the borrower and the dealer or other parties. With
respect to a dealer Title I Loan, a dealer may include a seller, a contractor or
supplier of goods or services.


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     Loans insured under the Title I Program are required to have fixed interest
rates and, generally, provide for equal installment payments due weekly,
biweekly, semi-monthly or monthly, except that a loan may be payable quarterly
or semi-annually in order to correspond with the borrower's irregular flow of
income. The first or last payments (or both) may vary in amount but may not
exceed 150% of the regular installment payment, and the first scheduled payment
may be due no later than two months from the date of the loan. The note must
contain a provision permitting full or partial prepayment of the loan. The
interest rate may be established by the lender and must be fixed for the term of
the loan and recited in the note. Interest on an insured loan must accrue from
the date of the loan and be calculated on a simple interest basis. The lender
must assure that the note and all other documents evidencing the loan are in
compliance with applicable federal, state and local laws.

     Each insured lender is required to use prudent lending standards in
underwriting individual loans and to satisfy the applicable loan underwriting
requirements under the Title I Program prior to its approval of the loan and
disbursement of loan proceeds. Generally, the lender must exercise prudence and
diligence to determine whether the borrower and any co-maker is solvent and an
acceptable credit risk, with a reasonable ability to make payments on the loan
obligation. The lender's credit application and review must determine whether
the borrower's income will be adequate to meet the periodic payments required by
the loan, as well as the borrower's other housing and recurring expenses, which
determination must be made in accordance with the expense-to-income ratios
published by the Secretary of HUD.

     Under the Title I Program, the FHA does not review or approve for
qualification for insurance the individual loans insured thereunder at the time
of approval by the lending institution (as is typically the case with other
federal loan programs). If, after a loan has been made and reported for
insurance under the Title I Program, the lender discovers any material
misstatement of fact or that the loan proceeds have been misused by the
borrower, dealer or any other party, it shall promptly report this to the FHA.
In that case, provided that the validity of any lien on the property has not
been impaired, the insurance of the loan under the Title I Program will not be
affected unless the material misstatements of fact or misuse of loan proceeds
was caused by (or was knowingly sanctioned by) the lender or its employees.

     Requirements for Title I Loans. The maximum principal amount for Title I
Loans must not exceed the actual cost of the project plus any applicable fees
and charges allowed under the Title I Program; provided that the maximum amount
does not exceed $25,000 (or the current applicable amount) for a single family
property improvement loan. Generally, the term of a Title I Loan may not be less
than six months nor greater than 20 years and 32 days. A borrower may obtain
multiple Title I Loans with respect to multiple properties, and a borrower may
obtain more than one Title I Loan with respect to a single property, in each
case as long as the total outstanding balance of all Title I Loans in the same
property does not exceed the maximum loan amount for the type of Title I Loan
thereon having the highest permissible loan amount.

     Borrower eligibility for a Title I Loan requires that the borrower have at
least a one-half interest in either fee simple title to the real property, a
lease thereof for a term expiring at least six months after the final maturity
of the Title I Loan or a recorded land installment contract for the purchase of
the real property, and that the borrower have equity in the property being
improved at least equal to the amount of the Title I Loan if the loan amount
exceeds $15,000. Any Title I Loan in excess of $7,500 must be secured by a
recorded lien on the improved property which is evidenced by a mortgage or deed
of trust executed by the borrower and all other owners in fee simple.

     The proceeds from a Title I Loan may be used only to finance property
improvements which substantially protect or improve the basic livability or
utility of the property as disclosed in the loan application. The Secretary of
HUD has published a list of items and activities which cannot be financed with
proceeds from any Title I Loan and from time to time the Secretary of HUD may
amend the list of items and activities. With respect to any dealer Title I Loan,
before the lender may disburse funds, the lender must have in its possession a
completion certificate on a HUD approved form, signed by the borrower and the
dealer. With respect to any direct Title I Loan, the borrower is required to
submit to the lender, promptly upon completion of the improvements but not later
than six months after disbursement of the loan proceeds with one six month
extension if necessary, a completion certificate, signed by the borrower. The
lender or its agent is required to conduct an on-site inspection on any Title I
Loan where the principal obligation is $7,500 or more, and on any direct Title I
Loan where the borrower fails to submit a completion certificate.


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     FHA Insurance Coverage. Under the Title I Program the FHA establishes an
insurance coverage reserve account for each lender which has been granted a
Title I insurance contract. The amount of insurance coverage in this account is
10% of the amount disbursed, advanced or expended by the lender in originating
or purchasing eligible loans registered with FHA for Title I insurance, with
certain adjustments. The balance in the insurance coverage reserve account is
the maximum amount of insurance claims the FHA is required to pay. Loans to be
insured under the Title I Program will be registered for insurance by the FHA
and the insurance coverage attributable to the loans will be included in the
insurance coverage reserve account for the originating or purchasing lender
following the receipt and acknowledgment by the FHA of a loan report on the
prescribed form pursuant to the Title I regulations. The FHA charges a fee of
0.50% per annum of the net proceeds (the original balance) of any eligible loan
so reported and acknowledged for insurance by the originating lender. The FHA
bills the lender for the insurance premium on each insured loan annually, on
approximately the anniversary date of the loan's origination. If an insured loan
is prepaid during the year, FHA will not refund the insurance premium, but will
abate any insurance charges falling due after the prepayment.

     Under the Title I Program the FHA will reduce the insurance coverage
available in the lender's FHA insurance coverage reserve account with respect to
loans insured under the lender's contract of insurance by (i) the amount of the
FHA insurance claims approved for payment relating to the insured loans and (ii)
the amount of insurance coverage attributable to insured loans sold by the
lender. The balance of the lender's FHA insurance coverage reserve account will
be further adjusted as required under Title I or by the FHA, and the insurance
coverage therein may be earmarked with respect to each or any eligible loans
insured thereunder, if a determination is made by the Secretary of HUD that it
is in its interest to do so. Originations and acquisitions of new eligible loans
will continue to increase a lender's insurance coverage reserve account balance
by 10% of the amount disbursed, advanced or expended in originating or acquiring
the eligible loans registered with the FHA for insurance under the Title I
Program. The Secretary of HUD may transfer insurance coverage between insurance
coverage reserve accounts with earmarking with respect to a particular insured
loan or group of insured loans when a determination is made that it is in the
Secretary's interest to do so.

     The lender may transfer (except as collateral in a bona fide loan
transaction) insured loans and loans reported for insurance only to another
qualified lender under a valid Title I contract of insurance. Unless an insured
loan is transferred with recourse or with a guaranty or repurchase agreement,
the FHA, upon receipt of written notification of the transfer of the loan in
accordance with the Title I regulations, will transfer from the transferor's
insurance coverage reserve account to the transferee's insurance coverage
reserve account an amount, if available, equal to 10% of the actual purchase
price or the net unpaid principal balance of the loan (whichever is less).
However, under the Title I Program not more than $5,000 in insurance coverage
shall be transferred to or from a lender's insurance coverage reserve account
during any October 1 to September 30 period without the prior approval of the
Secretary of HUD.

     Claims Procedures Under Title I. Under the Title I Program the lender may
accelerate an insured loan following a default on the loan only after the lender
or its agent has contacted the borrower in a face-to-face meeting or by
telephone to discuss the reasons for the default and to seek its cure. If the
borrower does not cure the default or agree to a modification agreement or
repayment plan, the lender will notify the borrower in writing that, unless
within 30 days the default is cured or the borrower enters into a modification
agreement or repayment plan, the loan will be accelerated and that, if the
default persists, the lender will report the default to an appropriate credit
agency. The lender may rescind the acceleration of maturity after full payment
is due and reinstate the loan only if the borrower brings the loan current,
executes a modification agreement or agrees to an acceptable repayment plan.

     Following acceleration of maturity upon a secured Title I Loan, the lender
may either (a) proceed against the property under any security instrument, or
(b) make a claim under the lender's contract of insurance. If the lender chooses
to proceed against the property under a security instrument (or if it accepts a
voluntary conveyance or surrender of the property), the lender may file an
insurance claim only with the prior approval of the Secretary of HUD.

     When a lender files an insurance claim with the FHA under the Title I
Program, the FHA reviews the claim, the complete loan file and documentation of
the lender's efforts to obtain recourse against any dealer who has agreed
thereto, certification of compliance with applicable state and local laws in
carrying out any foreclosure or repossession, and evidence that the lender has
properly filed proofs of claims, where the borrower is bankrupt or


                                       84



deceased. Generally, a claim for reimbursement for loss on any Title I Loan must
be filed with the FHA no later than nine months after the date of default of the
loan. Concurrently with filing the insurance claim, the lender shall assign to
the United States of America the lender's entire interest in the loan note (or a
judgment in lieu of the note), in any security held and in any claim filed in
any legal proceedings. If, at the time the note is assigned to the United
States, the Secretary has reason to believe that the note is not valid or
enforceable against the borrower, the FHA may deny the claim and reassign the
note to the lender. If either defect is discovered after the FHA has paid a
claim, the FHA may require the lender to repurchase the paid claim and to accept
a reassignment of the loan note. If the lender subsequently obtains a valid and
enforceable judgment against the borrower, the lender may resubmit a new
insurance claim with an assignment of the judgment. The FHA may contest any
insurance claim and make a demand for repurchase of the loan at any time up to
two years from the date the claim was certified for payment and may do so
thereafter in the event of fraud or misrepresentation on the part of the lender.

     Under the Title I Program the amount of an FHA insurance claim payment,
when made, is equal to the Claimable Amount, up to the amount of insurance
coverage in the lender's insurance coverage reserve account. For the purposes
hereof, the "Claimable Amount" means an amount equal to 90% of the sum of: (a)
the unpaid loan obligation (net unpaid principal and the uncollected interest
earned to the date of default) with adjustments thereto if the lender has
proceeded against property securing the loan; (b) the interest on the unpaid
amount of the loan obligation from the date of default to the date of the
claim's initial submission for payment plus 15 calendar days (but not to exceed
9 months from the date of default), calculated at the rate of 7% per annum; (c)
the uncollected court costs; (d) the attorney's fees not to exceed $500; and (e)
the expenses for recording the assignment of the security to the United States.

CONSUMER PROTECTION LAWS

     Federal, state and local laws extensively regulate various aspects of
brokering, originating, servicing and collecting loans secured by consumers'
dwellings. Among other things, these laws may regulate interest rates and other
charges, require disclosures, impose financial privacy requirements, mandate
specific business practices, and prohibit unfair and deceptive trade practices.
In addition, licensing requirements may be imposed on persons that broker,
originate, service or collect the loans.

     Additional requirements may be imposed under federal, state or local laws
on so-called "high cost mortgage loans," which typically are defined as loans
secured by a consumer's dwelling that have interest rates or origination costs
in excess of prescribed levels. These laws may limit certain loan terms, such as
prepayment charges, or the ability of a creditor to refinance a loan unless it
is in the borrower's interest. In addition, certain of these laws may allow
claims against loan brokers or originators, including claims based on fraud or
misrepresentations, to be asserted against persons acquiring the loans, such as
the trust fund.

     The federal laws that may apply to loans held in the trust fund include the
following:

o    the Truth in Lending Act and its regulations, which (among other things)
     require disclosures to borrowers regarding the terms of loans and provide
     consumers who pledged their principal dwelling as collateral in a
     non-purchase money transaction with a right of rescission that generally
     extends for three days after proper disclosures are given;

o    the Home Ownership and Equity Protection Act and its regulations, which
     (among other things) imposes additional disclosure requirements and
     limitations on loan terms with respect to non- purchase money, installment
     loans secured by the consumer's principal dwelling that have interest rates
     or origination costs in excess of prescribed levels;

o    the Home Equity Loan Consumer Protection Act and its regulations, which
     (among other things) limits changes that may be made to open-end loans
     secured by the consumer's dwelling, and restricts the ability to accelerate
     balances or suspend credit privileges on the loans;


                                       85



o    the Real Estate Settlement Procedures Act and its regulations, which (among
     other things) prohibit the payment of referral fees for real estate
     settlement services (including mortgage lending and brokerage services) and
     regulate escrow accounts for taxes and insurance and billing inquiries made
     by borrowers;

o    the Equal Credit Opportunity Act and its regulations, which (among other
     things) generally prohibits discrimination in any aspect of a credit
     transaction on certain enumerated basis, such as age, race, color, sex,
     religion, marital status, national origin or receipt of public assistance;

o    the Fair Credit Reporting Act, which (among other things) regulates the use
     of consumer reports obtained from consumer reporting agencies and the
     reporting of payment histories to consumer reporting agencies; and

o    the Federal Trade Commission's Rule on Preservation of Consumer Claims and
     Defenses, which generally provides that the rights of an assignee of a
     conditional sales contract (or of certain lenders making purchase money
     loans) to enforce a consumer credit obligation are subject to the claims
     and defenses that the consumer could assert against the seller of goods or
     services financed in the credit transaction.

     The penalties for violating these federal, state, or local laws vary
depending on the applicable law and the particular facts of the situation.
However, private plaintiffs typically may assert claims for actual damages and,
in some cases, also may recover civil money penalties or exercise a right to
rescind the loan. Violations of certain laws may limit the ability to collect
all or part of the principal or interest on a loan and, in some cases, borrowers
even may be entitled to a refund of amounts previously paid. Federal, state and
local administrative or law enforcement agencies also may be entitled to bring
legal actions, including actions for civil money penalties or restitution, for
violations of certain of these laws.

     Depending on the particular alleged misconduct, it is possible that claims
may be asserted against various participants in secondary market transactions,
including assignees that hold the loans, such as the trust fund. Losses on loans
from the application of these federal, state and local laws that are not
otherwise covered by a credit enhancement will be borne by the holders of one or
more classes of securities.

                    MATERIAL FEDERAL INCOME TAX CONSEQUENCES

GENERAL

     The following is a discussion of the anticipated material federal income
tax consequences of the purchase, ownership, and disposition of the securities
and is based on advice of special counsel to the depositor ("Tax Counsel"),
named in the prospectus supplement. The discussion is based upon the provisions
and interpretations 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, which change could apply retroactively.

     The discussion does not purport to deal with all aspects of federal income
taxation that may affect particular investors in light of their individual
circumstances, nor with certain types of investors subject to special treatment
under the federal income tax laws. This discussion 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, but much of the
discussion is applicable to other investors as well. Prospective Investors are
encouraged to consult their own tax advisers concerning the federal, state,
local and any other tax consequences to them of the purchase, ownership and
disposition of the securities.

     The federal income tax consequences to Holders will vary depending on
whether

o    the securities of a series are classified as indebtedness;


                                       86



o    an election is made to treat the trust fund relating to a particular series
     of securities as a real estate mortgage investment conduit ("REMIC") under
     the Internal Revenue Code of 1986, as amended (the "Code");

o    the securities represent an ownership interest in some or all of the assets
     included in the trust fund for a series; or

o    an election is made to treat the trust fund relating to a particular series
     of certificates as a partnership.

     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 the series. The
depositor will file with the SEC a Form 8-K on behalf of the related trust fund
containing an opinion of Tax Counsel with respect to the validity of the
information set forth under "Material Federal Income Tax Consequences" herein
and in the related prospectus supplement.

     TAXATION OF DEBT SECURITIES

     Interest and Acquisition Discount. The income on securities representing
regular interests in a REMIC ("Regular Interest Securities") is generally
taxable to holders in the same manner as the income on evidences of
indebtedness. Stated interest on 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."

     Debt securities that are Compound Interest securities will, and certain
other Debt securities 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 through 1275 of the Code and the Treasury regulations
issued thereunder (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. A holder of
a Debt security must include 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, however if it is less than a de minimis amount as
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 related closing date, the issue price for the class will be
treated as the fair market value of the 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 the 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 the 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. The interest on
those Debt securities will be unconditionally payable and constitute qualified
stated interest, not OID. Absent clarification of the OID Regulations, however,
if 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


                                       87



takes into account the length of the interval between payments. If the interval
between the issue date and the first distribution date on a Debt security is
longer than the interval between subsequent distribution dates, but the amount
of the distribution is not adjusted to reflect the longer interval, then for
purposes of determining whether the Debt security has de minimis OID, the stated
redemption price of the Debt security is treated as the issue price (determined
as described above) plus the greater of (i) the amount of the distribution
foregone or (ii) the excess (if any) of the Debt security's stated principal
over its issue price. If the interval between the issue date and the first
distribution date on a Debt security is shorter than the interval between
subsequent distribution dates, but the amount of the distribution is not
adjusted to reflect the shorter interval, then for the purposes of determining
the OID, if any, on the Debt security, the excess amount of the distribution
would be added to the Debt security's stated redemption price.

     Under the de minimis rule, OID on a Debt security will be considered to be
zero if the OID is less than 0.25% of the stated redemption price at maturity of
the Debt security multiplied by the weighted average maturity of the Debt
security. The weighted average maturity of a Debt security is the sum of the
weighted maturity of each payment of the Debt security's stated redemption
price. The weighted maturity of each stated redemption price payment is (i) the
number of complete years from the issue date until the payment is made,
multiplied by (ii) a fraction, the numerator of which is the amount of the
payment and the denominator of which is the Debt security's total stated
redemption price.

     Although unclear, it appears that the projected payments of stated
redemption price should be based on a schedule that is determined in accordance
with the Prepayment Assumption. The Prepayment Assumption with respect to a
series of Regular Certificates will be set forth in the related prospectus
supplement. Holders generally must report de minimis OID pro rata as principal
payments are received, and that income will be capital gain if the Debt security
is held as a capital asset. Holders may, however, 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,

o    the interest is unconditionally payable at least annually,

o    the issue price of the Debt security does not exceed the total
     noncontingent principal payments and

o    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 the Debt
     security.

     In the case of Compound Interest securities, certain Interest Weighted
Securities (as defined herein), 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.

     Regulations governing the calculation of OID on instruments having
contingent interest payments do not apply to debt instruments subject to Code
Section 1272(a)(6), such as the Debt securities, and the OID Regulations do not
contain provisions specifically interpreting Code Section 1272(a)(6). Until the
Treasury issues guidance to the contrary, the trustee intends to base its OID
computations on Code Section 1272(a)(6) and the OID Regulations as described in
this prospectus. Because no regulatory guidance currently exists under Code
Section 1272(a)(6), however, we can give no assurance that the 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 the Debt security, the
sum of the "daily portions" of the original issue discount. The amount of OID
includible in income by a holder will be computed by allocating to each day in
an accrual period in a taxable year a pro rata portion of the original issue
discount that accrued during that day. In the case of a Debt security that is
not a Regular Interest Security or that is subject to acceleration due to
prepayments on the underlying loans, the amount of OID includible in income of a
Holder for an accrual period 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


                                       88



interest. The adjusted issue price of a Debt security is the sum of its issue
price plus prior accruals of OID, reduced by the total payments other than
qualified stated interest payments made with respect to the Debt security in all
prior accrual periods.

     The amount of OID included in income by a holder of a debt instrument that
is subject to acceleration due to prepayments on other debt obligations securing
the 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 (i) 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 stated redemption price of the
Pay-Through Security, over (ii) 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 which 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 original issue discount 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 original issue discount 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
Securities (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 those adjustments. If the IRS were to require
that OID be accrued without the 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 trustee intends, based on the OID Regulations, to
calculate OID on those 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 if the holder purchases the Debt security for an amount
that exceeds its adjusted issue price, then the holder will be entitled (as will
an initial holder who pays more than a Debt security's issue price) to offset
the OID by comparable economic accruals of the excess.

     Effects of Defaults and Delinquencies. Holders of a Pay-Through Security
will be required to report income with respect to the security under an accrual
method without giving effect to delays and reductions in distributions
attributable to a default or delinquency on the underlying loans, except
possibly to the extent that it can be established that the 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 the 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 the losses
or reductions in income are uncertain and, accordingly, holders of securities
are encouraged to consult their 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 Issuer 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 the 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 IRS could assert that income derived from an


                                       89



Interest Weighted Security should be calculated as if the security were a
security purchased at a premium equal to the excess of the price paid by the
holder for the security over its stated principal amount, if any. Under this
approach, a holder would be entitled to amortize the premium only if it has in
effect an election under Section 171 of the Code with respect to all taxable
debt instruments held by the 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. That 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 case of Debt securities bearing
interest at a rate that varies directly, or according to a fixed formula, with
an objective index, it appears that (i) the yield to maturity of the Debt
securities and (ii) in the case of Pay-Through Securities, the present value of
all payments remaining to be made on the Debt securities, should be calculated
as if the interest index remained at its value as of the issue date of the
securities. Because the proper method of adjusting accruals of OID on a variable
rate Debt security is uncertain, holders of variable rate Debt securities are
encouraged to consult their tax advisers regarding the appropriate treatment of
the securities for federal income tax purposes.

     Market Discount. A security may be subject to the market discount rules of
Sections 1276 through 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. That market discount would accrue in a
manner to be provided in Treasury regulations but, until the regulations are
issued, the 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) (a) in the case of securities (or in the case of
a Pass-Through Security (as defined herein), as set forth below, the loans
underlying the security) issued without original issue discount, on the basis of
the rates of the 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 the security) issued with original issue discount, on the
basis of the rates of the OID in the relevant period to total OID remaining to
be paid.

     Section 1277 of the Code provides that 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 the security is allowed as a current deduction only to the
extent the excess is greater than the market discount that accrued during the
taxable year in which the interest expense was incurred. In general, the
deferred portion of any interest expense will be deductible when the 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 the
holder during the taxable year the election is made and thereafter, in which
case the interest deferral rule will not apply.

     Premium. 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 the security (and not as a separate deduction item) on a
constant yield method. Although no regulations addressing the computation of
premium accrual on securities similar to the securities have been issued, the
legislative history of the Tax Reform Act of 1986 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 the Class. If a holder makes an
election to amortize premium on a Debt security, the 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 the holder, and will be irrevocable without the consent of the
IRS. Purchasers who pay a premium for the securities are encouraged to consult
their tax advisers regarding the election to amortize premium and the method to
be employed.


                                       90



     The Treasury regulations (the "Bond Premium Regulations") dealing with
amortizable bond premium do not apply to prepayable debt instruments subject to
Code Section 1272(a)(6) such as the securities. Absent further guidance from the
IRS, the trustee intends to account for amortizable bond premium in the manner
described above. Prospective purchasers of the securities are encouraged to
consult their tax advisors regarding the possible application of the 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. 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 the holder of the Debt security acquires during the year of
the election and 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 the holder owns during the year
of the election and/or acquires thereafter. 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 one or more REMIC elections are
made with respect to a series of securities, then the arrangement by which the
securities of that series are issued will be treated as one or more REMICs 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 one
or more REMIC elections are made with respect to a series of securities, (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)(5)(B), 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), (ii) or (iii) in the proportion
that those REMIC assets (and income in the case of (ii)) are qualifying assets
(and income).

                  REMIC EXPENSES; SINGLE CLASS REMICS

     As a general rule, all of the expenses of a REMIC will be taken into
account by holders of the Residual Interests. In the case of a "single class
REMIC," however, the expenses will be allocated, under Treasury regulations,
among the holders of the Regular Interest Securities and the holders of the
Residual Interests (as defined herein) 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), the expenses will be deductible only to the extent
that the expenses, plus other "miscellaneous itemized deductions" of the Holder,
exceed 2% of the Holder's adjusted gross income and are not deductible for
purposes of computing the alternative minimum tax. In addition, 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) will be reduced by the lesser of

o    3% of the excess of adjusted gross income over the applicable amount, or

o    80% of the amount of itemized deductions otherwise allowable for the
     taxable year.


                                       91



     These percentages are scheduled to be reduced starting in 2006 and return
to current levels in 2010. 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

o    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

o    is similar to such a trust and which is structured with the principal
     purpose of avoiding the single class REMIC rules.

The applicable prospectus supplement may provide for the allocation of REMIC
expenses, but if it does not, the expenses of the REMIC will be allocated to
holders of the related Residual Interests.

TAXATION OF THE REMIC

     General. Although a REMIC is a separate entity for federal income tax
purposes, 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.

     Calculation of REMIC Income. 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

o    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

o    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 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 the expenses, when aggregated with the holder's other
miscellaneous itemized deductions for that year, do not exceed two percent of
the holder's adjusted gross income.

     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.

     Subject to possible application of the de minimis rules, the method of
accrual by the REMIC of OID income on mortgage loans will be equivalent to the
method under which holders of Pay-Through Securities accrue original issue
discount (that is, 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 the discount in income, but without regard to the de minimis
rules. See "Taxation of Debt Securities" above. A REMIC that acquires loans at a
market discount, however, must include that market discount in income currently,
as it accrues, on a constant yield basis.

     To the extent that the REMIC's basis allocable to loans that it holds
exceeds their principal amounts, the resulting premium will be amortized over
the life of the loans (taking into account the Prepayment Assumption) on a
constant yield method.

     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


                                       92


account any losses from prohibited transactions or any deductions attributable
to any prohibited transaction that resulted in a loss. In general, prohibited
transactions include:

o    subject to limited exceptions, the sale or other disposition of any
     qualified mortgage transferred to the REMIC;

o    subject to a limited exception, the sale or other disposition of a cash
     flow investment;

o    the receipt of any income from assets not permitted to be held by the REMIC
     pursuant to the Code; or

o    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 Interests will generally be responsible
for the payment of any such taxes imposed on the REMIC. To the extent not paid
by the holders or otherwise, however, the taxes will be paid out of the trust
fund and will be allocated pro rata to all outstanding classes of securities of
the REMIC.

TAXATION OF HOLDERS OF RESIDUAL INTERESTS

     The holder of a security representing a residual interest (a "Residual
Interest") 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 the holder
held the Residual Interest. 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 the quarter, and by allocating that amount among the
holders (on that day) of the Residual Interests in proportion to their
respective holdings on that day.

     The holder of a Residual Interest must report its proportionate share of
the taxable income of the REMIC whether or not it receives cash distributions
from the REMIC attributable to the income or loss. The reporting of taxable
income without corresponding 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 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 may be less than that of such a bond or instrument.

         Limitation on Losses. The amount of the REMIC's net loss that a holder
may take into account currently is limited to the holder's adjusted basis in the
Residual Interest at the end of the calendar quarter in which the loss arises. A
holder's basis in a Residual Interest will initially equal the 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 Interests to deduct net losses may be subject to additional
limitations under the Code, as to which the holders are encouraged to consult
their tax advisers.


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     Distributions. Distributions on a Residual Interest (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. If the
amount of the payment exceeds a holder's adjusted basis in the Residual
Interest, however, the holder will recognize gain (treated as gain from the sale
of the Residual Interest) to the extent of the excess.

     Sale or Exchange. A holder of a Residual Interest will recognize gain or
loss on the sale or exchange of a Residual Interest equal to the difference, if
any, between the amount realized and the holder's adjusted basis in the Residual
Interest at the time of the sale or exchange. Any loss from the sale of a
Residual Interest will be subject to the "wash sale" rules of Code Section 1091
if, during the period beginning six months before and ending six months after
the sale of the Residual Interest, the seller reacquires the Residual Interest,
or acquires (i) a Residual Interest in any other REMIC, (ii) a similar interest
in a "taxable mortgage pool" (as defined in Code Section 7701(i)) or (iii) an
ownership interest in a FASIT (as defined in Code Section 860L). In general,
under the wash sale rules, loss from the Residual Interest will be disallowed
and the Residual Interest Holder's basis in the replacement interest will be the
basis in the Residual Interest that was sold, decreased or increased, as the
case may be, by the difference between the selling price of the Residual
Interest and the purchase price of the replacement interest.

     Excess Inclusions. The portion of the REMIC taxable income of a holder of a
Residual Interest consisting of "excess inclusion" income may not be offset by
other deductions or losses, including net operating losses, on the holder's
federal income tax return. Further, if the holder of a Residual Interest is an
organization subject to the tax on unrelated business income imposed by Code
Section 511, the holder's excess inclusion income will be treated as unrelated
business taxable income of the 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 were to own a Residual
Interest, 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 Interest 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."

     Three special rules apply for determining the effect of excess inclusions
on the alternative minimum taxable income of a residual holder. First,
alternative minimum taxable income for the residual holder is determined without
regard to the 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.

     In the case of a Residual Interest that has no significant value, the
excess inclusion portion of a REMIC's income is generally equal to all of the
REMIC taxable income allocable to the residual holder. In other cases, 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, over the daily accruals for the quarterly period of (i) 120% of the
long term applicable federal rate on the Startup Day multiplied by (ii) the
adjusted issue price of the Residual Interest at the beginning of the 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 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 Interests may be disregarded. See "-- Restrictions on Ownership and
Transfer of Residual Interests" and "-- Tax Treatment of Foreign Investors"
below.

     Restrictions on Ownership and Transfer of Residual Interests. As a
condition to qualification as a REMIC, reasonable arrangements must be made to
prevent the ownership of a 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


                                       94



imposed by Sections 1 through 1399 of the Code, if the 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. In addition, no transfer of a Residual Interest 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.

     If a Residual Interest is transferred to a Disqualified Organization in
violation of the restrictions set forth above, a substantial tax can be imposed
on the transferor of the Residual Interest at the time of the transfer. In
addition, if a Disqualified Organization holds an interest in a pass-through
entity (including, among others, a partnership, trust, real estate investment
trust, regulated investment company, or any person holding as nominee), that
owns a Residual Interest, the pass-through entity will be required to pay an
annual tax on the Disqualified Organization's pass-through share of the excess
inclusion income of the REMIC. If an "electing large partnership" holds a
Residual Interest, all interests in the electing large partnership are treated
as held by disqualified organizations for purposes of the tax imposed upon a
pass-through entity under section 860E(e) of the Code. An exception to this tax,
otherwise available to a pass-through entity that is furnished certain
affidavits by record holders of interests in the entity and that does not know
the affidavits are false, is not available to an electing large partnership.

     Noneconomic Residual Interests. The REMIC Regulations disregard, for
federal income tax purposes, any transfer of a Noneconomic Residual Interest to
a "U.S. Transferee" unless no significant purpose of the transfer is to enable
the transferor to impede the assessment or collection of tax. For this purpose,
a U.S. Transferee means a U.S. Person as defined under "Certain Federal Income
Tax Consequences -- Non-REMIC Certificates -- Non-U.S. Persons." A U.S.
Transferee also includes foreign entities and individuals (Non-U.S. Persons) but
only if their income from the Residual Interest is subject to tax under Code
Section 871(b) or Code Section 882 (income effectively connected with a U.S.
trade or business). If the transfer of a Noneconomic Residual Interest is
disregarded, the transferor continues to be treated as the owner of the Residual
Interest and continues to be subject to tax on its allocable portion of the net
income of the REMIC.

         A Residual Interest (including a Residual Interest with a positive
value at issuance) is a "Noneconomic Residual Interest" at the time of transfer
unless, (i) taking into account the Prepayment Assumption and any required or
permitted clean up calls or required liquidation provided for in the REMIC's
organizational documents, the present value of the expected future distributions
on the Residual Interest at least equals the product of (A) the present value of
the anticipated excess inclusions and (B) the highest corporate income tax rate
in effect 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 taxes accrue on the anticipated excess inclusions
in an amount sufficient to satisfy the accrued taxes. A transfer of a
Noneconomic Residual Interest has a "significant purpose to impede the
assessment or collection of tax" if, at the time of transfer, the transferor
either knew or should have known (had "Improper Knowledge") that the transferee
would be unwilling or unable to pay taxes due on its share of the taxable income
of the REMIC.

         The REMIC Regulations also provide a safe harbor under which the
transferor of a Noneconomic Residual Interest is presumed not to have Improper
Knowledge at the time of transfer if the following conditions are met: (i) the
transferor conducts a reasonable investigation of the financial condition of the
transferee, finds that the transferee has historically paid its debts as they
came due, and finds no significant evidence to indicate that the transferee will
not continue to pay its debts as they come due; (ii) the transferee represents
that it understands that as a result of holding the Noneconomic Residual
Interest, it may incur tax liabilities in excess of any cash flows generated by
the Noneconomic Residual Interest and intends to pay taxes associated with
holding the Noneconomic Residual Interest as they become due; (iii) the
transferee represents that it will not cause income from the Noneconomic
Residual Interest to be attributable to a foreign permanent establishment or
fixed base (within the meaning of an applicable income tax treaty) ("Offshore
Location") of the transferee or another U.S. taxpayer; (iv) the transferee is
not located in an Offshore Location; and (v) the transferee meets either the
Formula Test or the Asset Test.

         A transfer of a Noneconomic Residual Interest meets the Formula Test if
the present value of the anticipated tax liabilities associated with holding the
Residual Interest does not exceed the sum of, (i) the present value of any
consideration given to the transferee to acquire the interest; (ii) the present
value of the expected future distributions on the interest; and (iii) the
present value of the anticipated tax savings associated with holding the


                                       95



interest as the REMIC generates losses. For purposes of the Formula Test the
transferee is assumed to pay tax at a rate equal to the highest corporate rate
of tax specified in Code Section 11(b)(1). If, however, the transferee has been
subject to the alternative minimum tax ("AMT") under Code Section 55 in the
preceding two years and will compute its taxable income in the current taxable
year using the AMT rate, then the transferee can assume that it pays tax at the
AMT rate specified in Code Section 55(b)(1)(B). Present values are computed
using a discount rate equal to the Federal short-term rate prescribed by Code
Section 1274(d) for the month of the transfer and the compounding period used by
the transferee.

     The Asset Test only applies in cases where the transferee is an Eligible
Corporation. To be an Eligible Corporation, the transferee must be a taxable
domestic C corporation other than a regulated investment company, a real estate
investment trust, a REMIC or a cooperative. In addition, regardless of who the
transferee may be, the transfer of a Residual Interest to an Offshore Location
does not qualify as a transfer to an Eligible Corporation even if the Offshore
Location is only a branch of an Eligible Corporation and not a separate legal
entity. A transfer of a Noneconomic Residual Interest meets the Asset Test if at
the time of the transfer, and at the close of each of the transferee's two
fiscal years preceding the year of transfer, the transferee's gross assets for
financial reporting purposes exceed $100 million and its net assets for
financial reporting purposes exceed $10 million. The gross assets and net assets
of a transferee do not include any obligation of any person related to the
transferee (such as a shareholder, partner, affiliate or sister corporation) or
any asset acquired for a principal purpose of satisfying the Asset Test. In
addition, the transferee must make a written agreement that any subsequent
transfer of the interest will be to another Eligible Corporation in a
transaction that satisfies the Asset Test. A transfer fails to meet this
requirement if the transferor knows, or has reason to know, that the transferee
will not honor the restrictions on subsequent transfers. Finally, the facts and
circumstances known to the transferor on or before the date of the transfer must
not reasonably indicate that the taxes associated with the Residual Interest
will not be paid. The consideration given to the transferee to acquire the
non-economic Residual Interest in the REMIC is only one factor to be considered.
However, if the amount of consideration is so low that under any set of
reasonable assumptions a reasonable person would conclude that the taxes
associated with holding the Residual Interest will not be paid, then the
transferor is deemed to know that the transferee cannot or will not pay. In
determining whether the amount is too low, the specific terms of the Formula
Test need not be used.

     Treatment of Inducement Fees. Regulations require inducement fees to be
included in income over a period reasonably related to the period in which the
related Residual Interest is expected to generate taxable income or net loss
allocable to the holder. The regulations provide two safe harbor methods, which
permit transferees to include inducement fees in income either (i) in the same
amounts and over the same periods that the taxpayer uses for financial reporting
purposes, provided that the period is not shorter than the period the REMIC is
expected to generate taxable income or (ii) ratably over the remaining
anticipated weighted average life of all the Regular and Residual Interests
issued by the REMIC, determined based on actual distributions projected as
remaining to be made on the interests under the prepayment assumption. If the
holder of a Residual Interest sells or otherwise disposes of the Residual
Interest, any unrecognized portion of the inducement fee must be taken into
account at the time of the sale or disposition. The final regulations also
provide that an inducement fee shall be treated as income from sources within
the United States. In addition, the IRS has issued administrative guidance
addressing the procedures by which transferees of Noneconomic Residual Interests
may obtain automatic consent from the IRS to change the method of accounting for
REMIC inducement fee income to one of the safe harbor methods provided in these
final regulations (including a change from one safe harbor method to the other
safe harbor method). Prospective purchasers of the Residual Interests are
encouraged to consult with their tax advisors regarding the effect of these
final regulations and the related guidance regarding the procedures for
obtaining automatic consent to change the method of accounting.

     Mark to Market Rules. A Residual Interest cannot be marked-to-market.

ADMINISTRATIVE MATTERS

     A REMIC's books must be maintained on a calendar year basis and a REMIC
must file an annual federal income tax return. Ordinarily, a 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.


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TAX STATUS AS A GRANTOR TRUST

     General. As specified in the related prospectus supplement if REMIC or
partnership elections are not made, 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 I of Subchapter J of the
Code and not as a corporation (the securities of that series, "Pass-Through
Securities"). In some series there will be no separation of the principal and
interest payments on the loans. In those 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.

     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 trustee and the servicer and similar fees (collectively, the "Servicing
Fee")), at the same time and in the same manner as those 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, that 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, that 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 the Servicing Fees under Section 162 or Section 212 of the Code to the
extent that the Servicing Fees represent "reasonable" compensation for the
services rendered by the 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, for
example, because they exceed reasonable compensation) will be deductible in
computing the holder's regular tax liability only to the extent that the fees,
when added to other miscellaneous itemized deductions, exceed 2% of adjusted
gross income and are not deductible in computing the holder's alternative
minimum tax liability. In addition, 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) 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 the taxable year. (These percentages are scheduled to be reduced
in 2006 and return to current levels in 2010).

     Discount or Premium on Pass-Through Securities. The holder's purchase price
of a Pass-Through Security is to be allocated among the underlying 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, generally, 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. 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 security, rather than with respect to the security. A Holder that
acquires an interest in a loan 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.

     The holder generally will be required to allocate the portion of market
discount that is allocable to a loan among the principal payments on the loan
and to include the discount allocable to each principal payment in


                                       97



ordinary income at the time the principal payment is made. That treatment
would generally result in discount being included in income at a different 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 the 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 the stripped interest.

     Servicing fees in excess of reasonable servicing fees ("excess servicing")
will be treated under the stripped bond rules. If the excess servicing fee is
less than 100 basis points (that is, 1% interest on the loan 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 OID Regulations and judicial decisions provide no direct guidance on
how the interest and original issue discount rules 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 which take into account with respect
to each accrual period the effect of prepayments during the period. However, the
Tax Reform Act of 1986 does not, absent Treasury regulations, appear
specifically to cover instruments such as the Stripped Securities, which
represent ownership interests in the underlying loans rather than debt
instruments "secured by" those loans. The Taxpayer Relief Act of 1997 may allow
use of the Cash Flow Bond Method with respect to Stripped Securities and other
Pass-Through Securities because it provides that the method applies to any pool
of debt instruments the yield on which may be affected by prepayments.
Nevertheless, it is believed that the Cash Flow Bond Method is a reasonable
method of reporting income for the securities, and it is expected that OID will
be reported on that basis; provided that the applicable prospectus supplement
may provide for the reporting of OID on an alternative basis. 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 underlying 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 delay a Holder's recognition of income.

     In the case of a Stripped Security that is an Interest Weighted Security,
the trustee intends, absent contrary authority, to report income to security
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 IRS could contend
that

o    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;


                                       98



o    the non-Interest Weighted Securities are subject to the contingent payment
     provisions of the Contingent Regulations; or

o    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 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 those 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)(5)(B) 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 for which a
partnership election is made, a Holder's tax basis in its security is the price
the holder pays for the 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. 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 the Regular
Interest Security had equaled 110% of the applicable federal rate as of the
beginning of the holder's holding period, over (ii) the amount of ordinary
income actually recognized by the holder with respect to the Regular Interest
Security.

MISCELLANEOUS TAX ASPECTS

     Backup Withholding. Subject to the discussion below with respect to trust
funds for which a partnership election is made, a Holder, other than a holder of
a Residual Interest, may, under certain circumstances, be subject to "backup
withholding" with respect to distributions or the proceeds of a sale of
securities to or through brokers that represent interest or original issue
discount on the securities. This withholding generally applies if the holder of
a security

     o    fails to furnish the trustee with its taxpayer identification number
          ("TIN");

     o    furnishes the trustee an incorrect TIN;

     o    fails to report properly interest, dividends or other "reportable
          payments" as defined in the Code; or

     o    under certain circumstances, fails to provide the trustee or the
          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.


                                       99



     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
are encouraged to consult their tax advisers as to their qualification for
exemption from backup withholding and the procedure for obtaining the exemption.

     The trustee will report to the Holders and to the servicer for each
calendar year the amount of any "reportable payments" during the year and the
amount of tax withheld, if any, with respect to payments on the securities.

NEW REPORTING REGULATIONS

     In January 2006 the IRS and Treasury Department finalized new rules
concerning the reporting of tax information with respect to "Widely Held
Mortgage Trusts." Under these new rules, the trustee may be compelled, or have
an opportunity, to adopt new ways of calculating and reporting tax items (such
as OID, market discount, sale proceeds and premium) to the Holders of
Pass-Through Securities, which changes may affect the timing of when a Holder
reports those items.

TAX TREATMENT OF FOREIGN INVESTORS

     Subject to the discussion below with respect to trust funds for which a
partnership election is made, under the Code, unless interest (including OID)
paid on a security (other than a Residual Interest) 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"), the interest will normally qualify as portfolio interest
(except where the recipient is a holder, directly or by attribution, of 10% or
more of the capital or profits interest in the issuer, or 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 the 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 the rate were reduced or eliminated by an
applicable income tax treaty) on, among other things, interest and other fixed
or determinable, annual or periodic income paid to Nonresidents.

     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 provided the appropriate ownership statements are
received. They will, however, generally be subject to the regular United States
income tax.

     Payments to holders of Residual Interests 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 the 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 income that constitutes excess inclusion income, a holder of a
Residual Interest will not be entitled to an exemption from or reduction of the
30% (or lower treaty rate) withholding tax rule. Until recently, excess
inclusions allocated to a Nonresident were subject to United States withholding
tax only when paid or distributed (or when the Residual Interest was disposed
of). The Treasury, however, has exercised its statutory authority to promulgate
regulations that require excess inclusions allocated to a Nonresident to be
taken into account at an earlier time in order to prevent the avoidance of tax.
These new regulations are discussed below. Under other REMIC Regulations, if a
Residual Interest has tax avoidance potential, a transfer of a Residual Interest
to a Nonresident will be disregarded for all federal tax purposes. A Residual
Interest has tax avoidance potential unless, at the time of the transfer the
transferor reasonably expects that the REMIC will distribute to the transferee
of the Residual Interest amounts that will equal at least 30% of each excess
inclusion, and that the 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 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 for purposes of the withholding tax provisions of the
Code. See "-- Excess Inclusions."

     New Regulations Applicable to REMIC Residuals. Effective August 1, 2006,
Temporary regulations have modified the general rule that excess inclusions from
a REMIC residual interest are not includible in the income of a


                                       100



foreign person (or subject to withholding tax) until paid or distributed. The
new regulations accelerate the time both for the reporting of and the tax
withholding on excess inclusions allocated to the foreign equity holders of
partnerships and certain other pass-through entities. The new rules also provide
that excess inclusions are United States sourced income. The timing rules apply
to a particular residual interest and a particular foreign person, if the first
allocation of income from the residual interest to the foreign person occurs
after July 31, 2006. The source rules apply for taxable years ending after
August 1, 2006.

     Treatment of Partners. Under the Temporary regulations, in the case of
REMIC residual interests held by a foreign person through a partnership, the
amount of excess inclusion income allocated to the foreign partner is deemed to
be received by the foreign partner on the last day of the partnership's taxable
year except to the extent that the excess inclusion was required to be taken
into account by the foreign partner at an earlier time under section 860G(b) as
a result of a distribution by the partnership to the foreign partner or a
disposition of the foreign partner's indirect interest in the REMIC residual
interest. A disposition in whole or in part of the foreign partner's indirect
interest in the REMIC residual interest may occur as a result of a termination
of the REMIC, a disposition of the partnership's residual interest in the REMIC,
a disposition of the foreign partner's interest in the partnership, or any other
reduction in the foreign partner's allocable share of the portion of the REMIC
net income or deduction allocated to the partnership.

     Treatment of Other Pass-Through Holders. Similarly, in the case of a
residual interest held by a foreign person as a shareholder of a real estate
investment trust or regulated investment company, as a participant in a common
trust fund or as a patron in an organization subject to part I of subchapter T
(cooperatives), the amount of excess inclusion allocated to the foreign person
must be taken into income at the same time that other income from the trust, the
company, the fund, or the organization would be taken into account.

     Withholding Obligations. Under the Temporary regulations, excess inclusions
allocated to a foreign person (whether as a partner or holder of an interest in
a pass-through entity) are expressly made subject to withholding tax. In
addition, in the case of excess inclusions allocable to a foreign person as a
partner, the Temporary regulations eliminate an important exception to the
withholding requirements. In general, under the eliminated exception, a
withholding agent unrelated to a payee is obligated to withhold on a payment
only to the extent that the withholding agent has control over the payee's money
or property and knows the facts giving rise to the payment.

TAX CHARACTERIZATION OF THE TRUST FUND AS A PARTNERSHIP

     Tax Counsel will deliver its opinion that a trust fund for which a
partnership election is made will not be a corporation or publicly traded
partnership taxable as a corporation for federal income tax purposes. This
opinion will be 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 securities 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, 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. That 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 that 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. Unless otherwise specified in the related
prospectus supplement, in the opinion of Tax Counsel, the notes will be
classified as debt for federal income tax purposes. The discussion below assumes
this characterization of the notes is correct.


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     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 (that is, any
excess of the principal amount of the notes over their issue price) is less than
a de minimis amount (that is, 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, additional tax considerations with respect to the 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, 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 the
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 the OID in income, on a
pro rata basis, as principal payments are made on the note. 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 the 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. 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 the 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 the noteholder
with respect to the note. That 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. 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

o    is not actually or constructively a "10 percent shareholder" of the trust
     fund or the seller (including a holder of 10% of the outstanding
     securities) 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

o    provides the owner trustee or other person who is otherwise required to
     withhold U.S. tax with respect to the notes (the "Withholding Agent") with
     an appropriate statement, signed under penalties of perjury, certifying
     that the beneficial owner of the note is an individual or corporation for
     federal income tax purposes and a foreign person and providing the foreign
     person's name and address.


                                       102



Generally, this statement is made on an IRS Form W-8BEN ("W-8BEN"), which is
effective for the remainder of the year of signature plus three full calendar
years unless a change in circumstances makes any information on the form
incorrect. Notwithstanding the preceding sentence, a W-8BEN with a U.S. taxpayer
identification number will remain effective until a change in circumstances
makes any information on the form incorrect, provided that the Withholding Agent
reports at least one payment annually to the beneficial owner on IRS Form
1042-S. The beneficial owner must inform the Withholding Agent within 30 days of
any change and furnish a new W-8BEN. A noteholder who is not an individual or
corporation (or an entity treated as a corporation for federal income tax
purposes) holding the Notes on its own behalf may have substantially increased
reporting requirements. In particular, in the case of notes held by a foreign
partnership (or foreign trust), the partners (or beneficiaries) rather than the
partnership (or trust) will be required to provide the certification discussed
above, and the partnership (or trust) will be required to provide certain
additional information.

     If a note is held through a securities clearing organization or certain
other financial institutions, the organization or institution may provide the
relevant signed statement to the withholding agent; in that case, however, the
signed statement must be accompanied by a Form W-8BEN or substitute form
provided by the foreign person that owns the note. If the 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 income 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 the gain is not
effectively connected with the conduct of a trade or business in the United
States by the foreign person and 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
on 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.

     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 special counsel to the depositor, 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 that 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," and 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 master
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.


                                       103



     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. That 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 the certificates will be disclosed in the applicable prospectus
supplement.

     Partnership Taxation. As a partnership, the trust fund will not be subject
to federal income tax. Rather, each certificateholder will be required to
separately take into account the holder's distributive 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.

     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 that month, including
interest accruing at the Pass-Through Rate for the 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 the month; and (iv) any
other amounts of income payable to the certificateholders for the month. That
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,
this approach for allocating trust fund income should be permissible under
applicable Treasury regulations, although we can give no assurance that the IRS
would not require a greater amount of income to be allocated to
certificateholders. Moreover, 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 that 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 those
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.

     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 that holder under the Code.

     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. Those deductions might be disallowed to the individual in whole or
in part and might result in the holder being taxed on an amount of income that
exceeds the amount of cash actually distributed to the 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 those 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.


                                       104



     Discount and Premium. If the loans are not issued with OID, then 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, 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 that discount in income currently as it accrues
over the life of the loans or to offset that premium against interest income on
the loans. As indicated above, a portion of the market discount income or
premium deduction may be allocated to certificateholders.

     Section 708 Termination. Pursuant to Code Section 708, a sale or exchange
of 50% or more of the capital and profits in a partnership would cause a deemed
contribution of assets of the partnership (the "old partnership") to a new
partnership (the "new partnership") in exchange for interests in the new
partnership. Those interests would be deemed distributed to the partners of the
old partnership in liquidation thereof, which would not constitute a sale or
exchange. Accordingly, if the trust fund were characterized as a partnership,
then even if a sale of certificates terminated the partnership under Code
Section 708, the holder's basis in its certificates would remain the same.

     Disposition of Certificates. Generally, 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 that
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 the certificates, and, upon sale or other disposition of some of the
certificates, allocate a portion of that 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 those special reporting requirements. Thus, to avoid those special
reporting requirements, the trust fund will elect to include market discount in
income as it accrues.

     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, that excess will generally give rise to
a capital loss upon the retirement of the certificates.

     Allocations Among 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 that 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 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


                                       105



requirements, the trust fund will not make that 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 owner trustee is required to keep or have kept
complete and accurate books of the trust fund. Those 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 those nominees
will be required to forward that 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 those 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. That information includes (i) the name,
address and taxpayer identification number of the nominee and (ii) as to each
beneficial owner (x) the name, address and identification number of the person,
(y) whether the 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 (z) certain information on
certificates that were held, bought or sold on behalf of the 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 Securities Exchange Act of 1934, as amended
is not required to furnish that information statement to the trust fund. The
information referred to above for any calendar year must be furnished to 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 those 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, as calculated for this purpose which may exceed the distributions to
certificateholders, that is allocable to foreign certificateholders pursuant to
Section 1446 of the Code, as if the income were effectively connected to a U.S.
trade or business. 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-8BEN, IRS Form W-9 or the holder's certification of
nonforeign status signed under penalties of perjury. A holder who is not an
individual or corporation (or an entity treated as a corporation for federal
income tax purposes) holding the Notes on its own behalf may have substantially
increased reporting requirements. In particular, if the holder is a foreign
partnership (or foreign trust), the partners (or beneficiaries) rather than the
partnership (or trust) will be required to provide the certification discussed
above, and the partnership (or trust) will be required to provide certain
additional information.

     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


                                       106



obtain a taxpayer identification number from the IRS and submit that number 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 the
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 that 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
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.

                            OTHER TAX CONSIDERATIONS

     In addition to the federal income tax consequences described in "Federal
Income Tax Consequences," potential investors should consider the state, local
and foreign tax consequences of the acquisition, ownership, and disposition of
the securities. State and local tax law may differ substantially from the
corresponding federal law, and this discussion does not purport to describe any
aspect of the tax laws of any state or locality. Therefore, potential investors
are encouraged to consult their own tax advisors with respect to the various
state, local and foreign tax consequences of an investment in the securities.

                              ERISA CONSIDERATIONS

     The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and Section 4975 of the Code impose requirements on employee benefit plans (and
on certain other retirement plans and arrangements, including individual
retirement accounts and annuities and Keogh plans as well as collective
investment funds and separate accounts in which those plans, accounts or
arrangements are invested) (collectively, "Plans") subject to ERISA or to
Section 4975 of the Code and on persons who bear specified relationships to
Plans ("Parties in Interest") or are fiduciaries with respect to those Plans.
Generally, ERISA applies to investments made by Plans. Among other things, ERISA
requires that the assets of Plans be held in trust and that the trustee, or
other duly authorized fiduciary, have exclusive authority and discretion to
manage and control the assets of 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 the 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 requirements imposed by ERISA and Section 4975 of the Code.
Accordingly, assets of those plans may be invested in securities without regard
to the considerations described above and below, subject to the provisions of
other applicable law. Any plan which is qualified and exempt from taxation under
Code Sections 401(a) and 501(a) is subject to the prohibited transaction rules
set forth in Code Section 503.

     On November 13, 1986, the United States Department of Labor (the "DOL")
issued final regulations concerning the definition of what constitutes the
assets of a Plan. (Labor Reg. Section 2510.3-101 (the "Plan Assets
Regulation")). Under this regulation, the underlying assets and properties of
corporations, partnerships and certain other entities in which a Plan makes an
"equity" investment could be deemed for purposes of ERISA to be assets of the
investing Plan in certain circumstances. Under the Plan Assets 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 has no
"substantial equity features." If securities are not treated as equity interests
in the issuer for purposes of the Plan Assets Regulation, a Plan's investment in
the securities would not cause the assets of the issuer to be deemed plan
assets. If the securities are deemed to be equity interests in the issuer, the
issuer could be considered to hold plan assets because of a Plan's investment in
those securities. In that event, the master servicer and other persons
exercising management or discretionary control over the assets of the issuer or
providing services with respect to those assets could be deemed to be
fiduciaries or other parties in interest with respect to investing Plans and
thus


                                       107



subject to the prohibited transaction provisions of Section 406 of ERISA and
Section 4975 of the Code and, in the case of fiduciaries, to the fiduciary
responsibility provisions of Title I of ERISA, with respect to transactions
involving the issuer's assets. Trust certificates are "equity interests" for
purposes of the Plan Asset Regulation.

     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 assets of a Plan 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 that Plan. Because the loans may be deemed assets of each Plan that purchases
equity securities, an investment in equity 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 unless a statutory, regulatory or administrative
exemption applies.

     Without regard to whether securities are considered to be equity interest
in the issuer, certain affiliates of the issuer might be considered or might
become Parties in Interest with respect to a Plan. In this case, the acquisition
or holding of the securities by or on behalf of the Plan could constitute or
give rise to a prohibited transaction, within the meaning of ERISA and Section
4975 of the Code, unless they were subject to one or more exemptions. Depending
on the relevant facts and circumstances, certain prohibited transaction
exemptions may apply to the purchase or holding of the securities -- for
example, Prohibited Transaction Class Exemption ("PTCE") 96-23, which exempts
certain transactions effected on behalf of a Plan by an "in-house asset
manager"; PTCE 95-60, which exempts certain transactions by insurance company
general accounts; PTCE 91-38, which exempts certain transactions by bank
collective investment funds; PTCE 90-1, which exempts certain transactions by
insurance company pooled separate accounts; or PTCE 84-14, which exempts certain
transactions effected on behalf of a Plan by a "qualified professional asset
manager". We can give no assurance that any of these exemptions will apply with
respect to any Plan's investment in securities, or that such an exemption, if it
did apply, would apply to all prohibited transactions that may occur in
connection with the investment. Furthermore, these exemptions generally do not
expressly address transactions incidental to the operation of the trust. You
should consult with your advisors regarding the specific scope, terms and
conditions of an exemption as it applies to you, as an investor, before relying
on that exemption's availability.

     The DOL has granted to certain underwriters individual administrative
exemptions (the "Underwriter Exemptions") from certain of the prohibited
transaction rules of ERISA and the related excise tax provisions of Section 4975
of the Code with respect to the initial purchase, the holding and the subsequent
resale by Plans of securities, including certificates, underwritten or privately
placed by that underwriter or its affiliate or by a syndicate managed by that
underwriter or its affiliate and issued by entities that hold investment pools
consisting of certain secured receivables, loans and other obligations and the
servicing, operation and management of the investment pools, provided the
conditions and requirements of the Underwriter Exemptions are met. The
Underwriter Exemptions also permits the entity to hold an interest-rate swap or
yield supplement agreement if it meets requirements set forth in the Underwriter
Exemptions.

     The entity may hold an interest-rate swap (a "swap" or "swap agreement") if
the swap: (a) is an "eligible swap"; (b) is with a bank or other financial
institution that meets certain rating requirements (an "eligible counterparty");
(c) meets certain additional specific conditions concerning the consequences if
the rating of the counterparty is reduced or withdrawn, which conditions depend
on whether the ratings of the securities to which the swap applies are dependent
on the swap and (d) permits the trust to make termination payments to the swap
counterparty (other than currently scheduled payments) solely from excess spread
or amounts otherwise payable to the servicer, depositor or seller. Any class of
securities to which one or more swap agreements applies may be acquired and held
in reliance upon the Underwriter Exemptions only by a "qualified plan investor."

     An "eligible swap" is one which: (a) is denominated in U.S. dollars; (b)
pursuant to which the trust pays or receives, on or immediately prior to the
respective payment or distribution date for the class of securities to which the
swap relates, a fixed rate of interest or a floating rate of interest based on a
publicly available index (e.g., LIBOR or the U.S. Federal Reserve's Cost of
Funds Index (COFI)), with the trust receiving such payments on at least a
quarterly basis and obligated to make separate payments no more frequently than
the counterparty, with all simultaneous payments being netted ("allowable
interest rate"); (c) has a notional amount that does not exceed either: (i) the
Class Security Balance of the class of securities to which the swap relates, or
(ii) the portion of the Class Security Balance of such class represented by
obligations ("allowable notional amount"); (d) is not


                                       108



"leveraged" (i.e., payments are based on the applicable notional amount, the day
count fractions, the fixed or floating rates permitted above, and the difference
between the products thereof, calculated on a one-to-one ratio and not on a
multiplier of such difference); (e) has a final termination date that is either
the earlier of the date on which the issuer terminates or the related class of
securities are fully repaid and (f) does not incorporate any provision which
could cause a unilateral alteration in the requirements described in (a) through
(d) above.

     A "qualified plan investor" is a plan for which the decision to buy such
class of securities is made by an independent fiduciary that is qualified to
understand the swap transaction and the effect the swap would have on the rating
of the securities and that (a) is a "qualified professional asset manager"
("QPAM") under PTCE 84-14, (b) is an "in-house asset manager" under PTCE 96-23
or (c) has total assets (both plan and non-plan) under management of at least
$100 million at the time the securities are acquired by the plan.

     The entity may hold a yield supplement agreement if it satisfies the
conditions of an "eligible yield supplement agreement." Generally, any yield
supplement agreement will be an eligible yield supplement agreement, provided
that if such yield supplement agreement is an interest rate cap contract, a
corridor contract or similar arrangement with a notional principal amount and is
purchased by or on behalf of the trust to supplement the interest rates
otherwise payable on obligations held by the trust fund, then such yield
supplement agreement will be an eligible yield supplement agreement only if it
meets the following conditions: (a) it is denominated in U.S. dollars; (b) it
pays an allowable interest rate; (c) it is not leveraged; (d) it does not allow
any of these three preceding requirements to be unilaterally altered without the
consent of the trustee; (e) it is entered into between the trust and an eligible
counterparty and (f) it has an allowable notional amount.

     While each Underwriter Exemption is an individual exemption separately
granted to a specific underwriter, the terms and conditions which generally
apply to the Underwriter Exemptions are substantially identical, and include the
following:

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

          (2) the securities acquired by the Plan have received a rating at the
     time of the acquisition that is one of the four highest generic rating
     categories from Standard & Poor's Ratings Services, a division of The
     McGraw-Hill Companies, Inc. ("S&P"), Moody's Investors Service, Inc.
     ("Moody's"), or Fitch Ratings, Inc. ("Fitch") (each, a "Rating Agency");

          (3) the trustee is not an affiliate of any other member of the
     Restricted Group, as defined below (other than an underwriter);

          (4) the sum of all payments made to and retained by the underwriters
     in connection with the distribution of the securities represents not more
     than reasonable compensation for underwriting the securities; the sum of
     all payments made to and retained by the seller pursuant to the assignment
     of the loans to the issuer represents not more than the fair market value
     of the loans; the sum of all payments made to and retained by the servicer
     and any sub-servicer represents not more than reasonable compensation for
     the person's services under the agreement pursuant to which the loans are
     pooled and reimbursements of the person's reasonable expenses in connection
     therewith; and

          (5) the Plan investing in the certificates is an "accredited investor"
     as defined in Rule 501(a)(1) of Regulation D of the SEC under the
     Securities Act.

     The issuer must also meet the following requirements:

          (i) the corpus of the issuer must consist solely of assets of the type
     that have been included in other investment pools;


                                       109



          (ii)securities in those other investment pools must have been rated in
     one of the four highest rating categories of S&P, Moody's, or Fitch for at
     least one year prior to the Plan's acquisition of securities; and

          (iii) securities evidencing interests in those other investment pools
     must have been purchased by investors other than Plans for at least one
     year prior to any Plan's acquisition of securities.

     Moreover, the Underwriter Exemptions generally provide relief from certain
self-dealing/conflict of interest prohibited transactions that may occur when a
Plan fiduciary causes a Plan to acquire securities of an issuer holding
receivables as to which the fiduciary (or its affiliate) is an obligor, provided
that, among other requirements:

o    in the case of an acquisition in connection with the initial issuance of
     certificates, at least fifty percent (50%) of each class of certificates in
     which Plans have invested, and at least fifty percent (50%) of aggregate
     interests in the issuer are acquired by persons independent of the
     Restricted Group;

o    the fiduciary (or its affiliate) is an obligor with respect to not more
     than five percent (5%) of the fair market value of the obligations
     contained in the investment pool;

o    the Plan's investment in securities of any class does not exceed
     twenty-five percent (25%) of all of the securities of that class
     outstanding at the time of the acquisition;

o    immediately after the acquisition, no more than twenty-five percent (25%)
     of the assets of any Plan with respect to which the person is a fiduciary
     is invested in securities representing an interest in one or more issuers
     containing assets sold or serviced by the same entity; and

o    the Plan is not sponsored by a member of the Restricted Group, as defined
     below.

     The Underwriter Exemptions provide only limited relief to Plans sponsored
by the seller, an underwriter, the trustee, the master servicer, any provider of
credit support to the trust, any counterparty to a swap contained in the trust,
any obligor with respect to loans included in the investment pool constituting
more than five percent (5%) of the aggregate unamortized principal balance of
the assets in the trust fund, or any affiliate of those parties (the "Restricted
Group").

     The Underwriter Exemptions provide exemptive relief to certain
mortgage-backed and asset-backed securities transactions using pre-funding
accounts. Mortgage loans or other secured receivables (the "obligations")
supporting payments to securityholders, and having a value equal to no more than
twenty-five percent (25%) of the total principal amount of the securities being
offered by the issuer, may be transferred to the issuer within a 90-day or
three-month period following the closing date, instead of being required to be
either identified or transferred on or before the closing date. The relief is
available when the prefunding account satisfies certain conditions.

     The rating of a security may change. If a class of securities no longer has
a required rating from at least one Rating Agency, the security will no longer
be eligible for relief under the Underwriter Exemption (although a Plan that had
purchased the security when it had a permitted rating would not be required by
the Underwriter Exemption to dispose of it.) A certificate that satisfies the
requirements of the Underwriter Exemptions other than the rating requirement may
be eligible for purchase by an insurance company investing assets of its general
account that include plan assets when the requirements of Sections I and III of
Prohibited Transaction Class Exemption 95-60 are met.

     The prospectus supplement for each series of securities will indicate the
classes of securities, if any, offered thereby as to which it is expected that
an Underwriter Exemption will apply.

     Any Plan fiduciary which proposes to cause a Plan to purchase securities
are encouraged to consult with its counsel concerning the impact of ERISA and
the Code, the applicability of the Underwriter Exemptions, the effect of the
Plan Assets Regulation, and the potential consequences in their specific
circumstances, prior to making that


                                       110



investment. Moreover, each Plan fiduciary should determine whether under the
general fiduciary standards of investment prudence and diversification an
investment in the securities is appropriate for the Plan, taking into account
the overall investment policy of the Plan and the composition of the Plan's
investment portfolio.

     The sale of certificates to a Plan is in no respect a representation by the
issuer or any underwriter of the Certificates that this investment meets all
relevant legal requirements with respect to investments by Plans generally or
any particular Plan, or that this investment is appropriate for Plans generally
or any particular Plan.

                                LEGAL INVESTMENT

     The prospectus supplement for each series of securities will specify which,
if any, of the classes of securities offered thereby constitute "mortgage
related securities" for purposes of the Secondary Mortgage Market Enhancement
Act of 1984 ("SMMEA"). Classes of securities that qualify as "mortgage related
securities" will be legal investments for persons, trusts, corporations,
partnerships, associations, business trusts, and business entities (including
depository institutions, life insurance companies and pension funds) created
pursuant to or existing under the laws of the United States or of any state
(including the District of Columbia and Puerto Rico) whose authorized
investments are subject to state regulations to the same extent as, under
applicable law, obligations issued by or guaranteed as to principal and interest
by the United States or those entities. Under SMMEA, if a state enacts
legislation prior to October 4, 1991 specifically limiting the legal investment
authority of those entities with respect to "mortgage related securities",
securities will constitute legal investments for entities subject to the
legislation only to the extent provided therein. Approximately twenty-one states
adopted the legislation prior to the October 4, 1991 deadline. SMMEA provides,
however, that in no event will the enactment of that legislation affect the
validity of any contractual commitment to purchase, hold or invest in
securities, or require the sale or other disposition of securities, so long as
the contractual commitment was made or the securities were acquired prior to the
enactment of the legislation.

     SMMEA also amended the legal investment authority of federally-chartered
depository institutions as follows: federal savings and loan associations and
federal savings banks may invest in, sell or otherwise deal in securities
without limitations as to the percentage of their assets represented thereby,
federal credit unions may invest in mortgage related securities, and national
banks may purchase securities for their own account without regard to the
limitations generally applicable to investment securities set forth in 12 U.S.C.
24 (Seventh), subject in each case to that regulations that the applicable
federal authority may prescribe. In this connection, federal credit unions
should review the National Credit Union Administration ("NCUA") Letter to Credit
Unions No. 96, as modified by Letter to Credit Unions No. 108, which includes
guidelines to assist federal credit unions in making investment decisions for
mortgage related securities and the NCUA's regulation "Investment and Deposit
Activities" (12 C.F.R. Part 703), which sets forth certain restrictions on
investment by federal credit unions in mortgage related securities (in each case
whether or not the class of securities under consideration for purchase
constituted a "mortgage related security"). The NCUA issued final regulations
effective December 2, 1991 that restrict and in some instances prohibit the
investment by Federal Credit Unions in certain types of mortgage related
securities.

     All depository institutions considering an investment in the securities
(whether or not the class of securities under consideration for purchase
constitutes a "mortgage related security") should review the Federal Financial
Institutions Examination Council's Supervisory Policy Statement on the
Securities Activities (to the extent adopted by their respective regulators)
(the "Policy Statement") setting forth, in relevant part, certain securities
trading and sales practices deemed unsuitable for an institution's investment
portfolio, and guidelines for (and restrictions on) investing in mortgage
derivative products, including "mortgage related securities", which are
"high-risk mortgage securities" as defined in the Policy Statement. According to
the Policy Statement, those "high-risk mortgage securities" include securities
not entitled to distributions allocated to principal or interest, or Subordinate
Securities. Under the Policy Statement, it is the responsibility of each
depository institution to determine, prior to purchase (and at stated intervals
thereafter), whether a particular mortgage derivative product is a "high-risk
mortgage security", and whether the purchase (or retention) of that product
would be consistent with the Policy Statement.

     The foregoing does not take into consideration the applicability of
statutes, rules, regulations, orders guidelines or agreements generally
governing investments made by a particular investor, including, but not limited
to "prudent investor" provisions, percentage-of-assets limits and provisions
which may restrict or prohibit


                                       111



investment in securities which are not "interest bearing" or "income paying," or
in securities which are issued in book-entry form.

     There may be other restrictions on the ability of certain investors,
including depository institutions, either to purchase securities or to purchase
securities representing more than a specified percentage of the investor's
assets. Investors are encouraged to consult their own legal advisors in
determining whether and to what extent the securities constitute legal
investments for those investors.

                             METHOD OF DISTRIBUTION

     Securities are being offered hereby in series from time to time (each
series evidencing or relating to a separate trust fund) through any of the
following methods:

o    by negotiated firm commitment or best efforts underwriting and public
     reoffering by underwriters, including in a resecuritization of any
     securities of any series by the depositor or any of its affiliates;

o    by agency placements through one or more placement agents primarily with
     institutional investors and dealers; and

o    by placement directly by the depositor with institutional investors.

     A prospectus supplement will be prepared for each series which will
describe the method of offering being used for that series and will set forth
the identity of any underwriters thereof and either the price at which the
series is being offered, the nature and amount of any underwriting discounts or
additional compensation to those underwriters and the proceeds of the offering
to the depositor, or the method by which the price at which the underwriters
will sell the securities will be determined. Each prospectus supplement for an
underwritten offering will also contain information regarding the nature of the
underwriters' obligations, any material relationship between the depositor and
any underwriter and, where appropriate, information regarding any discounts or
concessions to be allowed or reallowed to dealers or others and any arrangements
to stabilize the market for the securities so offered. In firm commitment
underwritten offerings, the underwriters will be obligated to purchase all of
the securities of the series if any of those securities are purchased.
Securities may be acquired by the underwriters for their own accounts and may be
resold from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale.

     Underwriters and agents may be entitled under agreements entered into with
the depositor to indemnification by the depositor against certain civil
liabilities, including liabilities under the Securities Act, or to contribution
with respect to payments which the underwriters or agents may be required to
make in respect thereof.

     In relation to each Member State of the European Economic Area which has
implemented the Prospectus Directive (each, a "Relevant Member State"), each
underwriter will be required to represent and agree with the depositor that with
effect from and including the date on which the Prospectus Directive is
implemented in that Relevant Member State (the "Relevant Implementation Date")
and with respect to any class of securities with a minimum denomination of less
than $100,000, it has not made and will not make an offer of securities to the
public in that Relevant Member State prior to the publication of a prospectus in
relation to the securities which has been approved by the competent authority in
that Relevant Member State or, where appropriate, approved in another Relevant
Member State and notified to the competent authority in that Relevant Member
State, all in accordance with the Prospectus Directive, except that it may, with
effect from and including the Relevant Implementation Date, make an offer of
securities to the public in that Relevant Member State at any time:

     (a) to legal entities which are authorized or regulated to operate in the
financial markets or, if not so authorized or regulated, whose corporate purpose
is solely to invest in securities;

     (b) to any legal entity which has two or more of (1) an average of at least
250 employees during the last financial year; (2) a total balance sheet of more
than (euro)43,000,000 and (3) an annual net turnover of more than
(euro)50,000,000, as shown in its last annual or consolidated accounts; or


                                       112



     (c) in any other circumstances which do not require the publication by the
depositor of a prospectus pursuant to Article 3 of the Prospectus Directive.

     For the purposes of this provision, the expression an "offer of securities
to the public" in relation to any class of securities of a series, which class
has a minimum denomination of less than $100,000, in any Relevant Member State
means the communication in any form and by any means of sufficient information
on the terms of the offer and the securities to be offered so as to enable an
investor to decide to purchase or subscribe the securities, as the same may be
varied in that Member State by any measure implementing the Prospectus Directive
in that Member State, and the expression "Prospectus Directive" means Directive
2003/71/EC and includes any relevant implementing measure in each Relevant
Member State.

     If a series is offered other than through underwriters, the prospectus
supplement relating thereto will contain information regarding the nature of the
offering and any agreements to be entered into between the depositor and
purchasers of securities of the series.

                                  LEGAL MATTERS

     The validity of the securities of each series, including certain federal
income tax consequences with respect thereto, will be passed upon for the
depositor by Sidley Austin LLP, 787 Seventh Avenue, New York, New York 10019, or
by Thacher Proffitt & Wood LLP, Two World Financial Center, New York, New York
10281, as specified in the prospectus supplement.

                              FINANCIAL INFORMATION

     A new trust fund will be formed with respect to each series of securities
and no trust fund will engage in any business activities or have any assets or
obligations prior to the issuance of the related series of securities.
Accordingly, no financial statements with respect to any trust fund will be
included in this prospectus or in the related prospectus supplement.

                                     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.

     The 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 class
and will reflect the Rating Agency's assessment solely of the likelihood that
holders of a class of securities of the class will receive payments to which the
securityholders are entitled under the related Agreement. The 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 the prepayments
might differ from that originally anticipated or the likelihood of early
optional termination of the series of securities. The 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. Each
security rating should be evaluated independently of any other security rating.
The rating will not address the possibility that prepayment at higher or lower
rates than anticipated by an investor may cause the 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.

     We can give no assurance that any the rating will remain in effect for any
given period of time or that it may not be lowered or withdrawn entirely by the
Rating Agency in the future if in its judgment circumstances in the future 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, the rating might also be lowered or withdrawn among other
reasons, because of an adverse change in the financial or other condition of a
credit enhancement provider or a change in the rating of the credit enhancement
provider's long term debt.


                                       113



     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 the series. The criteria are
sometimes based upon an actuarial analysis of the behavior of mortgage loans in
a larger group. The analysis is often the basis upon which each Rating Agency
determines the amount of credit enhancement required with respect to each the
class. We can give no assurance that the historical data supporting the
actuarial analysis will accurately reflect future experience nor 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. We
can give no assurance that values of any Properties have remained or will remain
at their levels on the respective dates of origination of the related loans. If
the residential real estate markets should experience an overall decline in
property values such that the outstanding 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 the Properties, the rates of
delinquencies, foreclosures and losses could be higher than those now generally
experienced in the mortgage lending industry. In addition, adverse economic
conditions (which may or may not affect real property values) may affect the
timely payment by mortgagors of scheduled payments of principal and interest on
the loans and, accordingly, the rates of delinquencies, foreclosures and losses
with respect to any trust fund. To the extent that those losses are not covered
by credit enhancement, the losses will be borne, at least in part, by the
holders of one or more classes of the securities of the related series.


                                       114



                             INDEX TO DEFINED TERMS

Accretion Directed...................................................         37
Accrual..............................................................         39
Adjustable Rate......................................................         38
Agency Securities....................................................         14
Agreement............................................................         15
AMT..................................................................         96
APR..................................................................         18
Asset Conservation Act...............................................         76
Available Funds......................................................         33
beneficial owner.....................................................         42
Book-Entry Securities................................................         42
Callable.............................................................         39
Capitalized Interest Account.........................................         59
Cash Flow Bond Method................................................         98
CERCLA...............................................................         76
CI...................................................................         44
Claimable Amount.....................................................         85
Class Security Balance...............................................         33
Clearstream, Luxembourg..............................................         44
Code.................................................................         87
COFI securities......................................................         41
Collateral Value.....................................................         19
Combined Loan-to-Value Ratio.........................................         18
Companion Class......................................................         37
Component Securities.................................................         37
Cooperative..........................................................         44
cooperative loans....................................................         15
cooperatives.........................................................         15
Cut-off Date Principal Balance.......................................         31
DBC..................................................................         44
Debt securities......................................................         87
debt-to-income ratio.................................................         28
Definitive Security..................................................         42
depositor............................................................         27
Detailed Description.................................................         15
Disqualified Organization............................................         94
DOL..................................................................        107
DTC..................................................................         42
Eleventh District....................................................         40
ERISA................................................................        107
Euroclear............................................................         42
Euroclear Operator...................................................         44
Euroclear Participants...............................................         44
European Depositaries................................................         42
excess servicing.....................................................         98
Exchange Act.........................................................         26
FHA..................................................................         15
FHLBSF...............................................................         40
Final Bond Premium Regulations.......................................         91
Financial Intermediary...............................................         42
Fitch................................................................        109
Fixed Rate...........................................................         38
Floating Rate........................................................         38
foreign person.......................................................        102
FTC Rule.............................................................         80
Funding Period.......................................................         59
Garn-St Germain Act..................................................         79
HI Contracts.........................................................         79
HI Loans.............................................................         79
Improper Knowledge...................................................         95
Indenture............................................................         31
Indirect Participants................................................         43
Insurance Proceeds...................................................         57
Insured Expenses.....................................................         57
Interest Only........................................................         38
Interest Weighted Securities.........................................         89
Inverse Floating Rate................................................         38
L/C Bank.............................................................         48
L/C Percentage.......................................................         48
Liquidation Expenses.................................................         57
Liquidation Proceeds.................................................         57
Loan Rate............................................................         16
Loan-to-Value Ratio..................................................         18
Master Servicing Agreements..........................................         14
Master Servicing Fee.................................................         66
Moody's..............................................................    60, 109
Mortgage.............................................................         55
mortgage related security............................................        111
NAS..................................................................         37
National Cost of Funds Index.........................................         41
NCUA.................................................................        111
New CI...............................................................         44
new partnership......................................................        105
Non-Accelerated Senior...............................................         37
Non-Agency Mortgage-Backed Securities................................         14
Noneconomic Residual Interest........................................         95
Nonresidents.........................................................        100
Notional Amount Securities...........................................         37
obligations..........................................................        110
Offshore Location....................................................         95
OID..................................................................         87
OID Regulations......................................................         87
old partnership......................................................        105
OTS..................................................................         41
PACs.................................................................         37
Partial Accrual......................................................         39
Participants.........................................................         42
Parties in Interest..................................................   107, 108
Pass-Through Securities..............................................         97
Pay-Through Security.................................................         89
percentage interests.................................................         68
Permitted Investments................................................         59
Plan Assets Regulation...............................................        107
Planned Principal Class..............................................         37
Plans................................................................        107
Policy Statement.....................................................        111


                                       115



Pool Insurance Policy................................................         49
Pool Insurer.........................................................         49
Pooling and Servicing Agreement......................................         14
Pre-Funded Amount....................................................         59
Pre-Funding Account..................................................         59
Prepayment Assumption................................................         89
Primary Mortgage Insurance Policy....................................         17
Prime Rate...........................................................         42
Principal Only.......................................................         38
Principal Prepayments................................................         34
Properties...........................................................         17
Property Improvement Loans...........................................         82
PTCE.................................................................        108
Purchase Price.......................................................         30
Rating Agency........................................................   109, 113
Ratio Strip Securities...............................................         98
RCRA.................................................................         77
Record Date..........................................................         32
Reference Bank Rate..................................................         39
Refinance Loan.......................................................         19
Regular Interest Securities..........................................         87
Relevant Depositary..................................................         42
Relevant Implementation Date.........................................        112
Relevant Member State................................................        112
Relief Act...........................................................      9, 81
REMIC................................................................     32, 87
Residual Interest....................................................         93
Restricted Group.....................................................        110
Retained Interest....................................................         31
Rules................................................................         43
S&P..................................................................        109
Sale and Servicing Agreement.........................................         14
Scheduled Principal Class............................................         37
SEC..................................................................         15
secured creditor exemption...........................................         76
Securities Act.......................................................         25
Security Account.....................................................         56
Security Owners......................................................         42
Security Register....................................................         32
Sellers..............................................................         14
Senior Securities....................................................         47
Sequential Pay.......................................................         38
Servicing Fee........................................................         97
Short-Term Note......................................................        102
Single Family Properties.............................................         17
SMMEA................................................................        111
Strip................................................................         38
Stripped Securities..................................................         97
Subordinate Securities...............................................         47
Subsequent Loans.....................................................         59
Super Senior.........................................................         38
Support Class........................................................         38
TACs.................................................................         38
Targeted Principal Class.............................................         38
Tax Counsel..........................................................         86
Terms and Conditions.................................................         45
Title I Loans........................................................         82
Title I Program......................................................         82
Title V..............................................................         79
Trust Agreement......................................................         15
Trust Fund Assets....................................................         14
UCC..................................................................         75
Underwriter Exemptions...............................................        108
VA ..................................................................         15
VA Guaranty..........................................................         66
Variable Rate........................................................         38
W-8BEN...............................................................        103
Withholding Agent....................................................        102


                                       116

                                 $456,500,100
                                 (APPROXIMATE)


                  ASSET-BACKED CERTIFICATES, SERIES 2006-SPS2


                CWABS ASSET-BACKED CERTIFICATES TRUST 2006-SPS2
                                 ISSUING ENTITY


                                  CWABS, INC.
                                   DEPOSITOR

                         [COUNTRYWIDE HOME LOANS LOGO]

                               SPONSOR AND SELLER



                      COUNTRYWIDE HOME LOANS SERVICING LP
                                MASTER SERVICER


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

                             PROSPECTUS SUPPLEMENT

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


COUNTRYWIDE SECURITIES CORPORATION

                                  CREDIT SUISSE

                                                             MERRILL LYNCH & CO.

     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 Asset-Backed Certificates, Series 2006-SPS2 in any
state where the offer is not permitted.

     Dealers will deliver a prospectus supplement and prospectus when acting as
underwriters of the Asset-Backed Certificates, Series 2006-SPS2 and with
respect to their unsold allotments or subscriptions. In addition, all dealers
selling the Asset-Backed Certificates, Series 2006-SPS2 will be required to
deliver a prospectus supplement and prospectus for 90 days after the date of
the prospectus supplement.



                                August 28, 2006